2011-08-17 08:00:00 CEST

2011-08-17 08:01:25 CEST


REGULATED INFORMATION

English
Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara Mining Company Interim Report for January-June 2011



STOCK EXCHANGE RELEASE
17 August 2011


         Talvivaara Mining Company Interim Report for January-June 2011
                        Focus on production reliability


Highlights

Q2 2011
  * Nickel production of 3,951t despite an extended maintenance and upgrade
    stoppage in April-May; all planned measures at the metals recovery plant
    completed
  * Net sales of EUR 37.6m adversely impacted by a high nickel inventory at the
    end of the quarter caused by a maintenance stoppage at Norilsk Nickel
    Harjavalta and a decrease in nickel price
  * Operating loss EUR (1.2)m
  * Acquisition of an additional 4% shareholding in the operating subsidiary
    Talvivaara Sotkamo Ltd from Outokumpu Mining Oy for EUR 60 million in June;
    option to acquire Outokumpu's remaining 16% shareholding in Talvivaara
    Sotkamo Ltd for EUR 240 million


H1 2011
  * Nickel production of 8,166t, up 245% versus H1 2010
  * Net sales EUR 104.1m (H1 2010: EUR 46.9m)
  * Operating profit EUR 10.4m (H1 2010: EUR 0.2m)



Highlights after the reporting period

  * Talvivaara was included in the OMX Helsinki 25 index of the Helsinki Stock
    Exchange from 1 August 2011 onwards



Key figures

--------------------------------------------+------+------+------+------+------
 EUR million                                |    Q2|    Q2| Q1-Q2| Q1-Q2|    FY
                                            |  2011|  2010|  2011|  2010|  2010
--------------------------------------------+------+------+------+------+------
 Net sales                                  |  37.6|  35.2| 104.1|  46.9| 152.2
--------------------------------------------+------+------+------+------+------
 Operating profit (loss)                    | (1.2)|   2.5|  10.4|   0.2|  25.5
--------------------------------------------+------+------+------+------+------
       % of net sales                       |(3.1%)|  7.2%| 10.0%|  0.4%| 16.7%
--------------------------------------------+------+------+------+------+------
 Profit (loss) for the period               | (4.6)|(16.8)|   8.1|(33.7)|(13.1)
--------------------------------------------+------+------+------+------+------
 Earnings per share, EUR                    |(0.02)|(0.06)|  0.02|(0.12)|(0.06)
--------------------------------------------+------+------+------+------+------
 Equity-to-assets ratio                     | 29.8%| 38.4%| 29.8%| 38.4%| 31.3%
--------------------------------------------+------+------+------+------+------
 Net interest bearing debt                  | 417.0| 190.7| 417.0| 190.7| 315.0
--------------------------------------------+------+------+------+------+------
 Debt-to-equity ratio                       |125.0%| 51.6%|125.0%| 51.6%| 82.8%
--------------------------------------------+------+------+------+------+------
 Capital expenditure                        |  25.1|  36.3|  35.5|  55.3| 115.7
--------------------------------------------+------+------+------+------+------
 Cash and cash equivalents at the end of the|  46.5|  35.4|  46.5|  35.4| 165.6
 period                                     |      |      |      |      |
--------------------------------------------+------+------+------+------+------
 Number of employees at the end of the      |   481|   382|   481|   382|   389
 period                                     |      |      |      |      |
--------------------------------------------+------+------+------+------+------

All reported figures in this release are unaudited.


CEO  Pekka  Perä  comments:  "Our  second  quarter  operations  were  focused on
improving  production reliability through an extensive upgrading and maintenance
programme  at the metals  recovery plant. Whilst  this work necessitated holding
back  our  ramp-up  plans,  I  am  pleased  to  report that the upgrade has been
completed  and that both production lines are  now back in operation. However, I
must  also underline the need for our continued improvement in running the plant
in   an   optimised  fashion  and  minimising  production  disturbances  through
preventative  maintenance.  These  same  targets  hold  true  also for our other
processes,  especially materials handling, where our  efforts to get the primary
heap  reclaiming to work at full capacity  went on throughout the second quarter
and will continue into the third.

We  are also placing continued emphasis on further mitigation of odour, dust and
water  emissions to the environment. We have  set ourselves the goal of becoming
an  industry  leader  in  environmentally  sustainable  mining and want to avoid
causing any environmental concerns in the nearby communities. Naturally, we must
also ensure we can comply with our environmental permit on a sustainable basis.

Our  financial  performance  for  the  second  quarter  reflected our production
stoppage  in April-May as well as declining  nickel prices. Due to a maintenance
stoppage  at Norilsk Nickel Harjavalta, we were also left with a sizeable nickel
inventory,  which pushed close to EUR 20 million  in net sales beyond the end of
the  quarter. Norilsk  Nickel is  again receiving  concentrate and we expect the
impact of this inventory increase to be fully recovered in the third quarter.

After  the quarter  end, market  conditions have  become challenging once again,
with nickel prices declining back to their 2011 lows seen earlier in the summer,
and  the very recent financial markets volatility impacting business confidence.
We expect however to counter the difficult market environment with the continued
production  ramp-up,  and  greater  sustained  production reliability during the
second half of the year."




Enquiries:

Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, CFO

Merlin PR Tel. +44 20 726 8400
David Simonson
Anca Spiridon


Webcast and conference call on 17 August 2011 at 12:00 GMT/14:00 EET

A combined webcast and conference call on the January-June 2011 Interim Result
will be held on 17 August 2011 at 12:00 GMT/14:00 EET. The call will be held in
English.

The webcast can be accessed through the following link:

http://qsb.webcast.fi/t/talvivaara/talvivaara_2011_0817_Q2/

A conference call facility will be available for a Q&A with senior management
following the presentation.

Participant - Finland: +358 (0)9 2313 9201
Participant - UK: +44 (0)20 7162 0077
Participant - US: +1 334 323 6201

Conference id: 891449

The webcast will also be available for viewing on the Talvivaara website shortly
after the event.




Financial review

Q2 2011 (April-June)

Net sales and financial result

Talvivaara's  net sales for  nickel and cobalt  deliveries to Norilsk Nickel and
for  zinc  deliveries  to  Nyrstar  during  the three months ended 30 June 2011
amounted  to  EUR  37.6 million  (Q2  2010: EUR  35.2 million).  The  net  sales
decreased by 43.4% compared to Q1 2011 due to a high nickel inventory at the end
of  the quarter,  and adverse  changes in  the EUR/USD  exchange rate and nickel
price.  More specifically, substantial  nickel and cobalt  deliveries to Norilsk
Nickel  were delayed  into the  third quarter  due to  a maintenance stoppage at
Norilsk  Nickel Harjavalta. Also, the final  settlement in Q2 2011 of sales that
were  provisionally invoiced and  recorded in Q1  2011, lead to foreign exchange
losses of EUR 2.0 million and to nickel price losses of EUR 12.0 million. During
the  second quarter, the EUR/USD exchange  rate increased from 1.3825 to 1.4453
and  the  LME  nickel  cash  price  decreased  from  28,873 USD/tonne to 23,113
USD/tonne.  Product  deliveries  during  the  period amounted to 2,705 tonnes of
nickel, 64 tonnes of cobalt and 6,682 tonnes of zinc.

Materials  and services during the second quarter amounted to EUR (31.9) million
(Q2  2010: EUR (21.4) million) and, relative to the level of production, were in
line with the previous quarter. Other operating expenses were EUR (16.7) million
in  Q2  2011 (Q2  2010: EUR  (7.8)  million),  reflecting  a  54.4% increase  in
maintenance  costs  compared  to  the  previous  quarter  due  to  the  extended
maintenance programmes carried out in April-May.

