Talvivaara inks €20 million loan, streaming holiday deal with Nyrstar

By Caroline Salls

Pittsburgh, April 1 - Talvivaara Mining Co. plc and operating subsidiary Talvivaara Sotkamo Ltd. entered into an up to €20 million loan and streaming holiday agreement with Nyrstar Sales and Marketing AG, according to a Talvivaara news release.

The facility will be available to the company in several tranches, with the amount of each advance calculated with reference to a corresponding delivery by Talvivaara Sotkamo of zinc in concentrate under the zinc streaming agreement.

While the loan addresses Talvivaara's current financing needs and reduces the overall funding gap of the company before reaching sustainable positive cash flow, the company said the agreement also demonstrates continued commitment by Nyrstar and Talvivaara to cooperation under the zinc streaming agreement.

In the short term, the agreement allows the Talvivaara entities to continue their corporate reorganization and a process under which Talvivaara will explore the options of identifying potential investor(s) to participate in a long-term, overall financial solution for the group.

With the available funds, Talvivaara said it can also continue to focus on improving its water balance situation and reach sustainability targets.

Subject to Talvivaara securing the overall financial solution, the company also has an option to enter into a streaming holiday for delivery volumes of up to 80,000 tons of zinc in concentrate.

During the streaming holiday, Nyrstar committed to purchase zinc concentrate from Talvivaara at market terms. In return, the value sharing mechanism of the original zinc streaming agreement will be amended so that, if the full holiday period is elected, the value sharing mechanism will thereafter become nil.

When applied, the company said the value sharing mechanism allows it to receive a cash consideration that is higher than the extraction and processing fee determined in the zinc streaming agreement.

The zinc concentrate deliveries entitling Talvivaara to the full loan amount are estimated to be made during the remainder of 2014. Talvivaara said it will immediately deliver to Nyrstar roughly 10,000 tons of zinc in concentrate and receive the first loan advancement of about €5 million.

Nyrstar said in a separate release that the agreement is designed to support Talvivaara's corporate reorganization without increasing Nyrstar's net exposure to Talvivaara.

Nyrstar's obligation to extend financing under the loan facility will cease at the earlier of the total amount outstanding including accrued interest exceeding €20 million or the commencement of a streaming holiday.

The administrator of Talvivaara and Talvivaara Sotkamo's corporate reorganization processes supports the agreement, the release said.

Helsinki-based Talvivaara Mining is a base metals producer with its primary focus on nickel and zinc.

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