Talvivaara Mining Company Interim Report for January-June 2013

Stock Exchange Release

Talvivaara Mining Company Plc

15 August 2013





Talvivaara Mining Company Interim Report for January-June 2013



Weak nickel price and continued water balance issues impacted financial result

Re-commenced ore processes and metals plant operating at record levels



Highlights



Q2 2013

* Nickel production of 1,776t and zinc production of 4,465t
* 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, seven weeks ahead of planned
schedule
* Flow rate at the metals plant reached a record 1,650 m(3)/h in June and
plant availability remained good
* Net sales of EUR 13.0m, reflecting low production volumes and substantial
decrease in nickel price
* Operating loss of EUR (23.9)m
* Extensive cost reduction and efficiency programme commenced in June with the
target of achieving cash flow positive operation as soon as possible


H1 2013

* Nickel production of 4,508t and zinc production of 7,593t
* Net sales of EUR 40.6m
* Operating loss of EUR (43.8)m
* Successfully completed financing transactions to de-risk balance sheet and
improve liquidity position, consisting of a EUR 261m rights issue, re-
negotiated EUR 100m revolving credit facility and EUR 19m in further advance
payments from Nyrstar and Cameco


Events after the reporting period

* Co-operation consultations impacting a maximum of 250 employees through
terminations of employment and/or temporary lay-offs announced on 2 July
2013
* Previous production guidance of approximately 18,000t nickel in 2013
withdrawn, but significant improvement in production expected in H2 2013
compared to H1 2013
* Operational improvement has continued in July and August with record level
mine and materials handling production, accelerated de-watering of old heaps
and promising early leaching results from newly stacked ore
* Cumulative cash flow improvement of approximately EUR 100 million targeted
over the next 12 months through successful implementation of the ongoing
efficiency and productivity improvement programme


Key figures



--------------------------------------------------------------------------------
EUR million Q2 Q2 Q1-Q2 Q1-Q2 FY

2013 2012 2013 2012 2012
--------------------------------------------------------------------------------
Net sales 13.0 33.4 40.6 72.5 142.9
--------------------------------------------------------------------------------
Operating profit (loss) (23.9) (10.9) (43.8) (22.3) (83.6)
--------------------------------------------------------------------------------
      % of net sales (183.3%) (32.5%) (107.9%) (30.8%) (58.5)%
--------------------------------------------------------------------------------
Profit (loss) for the period (27.6) (17.5) 51.5 (32.4) (103.9)
--------------------------------------------------------------------------------
Earnings per share, EUR (0.03) (0.06) (0.06) (0.12) (0.38)
--------------------------------------------------------------------------------
Equity-to-assets ratio 37.0% 28.9% 37.0% 28.9% 24.3%
--------------------------------------------------------------------------------
Net interest bearing debt 409.5 475.6 409.5 475.6 563.8
--------------------------------------------------------------------------------
Debt-to-equity ratio 81.2% 125.8% 81.2% 125.8% 183.3%
--------------------------------------------------------------------------------
Capital expenditure 15.3 20.7 32.6 35.3 97.5
--------------------------------------------------------------------------------
Cash and cash equivalents at the end 101.1 128.7 101.1 128.7 36.1
of the period
--------------------------------------------------------------------------------
Number of employees at the end of the 673 505 673 505 588
period
--------------------------------------------------------------------------------

All reported figures in this release are unaudited.

CEO Pekka Perä comments: "Our performance in the second quarter was a mixture of
good progress in our core operations, and continued challenges from the impact
of excess water on the bioheapleaching process. On the positive side, we were
able to re-commence mining and materials handling operations in May, some seven
weeks ahead of the planned schedule, and these functions have since progressed
to operate continuously at record levels. Similarly, our metals recovery plant
continues to operate consistently and, since the planned maintenance stoppage in
May-June, also at record flow rates. Restoration of the leaching performance in
our older heaps has however been somewhat slower than anticipated and excess
water in these heaps continues to slow down the process. We continue to focus
our efforts on improving the performance of the older heaps, while at the same
time securing good leaching of the newly stacked ore. So far, the early results
from our newest heap indicate better leaching than in any heap historically and
we look forward to the new heap contributing substantially to our metals
production during the fourth quarter. All in all, with the tireless work of our
team and the positive developments across processes, I believe we are turning
the corner and will achieve materially higher production levels in the second
half of the year than during the first half.



The environmental risk of the excess water at the mining area was reduced during
the second quarter thanks to the treatment and discharge of some 3 million m(3)
of the stored waters as well as favourable weather conditions. Whilst we feel
confident that the worst is now over with our water balance issues, we continue
our work towards an increasingly closed process water system and further
reduction of excess waters from the mine area.



In terms of our financial performance, the depressed nickel price, low
production volumes, and treatment and discharge costs of excess waters all
contributed to the weak results. Although the financing transactions completed
earlier this year provided us with additional financial flexibility, we must now
carefully manage our operations to sustain our financial flexibility for the
future. To achieve this, we have commenced and are implementing a broad
efficiency and productivity improvement programme, and a range of measures is
being implemented to cut costs and increase production levels. The co-operation
consultations with our personnel initiated in July form a part of this
programme, and whilst I regret that the consultations may lead to lay-offs
and/or terminations of employment, it is critical for us to take all the steps
required to achieve a more efficient operation. This is especially important
now, with the nickel price turning increasingly weak during the spring and
summer: whilst in the early part of the year the nickel price was around USD
18,000-19,000/t, we ended the first half with prices below USD 14,000/t. The
current market environment is difficult for the entire nickel mining industry,
and we don't believe the current price levels are sustainable for an extended
period of time. However, with macroeconomic concerns prevailing and nickel
inventories at record levels, we are making every effort to be prepared for a
continued weak price level in the near term."





Enquiries:



Talvivaara Mining Company Plc Tel. +358 20 712 9800

Pekka Perä, CEO

Saila Miettinen-Lähde, Deputy CEO and CFO



College Hill Tel. +44 20 7457 2020

David Simonson

Anca Spiridon



Webcast and conference call on 15 August 2013 at 11:00 am EET / 9:00 am GMT



A combined webcast and conference call on the January-June 2013 Interim Result
will be held on 15 August 2012 at 11:00 am EET / 9:00 am GMT. The call will be
held in English.



The webcast can be accessed through the following link:

http://qsb.webcast.fi/t/talvivaara/talvivaara_2013_0815_q2/#/webcast



A conference call facility will be available for a Q&A with senior management
following the presentation.



Participant - Finland: +358 (0)9 2313 9201

Participant - UK: +44 (0)20 7162 0077

Participant - US: +1 334 323 6201



Conference ID: 934585

The webcast will also be available for viewing on the Talvivaara website shortly
after the event.

Financial review



Q2 2013 (April-June)



Net sales and financial result



Talvivaara's net sales for nickel and cobalt deliveries to Norilsk Nickel and
for zinc deliveries to Nyrstar during the quarter ended 30 June 2013 amounted to
EUR 13.0 million (Q2 2012: EUR 33.4 million). Net sales decreased by 52.9%
compared to Q1 2013, primarily due to lower than expected product deliveries and
the substantial decrease in the nickel price. Production volumes were impacted
by the low metal grades in leach solution and a scheduled maintenance stoppage
in late May and early June. Product deliveries in Q2 2013 amounted to 1,756t of
nickel, 67t of cobalt and 2,081t of zinc.



Changes in inventories of finished goods and work in progress amounted to EUR
16.0 million (Q2 2012: EUR 23.8 million). Ore production was successfully re-
commenced in May and has since proceeded according to plan, which contributed to
the increase in work in progress.