Operating  loss for Q2 2011 was  EUR (1.2) million (Q2  2010: profit of EUR 2.5
million). Loss for the period amounted to EUR (4.6) million (Q2 2010: EUR (16.8)
million).

Balance sheet

Capital  expenditure during the quarter  totalled EUR 25.1 million (Q2 2010: EUR
36.3 million).   The  expenditure  related  primarily  to  the  construction  of
secondary  heap foundations  and a  gypsum pond,  equipment needed for secondary
leaching, and dust removal.

In June, Talvivaara Mining Company Plc acquired an additional 4% shareholding in
its operating subsidiary Talvivaara Sotkamo Ltd from Outokumpu Mining Oy for EUR
60 million.  As  a  result  of  the  acquisition,  Talvivaara  Mining  Company's
ownership  in Talvivaara Sotkamo increased from 80% to 84%. The equity effect of
the share acquisition is described below in the H1 2011 Balance sheet section.

H1 2011 (January-June)

Net sales and financial result

Talvivaara's  net sales during the six months ended 30 June 2011 amounted to EUR
104.1 million (H1 2010: EUR 46.9 million). The revenues came from the deliveries
of  6,551 tonnes of nickel, 15,418 tonnes  of zinc, and approximately 140 tonnes
of cobalt.

The  Group's other  operating income  amounted to  EUR 1.4 million (H1 2010: EUR
16.7 million)  and  came  mainly  from  fair  value  gains  on  foreign exchange
derivatives and indemnities on losses relating to certain equipment failures.

Materials  and services during the six months ended 30 June 2011 amounted to EUR
(68.2)  million (H1  2010: EUR (41.4)  million) with  the rise from the previous
year stemming from increased level of production.

Employee  benefit expenses including  the value of  employee expenses related to
the  employee share option scheme of  2007 were EUR (13.4) million (H1 2010: EUR
(9.9)  million).  The  increase  was  attributable  to  the  increased number of
personnel.

Other  operating expenses  amounted to  EUR (30.3)  million (H1 2010: EUR (19.3)
million),  of which energy and maintenance  costs comprised over two thirds. The
impact  of maintenance costs was particularly high  in the second quarter due to
the maintenance and upgrading programmes carried out in April-May.

Operating  profit amounted to EUR 10.4 million (H1 2010: EUR 0.2 million), which
represents 10.0% of the net sales during the period.

Finance  income for the six month period was EUR 20.1 million (H1 2010: EUR 4.9
million)  and  consisted  mainly  of  exchange  rate  gains  of EUR 18.5 million
relating  to the  advance payment  received from  Nyrstar for the zinc streaming
agreement entered into in February 2010. Finance costs of EUR (18.5) million (H1
2010: EUR (50.3) million) were mainly caused by interests on borrowings.

The  Company's profit for the period  amounted to EUR 8.2 million (H1 2010: loss
of EUR (33.7) million).

The  total comprehensive income for H1 of 2011 was EUR 3.3 million (H1 2010: EUR
(39.6)  million), including  a reduction  in hedge  reserves resulting  from the
occurrence of the hedged sales.

Balance sheet

Capital expenditure during H1 2011 totalled EUR 35.5 million (H1 2010: EUR 55.3
million).  The  expenditure  related  primarily  to  secondary heap foundations,
secondary  leaching, gypsum pond and dust removal. On the consolidated statement
of financial position as at 30 June 2011, property, plant and equipment totalled
EUR 741.0 million (31 December 2010: EUR 728.2 million).

In  the Group's  assets, inventories  amounted to  EUR 219.1 million  on 30 June
2011 (31   December   2010: EUR  175.4 million).  The  increase  in  inventories
reflected the ramp-up of production and the consequent increase in the amount of
ore stacked on heaps, valued at cost.

Trade  receivables  amounted  to  EUR  25.4 million on 30 June 2011 (31 December
2010: EUR  52.4 million).  The  decrease  in  trade  receivables  reflected  the
maintenance stoppage at Norilsk Nickel Harjavalta and the consequent high nickel
inventories at Talvivaara at the end of the period.

On 30 June 2011, cash and cash equivalents, including short-term deposits of EUR
11.9 million, totalled EUR 46.5 million (31 December 2010: EUR 165.6 million).

In equity and liabilities, the total equity amounted to EUR 333.6 million on 30
June 2011 (31 December 2010: EUR 380.3 million). Subsequent to Talvivaara Mining
Company's   acquisition  of  an  additional  4% shareholding  in  its  operating
subsidiary  Talvivaara Sotkamo, the equity decreased  by EUR 61.5 million as the
acquisition price of EUR 60 million and the transaction costs of EUR 1.5 million
were deducted from equity under to IFRS. On the other hand, the equity component
of  EUR 9.0 million for  the EUR 225 million  senior unsecured convertible bonds
due 2015 was recognised in equity during the period.

A  total  of  370,507 new  shares  were  subscribed for during H1 2011 under the
company's  stock  option  rights  2007A and  2007B and the convertible bonds due
2015. The entire subscription price of EUR 2.2 million was recognised in equity.

Borrowings  decreased from EUR  480.6 million on 31 December  2010 to EUR 463.5
million  at the end  of June 2011. The  changes in borrowings  during the period
included  determination  of  the  equity  component  for  the  senior  unsecured
convertible  bonds due 2015 after an Extraordinary General Meeting of Talvivaara
resolved to approve the issue of special rights in January 2011.

Total  advance payments  as at  30 June 2011 amounted  to EUR  252.5 million (31
December  2010: EUR 267.1 million).  The changes  in advance  payments during H1
2011 included  the  addition  of  a  EUR  7.0 million  advance payment by Cameco
Corporation  relating to  the uranium  off-take agreement  and non-cash exchange
rate gains of approximately EUR 18.5 million on the Nyrstar advance payment. The
Nyrstar  advance payment was  also amortised by  USD 4.1 million as  a result of
15,418 tonnes  of zinc deliveries  during the first  half of 2011. The remaining
USD  equivalent of the Nyrstar advance  payment amounted to USD 326.0 million on
30 June 2011.

Total  equity and liabilities as at 30 June 2011 amounted to EUR 1,118.7 million
(31 December 2010: EUR 1,216.3 million).




Financing

In  June,  Talvivaara  signed  a  EUR  80 million revolving credit facility with
Nordea  Bank,  primarily  as  back-up  financing  relating to the acquisition of
Talvivaara  Sotkamo shares  from Outokumpu  Mining. The  facility, which remains
undrawn, has an initial margin of 2.50%.

Negotiations  also  commenced  in  June  to  amend the EUR 100 million revolving
credit  facility signed in June 2010 with Nordea Bank, Svenska Handelsbanken and
Danske  Bank to accommodate  the share transaction  with Outokumpu Mining and to
also  otherwise amend  the agreement  to reflect  Talvivaara's current  stage of
development.  Final bank approvals of the amendments are pending but expected in
August  2011. Upon  approval  of  the  amendment  agreement, the EUR 100 million
revolving  credit facility will replace the  EUR 80 million commitment by Nordea
Bank.

In  February,  Talvivaara  signed  a  uranium  off-take  agreement  with  Cameco
Corporation.  According to  the terms  set forth  in the  agreement Cameco is to
provide  an upfront investment of up to USD 60 million to cover the construction
costs  of the uranium  extraction circuit. Talvivaara  will repay the investment
through  deliveries  of  uranium  concentrate  during  the  initial years of the
agreement. Once the capital sum has been repaid all uranium concentrate produced
thereafter  until 31 December 2027 will be bought by  Cameco at a price based on
market prices at the time of delivery.

