Talvivaaran Kaivososakeyhtiö Oyj - Company Announcement

Terrafame no longer pursuing the arrangement under the Letter of Intent and is demanding payment of the Nyrstar receivable

Stock Exchange Release
Talvivaara Mining Company Plc
3 June 2016


 Terrafame no longer pursuing the arrangement under the Letter of Intent and is
                  demanding payment of the Nyrstar receivable


Talvivaara  Mining Company Plc ("Talvivaara" or  "Company") has been informed by
Terrafame  Ltd ("Terrafame") that  Terrafame entities will  no longer pursue the
contemplated  arrangement concerning the sale of Talvivaara's assets relating to
the  Sotkamo mining operations  in accordance with  the Letter of  Intent by and
between  Talvivaara  and  Terrafame  entities  published  on  28 January  2016.
Terrafame  has  also  informed  the  Company  that  Winttal  Ltd has assigned to
Terrafame  all  its  rights,  title,  benefit  and  interest  under  the Zinc in
Concentrate   Purchase  Agreement  ("Streaming  Agreement")  and  the  Loan  and
Streaming  Holiday Agreement ("Streaming Holiday  Agreement") originally held by
Nyrstar  Sales & Marketing AG. Terrafame has further requested immediate payment
of  the receivable under  the Streaming Holiday  Agreement amounting in total to
approximately 12.8 million euros.

The  liability of  the Company  under the  Streaming Agreement  is based  on the
guarantee  issued by the  Company for the  due payment by  its former subsidiary
Talvivaara Sotkamo Ltd of the termination sum amounting to EUR 203.4 million and
payable  upon premature termination of the  Streaming Agreement. However, due to
among  others the inter-creditor  arrangements in force,  the view of Talvivaara
and  the administrator  of the  corporate restructuring  proceedings is that the
Company  cannot make  any payments  in relation  to the  termination sum if full
payment  has not been  made to the  Company's lenders having  receivables with a
higher ranked priority.

The  liability under the  Streaming Holiday Agreement  is based on the guarantee
issued  by the Company for the due  payment of loans drawn by Talvivaara Sotkamo
from Nyrstar under the Streaming Holiday Agreement.

Further,  Terrafame has  stated that,  in lack  of immediate repayment, it would
offset  the above mentioned  receivables against the  receivables of the Company
from  Terrafame  under  the  service  and  lease agreements between the parties.
Talvivaara   has   financed   its   current  business  activities  by  providing
administrative  and technical  services and  leasing machinery  and equipment to
Terrafame under said agreements.

The  Company continues assessing Terrafame's  announcements, the effects thereof
and  the measures to be  taken due to them.  The Company does not currently have
sufficient  cash reserves to make  the required payment in  full, and there is a
significant  risk  that  Terrafame's  demands  endanger  the  continuance of the
Company's  corporate restructuring proceedings and may lead to the bankruptcy of
the Company.

The  Company's view is that the arrangement under the Letter of Intent published
on  28 January  2016 would  still  be  in  the  best  interest  of both parties.
According  to the Company, an expeditious arrangement regarding the assets owned
by  the  Company  needed  in  the  Sotkamo  mining  operations  would  help  the
continuance  of the Sotkamo mining operations and in obtaining further financing
for  Terrafame. Talvivaara  will continue  its work  and explore  all avenues in
seeking a best possible solution for the Company and its stakeholders.


Enquiries

Talvivaara Mining Company Plc. Tel. +358 20 7129 800

Pekka Perä, CEO
Pekka Erkinheimo, Deputy CEO

[HUG#2017775]

Attachments:

Terrafame no longer pursuing the LOI arrangement 3.6.2016.pdf