The operating loss for Q2 2013 was EUR (23.9) million (Q2 2012: EUR (10.9)
million), corresponding to an operating margin of (183.3%) (Q2 2012: (32.5%)).
During the period, materials and services amounted to EUR (19.1) million (Q2
2012: EUR (33.6) million) and other operating expenses to EUR (12.7) million (Q2
2012: EUR (15.0) million), reflecting lower production volumes than the year
before. However, materials and services and other operating expenses increased
by 9.8% compared to the first quarter of 2013. The largest cost items were
production chemicals, external services, electricity and maintenance. In
particular, chemical costs relating to solution neutralization and removal of
non-saleable elements such as iron, manganese, aluminium and magnesium were high
during the second quarter due to the ongoing water management activities. In
addition, the planned shutdown of the metals recovery plant and the successful
re-commencement of ore production increased costs during Q2 2013 compared to Q1
2013.



Loss for the quarter amounted to EUR (27.6) million (Q2 2012: EUR (17.5)
million).



Balance sheet and financing



Capital expenditure during the second quarter of 2013 totalled EUR 15.3 million
(Q2 2012: EUR 20.7 million). The expenditure primarily related to the uranium
extraction circuit and water management structures such as dams.



H1 2013 (January-June)



Net sales and financial result



Talvivaara's net sales for nickel and cobalt deliveries to Norilsk Nickel and
for zinc deliveries to Nyrstar during the six month period ended 30 June 2013
amounted to EUR 40.6 million (H1 2012: EUR 72.5 million). The majority of net
sales came from nickel, whilst the zinc deliveries were limited to two shipments
with a zinc content of approximately 4,297t. Zinc production was impacted by
temporary technical issues resulting from efforts to further reduce odour
discharges. Product deliveries in H1 2013 amounted to 4,501t of nickel, 155t of
cobalt and 4,297t of zinc (H1 2012: 6,480t of nickel, 188t of cobalt, 15,440t of
zinc).



The Group's other operating income amounted to EUR 1.2 million (H1 2012: EUR
1.5 million) and mainly resulted from indemnities on property damages.



Changes in inventories of finished goods and work in progress amounted to EUR
23.3 million (H1 2012: EUR 46.3 million). Due to the temporary discontinuation
of mining and crushing operations between September 2012 and May 2013, no new
ore was stacked during Q1 2013 and early Q2 2013. Consequently, the work in
progress increased by less than during normal ramp-up operations. Ore production
was successfully re-commenced in May and has since proceeded according to plan.



Employee benefit expenses were EUR (15.5) million in H1 2013 (H1 2012: EUR
(14.8) million), with the increased expenses attributable to the increased
number of personnel. The increase was partially offset by the temporary lay-
offs, which Talvivaara started in February 2013 and ended in April 2013.



The operating loss for H1 2013 was EUR (43.8) million (H1 2012: EUR (22.3)
million. Materials and services amounted to EUR (41.7) million in H1 2013 (H1
2012: EUR (68.5) million) and other operating expenses were EUR (25.3) million
(H1 2012: EUR (33.9) million). The largest cost items were production chemicals,
external services, electricity and maintenance. Mining and materials handling
costs were lower compared to H1 2012 during the first part of the reporting
period due to the temporary suspension of ore production. In metals recovery,
costs were higher than in the previous year due to increased hydrogen sulphide
and hydrogen peroxide consumption as a result of inefficiencies caused by low
metal grades in feed solution and low solution temperatures. Furthermore, the
increased water neutralization expenses described above affected the operating
result, and temporary technical issues impacted zinc production as well as the
related production costs.



Finance income for H1 2013 was EUR 0.4 million (H1 2012: EUR 1.6 million).
Finance costs were EUR (24.8) million (H1 2012: EUR (21.7) million) and
consisted mainly of interest and related financing expenses on borrowings.



Loss for the first half of 2013 and the total comprehensive income amounted to
EUR (51.5) million (H1 2012: EUR (32.4) million), reflecting the low nickel
price, the high cost of treatment and discharge of excess waters and the lower
than anticipated level of product deliveries. Earnings per share was EUR (0.06)
in H1 2013 (H1 2012: EUR (0.12)).



Balance sheet



Capital expenditure in H1 2013 totalled EUR 32.6 million (H1 2012: EUR 35.3
million). The expenditure primarily related to water management structures and
the uranium extraction circuit. On the consolidated statement of financial
position as at 30 June 2013, property, plant and equipment totalled EUR 813.4
million (31 December 2012: EUR 809.5 million).



In the Group's assets, inventories amounted to EUR 329.0 million on 30 June
2013 (31 December 2012: EUR 297.8 million). The increase in inventories reflects
the ramp-up of production and the consequent increase in the amount of ore
stacked on heaps, valued at cost. The temporary suspension of ore mining
affected the increase in inventories during first half of 2013.



Trade receivables amounted to EUR 9.0 million on 30 June 2013 (31 December
2012: EUR 32.2 million). Trade receivables decreased compared to the previous
period due to lower levels of product deliveries and the sale of trade
receivables based on an agreement entered into in December 2012.



On 30 June 2013, cash and cash equivalents totalled EUR 101.1 million (31
December 2012: EUR 36.1 million).



In equity and liabilities, total equity amounted to EUR 504.4 million on 30 June
2013 (31 December 2012: EUR 306.8 million). Talvivaara raised EUR 250.8 million,
net of transaction costs, from the rights issue described below in the
"Financing" section. In addition, an interest cost of EUR 3.2 million of a
perpetual capital loan was capitalized in equity during the first half of 2013.



Provisions decreased from EUR 27.5 million on 31 December 2012 to EUR 15.8
million at the end of June 2013. The costs related to water management and the
gypsum pond leakage in November 2012 amounted to EUR 12.0 million in H1 2013 and
the corresponding provisions were de-recognized.



Borrowings decreased from EUR 599.8 million on 31 December 2012 to EUR 510.6
million at the end of June 2013. The changes in borrowings during H1 2013 mainly
related to the repayment of the senior unsecured convertible bonds of 2008 and
finance lease liabilities. Total advance payments as at 30 June 2013 amounted to
EUR 290.9 million, representing an increase of EUR 17.2 million from EUR 273.7
million on 31 December 2012. During H1 2013, Talvivaara received a total of EUR
7.4 million in advance payments from Cameco Corp. based on the amended
uranium off-take agreement between the companies, and EUR 12.0 million in
advance payments from Nyrstar based on the amendment agreement regarding the
zinc in concentrate streaming agreement (see "Financing"). Over the period, the
advance payment from Nyrstar was amortized by EUR 2.2 million as a result of
zinc deliveries.



Total equity and liabilities as at 30 June 2013 amounted to EUR 1,364.1 million
(31 December 2012: EUR 1,260.8 million).







Financing



On 12 February 2013 Talvivaara Sotkamo entered into an amendment agreement with
Cameco concerning the uranium take-in-kind agreement pursuant to which the
amount of the up-front investment that Cameco has paid to Talvivaara Sotkamo for
the construction of the uranium extraction facility was increased by USD 10
million to USD 70 million. In addition, the duration of the agreement was
extended to 31 December 2017 and commercial terms revised accordingly.
Talvivaara received the additional up-front investment in February 2013.



