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* Production guidance for full year 2013 withdrawn, but significant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.

Talvivaara Operational Update 19 July 2013:
http://hugin.info/136227/R/1717576/571170.pdf



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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
[HUG#1717576]




Unternehmen: Talvivaaran Kaivososakeyhtiö Oyj - ISIN: FI0009014716