In  January, an Extraordinary General Meeting  of Talvivaara resolved to approve
the  proposal  of  the  Board  of  Directors  for the issue of special rights in
relation  to EUR 225 million  senior unsecured convertible  bonds due 2015 which
were  issued on  in December  2010. The bonds  are convertible into 27.0 million
fully  paid ordinary  shares of  the Company.  The interest  rate applied to the
convertible  bond  is  4.00% and  the  yield  to  maturity  6.50%, reflecting  a
redemption price of 114.5% at maturity.

Currency option programme

In June 2011, Talvivaara entered into a currency option programme comprising USD
options  for  six  months  from  July  2011 through  December  2011. The monthly
obligation  amounts to  USD 7.5 million  and protection  to USD 5.0 million. The
collar ranges from 1.2884 to 1.4900.

Going concern

Talvivaara  Group's  forecasts  and  projections,  taking account of the Group's
current  liquidity position and reasonably possible changes in production, metal
prices  and foreign exchange rates, indicate the Group to be able to continue in
operational  existence  with  adequate  financial  resources for the foreseeable
future.  The  Group  therefore  continues  to  adopt  the going concern basis in
preparing its consolidated financial statements.

Production review

During  the second quarter, operations at  the Sotkamo mine focused on improving
production  reliability through an extensive maintenance and upgrading programme
carried  out at the metals recovery plant. The programme involved the increasing
of  sulphur melting  and certain  pumping capacities,  cleaning and upgrading of
hydrogen  sulphide  generators,  inspection  and  maintenance  of  reactors  and
thickeners,  and numerous small modification items, e.g. doubling up of selected
process pipelines, that will help improve production reliability and sustainable
capacity.  The  main  findings  from  the  thorough inspections included largely
anticipated  levels of  wear and  tear; no  unexpected or  serious corrosion was
found.  In the hydrogen sulphide generators  large amounts of contamination were
found and identified as the main cause of the reduced hydrogen sulphide capacity
during  the winter and  spring. As the  primary source of  the contamination was
determined  to be dust from crushing and  screening, measures were also taken to
prevent dust from entering the sulphur storage area.

The  maintenance and upgrading works commenced in early April and were completed
in late May. While most of the work was carried out while one production line at
the  plant was operating, a full stoppage  of fifteen days was also required. In
view  of the length of the full stoppage and the fact that for most of April and
May  only one production line  at a time was  operating, the achieved production
output  in Q2 2011 of 3,951t of nickel  (Q2 2010: 2,729t) and 7,662t of zinc (Q2
2010: 5,575t) can  be  considered  satisfactory.  Furthermore,  operation of the
plant after the completion of the upgrading and maintenance programme has proven
the facility to have sufficient capacity for full scale operation.
For the half-year, nickel output amounted to 8,166t, representing an increase of
245% over  the 3,339t of  nickel production  achieved during  the first  half of
2010. The  corresponding  half-year  figures  for  zinc were 14,005t in 2011 and
8,535t in 2010.

The  mining department produced 2.8Mt of ore (Q2 2010: 3.5Mt) and 5.3Mt of waste
(Q2 2010: 4.1Mt). The emphasis was again on waste mining to provide material for
levelling the ground for the secondary heap foundations. Ore mining continued to
be restricted due to the bottle-neck in primary heap reclaiming.

In  materials  handling,  the  focus  was  on primary heap reclaiming, which was
initially  delayed  by  a  contractor  change  in  Q1  2011 and has subsequently
suffered  from continued commissioning issues  with the purpose-built reclaiming
system.  Modifications to the  reclaiming equipment were  made during the second
quarter  in order  to improve  the feeding  of ore  into the  system. Additional
reclaiming  capacity  was  also  obtained  by  engaging  a  second contractor to
excavate  and  crush  ore  from  the  heap.  Despite these efforts, crushing and
stacking  of ore continued  to be restricted  by the limited reclaiming capacity
and  amounted in Q2 2011 to 2.8Mt (Q2  2010: 3.7Mt) and during the first half of
the year to 4.7Mt (Q1-Q2 2010: 7.0Mt).

Bioheapleaching  continued  to  progress  well  during  the  second quarter. The
average  nickel grades in solution pumped to metals recovery increased from 2.3
g/l  in April to 3.0 g/l  in June. The main  sources of leach solution were heap
sections  3 and  4. Leaching  in  the  secondary  heap also progressed well, but
solution  from the secondary leaching was not  yet pumped to metals recovery due
to the yet insufficient size of the secondary heap.


Production key figures

--------------------------+------+-----+-----+------+-----+------
                          |      |   Q2|   Q2| Q1-Q2|Q1-Q2|    FY
                          |      | 2011| 2010|  2011| 2010|  2010
--------------------------+------+-----+-----+------+-----+------
 Mining                   |      |     |     |      |     |
--------------------------+------+-----+-----+------+-----+------
      Ore production      |Mt    |  2.8|  3.5|   4.9|  6.6|  13.3
--------------------------+------+-----+-----+------+-----+------
      Waste production    |Mt    |  5.3|  4.1|  10.4|  6.5|  16.7
--------------------------+------+-----+-----+------+-----+------
 Materials handling       |      |     |     |      |     |
--------------------------+------+-----+-----+------+-----+------
      Stacked ore         |Mt    |  2.8|  3.7|   4.9|  7.0|  13.3
--------------------------+------+-----+-----+------+-----+------
 Bioheapleaching          |      |     |     |      |     |
--------------------------+------+-----+-----+------+-----+------
      Ore under leaching  |Mt    | 29.2| 18.0|  29.2| 18.0|  24.3
--------------------------+------+-----+-----+------+-----+------
 Metals recovery          |      |     |     |      |     |
--------------------------+------+-----+-----+------+-----+------
      Nickel metal content|Tonnes|3,951|2,729| 8,166|3,339|10,382
--------------------------+------+-----+-----+------+-----+------
      Zinc metal content  |Tonnes|7,662|5,575|14,005|8,535|25,462
--------------------------+------+-----+-----+------+-----+------


Sustainable development and permitting

Emissions to the environment

Environmental  monitoring  during  the  second  quarter  confirmed Talvivaara to
comply  with  all  of  its  environmental  permit  limits  for  water emissions.
Similarly,  the  hydrogen  sulphide  emissions  have  been  within the permitted
limits.  Despite the already achieved good results, work aimed at minimizing the
odour  discharges  continues  with  process  and  equipment  modifications. Dust
emissions  have been within permitted limits in all but one measurement point at
the screening building.

Permitting

The environmental permit application for uranium extraction was submitted to the
regional  environmental permitting agency in  March. Application for the renewal
of  the existing environmental permit was also submitted in March. Public notice
on   both   permit   applications  is  expected  during  the  autumn,  following
Talvivaara's  responses to the relevant  authorities' requests for amendments by
the end of August.

In  June 2011, Talvivaara submitted to the Ministry of Employment and Economy an
application  in accordance with  the Mining Act  (503/1965) for the expansion of
the  Talvivaara  mining  concession  area  by approximately 70 km(2). Subject to
approval  of the expansion,  the total area  of the Talvivaara mining concession
will  be approximately  130 km(2). The  expansion of  the mining concession area
relates   to  the  previously  announced  increase  in  the  Talvivaara  mineral
resources,  the full exploitation  of which is  not possible within the existing
mining concession area.