On 14 February 2013, Talvivaara Sotkamo entered into an amendment agreement with
Nyrstar regarding the zinc in concentrate streaming agreement pursuant to which
Nyrstar made an additional up-front payment of EUR 12 million to Talvivaara
Sotkamo in return for Talvivaara Sotkamo agreeing not to charge Nyrstar the EUR
350 per tonne extraction and processing fee on the next 38,000 tonnes of zinc in
concentrate delivered to Nyrstar as was agreed in the original zinc in
concentrate streaming agreement. The up-front payment was received in February
2013.



On 8 March 2013, an Extraordinary General Meeting of Talvivaara Mining Company
resolved to approve the proposal by the Board of Directors to authorise the
Board of Directors to undertake a share issue for consideration pursuant to the
shareholders' pre-emptive subscription right. The share issue was finalised in
April and all 1,633,857,840 new shares offered in the rights issue were
subscribed for. The gross proceeds amounted to approximately EUR 261 million and
the total number of shares in Talvivaara Mining Company increased to
1,906,167,480 shares.



On 20 May 2013, Talvivaara completed the repayment of its senior unsecured
convertible bonds of 2008. The remaining convertible bonds amounted to EUR 76.9
million and the repayment was completed according to the terms and conditions of
the bonds.



Going concern



Talvivaara is implementing a number of efficiency and productivity measures in
order to overcome its near-term operational challenges, stabilise and improve
its production processes and lower its operational costs (see "Efficiency and
productivity programme"). Talvivaara Group's forecasts and projections, taking
into account the productivity and efficiency measures being implemented, the
Group's current liquidity position and reasonably possible changes in
production, metal prices and foreign exchange rates, indicate the Group to be
able to continue in operational existence with adequate financial resources for
the foreseeable future. The Group therefore continues to adopt the going concern
basis in preparing its consolidated financial statements.



Production review



During the second quarter, Talvivaara produced 1,776t of nickel (Q2
2012: 3,194t) and 4,465t of zinc (Q2 2012: 6,686t). During the first half of
2013, Talvivaara produced 4,508t of nickel (H1 2012: 6,568t) and 7,593t of zinc
(H1 2012: 14,576t).



In metals recovery, 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 the re-start of
the plant after the 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.



In 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.



During the spring and early summer, the bioheapleaching process nevertheless
started to show signs of improvement. Heap temperatures increased materially,
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 complete. In the meantime, securing
efficient aeration and high quality management of the overall process will
continue to be in focus.



Ore production was successfully re-started in May and has since proceeded
according to plan. 1.6Mt of ore was crushed and stacked during Q2 2013 following
the-restart (Q2 2012: 3.0Mt), with June ore production amounting to 1.2Mt. The
reclaiming process also operated at planned capacities following process
modifications carried out during the spring and the addition of a jaw crusher
unit.



Metals production from fresh ore stacked after the re-start of mining in May
will become increasingly important during the second half of the year.
Therefore, special attention was paid to ensuring 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 in June. This proves very active
oxidation reactions in the heap and exceeds the corresponding performance of any
previous heap historically.



Production key figures



----------------------------------------------------------------
    Q2 Q2 Q1-Q2 Q1-Q2 FY

2013 2012 2013 2012 2012
----------------------------------------------------------------
Mining
----------------------------------------------------------------
     Ore production Mt 1.6 3.0 1.6 6.1 8.7
----------------------------------------------------------------
     Waste production Mt 0.9 1.1 0.9 2.6 5.3
----------------------------------------------------------------
Materials handling
----------------------------------------------------------------
     Stacked ore Mt 1.6 3.0 1.6 6.1 8.7
----------------------------------------------------------------
Bioheapleaching
----------------------------------------------------------------
     Ore under leaching Mt 46.1 41.8 46.1 41.8 44.3
----------------------------------------------------------------
Metals recovery
----------------------------------------------------------------
     Nickel metal content Tonnes 1,776 3,194 4,508 6,568 12,916
----------------------------------------------------------------
     Zinc metal content Tonnes 4,465 6,686 7,593 14,576 25,867
----------------------------------------------------------------



Efficiency and productivity programme



Talvivaara launched a broad efficiency and productivity programme in June in
circumstances where the price development of nickel had remained weak during the
first half of 2013. The overall target of the programme is to achieve cash flow
positive operation as soon as possible, regardless of the prevailing nickel
price, through increasing cost efficiency and improving productivity levels
across all functions of the Company. A separate task force was assigned to
coordinate the project and the work is being carried out in co-operation with
external consultants and Talvivaara's partners.



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. These consist of, among
others, improving the leaching performance of existing heaps, further optimizing
the production throughput and chemicals usage of the metals plant, working
capital management, capital expenditure cuts, sale of certain non-operational
assets and financing elements. The co-operation consultations announced on 2
July 2013 and potentially leading to organizational changes also form a part of
the programme.



As an integral part of the programme, Talvivaara has further rolled out a
performance management process across the entire organization. The process has
been mobilized through frequent performance management meetings at all levels of
the operation aiming to increase cost consciousness and improve day-to-day
planning. Incentive structures have also been amended to ensure alignment
between individual and Talvivaara's targets.Sustainable development, safety and
permitting



Safety



With respect to safety issues, Talvivaara's goal is a safe and healthy working
environment, and the Company continued to develop its safety culture based on a
zero accident philosophy. Increased focus has been placed on further safety
training of Talvivaara's personnel across all departments.



At the end of the second quarter, the injury frequency among the Talvivaara
personnel was 19.5 lost time injuries/million working hours on a rolling 12
month basis (30 June 2013: 13.7 lost time injuries/million working hours).



Environment



Talvivaara continues to focus on minimising the environmental impact of its
operations. Current primary focus is on water balance management. Treatment and
discharge of excess waters from the mine area 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. Approximately 3 million m(3) of excess water was neutralized
and discharged from the mine area during the first half of 2013. The quality of
discharged waters has remained at planned levels, with environmental impact, if
any, anticipated to be mainly caused by the sulphate content. Talvivaara expects
any metal burden to the environment to remain limited. Talvivaara considers the
continued discharge of excess water from the mine site to be necessary in order
to further reduce environmental and operational risk levels, and to secure
sufficient water management safety capacity.



In early April, Talvivaara detected a leakage at the gypsum pond of the mine.
The leakage was successfully stemmed within two days, and all leakage water was
contained within the safety dams in the mine area.



Whilst continuous improvement work is carried out, Talvivaara considers
historical hydrogen sulphide (odour) and dust emissions to have been resolved,
and only isolated complaints were received from neighbouring residents during
the first half of 2013.



Talvivaara places significant emphasis on timely and transparent communication
on environmental matters with the neighbouring communities and other interested
stakeholders. The locally focused Finnish language website www.paikanpaalla.fi
continued to be successfully used for the delivery of locally relevant, timely
information and for interaction with interested stakeholders.



Permitting



Talvivaara's existing environmental permit is currently being renewed under a
standard process. On 31 May 2013, the Northern Finland Regional State
Administrative Agency ("AVI") granted Talvivaara an environmental permit
decision relating to water discharges. The permit decision removed the volume
quota on water discharges and amended restrictions based on the amount of
contaminants. Instead of the previous volume quota, the new permit decision
restricts the water discharge flow rate on the basis of the prevailing flow rate
in the nearby Kalliojoki river at any given time. Talvivaara has submitted an
appeal to the Vaasa Administrative Court with respect to the flow rate
restriction in the permit decision, as the Company considers this permit
condition to unnecessarily restrict its ability to remove purified excess waters
from the area and thereby reduce the environmental risk level.



Until the permit decision, 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 new permit. Talvivaara expects
AVI to make a permit decision on the remaining elements of the overall
environmental permit in autumn 2013 at the earliest.



