Owners of multi-metal company Terrafame – Finnish Minerals Group, Trafigura Group’s private investment arm Galena Asset Management and Sampo – have reached an agreement with Terrafame on funding rearrangements and further financing of the company.

The owners are jointly prepared to ensure Terrafame will be able to continue the development of its operations in 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 with the management of Galena Asset Management (Galena) and Sampo will convert US$29m 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 EUR115m. 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 EUR80.5m and Galena to a maximum of around EUR34.5m in equity financing
  • These financing arrangements will be implemented at the same per-share subscription price of EUR160.42 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 EUR176.46 per share
  • In addition, Trafigura and Sampo will defer the repayment of USD43m (around EUR 37m) 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 start the production of battery chemicals. The commercial production of the new plant will start in early 2021.

“The construction of the battery chemicals plant in Sotkamo started in the summer of 2018, the construction work is entering its final stages,” said Terrafame CEO, Joni Lukkaroinen.

“The first trial use procedures will be initiated in the near future as the installation work in the main process areas progresses. The operating organisation of the production plant has also been nearly established and personnel training has progressed in the spring and in the summer.

“The new plant moves Terrafame downstream in the metal refinery chain, as the current intermediate metal product, nickel-cobalt sulphide, is refined into chemicals used in manufacturing batteries for electric vehicles.”