Baseline  studies  of  the  environment  and  preparations for the Environmental
Impact  Assessment  relating  to  the  potential production expansion (Operation
Overlord)  and the expansion of the  mining concession area continued during the
second  quarter. The Environmental Impact  Assessment is anticipated to commence
during the fourth quarter of 2011 and to cover certain parallel process options,
as  the final production  processes and end  products have not  yet been chosen.
Following  the  EIA,  Talvivaara  expects  to  submit  the  environmental permit
application for the expansion in 2012.

In  April 2010, Talvivaara applied to the Ministry of Employment and Economy for
a  permit to  extract uranium  as a  by-product, in  accordance with the Nuclear
Energy  Act. Processing of the permit  application at the Ministry of Employment
and  Economy is ongoing and the Talvivaara expects to obtain this permit in late
2011.

Safety and security

At  the end  of the  second quarter,  the injury  frequency among the Talvivaara
personnel  was 13.1 lost  time injuries/million  working hours  on a rolling 12
month basis (31 December 2010: 10.7 lost time injuries/million working hours).

Planned uranium extraction and uranium off-take agreement with Cameco
Corporation

In  February,  Talvivaara  signed  a  uranium  off-take  agreement  with  Cameco
Corporation.  Under the terms of the  agreement, Cameco will provide an up-front
investment, up to a maximum of USD 60 million, to cover the construction cost of
the   uranium  extraction  circuit  and  related  facilities.  Cameco's  capital
contribution  will be  repaid through  deliveries of  uranium concentrate in the
initial years of the agreement.

Once  the  capital  is  repaid,  Cameco  will  purchase  the uranium concentrate
produced  at Sotkamo through a supply agreement that will be in effect until 31
December 2027. Cameco will provide Talvivaara with payment for the uranium based
on a formula that references market prices at the time of delivery.

Annual   uranium   production   is   estimated  at  350tU (ca.  770,000 pounds),
corresponding to approximately 410t (900,000 pounds) of yellow cake (UO(4)).

Cameco   is   providing  technical  assistance  to  Talvivaara  in  the  design,
construction,  commissioning and operation of  the uranium extraction circuit to
be constructed at the Sotkamo mine.

The  agreements between Talvivaara and Cameco are subject to ratification by the
Euratom  Supply Agency and  the approval of  the European Commission pursuant to
the Euratom Treaty. These approvals are expected during the current year.

During  the second  quarter, preparations  for the  construction of  the uranium
recovery  facility continued  and the  key components  of the uranium extraction
circuit  were ordered. Commissioning  of the facility,  subject to receiving the
necessary  permits and  authorizations, is  expected during  the second  half of
2012.

Production expansion - Operation Overlord

Conceptual  studies relating to production  expansion beyond 50,000tpa of nickel
continued.  Recruiting of a dedicated project  team progressed during the second
quarter,   strengthening   the   team   to   nine  members  with  metallurgical,
infrastructure,  bioheapleaching,  materials  handling  and project coordination
expertise. Recruiting to the project team continues targeting added expertise in
environmental and water management issues, and automation.

Scoping  studies are currently based on the  target of doubling up the presently
planned   production  to  approximately  100,000tpa of  nickel.  Whilst  studies
relating  to various processing  options continue, it  appears relatively likely
that  a substantial part of the expanded  production would be LME quality nickel
metal.  Production of cobalt  metal is also  an option, but  refining of zinc to
zinc  metal is currently not within the planning scope. For certain products and
raw  materials,  e.g.  manganese  and  sulphuric  acid,  joint ventures or other
partnering arrangements will be investigated.

Investment  into the expansion project is planned to be carried out in a modular
fashion to allow stretching of the expenditure over an estimated 5-6 year period
starting  in  2013. The  modular  approach  also  allows  commissioning  of  the
equipment  and processes sequentially in the  order of the process stages, which
is expected to reduce the risk of serious start-up issues.

Acquisition of an additional 4% shareholding in the operating subsidiary
Talvivaara Sotkamo Ltd from Outokumpu Mining Oy

Talvivaara  Mining  Company  signed  an  agreement on 1 June 2011 with Outokumpu
Mining  Oy and  its parent  company Outokumpu  Oyj to  acquire an additional 4%
shareholding  in  Talvivaara  Sotkamo  Ltd.  As  a  result  of  the acquisition,
Talvivaara's  ownership  in  Talvivaara  Sotkamo  increased  from 80% to 84% and
Outokumpu Mining's ownership decreased to 16%. The acquisition price for the 4%
stake was EUR 60 million.

Simultaneously,  Talvivaara  entered  into  an  exclusive  option agreement with
Outokumpu  Mining  and  Outokumpu  Oyj  (the  "Option") whereby it will have the
right,  at its sole discretion, in one or more instalments, to acquire Outokumpu
Mining's remaining 16% shareholding in Talvivaara Sotkamo for EUR 240 million at
any  time  prior  to  31 March  2012. Should  Talvivaara  choose to exercise the
Option, entirely or partially, it will consider appropriate funding arrangements
for the payment of the exercise price at that time.

Fulfilment of minimum transportation requirement on Talvivaara-Murtomäki
railroad

In  2008-2009, Talvivaara constructed a 25 km  railway connecting the Talvivaara
mine  with the national  railway grid. Subject  to agreed minimum transportation
volumes  on the railroad  being achieved, the  Finnish State agreed to reimburse
the construction expenses to Talvivaara Infrastructure Oy up to an amount of EUR
40 million (0% VAT) in two instalments and to redeem the railroad as part of the
national  rail grid.  The first  agreed transportation  milestone was reached in
2010 and  the  Finnish  State  subsequently  paid  EUR  20 million  as a partial
reimbursement.  The  remaining  minimum  transportation  volumes were reached in
January 2011 and documentation work with the relevant authorities has since been
ongoing in order to effect the final redemption payment during 2011.

Annual General Meeting

Talvivaara's Annual General Meeting was held on 28 April 2011 in Sotkamo,
Finland. The resolutions of the AGM included:

  * that no dividend be paid for the financial year 2010;
  * that the annual fee payable to the members of the Board in 2012 be as
    follows: Chairman of the Board EUR 160,000, Deputy Chairman (Senior
    Independent Director) EUR 69,000, Chairman of the Audit Committee EUR
    69,000, Chairman of the Nomination Committee EUR 53,000, Chairman of the
    Remuneration Committee EUR 53,000, Chairman of the Sustainability Committee
    EUR 53,000, other Non-executive Directors and Executive Directors EUR
    48,000;
  * that the number of Board members be seven and that Mr. Edward Haslam, Mr.
    Eero Niiva, Ms. Eileen Carr, Mr. D. Graham Titcombe, Mr. Pekka Perä, Mr.
    Tapani Järvinen and Ms. Saila Miettinen-Lähde be re-elected as Board
    Members;
  * that the auditor be reimbursed according to the auditor's approved invoice
    and authorised public accountants PricewaterhouseCoopers Oy be elected as
    the company's auditor for the financial year 2011;
  * that the Board be authorised to decide on the repurchase, in one or several
    transactions, of a maximum of 10,000,000 of the Company's own shares. The
    repurchase authorisation is valid until 27 October 2012. The proposed
    authorisation replaces the authorisation to repurchase 10,000,000 shares
    granted by the Annual General Meeting of 15 April 2010; and
  * that the Company shall issue stock options partly to the key employees and
    partly to the personnel of the Company and its subsidiaries. The maximum
    total number of stock options issued will be 5,500,000 and the stock options
    entitle their owners to subscribe for a maximum total of 5,500,000 new
    shares in the Company or to receive existing shares held by the Company. The
    beginning of the share subscription period shall require attainment of
    certain operational or financial targets determined by the Board annually.