The environmental permit application for the planned uranium extraction is also
being processed by AVI and a decision on it is also expected in autumn 2013 at
the earliest. In addition, Talvivaara has filed an application for a chemical
permit relating to uranium recovery, which is currently pending.







Business development and commercial arrangements



Planned uranium extraction and uranium off-take agreement with Cameco



Talvivaara is preparing for the recovery of uranium as a by-product of the
Company's existing operations. Uranium occurs naturally in small concentrations
in the Talvivaara area and leaches into the process solution along with
Talvivaara's other products. Annual uranium production is estimated at ca.
350tU (ca. 770,000 pounds), corresponding to approximately 410t (900,000 pounds)
of yellow cake (UO(4)). Talvivaara's entire uranium production will be sold
under a long-term agreement to Cameco.



The uranium recovery facility is essentially completed, and commissioning is
expected following the receipt of remaining required permits.



Annual General Meeting



Talvivaara's Annual General Meeting was held on 2 May 2013 in Helsinki, Finland.
The resolutions of the AGM included:



* that no dividend be paid for the financial year 2012;
* that the annual fee payable to the members of the Board for the term until
the close of the Annual General Meeting in 2014 be as follows: Chairman of
the Board EUR 120,000, Deputy Chairman (Senior Independent Director) EUR
69,000, Chairmen of the Board Committees EUR 69,000 and other Non-executive
and Executive Directors EUR 48,000;
* that the number of Board members be nine and that Mr. Tapani Järvinen, Mr.
Pekka Perä, Mr. Graham Titcombe, Mr. Edward Haslam, Ms. Eileen Carr, Mr.
Stuart Murray, Mr. Michael Rawlinson and Ms. Kirsi Sormunen be re-elected as
Board members and Ms. Maija-Liisa Friman be appointed as new member of the
Board;
* that the auditor be reimbursed according to the auditor's approved invoice
and authorised public accountants PricewaterhouseCoopers Oy be elected as
the Company's auditor for the financial year 2013;
* that the Shareholders' Nomination Panel be established to prepare proposals
for the election and remuneration of the members of the Board and that the
Charter of the Shareholders' Nomination Panel be approved;
* that article 8 of the Company's Articles of Association be amended to
correspond to the changes to be made to the duties of the Board Committees
due to the establishment of the Shareholder's Nomination Panel and the
current practices applied by the Company


Risk management and key risks



In line with current corporate governance guidelines on risk management,
Talvivaara carries out an on-going process endorsed by the Board of Directors to
identify risks, measure their impact against certain assumptions and implement
the necessary proactive steps to manage these risks.



Talvivaara's operations are affected by various risks common to the mining
industry, such as risks relating to the development of Talvivaara's mineral
deposits, estimates of reserves and resources, infrastructure risks, and
volatility of commodity prices. There are also risks related to counterparties,
currency exchange ratios, management and control systems, historical losses and
uncertainties about the future profitability of Talvivaara, dependence on key
personnel, effect of laws, governmental regulations and related costs,
environmental hazards, and risks related to Talvivaara's mining concessions and
permits.



In the short term, Talvivaara's key operational risks continue to relate to
water management and the on-going ramp-up of operations. While the Company has
demonstrated that all of its production processes work and can be operated on
industrial scale, the rate of ramp-up is still subject to risk factors including
the time required to reach a sustainable level of water balance, reliability and
sustainable capacity of production equipment, and eventual speed of leaching and
rates of metals recovery in bioheapleaching. In addition, there may be
production and ramp-up related risks that are currently unknown or beyond the
Company's control.



The market price of nickel has historically been volatile and in the Company's
view this is likely to persist, driven by shifts in the supply-demand balance,
macroeconomic indicators and variations in currency exchange ratios. Nickel
sales currently represent close to 90% of the Company's revenues and variations
in the nickel price therefore have a direct and significant effect on
Talvivaara's financial result and economic viability. Talvivaara is, since
February 2010, unhedged against variations in metal prices. Full or
substantially full exposure to nickel prices is in line with Talvivaara's
strategy and supported by the Company's view that it can operate the Talvivaara
mine, once it has been fully ramped up, profitably also during the lows of
commodity price cycles.



Talvivaara's revenues are almost entirely in US dollars, whilst the majority of
the Company's costs are incurred in Euro. Potential strengthening of the Euro
against the US dollar could thus have a material adverse effect on the business
and financial condition of the Company. Talvivaara hedges its exposure to the US
dollar on a case by case basis with the aim of limiting the adverse effects of
US dollar weakness as considered justified from time to time.



Liquidity and refinancing risks may arise as a result of the Company's inability
to produce sufficient volumes of its saleable products, particularly nickel,
unexpected increase in production costs, and sudden or substantial changes in
the prices of commodities or currency exchange rates. Talvivaara seeks to reduce
liquidity risk by close monitoring of liquidity in order to detect any threat of
adverse changes in advance so as to allow for sufficient time to secure access
to adequate credit or other funding on reasonable terms. Talvivaara also seeks
to maintain a balanced maturity profile of its long-term debt in order to
mitigate refinancing risks.



Personnel and management



The number of personnel employed by the Group on 30 June 2013 was 673 (Q2
2012: 595), including approximately 80 temporary summer trainees.



Wages and salaries paid during the three months to 30 June 2013 totalled EUR
6.8 million (Q2 2012: EUR 5.7 million). Wages and salaries paid during the six
months to 30 June 2013 totalled EUR 12.8 million (H1 2012: EUR 12.3 million).



The salaries and wages of Talvivaara's personnel are based on industry-wide
collective agreements. The total compensation consists of base salary and short
and long term incentive schemes. Annual short term incentive metrics include
personal performance and company-wide criteria. The Company's long term
incentive schemes comprise Talvivaara's Stock Options 2007, Stock Options 2011
and Group personnel fund to manage the earnings bonuses paid by Talvivaara. In
addition, the management holding company Talvivaara Management Oy is owned by
executive management and certain other key employees.



In the second quarter, Talvivaara terminated the temporary lay-offs it had
started in February 2013 in order to re-start mining and materials handling
operations during May 2013. See "Events after the review period" for the planned
organizational changes announced on 2 July 2013.



Talvivaara's Communications Manager Olli-Pekka Nissinen received the ProCom -
the Finnish Association of Communications Professionals - award for the
Communication Professional of the Year in June 2013. Mr. Nissinen was
particularly commended for his crisis communications skills in connection with
the gypsum pond leakage in late 2012 and for taking Talvivaara's communication
towards increased transparency and proactivity.


Shares and shareholders



The number of shares issued and outstanding and registered on the Euroclear
Shareholder Register as of 30 June 2013 was 1,906,167,480. Including the effect
of the EUR 225 million convertible bond of 16 December 2010 and the Option
Schemes of 2007 and 2011, the authorised full number of shares of the Company
amounted to 2,041,901,379.



The share subscription period for stock options 2007B was between 1 April 2011
and 31 March 2013. No new shares of Talvivaara were subscribed for under the
stock option rights 2007B in H1 2013. A total of 2,284,337 stock option rights
2007B remained unexercised following the end of the subscription period and
expired.



After the adjustments to terms and conditions of the 2007 stock options in April
2013, a total of 16,289,000 option rights 2007C have been issued to employees
and the subscription period for stock options 2007C is between 1 April 2012 and
31 March 2014. No new shares of Talvivaara were subscribed for under the stock
option rights 2007C in H1 2013 and a total of 16,289,000 stock options 2007C
remain unexercised.



