Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara Mining Company Plc Operational Update

Stock Exchange Release
Talvivaara Mining Company Plc
10 October 2013


                         Talvivaara Operational Update


Highlights

  * Talvivaara produced 2,595t of nickel and 5,645t of zinc in Q3 2013, and
    7,103t of nickel and 13,239t of zinc in Q1-Q3 2013
  * Production continued to be impacted by low metal grades in leach solution
    due to prolonged effects of excess water in the older heaps
  * Leaching of new ore stacked since the re-start of mining in May continues to
    proceed well;
    new heap section completed in September and anticipated to start
    contributing to metals production in late October
  * A scheduled maintenance stoppage to remove bottlenecks from the metals
    recovery plant successfully executed in September
  * Darin Cooper appointed COO from 16 September
  * Company-wide efficiency and productivity  programme continued with targeted
    cash flow effect of EUR 100 million by July 2014
  * Owing to weak nickel price development since early 2013 and the prolonged
    effects of excess water on production levels, Talvivaara's liquidity
    position has weakened more than anticipated; as a result, the Company is
    undertaking an assessment of all available funding options to secure its
    financial flexibility and a sufficient level of liquidity going forward



Production and operational update

Metals production

Talvivaara  produced 2,595t of nickel and 5,645t of zinc in Q3 2013, and 7,103t
of  nickel  and  13,239t of  zinc  in  January-September 2013. Metals production
continued  to be impacted  by low metal  grades in leach  solution. However, the
average  feed flow to  the metals recovery  plant during Q3, excluding scheduled
maintenance,  was  1,375 m3/h,  which  is  a  new quarterly record and indicates
continued improvement in plant availability and production stability.

A  scheduled maintenance break at the metals  recovery plant was held at the end
of  September with  a total  stoppage time  of seven  days. The  maintenance was
primarily  designed to remove bottlenecks from the plant and it was successfully
executed  to allow  feed flow  rates of  up to 1,750m3/h following the stoppage.
Other  works carried  out during  the break  included e.g.  reactor maintenance,
scheduled inspection  of thickeners, cleaning of vent gas scrubbers and doubling
of  the  critical  process  automation  stations  in  order  to  increase  plant
availability.

In  the plant operation, focus has  remained on improving chemical efficiency as
part of the broader efficiency and productivity programme.

Ore production

Ore  production  during  the  quarter  amounted  to  4.1Mt. The amount of nickel
stacked  during the  period was  approximately 11,000t, which  exceeds the 2012
quarterly  average of 7,000t by 57%. The increase  is both a result of increased
tonnages  of ore  production and  of improved  grade control. The average nickel
grade of the ore stacked in Q3 was 0.27%.

Bioheapleaching

The excess water in the heaps stacked prior to the temporary shut-down of mining
in  September  2012 has  diluted  metal  grades  in  leach solution, reduced the
efficiency of aeration, slowed down the leaching reactions and impacted the rate
of  evaporation throughout the  current year. Efforts  to reverse the effects of
excess  water continued through the third quarter and resulted in the release of
substantial amounts of solution from the older heaps. Consequently, aeration has
become  more efficient  and signs  of increasing  reactivity in  these heaps are
emerging.  The rate of improvement has, however, remained below expectations and
resulted  in the leach solutions remaining diluted throughout the third quarter.
The  nickel grade in solution pumped  to metals recovery averaged 1.0 g/l during
the period, reflecting the subdued performance of the older heaps.

Improved  metal grades in leach  solution are expected to  be seen in the fourth
quarter  as a result of the newly stacked primary heap 4 coming into production.
Stacking  of this  heap was  completed in  the beginning  of September and leach
solution  from it will be pumped to  the metals recovery plant from late October
onwards. Leaching of the new heap 4 has progressed well as a result of efficient
aeration,  appropriate  water  balance  and  careful maintenance. Leach solution
temperature  has  remained  at  around  45°C despite  the recent drop in ambient
temperature.

Following  the completion of heap 4, stacking of a new round of heap 1 commenced
in  early September and has  progressed according to plan.  This heap section is
anticipated  to be completed at around the year-end and to start contributing to
metals production in the middle of the first quarter of 2014.

