Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara is implementing several development projects as a result of the gypsum pond leakage investigation conducted by VTT

Stock Exchange Release
Talvivaara Mining Company Plc
29 April 2013


     Talvivaara is implementing several development projects as a result of
             the gypsum pond leakage investigation conducted by VTT


VTT  Technical Research  Centre of  Finland ("VTT")  carried out  an independent
investigation,  commissioned  by  the  Board  of  Directors of Talvivaara Mining
Company  Plc ("Talvivaara" or  the "Company"), on  the reasons and circumstances
which  led  to  the  gypsum  pond  leakage  in  November 2012. The investigation
resulted  in several recommendations for corrective and development actions. The
Company   had   initiated   the   implementation   of   the  majority  of  these
recommendations  immediately  following  the  leakage  in November 2012, and the
Board  has  requested  action  plans  from  the  Company's  operative management
regarding the remaining recommendations.

Objectives of the investigation

The  objectives of VTT's investigation  were to study the  direct reasons of the
incident  and to  analyze the  root causes  leading into  the realization of the
risks.  Additionally, the  investigation included  a general  risk assessment of
other  pond structures. VTT's investigation team consisted of experts on dam and
pond   structures,   water  management,  safety  culture  and  management,  risk
management  and environmental legislation. The  Company's Board commissioned the
investigation  in order  to be  able to  ensure that  similar risks  are managed
better  in the future and  safety at the Company  develops to a level consistent
with the standards of sustainable production.

Results of the investigation

VTT's  experts  state  that  the  original  design  of gypsum pond section 1 was
vulnerable.  The  insulating  structure  of  the  pond section was a 1.5 mm HDPE
membrane and, based on the knowledge available and authority requirements at the
time, the water conductivity or erosion stability of the soil below had not been
paid sufficient attention to during the design and construction phases. The pond
structure  was designed  on the  presumption that  the pond  would predominantly
contain  relatively solid gypsum waste and any water accumulating in the pond in
conjunction  with effluent pumping would be pumped out, due to which the risk of
a  major leakage would not exist. However, contrary to original plans, water had
to  be stored in the gypsum  ponds as the accumulation of  water in the area was
more  than the Company's  1.3 Mm(3) annual quota  for discharging purified waste
waters into the environment. The investigation suggested that in the early years
of  operation the water  management measures were  not sufficiently holistic and
systematic as many other development projects and challenges consumed resources.
Even  though the Company implemented several steps to improve the water balance,
especially  from late 2011 onwards,  all ponds filled  up during the 2012 spring
melt  and water from the gypsum pond was temporarily pumped into the open pit. A
decision  was  made  to  raise  the  banks  of  gypsum pond 1 in order to create
additional  water  storage  volume.  The  elevation  was completed at the end of
September, and more than 1 Mm(3) of solution was pumped into the pond before the
leakage in section 1 started on 4 November.

VTT's  experts state that small seeps  always occur in HDPE membrane structures.
Even  small, seeping leakages can  start eroding the soil  beneath and result in
fracturing  of the  insulating membrane  if the  structures beneath the membrane
have  not been designed in  view of leakages. The  likely mechanism resulting in
the  leakage in  November was  such a  seeping leakage,  which escalated  as the
hydraulic  pressure increased due to filling up of the pond beyond earlier water
levels. Earlier leakages in the same pond section have also very likely resulted
in  latent damages  in the  pond foundations  as water  flowed through  the soil
beneath  the membrane in the pond dam and  at the bottom of the pond. Supervised
repairs  of the pond had  been carried out in  2008 and 2010. The November 2012
leakage  started at the point where the 2010 repairs had ended. Due to potential
similar  latent damages, VTT's  experts identified the  wall between gypsum pond
sections 1 and 2 as a high risk area. The April 2013 leakage occurred in section
2 in the immediate vicinity of this separating barrier.

Following the leakages in the earlier years, the Company had proactively altered
the  structure of new gypsum pond sections (3-6) such that a bentonite liner had
been placed beneath the HDPE membrane. The risk of an escalating fracture caused
by a seep leakage is therefore highly unlikely in these pond sections and a seep
as such does not constitute an environmental hazard.

The  investigation also found that after the elevation of the gypsum pond in the
autumn  of 2012, so  called raffinate  had been  pumped into  the pond  from the
metals  recovery plant. Raffinate is process solution from which valuable metals
have  been precipitated and  recovered, but which  has not been  purified at the
post-neutralization  phase at the metals plant.  The water quality in the gypsum
pond deteriorated as a result of this pumping arrangement. The water quality did
not have any impact on the occurrence of the November leakage, but to the extent
the leakage waters had to be discharged into the environment, raffinate may have
had a more acidifying impact on the environment than the waters otherwise stored
in the gypsum pond.

In  addition to recommendations  pertaining to water  management, pond usage and
leakage  risk  management,  VTT  also  gave  recommendations  on  the  long-term
development  of  the  Company's  safety  culture. Certain project-phase legacies
remain  in the Company's operational  culture, due to which  it is important for
the  Company's  Board  and  operative  management  to  work  together to clarify
management  principles  in  order  to  align  operational  procedures  with  the
requirements  of the ongoing production  phase. VTT recommends sustained actions
to  further improve the technical requirements of production and to continuously
assess  and improve  the safety  culture. In  addition, VTT  recommends that the
Company  further  strengthens  its  internal  resources,  in  particular as they
pertain to safety and environmental matters.