After the adjustments to terms and conditions of the 2011 stock options in April
2013, a total of 9,432,500 option rights 2011B have been issued to key employees
and the subscription period for stock options 2011B is between 1 April 2015 and
31 March 2017. A total of 9,432,500 stock options 2011B remain unexercised.



In March 2013 an Extraordinary General Meeting of Talvivaara Mining Company
resolved to approve the proposal by the Board of Directors to authorise the
Board of Directors to undertake a share issue for consideration pursuant to the
shareholders' pre-emptive subscription rights. The share issue was completed in
April 2013 and the total number of shares in Talvivaara Mining Company Plc
increased to 1,906,167,480 shares.



As at 30 June 2013, the shareholders who held more than 5% of the shares and
votes of Talvivaara were Solidium Oy (16.7%), Pekka Perä (6.5%) and Varma Mutual
Pension Insurance Company (6.2%).



Events after the review period



Planned organizational changes



On 2 July 2013, Talvivaara announced that it is planning organizational changes
to support the Company's cost reduction and efficiency programme in
circumstances where the price development of nickel has remained weak during the
first half of 2013. The Company believes that the planned changes will increase
operational efficiency, reduce operating costs and assist in creating an
organization better reflecting current market conditions.



The Company expects that the planned changes may result in terminations of
employment and/or temporary lay-offs and impact a maximum of 250 employees. The
Company has invited representatives of employee groups to co-operation
consultations in accordance with applicable law. All three corporate entities,
Talvivaara Mining Company Plc, Talvivaara Sotkamo Ltd and Talvivaara Exploration
Ltd, are within the scope of the consultations.



Continued improvement in operations



Talvivaara's mining and materials handling operations have reached all-time
record levels in July, with ore production amounting to 1.6Mt during the month.
The early leaching of the ore stacked since the re-commencement of mining in
mid-May has exceeded the performance of any heap historically, with leach
solution temperatures currently at around 54°C and indicating high levels of
leaching activity in the heap. Evaporation from this heap section is also
strong, which has a substantial positive effect on the water balance management.
De-watering of older heaps was slower than anticipated through Q2 2013, but is
now accelerating as a result of focused efforts to improve the leaching
performance. Operations at the metals recovery plant have continued at high flow
rates and with high availabilities.



The recent operational performance is in line with the targets set in
Talvivaara's ongoing efficiency and productivity programme and contributes to
Talvivaara's ability to sustain and improve its operations and financial result
in the current market environment. Talvivaara targets a cumulative cash flow
improvement of approximately EUR 100 million over the next 12 months through
successful implementation of the programme.



Short-term outlook



Operational outlook



As announced in Talvivaara's operational update on 19 July 2013, Talvivaara has
withdrawn 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.



Market outlook



Alongside other base metals, the nickel price has been under significant
pressure through the first half of 2013. The LME nickel price declined from a
level of USD 18,000-19,000/t in early 2013 to below USD 14,000/t in the summer.
Concerns over the global macroeconomic growth outlook, stainless steel
utilisation rates and the build-up of global nickel inventories have weighed on
the nickel price, as LME nickel inventories have reached a record high of more
than 200,000t. Talvivaara expects nickel price volatility to remain elevated and
the current high inventory levels and global economic uncertainty to limit price
upside in the near term.



Whilst the near-term market outlook remains challenging, the prevailing price
level is materially below the marginal cost of production for a large part of
the nickel mining industry. Talvivaara therefore considers the current price
level to be unsustainable in the medium term, and price related supply
restrictions along with positive macroeconomic developments to be potential
triggers for a material price increase. In the longer term, Talvivaara foresees
the nickel industry fundamentals to support favourable nickel price development,
driven by increasing marginal cost of production across the nickel industry and
lack of new committed nickel projects to replace depleting supply after the next
few years.





15 August 2013





Talvivaara Mining Company Plc

Board of Directors







+------------------------------------------------+---------+---------+---------+
|CONSOLIDATED INCOME STATEMENT | | | |
+--------------------------------------+---------+---------+---------+---------+
|(all amounts in EUR '000) |Unaudited|Unaudited|Unaudited|Unaudited|
| | | | | |
| | three| three| six| six|
| | | | | |
| |months to|months to|months to|months to|
| | | | | |
| |30 Jun 13|30 Jun 12|30 Jun 13|30 Jun 12|
+--------------------------------------+---------+---------+---------+---------+
|Net sales | 13,013| 33,440| 40,618| 72,467|
+--------------------------------------+---------+---------+---------+---------+
|Other operating income | 448| 142| 1,177| 1,499|
+--------------------------------------+---------+---------+---------+---------+
|Changes in inventories of finished | 15,974| 23,844| 23,262| 46,322|
|goods and work in progress | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Materials and services | (19,126)| (33,553)| (41,740)| (68,474)|
+--------------------------------------+---------+---------+---------+---------+
|Personnel expenses | (8,211)| (6,980)| (15,496)| (14,799)|
+--------------------------------------+---------+---------+---------+---------+
|Depreciation, amortization, depletion | (13,300)| (12,747)| (26,399)| (25,411)|
|and impairment charges | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Other operating expenses | (12,656)| (15,016)| (25,268)| (33,905)|
+--------------------------------------+---------+---------+---------+---------+
|Operating profit (loss) | (23,858)| (10,870)| (43,846)| (22,301)|
+--------------------------------------+---------+---------+---------+---------+
|Finance income | 520| 125| 408| 1,568|
+--------------------------------------+---------+---------+---------+---------+
|Finance cost | (13,131)| (12,373)| (24,760)| (21,745)|
+--------------------------------------+---------+---------+---------+---------+
|Finance income (cost) (net) | (12,611)| (12,248)| (24,352)| (20,177)|
+--------------------------------------+---------+---------+---------+---------+
|Profit (loss) before income tax | (36,469)| (23,118)| (68,198)| (42,478)|
+--------------------------------------+---------+---------+---------+---------+
|Income tax expense | 8,889| 5,642| 16,686| 10,093|
+--------------------------------------+---------+---------+---------+---------+
|Profit (loss) for the period | (27,580)| (17,476)| (51,512)| (32,385)|
+--------------------------------------+---------+---------+---------+---------+
|Attributable to: | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Owners of the parent | (28,278)| (15,999)| (53,143)| (29,560)|
+--------------------------------------+---------+---------+---------+---------+
|Non-controlling interest | 698| (1,477)| 1,631| (2,825)|
+--------------------------------------+---------+---------+---------+---------+
| | (27,580)| (17,476)| (51,512)| (32,385)|
+--------------------------------------+---------+---------+---------+---------+
|Earnings per share for profit (loss) | | | | |
|attributable to the owners of the | | | | |
|parent (expressed in EUR per share) | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Basic and diluted | (0.03)| (0.06)| (0.06)| (0.12)|
+--------------------------------------+---------+---------+---------+---------+





+--------------------------------------------------------------------+---------+
|CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |
+-----------------------------------+------------+---------+---------+---------+
|(all amounts in EUR '000) | Unaudited|Unaudited|Unaudited|Unaudited|
| | | | | |
| | three| three| six| six|
| | | | | |
| | months to|months to|months to|months to|
| | | | | |
| |30 June 2013|30 Jun 12|30 Jun 13|30 Jun 12|
+-----------------------------------+------------+---------+---------+---------+
|Profit (loss) for the period | (27,580)| (17,476)| (51,512)| (32,385)|
+-----------------------------------+------------+---------+---------+---------+
|Other comprehensive income, net of | -| -| -| -|
|tax | | | | |
+-----------------------------------+------------+---------+---------+---------+
|Total comprehensive income | (27,580)| (17,476)| (51,512)| (32,385)|
+-----------------------------------+------------+---------+---------+---------+
|Attributable to: | | | | |
+-----------------------------------+------------+---------+---------+---------+
|Owners of the parent | (28,278)| (15,999)| (53,143)| (29,560)|
+-----------------------------------+------------+---------+---------+---------+
|Non-controlling interest | 698| (1,477)| 1,631| (2,825)|
+-----------------------------------+------------+---------+---------+---------+
| | (27,580)| (17,476)| (51,512)| (32,385)|
+-----------------------------------+------------+---------+---------+---------+





