New financing package from the owners for Terrafame’s development
Terrafame’s owners have agreed on a new financing package to support the further development of the company’s operations.
THE OWNERS of the multi-metal company Terrafame Oy – Finnish Minerals Group, Trafigura Group’s private investment arm Galena Asset Management and Sampo plc – have reached an agreement with Terrafame on funding rearrangements and further financing of the company. The owners are jointly prepared to ensure that Terrafame will be able to continue the development of its operations under the current uncertain market situation and finalise the investment project for its battery chemicals plant as planned.
The new financing arrangement consists of the restructuring of existing loans as well as a new equity financing commitment:
- Funds under the management of Galena Asset Management (Galena) and Sampo will convert USD 29 million (approx. EUR 25 million) in long-term loans granted to Terrafame, due to mature in 2020, into ownership in the company by exercising stock options previously granted to them.
- Finnish Minerals Group and Galena commit to grant new equity financing totalling a maximum of EUR 115 million. The equity investment will be implemented by Finnish Minerals Group and Galena pro rata to their current holdings. Accordingly, Finnish Minerals Group has committed to a maximum of around EUR 80,5 million and Galena to a maximum of around EUR 34,5 million in equity financing.
- These financing arrangements will be implemented at the same per-share subscription price of EUR 160.42 that has been used in all previous arrangements concerning Terrafame. The share subscription price for options related to long-term loans and equity investments will be harmonised to EUR 176.46 per share.
- In addition, Trafigura and Sampo will defer the repayment of USD 43 million (approx. EUR 37 million) in long-term loans previously granted to Terrafame, due to mature in 2021, to the end of 2022.
- Lastly, Trafigura will commit to purchase additional volumes of Terrafame’s zinc precipitates.
With these financing arrangements, the owners will be able to strengthen Terrafame’s balance sheet as the company prepares to begin the production of battery chemicals. The arrangements will also secure Finnish Minerals Group’s position as the majority owner of Terrafame.
Terrafame’s development work continues to increase company value
According to Matti Hietanen, CEO of Finnish Minerals Group, Terrafame's value has developed positively over a period of five years. In Hietanen’s view, today Terrafame plays a key role in building the European value chain for lithium-ion batteries.
“With the financing arrangement, Terrafame’s owners commit to ensure that the company will continue its development work and begin the production of battery chemicals next year as planned. This joint effort will take Terrafame further in the value chain strengthening the company’s future prospects. At the same time, the financing arrangement will reinforce the position of Finnish Minerals Group as Terrafame’s majority owner,” Hietanen says.
The battery chemicals plant will generate significant economic effects
Terrafame's battery chemicals plant is a significant project on a global scale. The plant’s production will be based on nickel-cobalt already excavated at the Sotkamo mine. In the future, the company will locally further process nickel-cobalt sulphide, its main product, into sulphates used for the manufacture of intermediate products for lithium-ion batteries. The precursor and cathode active material plants, currently under negotiation by Finnish Minerals Group, would produce these intermediate products required further up in the battery value chain.
Construction of the battery chemicals plant in Sotkamo, Finland began in the summer of 2018, and the installation of process equipment and recruitments for the production organisation started in late 2019. Once operational in 2021, the plant will directly employ approximately 150 people. According to the regional economic impact report commissioned by Terrafame, the multiplier effects of the battery chemical plant amount to 138–223 person-years in the Kainuu region and 119–338 person-years elsewhere in Finland.
All in all, Terrafame's operations, including the battery chemicals plant, will generate an estimated 4,700–5,000 person-years annually. With the new plant, Terrafame's share of the GDP of the Kainuu region will rise to approximately 19 per cent.
Terms used in the text:
pCAM – precursor cathode active material, preliminary stage of the lithium-ion battery cathode active material.
CAM – cathode active material, a powdery end-product used in cathode manufacturing at cell plants.
Further information for the media:
CEO Matti Hietanen, Finnish Minerals Group, +358 40 8238806, matti.hietanen(at)mineralsgroup.fi
The mission of Finnish Minerals Group is to responsibly maximise the value of Finnish minerals. We manage the State’s mining industry shareholdings and strive to develop the Finnish value chain of lithium-ion batteries. In addition, we are engaged in long-term technology development of the mining and battery industry. Through our work, we contribute to Europe moving towards electric transport and a more sustainable future. www.mineralsgroup.fi