Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Talvivaara has signed a letter of intent for the sale of mining-related assets to Terrafame

Stock Exchange Release
Talvivaara Mining Company Plc
28 January 2016



 Talvivaara has signed a letter of intent for the sale of mining-related assets
                                  to Terrafame


Talvivaara Mining Company Plc ("Talvivaara"), Terrafame Group Ltd, Terrafame Ltd
and  Winttal Ltd, a subsidiary  of Terrafame Group Ltd,  have signed a letter of
intent,  in which  the parties  provisionally agree  on the  essential terms and
conditions  for the  sale of  Talvivaara's assets  related to the Sotkamo mining
operations.  Assets to be sold  include, among others, the  lime plant needed in
the  Sotkamo  operations,  laboratory  business,  as  well  as  ownership of the
geological  data associated with the mine.  In addition, the parties have agreed
on  the transfer of the laboratory personnel  to Terrafame Ltd as old employees,
as  well as  on the  possibility of  Terrafame Ltd  to recruit  Talvivaara's key
personnel working at the mine.

Upon  completion of the arrangements set out  in the Letter of Intent, Terrafame
Ltd  shall pay to Talvivaara a total  net purchase price of EUR 3.8 million. The
transaction is subject to certain conditions, which are described in more detail
under   the  heading  "Timetable  and  conditions  for  the  completion  of  the
arrangements".

As  part of the  Letter of Intent,  it has also  been provisionally agreed that,
Talvivaara will have a possibility to become owner of Terrafame Ltd with a stake
of  at  least  10.1 per  cent  of  the  shares  and  votes,  if  Talvivaara  can
successfully raise the necessary funds for the investment. Talvivaara would have
right  to use  the option  between 1 November  2016 and 30 April  2017, prior to
which  period  the  parties  would  agree  on  the  terms  and conditions of the
investment, including the applicable subscription price and the key terms of the
shareholders'  agreement. The  parties may  also agree  on a  stake greater than
10.1 per  cent. Terrafame Group Ltd may redeem the Talvivaara share subscription
option  by notifying Talvivaara of the redemption no later than 31 October 2016
and  by paying a separate  redemption fee of EUR  3.8 million to Talvivaara. The
intention  of the parties is to agree  on more detailed terms and conditions for
Talvivaara's  share  subscription  option  separately  in  a  subscription right
agreement to be negotiated as a part of the detailed agreements.

The essential terms for the sale of Talvivaara's assets

It  has been  preliminarily agreed  that the  contemplated arrangement under the
Letter of Intent would consist of two separates phases:

In  the first phase, Terrafame Ltd will  buy the laboratory business required in
the  production process,  and the  geological data  associated with  the Sotkamo
mine. The laboratory personnel will be transferred to Terrafame Ltd's employment
as  old employees. In  addition, the possibility  for Talvivaara's key personnel
working  at the mine to  transfer to Terrafame Ltd's  service will be agreed. In
the  first phase of the arrangement, Terrafame  Ltd will pay a purchase price of
EUR 3.8 million to Talvivaara.

Upon  completion of the second phase of  the arrangement, Terrafame Ltd will buy
from  Talvivaara the lime plant required in  the production process of the mine.
Terrafame  Ltd shall  pay to  Talvivaara a  purchase price  of EUR 12.5 million.
Simultaneously, Talvivaara will pay to Winttal Ltd EUR 3.8 million as a full and
final  settlement of Talvivaara's debts  and liabilities, which were transferred
to  Winttal Ltd from Nyrstar Sales &  Marketing AG in December 2015. These debts
and  liabilities comprise  of Talvivaara's  guarantee liability of approximately
EUR  12.8 million  under    the  Loan  and  Streaming  Holiday  Agreement  and a
guarantee liability for a termination sum of approximately EUR 203.4 million the
Zinc  in Concentrate Purchase Agreement, which thereby shall be considered fully
and finally settled upon completion of the arrangement.


In addition, as part of the arrangements, Terrafame Group Ltd will acquire debts
of  Talvivaara from  certain commercial  banks and  Finnvera Plc, with a nominal
value   of   approximately   EUR   129.6 million.  These  debts  are  considered
restructuring debts under Talvivaara's draft restructuring programme, which will
receive  a payment of EUR 7.5 million under the business mortgage claims, whilst
the  unsecured part  of the  debts would  be paid approximately EUR 1.2 million.
Upon completion of the second phase of the arrangements, Talvivaara shall pay to
Terrafame  Group  Ltd  for  the  debts  transferred  by the commercial banks and
Finnvera  Plc  a  total  sum  of  EUR  8.7 million  in accordance with the final
restructuring programme.

The  difference  between  the  total  purchase  price  and  the  sums payable by
Talvivaara  to Terrafame entities on the basis of Talvivaara's debts is thus EUR
3.8 million,  which Terrafame Ltd will pay to Talvivaara as a net purchase price
for all assets transferred.

Upon  completion of the arrangements under the Letter of Intent, all main assets
of  Talvivaara  currently  generating  income  for  Talvivaara would transfer to
Terrafame  Ltd. However,  the completion  of the  arrangements would  enable the
completion  of Talvivaara's corporate restructuring proceedings and the payments
to  the creditors under the restructuring programme, and it would facilitate the
development of Talvivaara's existing and potential new business opportunities.

In connection with arrangements, Terrafame entities undertake to accept the cuts
proposed  in Talvivaara's  draft restructuring  programme and  not to appeal the
district court decision confirming the restructuring programme.

Timetable and conditions for the completion of the arrangements

The  signed Letter of  Intent is, with  certain limited exceptions, legally non-
binding  and conditional upon the detailed agreements concerning the arrangement
being finalized and accepted by all parties no later than 3 February 2016, or on
another  date agreed  by the  parties, at  which instant  the first phase of the
arrangements would be completed.

The  second phase  of the  arrangements is  also conditional  on the approval by
Talvivaara's General Meeting of Shareholders and on confirmation of Talvivaara's
restructuring  programme with a  targeted dead line  of 30 April 2016. The whole
arrangement  under  the  Letter  of  Intent  is  also conditional on a favorable
decision  by the  Vaasa Administrative  Court on  Nuasjärvi discharge pipe line,
enabling the continuance of Terrafame's mining operations.

However,  there is no  guarantee that Talvivaara  and Terrafame entities will be
able to successfully agree on the detailed contracts required by the arrangement
or,  if  the  said  contracts  are  entered  into,  that the arrangements can be
successfully  completed in their entirety.  If Talvivaara and Terrafame entities
fail to enter into the above mentioned detailed agreements for any reason, or if
the  arrangements do not reach  completion in their entirety,  this is likely to
result in Talvivaara's bankruptcy, unless other options have become available by
then.



Enquiries

Talvivaara Mining Company Plc. Tel. 020 7129 800

Pekka Perä, CEO
Pekka Erkinheimo, Deputy Ceo

[HUG#1981951]

Attachments:

Talvivaara has signed a letter of intent for the sale of assets.pdf