CONSOLIDATED STATEMENT OF FINANCIAL POSITION

  Unaudited

(all amounts in EUR '000) 30 Jun 13

ASSETS

Non-current assets

Property, plant and equipment 813,418

Biological assets 9,042

Intangible assets 6,897

Investments in associates 6,710

Deferred tax assets 71,066

Other receivables 7,738

Available-for-sale financial assets 2

  914,873

Current assets

Inventories 328,968

Trade receivables 8,992

Other receivables 10,151

Cash and cash equivalent 101,140

  449,251

Total assets 1,364,124

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital 80

Share premium 8,086

Other reserves 790,564

Retained earnings (306,359)

  492,371

Non-controlling interest in equity 12,023

Total equity 504,394

Non-current liabilities

Borrowings 492,396

Advance payments 272,476

Other payables 249

Provisions 6,497

  771,618

Current liabilities

Borrowings 18,249

Advance payments 18,438

Trade payables 20,498

Other payables 21,658

Provisions 9,269

  88,112

Total liabilities 859,730

Total equity and liabilities 1,364,124







CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY



A. Share capital

B. Share issue

C. Share premium

D Invested unrestricted equity

E. Other reserves

F Retained earnings

G. Total

H. Non-controlling interest

I. Total equity



(all amounts
in EUR '000) A B C D E F G H I
--------------------------------------------------------------------------------
1 Jan 12 80 278 8,086 404,070 45,462 (151,129) 306,847 15,733 322,580

Profit (loss)
for the
period - - - - - (29,560) (29,560) (2,825) (32,385)

Other
comprehensive
income

- Other
comprehensive
income - - - - - - - - -
-------------------------------------------------------------------
Total
comprehensive
income for
the period - - - - - (29,560) (29,560) (2,825) (32,385)

Transactions
with owners

Stock options - (278) - 5,198 - - 4,920 - 4,920

Senior
unsecured
convertible
bonds due
2013 - - - - (251) - (251) - (251)

Perpetual
capital loan - - - - 2,353 (1,777) 576 109 685

Share issue - - - 81,504 - - 81,504 - 81,504

Incentive
arrangement
for Executive
Management - - - - 47 - 47 - 47

Employee
share option
scheme

- value of
employee
services - - - - 1,106 - 1,106 - 1,106
-------------------------------------------------------------------
Total
contribution
by and
distribution
to owners - (278) - 86,702 3,255 (1,777) 87,902 109 88,011

Total
transactions
with owners - (278) - 86,702 3,255 (1,777) 87,902 109 88,011
-------------------------------------------------------------------
30 Jun 12 80 - 8,086 490,772 48,717 (182,466) 365,189 13,017 378,206
-------------------------------------------------------------------
31 Dec 12 80 - 8,086 490,749 48,810 (251,365) 296,360 10,392 306,752
-------------------------------------------------------------------
1 Jan 13 80 - 8,086 490,749 48,810 (251,365) 296,360 10,392 306,752

Profit (loss)
for the
period - - - - - (53,143) (53,143) 1,631 (51,512)

Other
comprehensive
income

- Other
comprehensive
income - - - - - - - - -
-------------------------------------------------------------------
Total
comprehensive
income for
the period - - - - - (53,143) (53,143) 1,631 (51,512)

Transactions
with owners

Senior
unsecured
convertible
bonds due
2013 - - - - (2,417) - (2,417) - (2,417)

Perpetual
capital loan - - - - 2,612 (1,851) 761 - 761

Rights issue - - - 250,827 - - 250,827 - 250,827

Incentive
arrangement
for Executive
Management - - - - (140) - (140) - (140)

Employee
share option
scheme

- value of
employee
services - - - - 123 - 123 - 123
-------------------------------------------------------------------
Total
contribution
by and
distribution
to owners - - - 250,827 178 (1,851) 249,154 - 249,154

Total
transactions
with owners - - - 250,827 178 (1,851) 249,154 - 249,154
-------------------------------------------------------------------
30 Jun 13 80 - 8,086 741,576 48,988 (306,359) 492,371 12,023 504,394
-------------------------------------------------------------------







+----------------------------------------------------------+---------+---------+
|CONSOLIDATED STATEMENT OF CASH FLOWS | | |
+--------------------------------------+---------+---------+---------+---------+
|(all amounts in EUR '000) |Unaudited|Unaudited|Unaudited|Unaudited|
| | | | | |
| | three| three| six| six|
| | | | | |
| |months to|months to|months to|months to|
| | | | | |
| |30 Jun 13|30 Jun 12|30 Jun 13|30 Jun 12|
+--------------------------------------+---------+---------+---------+---------+
|Cash flows from operating activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Profit (loss) for the period | (27,580)| (17,476)| (51,512)| (32,385)|
+--------------------------------------+---------+---------+---------+---------+
|Adjustments for | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Tax | (8,889)| (5,642)| (16,686)| (10,093)|
+--------------------------------------+---------+---------+---------+---------+
|Depreciation and amortization | 13,300| 12,747| 26,399| 25,411|
+--------------------------------------+---------+---------+---------+---------+
|Other non-cash income and expenses | (9,675)| (6,252)| (19,831)| (12,037)|
+--------------------------------------+---------+---------+---------+---------+
|Interest income | (520)| (125)| (408)| (1,568)|
+--------------------------------------+---------+---------+---------+---------+
|Interest expense | 13,131| 12,373| 24,760| 21,745|
+--------------------------------------+---------+---------+---------+---------+
| | (20,233)| (4,375)| (37,278)| (8,932)|
+--------------------------------------+---------+---------+---------+---------+
|Change in working capital | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Decrease(+)/increase(-) in other | 9,690| 1,242| 17,981| 15,949|
|receivables | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Decrease (+)/increase (-) in | (22,505)| (22,305)| (31,207)| (50,130)|
|inventories | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Decrease(-)/increase(+) in trade and | (16,558)| (8,738)| (20,863)| (21,296)|
|other payables | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Change in working capital | (29,373)| (29,801)| (34,089)| (55,477)|
+--------------------------------------+---------+---------+---------+---------+
| | (49,606)| (34,176)| (71,367)| (64,409)|
+--------------------------------------+---------+---------+---------+---------+
|Interest and other finance cost paid | (16,332)| (11,690)| (16,642)| (12,531)|
+--------------------------------------+---------+---------+---------+---------+
|Interest and other finance income | (37)| 132| 176| 357|
+--------------------------------------+---------+---------+---------+---------+
|Income taxes paid | (12)| -| (12)| -|
+--------------------------------------+---------+---------+---------+---------+
|Net cash generated (used) in operating| (65,987)| (45,734)| (87,845)| (76,583)|
|activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Cash flows from investing activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Investments in associates | (530)| (377)| (1,016)| (3,948)|
+--------------------------------------+---------+---------+---------+---------+
|Purchases of property, plant and | (15,039)| (20,556)| (32,124)| (35,127)|
|equipment | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Purchases of biological assets | (193)| -| (245)| -|
+--------------------------------------+---------+---------+---------+---------+
|Purchases of intangible assets | (36)| (101)| (212)| (194)|
+--------------------------------------+---------+---------+---------+---------+
|Proceeds from sale of property, plant | -| -| -| 18|
|and equipment | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Proceeds from sale of biological | -| 91| 92| 91|
|assets | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Net cash generated (used) in investing| (15,798)| (20,943)| (33,505)| (39,160)|
|activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Cash flows from financing activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Proceeds from share issue net of | 193,355| (39)| 247,390| 81,138|
|transactions costs | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Realised stock options | -| 4,619| -| 4,920|
+--------------------------------------+---------+---------+---------+---------+
|Related party investment in Talvivaara| (186)| -| (186)| -|
|shares | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Proceeds from interest-bearing | -| 110,000| -| 130,000|
|liabilities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Proceeds from advance payments | 8| 6,546| 19,488| 8,333|
+--------------------------------------+---------+---------+---------+---------+
|Buy-back of convertible bonds | -| (8,168)| -| (8,168)|
+--------------------------------------+---------+---------+---------+---------+
|Payment of interest-bearing | (78,943)| (3,495)| (80,260)| (11,764)|
|liabilities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Net cash generated (used) in financing| 114,234| 109,463| 186,432| 204,459|
|activities | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Net increase (decrease) in cash and | 32,449| 42,786| 65,082| 88,716|
|cash equivalents | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Cash and cash equivalents at beginning| 68,691| 85,949| 36,058| 40,019|
|of the period | | | | |
+--------------------------------------+---------+---------+---------+---------+
|Cash and cash equivalents at end of | 101,140| 128,735| 101,140| 128,735|
|the period | | | | |
+--------------------------------------+---------+---------+---------+---------+





