UPDATE 2-Miner Talvivaara Q3 loss deeper, sticks to target

LONDON, Nov 11 (Reuters) - Finnish nickel and zinc miner Talvivaara posted a deeper third-quarter loss on Wednesday due to weak output, but said it was over the worst of its production problems. "All in all, our outlook remains positive for the remainder of the year, with the most challenging production problems now behind us," Chief Executive Pekka Per said. "While sustained ramp-up of crushing according to plan continues to be critical, we remain confident that our 2010 production target of approximately 30,000 tonnes of nickel is achievable." The London-listed company, which started production last year, said its loss for the three months to end September deepened to 10.7 million euros ($16.0 million) from 9.4 million euros in the same period last year. The shares were up 2.5 percent at 375.99 pence at 1227 GMT, compared with a 4.4 percent gain in the UK mining index . "Talvivaara's Q3 results were reassuring and in line with what the market should have been expecting," said FinnCap in a note, adding that it believes the 2010 nickel production target can be achieved if the mine suffers no further setbacks. The firm restarted its metals recovery plant in mid September, after the circuit had been switched off for part of the quarter, and said production volumes in the fourth quarter are expected to be commercially significant. Talvivaara may have to make further modifications at the plant, lasting about a week or so, but does not expect these to affect production next year, Per told Reuters in an interview. "I am very positive about next year. It's been a struggle but the major problems are behind us now." However, he expects to see prices for steel ingredients nickel and zinc falling about 15 percent in the short term. Nickel prices in London have risen about 47 percent this year, while zinc is up 82 percent. "We haven't seen any sign of consumption picking up in the Western world and China doesn't need all the nickel that is produced," he said, although he added that the weak dollar may partly offset this effect. He is positive about the longer-term outlook for stainless steel once demand picks up outside of China and expects consumption levels to be at higher levels than before the financial crisis. In June, the firm raised 71.3 million pounds ($119.4 million) in a placing and is using the funds to boost production to around 50,000 tonnes of nickel a year by 2012. ($1=.6674 euros) ($1=.5973 pounds) (Reporting by Eric Onstad and Julie Crust, editing by Will Waterman and Mike Nesbit) Keywords: TALVIVAARA/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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