Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara launches an offering of approximately €85 million

Additional financing to facilitate broader metals processing capability
 
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR IN ANY
OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE
LAW 
 
 
Talvivaara announced today the commencement of an offering (the “Offering”) of
approximately EUR 85 million of senior unsecured convertible bonds due 2013
(the “Securities”) to international institutional investors. The Securities
will be convertible into fully paid ordinary shares of Talvivaara (the
“Shares”). 
 
The Securities, the final size of which will be determined at the time of
pricing, will be convertible into approximately 11.5 million Shares or 5% of
Talvivaara's outstanding share capital. 
 
The Securities have a five-year maturity and will carry a coupon of between
4.75% and 5.25% per annum, payable semi-annually in arrears, with a conversion
price expected to be set at a premium of between 38% and 48% above the volume
weighted average price of the Shares from launch to pricing. The Securities
will be issued at par and will redeem at par on maturity. The Securities are
expected to price today and closing is expected to occur on or about 20 May
2008. 
 
The net proceeds of the Offering will be used to realize Talvivaara's further
strategic goals, in particular to enhance Talvivaara's metals processing
facility in order to accommodate a broader range of raw material streams and
end products. This could include additional polymetallic intermediates from
other sources as well as being able to recover manganese, which is present in
the Talvivaara leach solution. In addition, the proceeds will be used for
general corporate purposes, providing additional financial flexibility. 
 
The Company's main activity, the construction of the Talvivaara mine in
Sotkamo, Finland (the “Project”), is proceeding according to plan with
anticipated production start-up in Q4 2008. Talvivaara expects to draw down on
its committed project term loan facility (the “Facility”), in the near future
to complete the funding of the Project through to full scale production. 
 
In this context, the Company is in the process of ensuring that the remaining
conditions precedent to drawdown are in place, including the completion of
hedging programmes for nickel and zinc as required by certain provisions of the
Facility agreement. 
 
Talvivaara's CEO, Mr Pekka Perä commented: ”This offering gives Talvivaara a
great opportunity to invest in a broadening of our processing capabilities at
Sotkamo, which could allow us to recover additional and highly sought after
metals such as manganese, which are already present in the Talvivaara leach
solution. The construction of the main mine facilities is proceeding according
to plan, with first leaching in July and first production in October of this
year.” 
 
The Offering, execution of certain agreements in relation to the Offering and
the closing of the Offering are expected to take place in advance of the expiry
on 1 June 2008 of the Company's lock-up agreed at the time of admission of the
Shares on the London Stock Exchange's main market for listed securities in June
2007 (the “Lock-up”). In accordance with Listing Rule 9.6.17, the Company
hereby announces that JPMorgan Cazenove Limited has consented to waive the
Lock-up in order to permit the Company to offer and issue the Securities and to
authorise, execute and deliver all such documentation that will be required in
connection with the Offering. 
 
No application has been made to list the Securities.
 
Merrill Lynch International is Sole Bookrunner and Sole Lead Manager of the
Offering. 
 
STABILISATION/FSA.  
 
ENQUIRIES	 
Talvivaara	 
Saila Miettinen-Lähde, CFO	Tel: +358 40 548 3695
Timo Laatio	Tel: +358 50 572 1877
 	 
Merrill Lynch International	Tel: +44 20 7628 1000
Harri Sundvik	 
Craig Coben	 
Mark Echlin	 
Keyvan Zolfaghari	 
 