NOTES



1. Basis of preparation



This interim report has been prepared in compliance with IAS 34.



The interim financial information set out herein has been prepared on the same
basis and using the same accounting policies as were applied in drawing up the
Group's statutory financial statements for the year ended 31 December 2012.





+------------------------------------+------------+---------+--------+---------+
|2. Property, plant and equipment | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|(all amounts in EUR '000) |Machinery|Construction| Land| Other| Total|
| | | | | | |
| | and| in| and|tangible| |
| | | | | | |
| |equipment| progress|buildings| assets| |
+--------------------------+---------+------------+---------+--------+---------+
|Gross carrying amount at | 376,741| 114,378| 281,209| 229,479|1,001,807|
|1 Jan 13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Additions | 386| 29,643| 8| -| 30,037|
+--------------------------+---------+------------+---------+--------+---------+
|Transfers | 10,928| (23,774)| 8,991| 3,855| -|
+--------------------------+---------+------------+---------+--------+---------+
|Gross carrying amount at | 388,055| 120,247| 290,208| 233,334|1,031,844|
|30 Jun 13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Accumulated depreciation | 96,677| -| 44,918| 50,760| 192,355|
|and impairment losses at | | | | | |
|1 Jan 13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Depreciation for the | 15,455| -| 6,329| 4,287| 26,071|
|period | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Accumulated depreciation | 112,132| -| 51,247| 55,047| 218,426|
|and impairment losses at | | | | | |
|30 Jun 13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Carrying amount at 1 Jan | 280,064| 114,378| 236,291| 178,719| 809,452|
|13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+
|Carrying amount at 30 Jun | 275,923| 120,247| 238,961| 178,287| 813,418|
|13 | | | | | |
+--------------------------+---------+------------+---------+--------+---------+





3. Trade receivables

(all amounts in EUR '000)

  30 Jun 13 31 Dec 12
--------------------
Nickel-Cobalt sulphide 3,622 25,254

Zinc sulphide 5,370 6,912

Copper sulphide - 8
--------------------
Total trade receivables 8,992 32,174
--------------------



4. Inventories

(all amounts in EUR '000)

  30 Jun 13 31 Dec 12
--------------------
Raw materials and consumables 29,021 21,077

Work in progress 295,410 272,775

Finished products 4,537 3,909
--------------------
Total inventories 328,968 297,761
--------------------







5. Borrowings

(all amounts in EUR '000)

Non-current 30 Jun 13 31 Dec 12
--------------------
Capital loans 1,405 1,405

Investment and Working Capital loan 45,971 51,600

Senior Unsecured Bonds due 2017 108,810 108,683

Revolving Credit Facility 69,609 69,451

Senior Unsecured Convertible Bonds due 2015 230,399 225,875

Finance lease liabilities 20,581 30,748

Other 15,621 18,266
--------------------
  492,396 506,028
--------------------
Current

Investment and Working Capital loan 11,430 6,430

Senior Unsecured Convertible Bonds due 2013 - 75,805

Finance lease liabilities 6,819 11,558
--------------------
  18,249 93,793
--------------------

--------------------
Total borrowings 510,645 599,821
--------------------







6. Advance payments

(all amounts in EUR '000)

Non-current 30 Jun 13 31 Dec 12
--------------------
Deferred zinc sales revenue 218,548 219,385

Deferred uranium sales revenue 53,928 46,462
--------------------
  272,476 265,847
--------------------
Current

Deferred zinc sales revenue 18,433 7,790

Other 5 67
--------------------
  18,438 7,857
--------------------

--------------------
Total advance payments 290,914 273,704
--------------------





7. Provisions

Gypsum Water

pond balance Environmental Mining

  leakage management restoration fee Total
-------------------------------------------------------
31 Dec 12 12,156 9,082 6,136 154 27,528
-------------------------------------------------------
Charged/(credited) to the

income statement:

Additional provisions - - 178 19 197

Unwinding of discount - - 10 - 10

Used during the period (6,837) (5,132) - - (11,969)
-------------------------------------------------------
30 Jun 13 5,319 3,950 6,324 173 15,766
-------------------------------------------------------
The non-current and
current portions of
provisions are as
follows:

  30 Jun 13 31 Dec 12
-------------------------------------------------------------
Non-current

Gypsum pond leakage - 5,000

Environmental
restoration 6,324 6,136

Mining fee 173 154
-------------------------------------------------------------
  6,497 11,290

Current

Gypsum pond leakage 5,319 7,156

Water balance
management 3,950 9,082
-------------------------------------------------------------
  9,269 16,238
-------------------------------------------------------------
Total 15,766 27,528
-------------------------------------------------------------





8. Changes in the number of shares issued

  Number of shares
-----------------
31 Dec12 272,309,640

Rights issue 1,633,857,840
-----------------
30 Jun 13 1,906,167,480
-----------------





9. Contingencies and commitments

(all amounts in EUR '000)

The future aggregate minimum lease payments under non cancellable

operating leases

  30 Jun 13 31 Dec 12
--------------------------------
Not later than 1 year 1,748 1,910

Later than 1 year and not later than 5 years 777 1,036

Later than 5 years 47 47
--------------------------------
  2,572 2,993







Capital commitments



At 30 June 2013, the Group had capital commitments amounting to EUR 9.6 million
(31 December 2012: EUR 15.1 million) principally relating to the completion of
the Talvivaara mine, improving the reliability and expansion of production
capacity. These commitments are for the acquisition of new property, plant and
equipment.





