Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara Mining Company Plc Operational Update

Stock Exchange Release
Talvivaara Mining Company Plc
19 July 2013


                         Talvivaara Operational Update


Highlights
  * Talvivaara produced 1,776t of nickel and 4,465t of zinc in Q2 2013, and
    4,508t of nickel and 7,593t of zinc in H1 2013
  * Production impacted by a planned maintenance stoppage and low metal grades
    in leach solution due to continued effect of excess water in the older
    heaps
  * Successful re-start of ore production in May with monthly output of 1.2Mt in
    June and current monthly run-rate exceeding 1.6Mt; promising early leaching
    results from newly stacked ore
  * Flow rate at the metals plant reached a record 1,650 m(3)/h in June and
    plant availability  remains good
  * Risk level related to excess water on site reduced by continued discharge of
    treated water within permitted limits
  * Extensive cost reduction and efficiency programme ongoing with aim of
    increasing overall cost efficiency and improving productivity levels;
    organizational changes likely to be included
  * Production guidance for full year 2013 withdrawn, but significant
    improvement in production expected in H2 2013 compared to H1 2013


Production and operational update

Metals production

Talvivaara  produced 1,776t of nickel and 4,465t of zinc in Q2 2013, and 4,508t
of  nickel  and  7,593t of  zinc  in  H1 2013. Metals production continued to be
impacted  by low metal grades  in leach solution. Talvivaara  also carried out a
scheduled  maintenance stoppage  in late  May and  early June,  due to which the
metals  plant was shut down or  running at substantially restricted capacity for
approximately  two and  a half  weeks. In  addition, planned  maintenance of the
hydrogen  sulphide plants  caused some  capacity restrictions  already from mid-
April onwards.

Following  re-start of the  plant after the  scheduled maintenance stoppage, the
flow rate reached a record level of 1,650 m(3)/h in June. Metals plant operation
has been relatively stable throughout H1 2013 and is not anticipated to restrict
production levels going forward.

Ore production

Ore  production was  successfully re-commenced  in May  and has  since proceeded
according  to plan.  1.2Mt of new  ore was  crushed and  stacked in  June, and a
record monthly run-rate exceeding 1.6Mt has been reached in July. The reclaiming
process   is  also  operating  at  planned  capacity  levels  following  process
modifications  carried out during the  spring and the addition  of a jaw crusher
unit.



Bioheapleaching

As  anticipated in Talvivaara's previous  operational outlook in connection with
the  Q1 2013 interim results, metals  production and bioheapleaching performance
continued  to be impacted by water balance issues throughout H1 2013. The excess
water  in the heaps stacked prior to  the shut-down of mining in September 2012
continued  to dilute  metal grades  in leach  solution, reduce the efficiency of
aeration,  slow down the leaching reactions  and impact the rate of evaporation.
The  nickel grade  in solution  pumped to  metals recovery  declined to a low of
approximately  1.0 g/l during April, and increased  to a level of 1.1-1.2 g/l by
June.

Whilst  the impact of excess water on the leaching process has been greater than
expected  and the recovery from  it somewhat slower than  hoped for, the process
has  nevertheless started showing signs of improvement during the recent months.
Heap  temperatures  have  materially  increased,  indicating  growing  levels of
chemical  and biological activity, and there is strong evidence of significantly
improved  leaching  results  in  de-watered  heap  sections.  De-watering of all
existing heaps is ongoing by intermittent discontinuation of irrigation, but due
to  limited  space  available  for  the  solution draining from the heaps during
irrigation stoppages, this process is anticipated to take several more months to
completion.  In  the  meantime,  securing  efficient  aeration  and high quality
management of the process overall will continue to be in focus.

Metals  production from fresh  ore stacked after  the re-start of  mining in May
will  become  increasingly  important  during  the  latter  half  of  the  year.
Therefore,  special attention is paid to  securing efficient start-up of the new
heaps,  the  first  one  of  which  (primary  heap  no.  4) is anticipated to be
completed  in the beginning of September.  Whilst still being stacked, the early
leaching  of  this  heap  has  been  very  promising  with  temperatures  of the
circulating  solution already exceeding 50°C. This  proves very active oxidation
reactions  in the heap and exceeds the corresponding performance of any previous
heap historically.

Water management

Treatment  and  discharge  of  excess  waters  from  the mine area has continued
throughout  the period, reducing the water  management related risk level whilst
also allowing mining activities to be re-started and other operational processes
to  continue according  to plan.  Until the  end of  May 2013, the treatment and
discharge of water was carried out under the Company's notification of exception
under the Environmental Protection Act and related decision by the Kainuu Centre
for  Economic Development, Transport and  the Environment in February 2013. From
the  beginning of  June onwards,  the discharge  has continued  under the permit
granted  by the Northern Finland Regional State Administrative Agency ("AVI") on
31 May 2013.

Efficiency and productivity programme

Talvivaara  launched a  broad efficiency  and productivity  programme in June in
circumstances where the price development of nickel has remained weak during the
first  half of  2013. The programme  is targeted  at increasing the overall cost
efficiency  and  improving  productivity  levels  across  all  functions  of the
Company.  The programme commenced with  an intensive five-week diagnostics phase
which  was  completed  in  early  July.  Approximately 30 initiatives to enhance
efficiency   and   productivity  were  identified,  and  the  programme  is  now
progressing  into full-scale  implementation of  the identified initiatives. The
co-operation  consultations  announced  on  2 July  2013 may potentially lead to
organizational changes which form a part of the programme.


Production guidance

Talvivaara  withdraws  its  2013 nickel  production  guidance  of  approximately
18,000t due  to  remaining  uncertainties  relating  to  the short-term leaching
performance  of the existing  heaps. However, H2  2013 production is expected to
increase  substantially compared to H1 2013 as the newly stacked heaps are taken
into production and the overall leaching performance continues to improve.


CEO  Pekka Perä comments: "The challenge we have faced with the excess water has
been  remarkable, but our team has worked tirelessly to stabilize the operations
and  to minimize the environmental risks. The systematic work has now started to
bear  fruit with  mining and  materials handling  operations running at all-time
record  levels, and  the metals  recovery plant  recording higher than ever flow
rates.  Revival of the leaching performance in  our older heaps has however been
somewhat  slower than we  had hoped for  and some uncertainties  relating to the
short-term  leaching  rates  still  remain.  This  has forced us to withdraw our
production guidance for the current year until we get more clarity into the near
term  leaching recoveries. This said, our recent success in water management and
materials handling operations will now allow us to accelerate the dewatering and
revival of the old heaps, and the newly constructed heap will start contributing
metals  within the  next few  weeks. As  a result,  we expect  production in the
second  half of the year to significantly exceed the amounts achieved during the
first six months of 2013.

The  challenging market environment  and poor nickel  price development over the
recent months have also made us take a particularly close look at the efficiency
and  productivity of our operations. Although I regret that we have had to start
co-operation  consultations with our personnel as part of the ongoing efficiency
programme, I believe the targeted productivity improvement is necessary in order
for us to succeed in the current low nickel price environment."


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#1717576]

Attachments:

Talvivaara Operational Update 19 July 2013.pdf