Measures taken by the Company on the basis of VTT's recommendations

The  Company's Board and operative  management have familiarized themselves with
VTT's   report   and   recommendations.   The  Board  is  satisfied  with  VTT's
investigation, which diligently studied the reasons of the incident and provides
valuable  input  for  the  development  of  the  Company's  risk  management and
organization.

Water management

Since  the November 2012 leakage, a key area  of development for the Company has
been  the mitigation of risks related to water management and the achievement of
a  sustainable water  balance. In  order to  achieve these goals, Talvivaara has
established  a  separate  organization  focusing  on  water management, which is
responsible  for  the  overall  water  balance  management  and  the  design and
implementation of necessary short-term and long-term water management measures.

Talvivaara  commenced immediate actions following  the November 2012 gypsum pond
leakage  to reduce the water volume  in all bioheapleaching safety ponds, gypsum
ponds  and safety dams such that the  safe treatment of spring melt waters could
be  ensured and  sufficient safety  capacity in  view of  potential new leakages
could  be created. As  the gypsum pond  section 2 had been  identified as a high
risk area, but it was not possible to empty the pond section into other ponds in
the  mining  area  due  to  the  prevailing  water  balance situation, immediate
measures  were in particular aimed at  ensuring sufficient volume in safety dams
for  the water contained in this pond section. This approach was successful, and
all  waters from  the 7 April  2013 leakage in  section 2 were  contained in the
safety  dams located in the Southern part of the mining area. The leakage waters
will be purified and discharged into the environment within the schedule allowed
by discharge quotas and neutralization capacity.

Water  purification capacity  has during  the early  part of 2013 been increased
materially  above the 1.3 Mm(3)  annual discharge quota  allowed by Talvivaara's
environmental  permit. Further  purification capacity  will be  constructed such
that  by the end of 2013 the total treatment capacity exceeds 6 Mm(3) per annum.
This  capacity is expected to be  sufficient for water purification requirements
even during intense flooding and other exceptional circumstances.

At  present Talvivaara is purifying and  discharging into the environment excess
waters stored in the mining area within the 1.8 Mm(3) additional discharge quota
granted  in  February  2013 by  the  Kainuu  Centre  for  Economic  Development,
Transport  and the  Environment. However,  the Company  considers this discharge
quota  insufficient for lowering risks related to water balance management to an
acceptable  level, and therefore the Company has applied to the Northern Finland
Regional  State Administrative Agency ("AVI") for  an increase of the additional
discharge  quota.  In  its  report,  VTT  also  states  that  attaining  a  safe
operational  level requires  a material  increase in  the quota  for discharging
waters.

In  addition to the temporary  discharge quotas, the Company  has applied to AVI
for  a permanent removal of the annual  water discharge quota from the Company's
environmental  permit in order to sustainably  manage the overall water balance.
No changes have been applied for the discharge limits of environmentally harmful
substances, and therefore no additional environmental burden is expected.

Talvivaara  is currently preparing  a holistic long-term  water management plan,
which  is expected to be completed by  the end of June 2013. Central elements of
the  plan comprise  a nearly  closed process  water circuit,  and separation and
separate treatment of natural run-off waters and waters accumulating in the open
pit.  The technical prerequisites for a closed process water circuit are already
largely  in place  due to  investments in  reverse osmosis  technology and other
process alterations. Significant progress has also been made in water separation
in  early 2013, and  the water  catchment area  at the  mine has been materially
reduced as a result of new dam structures. These structures largely prevent run-
off waters from mixing with metal-containing waters.

Pond usage

The  gypsum ponds  are to  be returned  to their  original planned usage as soon
possible, such that the excess water volume in the ponds is low at all times and
water  quality is  monitored on  an ongoing  basis. Bioheapleaching safety ponds
should  also  normally  be  empty.  Both  targets  require  the purification and
discharge  of excess waters from the mine  site in the near term and maintenance
of a sustainable water balance in the long term.


Safety culture

In  the future Talvivaara  will pay increasing  attention on risk management and
active development of the Company's safety culture with the help of its internal
organization  and, as  required, external  consultants. In  order to ensure this
development  the Company's  sustainability organization  will be strengthened by
1-3 people  during the current year and a  person responsible for safety will be
nominated  for  each  production  department.  Required  safety training will be
arranged  for all levels  of the organization  in order to permanently establish
best industry practices as part of Talvivaara's day-to-day operations.

The  Company's Board further states that the  purpose of this announcement is to
publish  the central observations and recommendations of VTT's investigation and
the  measures taken by the Company on  the basis of VTT's recommendations. There
are  ongoing investigations by the police and the Safety Investigation Authority
relating  to  the  gypsum  pond  leakage  that  include  questions  relating  to
environmental  permitting mechanics and judicial  processes. The Company's Board
does not comment on such questions at this stage.



Enquiries
Talvivaara Mining Company Plc Tel +358 20 7129 800
Tapani Järvinen, Chairman of the Board of Directors
Kirsi Sormunen, Member of the Board of Directors


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#1697340]

Attachments:

Talvivaara implementing projects as a result of VTT investigation.pdf