Risk management and principal risks

In  line  with  current  corporate  governance  guidelines  on  risk management,
Talvivaara  carries out an ongoing process endorsed by the Board of Directors to
identify  risks, measure their impact  against certain assumptions and implement
the necessary proactive steps to manage these risks.

Talvivaara's  operations  are  affected  by  various  risks common to the mining
industry,  such as  risks relating  to the  development of  Talvivaara's mineral
deposits,  estimates  of  reserves  and  resources,  infrastructure  risks,  and
volatility of commodity prices. There are also risks related to counter parties,
currency  exchange ratios, management and control systems, historical losses and
uncertainties  about the future  profitability of Talvivaara,  dependence on key
personnel,   effect   of  laws,  governmental  regulations  and  related  costs,
environmental  hazards, and risks related to Talvivaara's mining concessions and
permits.

In  the short  term, Talvivaara's  key operational  risks relate  to the ongoing
ramp-up  of  operations.  While  the  Company  has  demonstrated that all of its
production  processes work and can be operated  on an industrial scale, the rate
of  ramp-up is  still subject  to risk  factors, including various technical and
operational  risks, that  may currently  be unknown  or are beyond the Company's
control. In order to better mitigate operational risks going forward, Talvivaara
has  in  place  an  ongoing  production  reliability programme, which targets at
reducing  downtime  and  risk  of  accidents  through detailed evaluation of all
equipment  and processes and subsequent  improvement of operating procedures and
maintenance.  The Company has also recently  carried out and is planning further
maintenance  and upgrading programmes  at the metals  recovery plant in order to
improve plant availability and capacity in the future.

The  market  price  of  nickel  is,  together  with production volumes, the main
determinant  of  Talvivaara's  revenues.  The  volatility  of  nickel  price has
historically  been high and  the volatility is  in the Company's  view likely to
persist  also in the future. Talvivaara is unhedged against variations in nickel
prices,  which means that nickel price volatility will have a substantial effect
on  the Company's  revenues and  result. Full  or substantially full exposure to
nickel  prices  is  in  line  with  Talvivaara's  strategy  and supported by the
Company's  view that it  can operate the  Talvivaara mine profitably also during
the lows of commodity price cycles.

Talvivaara's  revenues are determined mostly in  US dollars, whilst the majority
of the Company's costs are incurred in Euro. Potential strengthening of the Euro
against  the US dollar could thus have a material adverse effect on the business
and  financial condition of  the Company. Talvivaara  hedges its exposure to the
currency  exchange risk relating to  the US dollar on  a case by case basis with
the  aim of  limiting the  adverse effects  of US  dollar weakness as considered
justified from time to time.

Personnel

The  number  of  personnel  employed  by  the  Group on 30 June 2011 was 481 (Q2
2010: 382), including 65 summer trainees.

Wages  and salaries paid during the first  three months of the year totalled EUR
8.7 million (Q2 2010: EUR 6.7 million).

As  part of the  Group's long term  incentive plan, the  employees of Talvivaara
resolved  on  18 June  2011 to  establish  a  Group personnel fund to manage the
earnings  bonuses paid by  Talvivaara. In accordance  with its byelaws, the fund
will  invest a substantial proportion of its assets in Talvivaara Mining Company
shares.  The  fund  is  managed  by  personnel  representatives  elected  by the
employees. Registration of the fund is pending at the Ministry of Employment and
Economy.

Shares and shareholders

The  number of  shares issued  and outstanding  and registered  on the Euroclear
Shareholder Register as of 30 June 2011 was 245,727,603. Including the effect of
the  EUR  85 million  convertible  bond  of  14 May  2008, the  EUR  225 million
convertible  bond  of  16 December  2010 and  the  Option  Scheme  of  2007, the
authorised full number of shares of the Company amounted to 290,636,391.

The  share subscription period for stock  options 2007A is between 1 April 2010
and  31 March 2012 and for stock options 2007B between 1 April 2011 and 31 March
2013. By  30 June 2011 a total of 292,586 Talvivaara Mining Company's new shares
had  been subscribed  for under  the stock  option rights  2007A and a  total of
2,040,514 stock  option rights  2007A remain unexercised.  A total of 42,763 new
shares of Talvivaara were subscribed for under the stock option rights 2007B and
a  total of 2,290,337 stock option rights 2007B remain unexercised. In addition,
a  total of  214,736 new shares  of the  Company were  subscribed for  under the
convertible bonds due 2015.

As  at 30 June 2011, the  shareholders who held  more than 5% of  the shares and
votes  of Talvivaara  were Pekka  Perä (23.0  %), Varma Mutual Pension Insurance
Company  (8.6%),  BlackRock  Investment  Management  (6.0%) and Ilmarinen Mutual
Pension Insurance Company (5.4%).

Events after the review period

Inclusion of Talvivaara Mining Company in the OMX Helsinki 25 index

Talvivaara  was  included  in  the  OMX  Helsinki 25 index of the Helsinki Stock
Exchange from 1 August 2011.

Short-term outlook

Operational outlook

The  nickel inventory build-up of the second quarter is expected to be recovered
during the third quarter, which in turn is likely to have a substantial positive
impact on the Group's Q3 2011 financial result.

The  maintenance and upgrading  stoppage planned for  the second half of 2011 is
likely to be scheduled for the fourth quarter.

Production  ramp-up at the Sotkamo mine has continued and Talvivaara expects its
nickel  production for the current  year to report towards  the lower end of the
previously given guidance range of 22,000-28,000t.

Near  term  progress  in  the  reclaiming  and  stacking  of the primary heap is
critical in view of the 2012 production targets. The production guidance for the
coming  year will be reassessed based on the performance of these processes over
the  next  2-3 months.  The  availability  and  utilization  rate  of the metals
recovery plant in the near future will also be a factor.

Market outlook

The  third quarter  of 2011 started  relatively positively  for base metals with
nickel  price  climbing  to  around  USD  25,000 per tonne and zinc reaching USD
2,500 per  tonne. However, the recently  heightened macroeconomic concerns over,
amongst  others,  a  slowdown  of  economic  growth,  the US debt burden and the
Eurozone  sovereign debt issues, have impacted  also the commodity markets. This
has  resulted in the  whole base metals  complex retracting lower  and in nickel
price  declining to  its lowest  level in  2011 at around  USD 21,000 per tonne.
Whilst  this movement has  been predominantly driven  by speculative trading and
the   overall   de-risking   taking   place   across  asset  classes,  prolonged
macroeconomic  concerns may also  begin to impact  the fundamental supply-demand
balance  and hence the nickel price. On the other hand, the global nickel market
has  remained in a deficit throughout the first half of the year with LME nickel
stocks  currently around  their lowest  levels since  early 2009. An increase in
production  especially from ferronickel and nickel  pig iron is predicted, but a
significant shift of the supply-demand balance is not expected in the near term.

Overall,  the short-term outlook  for nickel is  uncertain and volatility across
the   base   metals   complex  is  likely  to  remain  high.  The  macroeconomic
uncertainties  create downside  risks, but  longer term  fundamentals, including
marginal  cost of production, would appear to support the nickel price at around
USD 20,000 per tonne.