 
THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO
THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF
1933, AS AMENDED (“REGULATION S”). THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL
SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE
BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE
WOULD BE UNLAWFUL. THE SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN
AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THERE WILL BE NO PUBLIC OFFER
OF THE SECURITIES IN THE UNITED STATES. 
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY ANY CONVERTIBLE BONDS. 
THIS ANNOUNCEMENT IS DIRECTED AT AND IS ONLY BEING DISTRIBUTED IN THE UNITED
KINGDOM TO (I) PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO
INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS
ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”), (II) HIGH NET WORTH
ENTITIES, AND OTHER PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED
FALLING WITHIN ARTICLE 49 OF THE ORDER, AND (III) PERSONS TO WHOM IT MAY
OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO
AS "RELEVANT PERSONS"). THIS COMMUNICATION MUST NOT BE READ, ACTED ON OR RELIED
ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT
ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT
PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. BY READING THIS
ANNOUNCEMENT, THE READER ACKNOWLEDGES THAT IT IS A PERSON EITHER (I) OUTSIDE
THE UNITED KINGDOM OR (II) FALLING WITHIN ONE OF THE FOREGOING CATEGORIES. 
IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (“EEA”), THIS ANNOUNCEMENT AND
ANY OFFER IF MADE SUBSEQUENTLY IS DIRECTED ONLY AT PERSONS WHO ARE “QUALIFIED
INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE DIRECTIVE 2003/71/EC
(THE “PROSPECTUS DIRECTIVE”) (“QUALIFIED INVESTORS”). ANY PERSON IN THE EEA WHO
ACQUIRES THE SECURITIES IN ANY OFFER (AN “INVESTOR”) OR TO WHOM ANY OFFER OF
THE SECURITIES IS MADE WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT IT IS
A QUALIFIED INVESTOR. 
THIS ANNOUNCEMENT IS A SUMMARY ONLY, AND DOES NOT PURPORT TO IDENTIFY OR
SUGGEST THE RISKS (DIRECT OR INDIRECT) WHICH MAY BE ASSOCIATED WITH YOUR
INVESTMENT IN THE SECURITIES. 
MERRILL LYNCH INTERNATIONAL IS ACTING FOR TALVIVAARA IN CONNECTION WITH THE
OFFERING, AND FOR NO-ONE ELSE AND WILL NOT BE RESPONSIBLE TO ANYONE OTHER THAN
TALVIVAARA FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF MERRILL LYNCH
INTERNATIONAL OR FOR PROVIDING ADVICE IN RELATION TO THE OFFERING, AND MERRILL
LYNCH INTERNATIONAL MAKES NO REPRESENTATIONS AS TO THE ACCURACY OF AND TAKE NO
RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT OR ANY MATTERS REFERRED TO
HEREIN. 
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT TO BE RELIED UPON
IN SUBSTITUTION FOR THE EXERCISE OF INDEPENDENT JUDGEMENT.  IT IS NOT INTENDED
AS INVESTMENT ADVICE AND UNDER NO CIRCUMSTANCES IS IT TO BE USED OR CONSIDERED
AS AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OR A
RECOMMENDATION TO BUY OR SELL ANY SECURITIES. NEITHER MERRILL LYNCH
INTERNATIONAL NOR ITS RESPECTIVE AFFILIATES ACCEPTS ANY LIABILITY ARISING FROM
THE USE OF OR MAKES ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF
THIS ANNOUNCEMENT. 
EACH PERSON READING THIS ANNOUNCEMENT SHOULD CONSULT HIS/HER PROFESSIONAL
ADVISER TO ASCERTAIN THE SUITABILITY OF THE SECURITIES AS AN INVESTMENT.  IN
ADDITION, HAVING READ THIS ANNOUNCEMENT, EACH PROSPECTIVE INVESTOR SHOULD
PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT
IN THE SECURITIES FOR AN INDEFINITE PERIOD. TALVIVAARA NOR MERRILL LYNCH
INTERNATIONAL MAKES ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE
SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING
TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE SECURITIES OR
(III) THE FUTURE PERFORMANCE OF THE SECURITIES EITHER IN ABSOLUTE TERMS OR
RELATIVE TO COMPETING INVESTMENTS. 
IN CONNECTION WITH THE OFFERING, MERRILL LYNCH INTERNATIONAL AND ITS RESPECTIVE
AFFILIATES MAY, FOR THEIR OWN ACCOUNT, ENTER INTO ASSET SWAPS, CREDIT
DERIVATIVES OR OTHER DERIVATIVE TRANSACTIONS RELATING TO THE SECURITIES AND/OR
THE SHARES AT THE SAME TIME AS THE OFFER AND SALE OF THE SECURITIES OR IN
SECONDARY MARKET TRANSACTIONS. MERRILL LYNCH INTERNATIONAL OR ANY OF ITS
RESPECTIVE AFFILIATES MAY FROM TIME TO TIME HOLD LONG OR SHORT POSITIONS IN OR
BUY AND SELL SUCH SECURITIES OR DERIVATIVES OR THE SHARES. NO DISCLOSURE WILL
BE MADE OF ANY SUCH POSITIONS.  THE AMOUNT OF ANY SUCH PURCHASES WILL BE
DETERMINED AT THE TIME OF PRICING OF THE SECURITIES AND WILL BE SUBJECT TO
TOTAL DEMAND RECEIVED AND FINAL ALLOCATIONS. IN ADDITION, MERRILL LYNCH
INTERNATIONAL AND ITS AFFILIATES MAY PERFORM SERVICES FOR, OR SOLICIT BUSINESS
FROM THE TALVIVAARA, MAY MAKE MARKETS IN THE SECURITIES OF THE TALVIVAARA
AND/OR HAVE A POSITION OR EFFECT TRANSACTIONS IN SUCH SECURITIES.