Talvivaara Mining Company Plc: Operational and Resource Update

Stock Exchange Release
Talvivaara Mining Company Plc
28 November 2012


Talvivaara Operational and Resource Update

Measures to improve water balance and bioheapleaching performance in focus
32% increase in total resources to 2,053Mt of ore


Highlights
* Full-year 2012 nickel production guidance updated to approximately 13,000t
* Metals recovery plant successfully restarted following stoppage related to
the gypsum pond leakage
* Ore production to remain restricted until mid-2013 due to excess water in
the open pit; near term focus on enhancing recovery of existing metals
inventory in the heaps
* Reverse osmosis water purification plant successfully commissioned; other
measures to improve water balance advancing aided by special organizational
changes
* 32% increase in measured, indicated and inferred resources to 2,053Mt,
further confirming Talvivaara's long mine life


Production guidance

Talvivaara has stated in its Production Update of 15 October 2012 and its Q3
Interim Results of 8 November 2012 that it anticipates its fourth quarter
production to increase over the 4,030t of nickel achieved in the third quarter.
Following the stoppage of its metals recovery plant between 4 and 21 November
2012 due to the previously announced gypsum pond leakage, the Company has re-
assessed this target and now anticipates its fourth quarter and full-year 2012
production to reach approximately 2,500t and 13,000t nickel, respectively.

Talvivaara anticipates announcing its nickel production guidance for the coming
year in early 2013. The key drivers for the production level include the near
term development in the water balance, the timing of re-start of ore production
and the effectiveness of bioheapleaching following the measures being taken to
reverse the recent effects of excess water and insufficient aeration. Whilst the
full impact of these factors will only become clear over the course of the
coming year, the Company anticipates to be in a position to adequately estimate
their effect during the first quarter. Furthermore, Talvivaara continues to
believe that the existing, over 55,000t nickel inventory in the heaps will
provide sufficient supply of metals for a reasonable production ramp-up in 2013
despite the temporary suspension of ore production.

Operational update and key focus areas

Metals recovery

As announced earlier, Talvivaara received on 21 November 2012 the permit from
the Kainuu Centre for Economic Development, Transport and the Environment
("Kainuu ELY Centre") to re-start its metals recovery plant. The Company had
suspended the plant temporarily since 4 November 2012 following the gypsum pond
leakage and related risk analyses and steps taken to ensure the safety of
operations and to minimize the environmental impact of the leakage. Since a
successful re-start on 21 November 2012, operations at the plant have ramped up
according to plan, and the facility has returned to the stable utilization rates
achieved before the suspension. Solution flow rates at the plant are now close
to 1,400 m(3)/h and ramp-up to around 1,600 m(3)/h is anticipated over the
coming weeks.

Talvivaara commenced production of saleable quantities of copper sulphide in
October 2012. For the time being, the product is being sold under spot
arrangements.

Construction of the uranium recovery circuit is on track for completion by early
2013, and uranium production will start after the related environmental permit
has been received. The decision on the environmental permit is expected in May
2013 in connection with the general update of the mine's environmental permit.
The permit decision was previously expected in late January or February 2013,
and the Company now anticipates a 3-4 month delay in the process due to certain
further clarification requests expected from the permitting authority due to the
gypsum pond leakage.

Bioheapleaching

Bioheapleaching has suffered from the historically heavy rainfall experienced in
the Kainuu region throughout the spring, summer and autumn. As a result, a
significant volume of excess water has accumulated into solution circulation and
diluted metal grades in solution as well as affected the efficiency of heap
aeration and reduced evaporation. Nickel grades in solution pumped to metals
recovery have declined from slightly below 2.0 g/l at the start of the year to
1.4-1.5 g/l currently.

The Company has undertaken an extensive study to further identify the factors
impacting leaching performance, and as a result identified a number of
additional measures to improve leaching results. As part of the study,
production heap sections have been opened to determine leaching properties
within the heap. Whilst some areas in the opened sections had been well oxidized
and leaching results were optimal, several other areas were found where aeration
had been inefficient and where the ore remained clearly unreacted. Multiple
changes are being implemented to ensure constant and balanced distribution of
air within heaps, including elimination of aeration pipe blockages, alterations
in the physical design of future primary heaps and aeration pipes, and an
improved drainage system. In the near term, the accelerated rate of reclaiming
and re-stacking of the existing primary heaps also continues in order to enable
efficient recovery of the existing nickel inventory in the heaps. Preliminary
results since September indicate significantly improved leaching, as less
effectively leached sections are being better oxidized.

Development work is also ongoing to improve agglomeration quality, as the
moisture content and stability of agglomerates is a key factor affecting
leaching times and recovery rates. Copper heap leaching operations have reported
up to 30-50% improvements in leaching times depending on the quality of
agglomerates.

Leaching results may also be impacted in part by the accumulation of certain
elements in the solution circulation, the impact of which is being managed by
controlling their concentration in irrigation solution.

Ore production

As previously announced, Talvivaara discontinued mining and crushing operations
on a temporary basis from the beginning of September due to the prevailing water
balance situation. The temporary production scheme alteration has proceeded as
planned, and anticipated cost savings are being realized.