17 August 2011


Talvivaara Mining Company Plc
Board of Directors

CONSOLIDATED INCOME STATEMENT

                      Unaudited    Unaudited    Unaudited              Unaudited
(all amounts in    three months three months   six months             six months
EUR '000)          to 30 Jun 11 to 30 Jun 10 to 30 Jun 11           to 30 Jun 10
                  --------------------------------------------------------------
Net sales                37,647       35,248      104,114                 46,854



Other operating
income                    1,085        1,283        1,421                 16,711

Changes in
inventories of
finished goods and
work in progress         26,893       13,084       39,674                 32,159

Materials and
services               (31,894)     (21,439)     (68,204)               (41,369)

Personnel expenses      (6,626)      (5,004)     (13,421)                (9,856)

Depreciation,
amortization,
depletion and
impairment charges     (11,618)     (12,786)     (22,816)               (25,032)

Other operating
expenses               (16,671)      (7,843)     (30,335)               (19,268)


                  --------------------------------------------------------------
Operating profit
(loss)                  (1,184)        2,543       10,433                    199

Finance income            4,320        3,713       20,053                  4,864

Finance cost            (9,125)     (28,988)     (18,512)               (50,316)
                  --------------------------------------------------------------
Finance income
(cost) (net)            (4,805)     (25,275)        1,541               (45,452)

Profit (loss)
before income tax       (5,989)     (22,732)       11,974               (45,253)



Income tax expense        1,356        5,968      (3,823)                 11,553


                  --------------------------------------------------------------
Profit (loss) for
the period              (4,633)     (16,764)        8,151               (33,700)
                  --------------------------------------------------------------
Attributable to:

Owners of the
parent                  (3,937)     (15,025)        4,902               (28,886)

Non-controlling
interest                  (696)      (1,739)        3,249                (4,814)
                  --------------------------------------------------------------
                        (4,633)     (16,764)        8,151               (33,700)
                  --------------------------------------------------------------
Earnings per share
for profit (loss)
attributable to
the owners of the
parent expressed
in EUR per share)

Basic and diluted        (0.02)       (0.06)         0.02                 (0.12)



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                Unaudited    Unaudited    Unaudited    Unaudited
                             three months three months   six months   six months
(all amounts in EUR '000)    to 30 Jun 11 to 30 Jun 10 to 30 Jun 11 to 30 Jun 10
                            ----------------------------------------------------
Profit (loss) for the period      (4,633)     (16,764)        8,151     (33,700)

Other comprehensive income,

items net of tax

Cash flow hedges                  (2,335)      (2,857)      (4,879)      (5,876)
                            ----------------------------------------------------
Other comprehensive income,
net of tax                        (2,335)      (2,857)      (4,879)      (5,876)


                            ----------------------------------------------------
Total comprehensive income        (6,968)     (19,621)        3,272     (39,576)
                            ----------------------------------------------------


Attributable to:

Owners of the parent              (6,000)     (17,311)          804     (33,587)

Non-controlling interest            (968)      (2,310)        2,468      (5,989)
                            ----------------------------------------------------
                                  (6,968)     (19,621)        3,272     (39,576)
                            ----------------------------------------------------




CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                    Unaudited as   Audited as Unaudited as
(all amounts in EUR '000)           at 30 Jun 11 at 31 Dec 10 at 30 Jun 10

ASSETS

Non-current assets

Property, plant and equipment            741,006      728,226      663,154

Biological assets                          8,317        8,464        8,112

Intangible assets                          7,559        7,737        7,734

Deferred tax assets                       21,104       22,421       35,199

Other receivables                          2,970        7,626        7,600

Available-for-sale financial assets          590          464            -

                                         781,546      774,938      721,799

Current assets

Inventories                              219,105      175,361      136,824

Trade receivables                         25,352       52,354       26,736

Other receivables                          6,094        8,702        3,680

Financial assets at fair value
through profit or loss                    11,898            -            -

Derivative financial instruments             703           40            -

Cash and cash equivalent                  34,628      165,555       35,431

                                         297,780      402,012      202,671

Assets held for sale                      39,395       39,391       39,372

Total assets                           1,118,721    1,216,341      963,842

EQUITY AND LIABILITIES

Equity attributable to equity
holders of the parent

Share capital                                 80           80           80

Share issue                                    -           91          340

Share premium                              8,086        8,086        8,086

Hedge reserve                              3,770        7,494       11,866

Other reserves                           447,929      433,012      439,020

Retained earnings                      (142,032)     (84,322)    (100,254)

                                         317,833      364,441      359,138

Non-controlling
interest in equity                        15,802       15,831       10,777

Total equity                             333,635      380,272      369,915

Non-current liabilities

Borrowings                               423,903      437,623      196,756

Advance payments                         218,454      231,812      259,559

Trade payables                                 -           17            -

Derivative financial instruments               -            -        1,557

Provisions                                 5,278        3,935        2,453

                                         647,635      673,387      460,325

Current liabilities

Borrowings                                39,622       42,934       29,404

Advance payments                          34,093       35,243       32,012

Trade payables                            40,035       39,408       31,580

Other payables                            22,644       43,820       39,788

Derivative financial instruments           1,057        1,277          818

                                         137,451      162,682      133,602

Total liabilities                        785,086      836,069      593,927

Total equity and liabilities           1,118,721    1,216,341      963,842



CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

 A. Share capital
 B. Share issue
 C. Share premium
 D. Hedge reserve
 E. Invested unrestricted equity
 F. Other reserves
 G. Retained earnings
 H. Total
 I. Non-controlling interest
 J. Total equity


(all amounts in    A   B     C      D       E     F    G    H     I    J
EUR '000)
                  --------------------------------------------------------
1 Jan 10                                         16,  (71, 370,   11, 382,              80    - 8,086  16,567 401,248 200  368)  813   784  597

Profit (loss)                                         (28, (28,   (4, (33,
for the period      -    -     -       -       -   -  886) 886)  814) 700)

Other
comprehesive
income

                                                            (4,   (1,  (5,
- Cash flow hedges  -    -     - (4,701)       -   -     - 701)  175) 876)
                  --------------------------------------------------------
Total
comprehensive
income for                                            (28, (33,   (5, (39,
the period          -    -     - (4,701)       -   -  886) 587)  989) 576)

Transactions
with owners

Stock options
                    -  340     -       -      11   -     -  351     -  351

Perpetual                                        19,        19,    4,  24,
capital loan        -    -     -       -       - 925     -  925   982  907

Employee share
option scheme

- value of
employee                                          1,         1,         1,
services            -    -     -       -       - 636     -  636     -  636
                  --------------------------------------------------------
Total
contribution by
and distribution                                 21,        21,    4,  26,
to owners           -  340     -       -      11 561     -  912   982  894

Total
transactions                                     21,        21,    4,  26,
with owners         -  340     -       -      11 561     -  912   982  894

30 Jun 11                                        37, (100, 359,   10, 369,
                   80  340 8,086  11,866 401,259 761  254)  138   777  915
                  --------------------------------------------------------
31 Dec 10                                        31,  (84, 364,   15, 380,
                   80   91 8,086   7,494 401,612 400  322)  441   831  272
                  --------------------------------------------------------
1 Jan 11                                         31,  (84, 364,   15, 380,    80   91 8,086   7,494 401,612 400  322)  441   831  272
                  --------------------------------------------------------
Profit (loss)                                           4,   4,    3,   8,
for the period      -    -     -       -       -   -   902  902   249  151

Other
comprehesive
income

                                                            (4,        (4,
- Cash flow hedges  -    -     - (4,098)       -   -     - 098) (781) 879)
                  --------------------------------------------------------
Total
comprehensive
income for                                              4,         2,   3,
the period          -    -     - (4,098)       -   -   902  804   468  272

Transactions
with owners

Stock options
                    - (91)     -       -     502   -     -  411     -  411

Conversion
of convertible                                               1,         1,
bond                -    -     -       -   1,800   -     -  800     -  800

Acquisition of                                        (60, (59,   (2, (61,
subsidiary          -    -     -     374       - 996  721) 351)  137) 488)

