Nyrstar has an agreement with the Talvivaara Mining Company to receive 100 per cent of its zinc in concentrate production until a total of 1.25 million tonnes has been reached. The Talvivaara Mining Company Plc. is a base metals producer with its primary focus on nickel and zinc. The company’s main asset is the nickel mine in Sotkamo, Finland.
The two poly-metallic deposits – Kuusilampi and Kolmisoppi – comprise one of the largest known sulphide nickel resources in Europe. The 642 million tonnes of ore, in measured and indicated categories, are estimated to be sufficient to support anticipated production levels for more than 60 years. Production at the mine started in October 2008 with the precipitation of the first metal sulphides. The Talvivaara Mining Company Plc. is currently ramping-up their planned nickel production to 50,000 tonnes per annum (tpa), with by-products of approximately 90,000 tpa of zinc in concentrate, 15,000 tpa of copper in concentrate, and 1,800 tpa of cobalt.
Talvivaara will deliver 100% of its zinc concentrate production to Nyrstar until the 1.25 million tonnes of zinc in concentrate has been delivered (equivalent to approximately 2 million tonnes of zinc concentrate at a grade of 65%). In addition to the US$335 million purchase price, Nyrstar will pay Talvivaara an extraction and processing fee of €350 per tonne of zinc in concentrate delivered (with escalators in relation to the price of elemental sulphur and propane), as well as the following price participation:
- until the later of the seventh anniversary of the agreement (January 2017) or
delivery of 600,000 MT of zinc in concentrate, Nyrstar will pay to Talvivaara 10%
of the zinc price exceeding US$2500 per tonne (up to US$3000 per tonne), and
30% of the zinc price exceeding US$3000 per tonne; and
- thereafter, Nyrstar will pay to Talvivaara 30% of the excess of the zinc price
above the €350 per tonne processing fee.