Finland: British investor makes conditional bid for Talvivaara

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(Heikki Rönty / Yle)
(Heikki Rönty / Yle)
A British investment company specialising in corporate restructuring cases has tabled a conditional offer to purchase the beleaguered Talvivaara mining operation.

If the deal goes through, government and proposed investor Audley Capital will pump an additional 200 million euros to reboot mining operations.

Audley Capital made the conditional offer to purchase Talvivaara’s nickel mining operations in Sotkamo, eastern Finland. The parent company’s mining outfit filed for bankruptcy in November last year.

The conditional agreement was made with Terrafame, a wholly-state owned company hastily set up in February to manage the manage Talvivaara’s so-far shaky restructuring and efforts to find a new owner.

So far the price tag of the offer has not been disclosed. The deal is expected to be sealed this summer.

According to its website, Audley Capital Advisors’ investment portfolio focuses on natural resource and special situation opportunities.

Vapaavuori: Deal will protect employees

Economic Affairs Minister Jan Vapaavuori described the offer as significant, but pointed out that it is still only conditional.

“Once it has been finalised the reorganisation will protect the position of employees and minimise environmental risks,” public bankruptcy administrator Jari Salminen declared in a statement.

In a separate release the Economic Affairs ministry said that the goal is to ensure continuing operations at the Talvivaara mine.

According to the terms of the offer, Audley would be the primary investor, with its ownership corresponding to an 85 percent stake in the operation.

The new chief executive officer would become John McKenzie, nominated by Audley. He was previously front man for the copper division of Anglo American, a London-based mining multinational.

“We are convinced that Talvivaara has the potential to develop into a profitable operation,” McKenzie said.

In addition to the purchase price, Terrafame and Audley will commit to investing more than 200 million euros to reboot mining operations.

Environmental liability risks to be shared

Terrafame and Audley will also share the environmental liability risks associated with mining activities. The quality of the ore mined in Sotkamo is relatively poor and requires the company to use a bioleaching process to extract the mineral from the ore.

Talvivaara has frequently run afoul of many environmental authorities and activists, many of whom have called for its closure. In February CEO Pekka Perä was slapped with charges for environmental crimes.

Talvivaara first filed a restructuring proposal at the end of September 2014. The main goal of the process was to write down the company’s massive debts and to find new investors to re-float the business.

Talvivaara Sotkamo filed for bankruptcy in November after efforts to find short-term financing fell flat.

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