Perpetual                                              (1,  (1,        (2,
capital loan        -    -     -       -       -   -  891) 891) (360) 251)
                  --------------------------------------------------------
Incentive
arrangement
for Executive
Management          -    -     -       -       -  47     -   47     -   47

Convertible
bond,
equity                                            9,         9,         9,
component           -    -     -       -       - 018     -  018     -  018

Employee
share
option
scheme

- value of
employee                                          2,         2,         2,
services            -    -     -       -       - 554     -  554     -  554

Total
contribution
by and
distribution                                     12,  (62, (47,   (2, (49,
to owners           - (91)     -     374   2,302 615  612) 412)  497) 909)

Total
transactions                                     12,  (62, (47,   (2, (49,
with owners         - (91)     -     374   2,302 615  612) 412)  497) 909)
                  --------------------------------------------------------
30 Jun 2011                                      44, (142, 317,   15, 333,
                   80    - 8,086   3,770 403,914 015  032)  833   802  635
                  --------------------------------------------------------


CONSOLIDATED STATEMENT OF CASH FLOWS

                                Unaudited    Unaudited    Unaudited    Unaudited
                             three months three months   six months   six months
(all amounts in EUR '000)    to 30 Jun 11 to 30 Jun 10 to 30 Jun 11 to 30 Jun 10
                            ----------------------------------------------------
Cash flows from operating
activities

Profit (loss) for the period      (4,633)     (16,764)        8,151     (33,700)

Adjustments for

Tax                               (1,357)      (5,968)        3,822     (11,553)

Depreciation and
amortization                       11,618       12,786       22,816       25,032

Other non-cash income and
expenses                         (12,012)      (2,459)     (17,992)      (2,320)

Interest income                   (4,320)      (3,713)     (20,053)      (4,864)

Fair value gains (losses) on
financial
assets at fair value through
profit or loss                      (240)      (2,987)        (385)     (16,642)

Interest expense                    9,125       28,988       18,512       50,316
                            ----------------------------------------------------
                                  (1,819)        9,883       14,871        6,269

Change in working capital

Decrease(+)/increase(-)
in other receivables               36,364     (14,063)       37,707      (9,744)

Decrease (+)/increase (-)
in inventories                   (28,221)     (12,517)     (43,743)     (27,312)

Decrease(-)/increase(+) in
trade and other payables          (8,254)       39,181     (22,647)       34,293                   ----------------------------------------------------
Change in working capital           (111)       12,601     (28,683)      (2,763)
                            ----------------------------------------------------
                                  (1,930)       22,484     (13,812)        3,506

Interest and other finance
cost paid                         (9,704)      (8,809)     (11,514)     (13,210)

Interest and other finance
income                                 70        3,702          339       50,818
                            ----------------------------------------------------
Net cash generated (used)
in operating activities          (11,564)       17,377     (24,987)       41,114

Cash flows from investing
activities

Acquisition of subsidiary,
net of cash acquired             (61,487)            -     (61,487)            -

Purchases of property,
plant and equipment              (25,013)     (36,218)     (35,384)     (55,178)

Purchases of biological
assets                               (35)          (7)         (35)          (7)

Purchases of intangible
assets                               (81)        (110)        (104)        (124)

Proceeds from sale
of biological assets                   48           33          232           92

Purchases of financial
assets at
fair value through profit or
loss                             (12,010)            -     (12,010)            -

Purchases of available-for-
sale
financial assets                     (90)            -        (128)            -
                            ----------------------------------------------------
Net cash generated (used)
in investing activities          (98,668)     (36,302)    (108,916)     (55,217)

Cash flows from financing
activities

Realised stock options                377          351          411          351

Proceeds from interest-
bearing liabilities                 1,067        1,539        1,067        6,539

Perpetual capital loan                  -            -      (3,042)       24,875

Proceeds from advance
payments                                -       20,000        7,000      263,419

Payment of interest-bearing
liabilities                       (1,234)     (23,448)      (2,460)    (257,527)
                            ----------------------------------------------------
Net cash generated (used)
in financing activities               210      (1,558)        2,976       37,657

Net increase (decrease) in
cash and cash equivalents       (110,022)     (20,483)    (130,927)       23,554

Cash and cash equivalents
at beginning of the period        144,650       55,914      165,555       11,877
                            ----------------------------------------------------
Cash and cash equivalents
at end of the period               34,628       35,431       34,628       35,431
                            ----------------------------------------------------


NOTES

 1.       Basis of preparation


  This interim report has been prepared in compliance with IAS 34.

  The interim financial information set out herein has been prepared on the same
basis and using the same accounting policies as were applied in drawing up the
Group's statutory financial statements for the year ended 31 December 2010.

2. Property, plant and
equipment

                            Machinery   Construction    Land     Other
                               and           in          and    tangible
(all amounts in EUR '000)   equipment     progress    buildings  assets   Total
                         -------------------------------------------------------
Gross carrying amount at
1 Jan 11                        336,598        21,035   257,613  206,227 821,473

Additions                           275        35,038        67        4  35,384

Disposals                             -             -      (66)        -    (66)

Transfer to assets held
for sale                              -             -         -      (4)     (4)

Transfers                        10,591      (13,931)     2,583      757       -
--------------------------------------------------------------------------------
Gross carrying amount at
30 Jun 11                       347,464        42,142   260,197  206,984 856,787
                         -------------------------------------------------------
Accumulated depreciation
and impairment losses

at 1 Jan 11                      39,793             -    21,150   32,304  93,247

Depreciation for the
period                            9,522             -     9,254    3,758  22,534
--------------------------------------------------------------------------------
Accumulated depreciation
and impairment losses at
30 Jun 11                        49,315             -    30,404   36,062 115,781
                         -------------------------------------------------------
Carrying amount at 1 Jan
11                              296,805        21,035   236,463  173,923 728,226
                         -------------------------------------------------------
Carrying amount at 30 Jun
11                              298,149        42,142   229,793  170,922 741,006

3. Trade
receivables

(all amounts in
EUR '000)

                   30 Jun 11   31 Dec 10
                 -------------------------
Nickel-Cobalt
sulphide                23,377     50,437

Zinc sulphide            1,975      1,917
                 -------------------------
Total trade
receivables             25,352     52,354


4. Inventories

(all amounts in EUR '000)

                              30 Jun 11 31 Dec 10
                             --------------------
Raw materials and consumables    12,738     8,668

Work in progress                178,990   154,632

Finished products                27,377    12,061
                             --------------------
Total inventories               219,105   175,361
                             --------------------



5. Borrowings

(all amounts in EUR '000)

Non-current                         30 Jun 11 31 Dec 10
                                   --------------------
Capital loans                           1,405     1,405

Investment and Working Capital loan    57,732    57,324

Senior Unsecured Convertible
Bonds due 2013                         79,452    78,086

Senior Unsecured Convertible
Bonds due 2015                        212,955   219,426

Finance lease liabilities              46,456    53,018

Other                                  25,903    28,364
                                   --------------------
                                      423,903   437,623
                                   --------------------
Current

Investment and Working Capital loan       715         -

Railway Term Loan Facility             18,700    18,527

Finance lease liabilities              16,007    20,211

Interest Subsidy Loans                  4,200     4,196
                                   --------------------
                                       39,622    42,934
                                   --------------------
Total borrowings                      463,525   480,557
                                   --------------------


6. Changes in the number of shares issued
                                 Number of
                               shares issued
                              --------------
31 Dec 10                        245,316,718

Stock options 2007A and 2007B        189,149

Conversion of senior unsecured       215,736
Convertible Bonds due 2015
                              --------------
30 Jun 11                        245,721,603
                              --------------


7. Contingencies and commitments

(all amounts in EUR '000)

The future aggregate minimum lease payments under non-cancellable operating
leases

                                          30 Jun 11          31 Dec 10
                                         ---------------------------------------
Not later than 1 year                         1,724                        1,175

Later than 1 year and not later than 5
years                                         2,089                        1,993

Later than 5 years                                -                           11
                                         ---------------------------------------
                                              3,813                        3,179



Capital commitments

At  30 June 2011, the Group had capital  commitments principally relating to the
completion  of the Talvivaara  mine, improving the  reliability and expansion of
production  capacity. These commitments are for the acquisition of new property,
plant and equipment.


