Talvivaara Mining Company Plc - Production Update October 2012

Stock Exchange Release
Talvivaara Mining Company Plc
15 October 2012


Talvivaara Production Update

Improved production in the third quarter
Challenging water balance impacting ability to deliver full year production
target


Highlights

* Nickel production of 4,030t in Q3 2012 and 10,598t year to date
* Zinc production of 7,184t in Q3 2012 and 21,760t year to date
* Continued progress in equipment availabilities and run rates
* Heavy rains impacted solution grades; some effect likely to persist through
year-end
* Q4 2012 nickel production anticipated to improve over Q3, but challenging
water balance has impacted ability to deliver the full year 2012 production
target of approximately 17,000t of nickel


Production update

Metals recovery

Talvivaara produced 4,030t of nickel and 7,184t of zinc in the third quarter of
2012, which represents a clear improvement over 3,194t of nickel and 6,686t of
zinc in the previous quarter. Metals production in the first nine months of
2012 amounted to 10,598t of nickel and 21,760t of zinc.

The Company continued to achieve stable operation of the metals recovery plant
for most of the third quarter. Deviations from stable operation were caused by
two brief power outage -related stoppages in late July and an unscheduled
downtime of 8 days in late September due to problems in re-starting hydrogen
sulphide production following a planned 4-hour stoppage for piping installations
to enable de-watering of the open-pit mine.

Leach solution flow rate through the plant improved throughout the quarter and
reached an average of 1,447 m(3)/h in September excluding the unscheduled
stoppage. Flow rates exceeding 1,500 m(3)/h have again been reached following
the stoppage and the Company expects a gradual increase in the flow rate towards
previously tested 1,800 m(3)/h during the fourth quarter, enabling a sustainable
step-up of the metals production rate.

Bioheapleaching and water management

Continued historically heavy rainfall throughout the third quarter has prolonged
water balance issues at the Sotkamo mine. In the first nine months of the year,
the total rainfall in the area amounted to 710mm, which exceeds the long-term
average of 489mm by 45%. During most of the spring and summer, rainfall in the
area exceeded the long-term average by 50-100%. As a result, some 1.7Mm(3) of
excess water has accumulated at the mine site and been temporarily stored in the
open pit. De-watering of the pit started in September following the completion
of an expansion of the gypsum pond and piping installations noted above and is
anticipated to take 2-3 months.

The planned commissioning of two reverse osmosis plants for water purification
during the fourth quarter is further expected to improve the water balance by
enabling Talvivaara to increase recycling of purified process waters and to
reduce raw water intake. A third reverse osmosis unit will be installed next
spring.

The excess water in circulation has continued to dilute metal grades in leach
solution. During the quarter, the average nickel grade in solution pumped to the
metals recovery plant was 1.5-1.6 g/l compared to slightly below 2 g/l at the
start of the year.

The unusually high water content in the heaps has also been found to impact
leaching by reducing the efficiency of aeration. Measures to improve aeration
are being taken and include accelerated reclaiming of the existing primary heaps
as well as improving the overall water balance, which over time enables
reduction of the amount of water in circulation. Development work is also
ongoing to improve the design of future primary heaps for optimal aeration
efficiency.

As a result of the ongoing efforts to reduce the impact of excess water on
leaching performance, Talvivaara expects to see moderate improvement in the
leach solution grades during the remainder of 2012. However, a complete reversal
of the impact is unlikely to be achieved before the year-end.

Ore production

Because water in the open pit prevented mining in accordance with original plans
in the third quarter, the mining department sourced ore from a more distant
location at the Southern end of the Kuusilampi pit. Despite this, a record level
of 1.5Mt of ore was mined and subsequently crushed in July and equipment
availabilities in materials handling approached the required steady state
levels.

As announced in connection with the Company's second quarter results on 16
August 2012, Talvivaara has decided to discontinue mining and crushing
operations for a period of 3-4 months from the beginning of September due to the
prevailing water balance situation. Discontinuing mining and crushing operations
is carried out without lay-offs or redundancies. The temporary production scheme
alteration is proceeding as planned and, as a result, Talvivaara expects to
realize operating cost savings of approximately EUR 20 million during the fourth
quarter of 2012 and first quarter of 2013. The altered production scheme is not
anticipated to negatively impact metals production during the remainder of
2012. Because of the large nickel inventory already under leaching in the heaps
and the long leaching times that in total extend over several years, the impact
on 2013 production is also anticipated to be minor.

Permitting

The authorities responsible for Talvivaara's environmental permit renewal and
the environmental permit for uranium recovery have informed the Company of a
delay in processing the applications. Decisions on the permits were previously
expected by year-end 2012, but will now be postponed until late January or
February 2013. Talvivaara continues to operate under the Company's existing
environmental permit until the renewal process is completed and does not
anticipate the delay having any material impact on its production output or
financial results.

Production guidance

Talvivaara anticipates its Q4 2012 production to improve over the level attained
in Q3 2012. However, due to the challenging water balance situation the Company
considers it unlikely that its full year 2012 production target of approximately
17,000t of nickel will be achieved.

Reporting and upcoming events

Talvivaara will announce its January-September interim results on 8 November
2012.

Talvivaara's Capital Markets Day will be held in London on 20 November 2012.
Further details of the event and its video cast will be available on the
Company's web site approximately one week prior to the event.


Enquiries:

Talvivaara Mining Company Plc Tel: +358 20 7129 800
Harri Natunen, Chief Executive Officer
Saila Miettinen-Lähde, Deputy CEO and CFO (available from 9:30 GMT / 11:30 EET
onwards)


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 and is included in the FTSE 250
index. Further information can be found at www.talvivaara.com.



Talvivaara Production Update 15.10.2012:
http://hugin.info/136227/R/1648980/531669.pdf



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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
[HUG#1648980]




Unternehmen: Talvivaaran Kaivososakeyhtiö Oyj - ISIN: FI0009014716