Water management

Treatment and discharge of excess waters from the mine area continued throughout
the  quarter. However, the discharge  rate was limited by  the reference flow in
the  Kalliojoki  river,  which  remained  low  throughout the quarter. The water
balance  overall is  currently at  an acceptable  level, but  the discharge rate
limitation  has particularly hindered Talvivaara's  ability to empty gypsum pond
sections  5 and  6 from  excess  water  by  31 October  2013, as required by the
environmental   permit   decision   of   the  Northern  Finland  Regional  State
Administrative  Agency  ("AVI")  of  31 May  2013. Talvivaara has applied for an
extension  to this time limit  from the Vaasa Administrative  Court and AVI, and
filed   an   appeal   against   the  discharge  rate  limitation  to  the  Vaasa
Administrative Court.

Efficiency and productivity programme

Talvivaara  is committed to a broad efficiency and productivity programme, which
was  launched in June 2013 and targets at  achieving a EUR 100 million cash flow
effect  from savings and productivity improvements  within 12 months. As part of
the  programme,  Talvivaara  conducted  co-operation  consultations,  which were
concluded   in  August  and  reduced  the  number  of  personnel  by  68 through
terminations of employment and retirement, and by further 96 employees through a
decision not to renew temporary contracts.

The  efficiency and productivity  programme is headed  by COO Darin Cooper since
16 September and is proceeding according to plan.

Production and financing outlook

Talvivaara  continues to  anticipate its  H2 2013 nickel  production to increase
substantially  compared to  the H1  2013 output of  4,508t as the  newly stacked
heaps  are taken into production in the fourth quarter and start contributing to
the  metals grades in leach solution.  Following the recent maintenance work, no
scheduled stoppages are planned for the remainder of the year.

As  the market  price of  nickel has  declined by  more than 20% since the first
quarter of 2013 and the Company's production has continued to be impacted by the
prolonged  effects of  excess water  on older  ore heaps, Talvivaara's liquidity
position  has  weakened  more  than  anticipated.  As  a  result, the Company is
undertaking  an  assessment  of  all  available  funding  options  to secure its
financial  and operational flexibility and a sufficient level of liquidity going
forward.


CEO Pekka Perä comments: "The market environment remained challenging during the
third  quarter with nickel price persistently at around USD 13,000 to 14,000 per
tonne.  In  the  short  term,  we  can  unfortunately not expect to see material
improvements  in commodity prices and will  therefore have to keep concentrating
on  our  efficiency  and  productivity  programme  to  conserve cash and improve
productivity.

I  am  pleased  to  report  that  our  personnel  is  achieving better than ever
operational   performance   throughout  the  production  processes  despite  the
challenges  they have faced with the water  balance issues as well as the recent
co-operation  consultations. Of particular note  are the consistent improvements
seen in mining and materials handling tonnages and the good leaching performance
of  the newly stacked ore. However, despite  our intensive efforts to revive the
older  heaps from the  effects of excess  water, we have  only achieved moderate
success,  which in turn has limited  our production volumes throughout the year.
This,  together with the weak nickel  price, has impacted our liquidity position
more  than anticipated and  in order to  secure sufficient financial flexibility
and  liquidity going  forward, we  are now  assessing all  available options for
additional funding."


Enquiries
Talvivaara Mining Company Plc Tel +358 20 7129 800
Pekka Perä, CEO
Saila Miettinen-Lähde, Deputy CEO and CFO

Talvivaara Mining Company Plc
Talvivaara Mining Company is an internationally significant base metals producer
with  its  primary  focus  on  nickel  and  zinc  using  a  technology  known as
bioheapleaching  to extract metals out  of ore. Bioheapleaching makes extraction
of  metals  from  low  grade  ore  economically  viable. The Talvivaara deposits
comprise  one of the largest known sulphide  nickel resources in Europe. The ore
body  is  estimated  to  support  anticipated  production  for  several decades.
Talvivaara has secured a 10-year off-take agreement for 100 per cent of its main
output  of nickel and cobalt to Norilsk Nickel and entered into a long-term zinc
streaming  agreement with Nyrstar  NV. Talvivaara is  listed on the London Stock
Exchange  Main Market and NASDAQ OMX  Helsinki. Further information can be found
at www.talvivaara.com.

[HUG#1734699]

Attachments:

Talvivaara Operational Update Oct 10 2013.pdf