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INTERVIEW-UPDATE 1-Talvivaara mine to start on schedule -CEO

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Mon Aug 11, 2008 10:36pm IST

* Sotkamo nickel mine output to start Oct 1

* Mulls listing shares in euro zone

* Manganese production start realistic in 2 years

* Eyes cheap acquisition targets

By Tarmo Virki and Azer Sawiris

HELSINKI (Reuters) - Finnish miner Talvivaara (TALV.L) is set start production at its nickel mine in Sotkamo site in northern Finland on schedule on Oct. 1, and within budget, its chief executive Pekka Pera said.

"I am confident that we will be able to meet this deadline in time and on budget," Pera, also the company's largest shareholder, told Reuters. He added that production will ramp up gradually over the next 18 months.

The company is estimating its annual output of nickel at 33,000 tonnes -- some 2.3 percent of global volume -- and it has a 10-year agreement with Russia's Norilsk Nickel (GMKN.MM) for all of it.

Pera said Talvivaara is also mulling listing its shares in the euro zone, with the Helsinki bourse as one option, after its shares were floated on the London Stock Exchange in June last year.

The company, which Pera formed in 2003, bought the Talvivaara deposit in northern Finland from Finnish stainless steel maker Outokumpu (OUT1V.HE) in 2004 for a price of 1 euro ($1.50) and a 20 pct stake in the mine.

It now has a market capitalisation of 644 million pounds ($1.24 billion).

Talvivaara has started a feasibility study with Outokumpu for manganese production in Finland at volume of 30,000 tonnes a year.

"There is a realistic option that we could be producing manganese in two years," Pera said.

Pera also said the company is eyeing mining deposits around the world as the credit crunch has cut valuations, but it aims to focus first on setting up the production at Sotkamo site.

"It might be too soon to start buying another company at the moment," he said, but added: "Target companies are cheap. Very cheap." (Editing by Hans Peters)

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