Talvivaara previously anticipated ore production to re-start around year-end
2012, but the recent gypsum pond leakage and overall water balance issues have
postponed the Company's target for re-start of mining and crushing operations.
Talvivaara currently expects to re-commence ore production in mid-2013 once the
open-pit has been de-watered and the overall water balance improvement measures
have been implemented.

Cost savings

Talvivaara anticipates continuing to realize significant cost savings as a
result of the temporarily suspended ore production. Given the recent disruptions
in the Company's metals production, additional costs incurred in stemming the
gypsum pond leakage and minimizing its environmental impact as well as the
prevailing weakness in the nickel price, Talvivaara considers systematic cost
savings to be one of its key targets in the near term.

Water balance management

Organisational changes

In order to facilitate an efficient and sustainable solution to the water
balance issues, Talvivaara has established a temporary special organization
focused on the subject. The special organization is headed by Chief Mining
Officer Jari Voutilainen, reporting to CEO Pekka Perä. Several of Talvivaara's
key experts have been seconded to the team which focuses on the planning and
execution of necessary water storage and pumping arrangements as well as waste
water neutralization measures.

Operational measures

In the medium term, Talvivaara will target a nearly closed circuit water
circulation system, reducing the risk of weather conditions impacting the
Company's operations or environmental safety. Talvivaara has commissioned the
new reverse osmosis -based water treatment plant in November 2012, and
additional capacity will be installed next spring. The reverse osmosis
technology is a key step in achieving a closed circuit system, and enables the
Company to significantly reduce or completely stop raw water intake into the
process.

Environmental update following the gypsum pond leakage

As a result of the gypsum pond leakage, Talvivaara had to discharge some leakage
waters into the environment in a controlled manner. Due to immediate
safeguarding measures, the majority of leakage waters were however contained
within the mining concession area. Only local environmental impact within the
immediate vicinity of the mine area has been detected to date, and the Company
and authorities continue to monitor the situation.

Organisational changes

As announced on 15 November 2012, Tapani Järvinen has been appointed Chairman of
the Company's Board of Directors and Pekka Perä has been appointed Chief
Executive Officer. Both appointments are of interim nature and in force until
further notice and at least until the Company's operations have been stabilized
following the recent events. Talvivaara's previous Chief Executive Officer,
Harri Natunen, has been appointed Chief Operations Officer.


Resource update

Talvivaara's recent drilling campaigns have focused on the Kolmisoppi deposit,
where open-pit mining operations have not yet commenced.

The total Mineral Resources, as defined by the JORC code, increased by 32% to
2,053Mt from the total of 1,550Mt announced in October 2010. The increased
resources contain 4.5Mt of nickel and 10.3Mt of zinc, up from 3.4Mt and 7.6Mt in
2010, respectively. Talvivaara's current total Mineral Resources are presented
in the table below.

-------------------------------------------------------------------
Category Year Mt Nickel % Cobalt % Copper % Zinc % Uranium %
-------------------------------------------------------------------
Measured 2012 504.0 0.23 0.02 0.13 0.50 0.0017
-------------------------------------------------------------------
  2010 432.2 0.23 0.02 0.13 0.50 0.0017
-------------------------------------------------------------------
Indicated 2012 800.5 0.23 0.02 0.13 0.51 0.0017
-------------------------------------------------------------------
  2010 689.2 0.23 0.02 0.13 0.50 0.0018
-------------------------------------------------------------------
Subtotal 2012 1,304.5 0.23 0.02 0.13 0.50 0.0017
-------------------------------------------------------------------
  2010 1,121.4 0.23 0.02 0.13 0.50 0.0018
-------------------------------------------------------------------
Inferred 2012 748.3 0.21 0.02 0.12 0.49 0.0018
-------------------------------------------------------------------
  2010 428.8 0.20 0.02 0.12 0.47 0.0017
-------------------------------------------------------------------
Total 2012 2,052.8 0.22 0.02 0.13 0.50 0.0017
-------------------------------------------------------------------
  2010 1,550.2 0.22 0.02 0.13 0.49 0.0017
-------------------------------------------------------------------

The resource increase further confirms the long mine life of the Talvivaara
deposits. Further excellent exploration potential remains around the currently
known ore body, and 2013 exploration targets focus on infill drilling at the
Southern and Northern parts of the Kolmisoppi deposit and the area between the
Kuusilampi and Kolmisoppi deposits.

Talvivaara has undertaken a project to also update its ore reserves estimates
and anticipates announcing the new reserves during the second half of 2013.


Enquiries
Talvivaara Mining Company Plc Tel +358 20 7129 800
Pekka Perä, Chief Executive Officer
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 and is included in the FTSE 250
Index. Further information can be found at www.talvivaara.com.

Talvivaara production and resource update 28.11.12:
http://hugin.info/136227/R/1660955/538005.pdf



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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
[HUG#1660955]




Unternehmen: Talvivaaran Kaivososakeyhtiö Oyj - ISIN: FI0009014716