Talvivaara Mining Company
Plc

Key financial figures of           Three     Three       Six       Six    Twelve
the Group                      months to months to months to months to months to
                               30 Jun 11 30 June10 30 Jun 11 30 Jun 10 31 Dec 10
                              --------------------------------------------------
                          EUR
Net sales                 '000    37,647    35,248   104,114    46,854   152,163

                          EUR
Operating profit (loss)   '000   (1,184)     2,543    10,433       199    25,456

Operating profit (loss)
percentage                        -3.1 %     7.2 %    10.0 %     0.4 %    16.7 %

                          EUR
Profit (loss) before tax  '000   (5,989)  (22,732)    11,974  (45,253)   (9,908)

Profit (loss) for the     EUR
period                    '000   (4,633)  (16,764)     8,151  (33,700)  (13,052)

Return on equity                  -1.3 %    -4.4 %     2.3 %    -9.0 %    -3.4 %

Equity-to-assets ratio            29.8 %    38.4 %    29.8 %    38.4 %    31.3 %

                          EUR
Net interest-bearing debt '000   416,999   190,729   416,999   190,729   315,002

Debt-to-equity ratio             125.0 %    51.6 %   125.0 %    51.6 %    82.8 %

Return on investment               0.5 %     2.0 %     3.2 %     2.3 %     3.1 %

                          EUR
Capital expenditure       '000    25,129    36,335    35,523    55,308   115,658

Research & development    EUR
expenditure               '000         -        63         -        63       365

Property, plant and       EUR
equipment                 '000   741,006   663,154   741,006   663,154   728,226

Derivative financial      EUR
instruments               '000     (354)   (2,375)     (354)   (2,375)   (1,237)

                          EUR
Borrowings                '000   463,525   226,160   463,525   226,160   480,557

Cash and cash equivalents
at                        EUR
the end of the period(1)  '000    46,526    35,431    46,526    35,431   165,555



'1) including financial assets at fair value through profit or loss


Share-related key
figures

                               Three       Three         Six       Six    Twelve
                           months to   months to   months to months to months to
                           30 Jun 11   30 Jun 10   30 Jun 11 30 Jun 10 31 Dec 10
                 ---------------------------------------------------------------
Earnings per
share             EUR         (0.02)      (0.06)        0.02    (0.12)    (0.06)

Equity per share  EUR           1.29        1.46        1.29      1.46      1.55

Development of
share price
at London Stock
Exchange

Average trading
price(1)          EUR           5.50        4.60        6.12      4.48      4.89

                  GBP           4.86        4.00        5.31      3.90      4.20

Lowest trading
price(1)          EUR           4.56        3.94        4.64      3.94      3.99

                  GBP           4.03        3.42        4.03      3.42      3.42

Highest trading
price(1)          EUR           6.59        5.63        7.16      5.63      7.11

                  GBP           5.82        4.90        6.22      4.90      6.10

Trading price at
the
end of the
period(2)         EUR           5.15        4.47        5.15      4.47      6.92

                  GBP           4.65        3.65        4.65      3.65      5.96

Change during the
period                       -20.0 %     -17.8 %     -21.9 %    -5.5 %    54.2 %

Price-earnings
ratio                           neg.        neg.         258      neg.      neg.

Market
capitalization at
the end of the    EUR
period(3)         '000     1,265,975   1,094,758   1,265,975 1,094,758 1,697,196

                  GBP
                  '000     1,142,605     894,910   1,142,605   894,910 1,460,861

Development in
trading volume

                  1000
Trading volume    shares      14,927      26,722      26,347    65,827    93,802

In relation to
weighted
average number of
shares                         6.1 %      10.9 %      10.8 %    26.8 %    38.2 %

Development of
share
price at OMX
Helsinki

Average trading
price             EUR           5.55        4.71        6.16      4.55      5.18

Lowest trading
price             EUR           4.53        4.04        4.53      3.99      3.99

Highest trading
price             EUR           6.63        5.62        7.34      5.62      7.18

Trading price at
the
end of the period EUR           5.16        4.45        5.16      4.45      7.07

Change during the
period                       -21.8 %     -10.4 %     -27.0 %     2.8 %    63.3 %

Price-earnings
ratio                           neg.        neg.         258      neg.      neg.

Market
capitalization at
the end of the    EUR
period            '000     1,267,923   1,091,545   1,267,923 1,091,545 1,734,389

Development in
trading volume

                  1000
Trading volume    shares      44,708      36,300      82,728    76,392   140,115

In relation to
weighted
average number of
shares                        18.3 %      14.8 %      33.9 %    31.2 %    57.1 %

Adjusted average                                              245,177,  245,241,
number of shares         244,339,128 245,177,646 244,339,128       646       660

Fully diluted
average                                                       245,177,  245,241,
number of shares         244,339,128 245,177,646 244,339,128       646       660

Number of shares
at the                                                        245,180,  245,316,
end of the period        245,721,603 245,180,718 245,721,603       718       718




 1.
 2.
 3.





Employee-related key figures

                                  Three     Three       Six       Six    Twelve
                              months to months to months to months to months to
                              30 Jun 11 30 Jun 10 30 Jun 11 30 Jun 10 31 Dec 10
                      ---------------------------------------------------------
                       EUR
Wages and salaries     '000       5,405     4,145    11,262     8,381    16,652

Average number of
employees                           451       365       429       344       362

Number of employees at
the end of the period               481       382       481       382       389



Other figures

                                Three     Three       Six       Six    Twelve
                            months to months to months to months to months to
                            30 Jun 11 30 Jun 10 30 Jun 11 30 Jun 10 31 Dec 10
                           --------------------------------------------------
Share options outstanding
at the end of the period    5,796,111 5,333,100 5,796,111 5,333,100 5,950,822

Number of shares to
be issued against the
outstanding share options   5,796,111 5,333,100 5,796,111 5,333,100 5,950,822

Rights to vote of shares to
be issued against the
outstanding share options       2.4 %     2.1 %     2.4 %     2.1 %     2.4 %



Talvivaara Mining Company Plc

Key financial figures of the Group


Return on equity          Profit (loss) for the period
                         -------------------------------------------------------
                          (Total equity at the beginning of period + Total
                          equity at the end of period)/2


Equity-to-assets ratio    Total equity
                         -------------------------------------------------------
                          Total assets


Net interest-bearing debt Interest-bearing debt - Cash and cash equivalent


Debt-to-equity ratio      Net interest-bearing debt
                         -------------------------------------------------------
                          Total equity


Share-related key figures


                          Profit (loss) attributable to equity holders of the
Earnings per share        Company
                         -------------------------------------------------------
                          Adjusted average number of shares


Equity per share          Equity attributable to equity holders of the Company
                         -------------------------------------------------------
                          Adjusted average number of shares


Market capitalization at  Number of shares at the end of the period * trading
the end of the period     price at the end of the period






[HUG#1537852]