+--------------------------------------+---------+---------+---------+---------+
|Talvivaara Mining Company Plc | | | | |
+----------------------------+---------+---------+---------+---------+---------+
|Key financial figures of the| Three| Three| Six| Six| Twelve|
|Group | | | | | |
| |months to|months to|months to|months to|months to|
| | | | | | |
| |30 Jun 13|30 Jun 12|30 Jun 13|30 Jun 12|31 Dec 12|
+-------------------+--------+---------+---------+---------+---------+---------+
|Net sales |EUR '000| 13,013| 33,440| 40,618| 72,467| 142,948|
+-------------------+--------+---------+---------+---------+---------+---------+
|Operating profit |EUR '000| (23,858)| (10,870)| (43,846)| (22,301)| (83,588)|
|(loss) | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Operating profit | | -183.3 %| -32.5 %| -107.9 %| -30.8 %| -58.5 %|
|(loss) percentage | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Profit (loss) |EUR '000| (36,469)| (23,118)| (68,198)| (42,478)|(129,292)|
|before tax | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Profit (loss) for |EUR '000| (27,580)| (17,476)| (51,512)| (32,385)|(103,911)|
|the period | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Return on equity | | -6.6 %| -4.5 %| -12.7 %| -9.2 %| -33.0 %|
+-------------------+--------+---------+---------+---------+---------+---------+
|Equity-to-assets | | 37.0 %| 28.9 %| 37.0 %| 28.9 %| 24.3 %|
|ratio | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Net interest- |EUR '000| 409,505| 475,630| 409,505| 475,630| 563,763|
|bearing debt | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Debt-to-equity | | 81.2 %| 125.8 %| 81.2 %| 125.8 %| 183.8 %|
|ratio | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Return on | | -1.5 %| -0.5 %| -2.8 %| -1.2 %| -6.7 %|
|investment | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Capital expenditure|EUR '000| 15,268| 20,657| 32,581| 35,321| 97,451|
+-------------------+--------+---------+---------+---------+---------+---------+
|Property, plant and|EUR '000| 813,418| 773,623| 813,418| 773,623| 809,452|
|equipment | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+
|Borrowings |EUR '000| 510,645| 604,365| 510,645| 604,365| 599,821|
+-------------------+--------+---------+---------+---------+---------+---------+
|Cash and cash |EUR '000| 101,140| 128,735| 101,140| 128,735| 36,058|
|equivalents at the | | | | | | |
|end of the period | | | | | | |
+-------------------+--------+---------+---------+---------+---------+---------+







Share-related key
figures

  Three Three Six Six Twelve

months to months to months to months to months to

  30 Jun 13 30 Jun 12 30 Jun 13 30 Jun 12 31 Dec 12
----------------------------------------------------
Earnings per share EUR (0.03) (0.06) (0.06) (0.12) (0.38)

Equity per
share(1) EUR 0.90 1.40 0.90 1.40 1.11

Development of
share price at
London Stock
Exchange

Average trading
price(2) EUR 0.17 2.21 0.27 2.99 2.50

  GBP 0.15 1.82 0.23 2.46 2.02

Lowest trading
price(2) EUR 0.14 1.57 0.14 1.57 1.03

  GBP 0.12 1.29 0.12 1.29 0.83

Highest trading
price(2) EUR 0.21 2.95 1.33 4.37 4.43

  GBP 0.18 2.43 1.14 3.59 3.59

Trading price at
the end of the
period(3) EUR 0.15 2.13 0.15 2.13 1.25

  GBP 0.13 1.72 0.13 1.72 1.02

Change during the
period   -39.8 % -28.8 % -87.8 % -14.3 % -48.8 %

Price-earnings
ratio   neg. neg. neg. neg. neg.

Market
capitalization at 578, 578, 341,
the end of the
period(4) EUR '000 277,964 844 277,964 844 597

467, 467, 278,

GBP '000 238,271 011 238,271 011 777

Development in
trading volume

Trading volume 1000
shares 117,832 29,445 160,267 66,716 103,218

In relation to
weighted average
number of shares   12.4 % 11.3 % 16.9 % 25.6 % 38.7 %

Development of
share price at OMX
Helsinki

Average trading
price EUR 0.17 2.13 0.25 2.99 2.31

Lowest trading
price EUR 0.14 1.57 0.14 1.57 1.08

Highest trading
price EUR 0.22 2.92 1.39 4.35 4.35

Trading price at
the end of the
period EUR 0.14 2.12 0.14 2.12 1.24

Change during the
period   -37.0 % -27.1 % -88.5 % -14.9 % -50.2 %

Price-earnings
ratio   neg. neg. neg. neg. neg.

Market
capitalization at 577, 272, 577, 338,
the end of the
period EUR '000 272,582 296 582 296 209

Development in
trading volume

46, 646, 114, 209,
Trading volume 1000
shares 532,927 221 009 894 565

In relation to
weighted average
number of shares   56.1 % 17.8 % 68.4 % 44.2 % 78.5 %

Adjusted average 949,322, 260,218, 949,322, 260,218, 266,846,
number of shares
  557 489 557 489 084

Fully diluted 947,054, 260,218, 947,054, 260,218, 265,742,
average number of
shares   557 489 557 489 084

Number of shares 1,906,167, 272,309, 1,906,167, 272,309, 272,309,
at the end of the
period   480 640 480 640 640







(1)) The funds entered into share issue reserve are not included in the
calculation.

(2)) Trading price is calculated on the average of EUR/GBP exchange rates
published by the European Central Bank during the period.

(3)) Trading price is calculated on the EUR/GBP exchange rate published by the
European Central Bank at the end of the period.

(4)) Market capitalization is calculated on the EUR/GBP exchange rate published
by the European Central Bank at the end of the period.





Employee-related key Three Three Six Six Twelve
figures
months to months to months to months to months to

  30 Jun 13 30 Jun 12 30 Jun 13 30 Jun 12 31 Dec 12
--------------------------------------------------
Wages and salaries EUR '000 6,756 5,693 12,787 12,274 23,080

Average number of
employees   629 548 607 516 547

Number of employees
at the end of the
period   673 595 673 595 588









Other figures

Three Three Six Six Twelve

months to months to months to months to months to

  30 Jun 13 30 Jun 12 30 Jun 13 30 Jun 12 31 Dec 12
----------------------------------------------------
Share options outstanding at
the end of the period 25,721,500 4,611,337 25,721,500 4,611,337 5,958,837

Number of shares to be
issued against the
outstanding share options 25,721,500 4,611,337 25,721,500 4,611,337 5,958,837

Rights to vote of shares to
be issued against the
outstanding share options 1.3 % 1.7 % 1.3 % 1.7 % 2.1 %

Talvivaara Mining Company Plc

Key financial figures of the Group



Return on equity Profit (loss) for the period
--------------------------------------------------------------
(Total equity at the beginning of period + Total equity at
  the end of period)/2



Equity-to-assets
ratio Total equity
--------------------------------------------------------------
  Total assets



Net interest-
bearing debt Interest-bearing debt - Cash and cash equivalent



Debt-to-equity
ratio Net interest-bearing debt
--------------------------------------------------------------
  Total equity



Return on
investment Profit (loss) for the period + Finance cost
--------------------------------------------------------------
(Total equity at the beginning of period + Total equity at
the end of period)/2 +

(Borrowings at the beginning of period + Borrowings at the
  end of period)/2



Share-related key
figures



Earnings per share Profit (loss) attributable to equity holders of the Company
--------------------------------------------------------------
  Adjusted average number of shares



Equity per share Equity attributable to equity holders of the Company
--------------------------------------------------------------
  Adjusted average number of shares










Talvivaara Interim Report Jan-Jun 2013 15.8.13:
http://hugin.info/136227/R/1723170/574249.pdf



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(i) the releases contained herein are protected by copyright and
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.

Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
[HUG#1723170]