Talvivaaran Kaivososakeyhtiö Oyj : Talvivaara Mining Company annual results review for the year ended 31 December 2012

 Talvivaaran Kaivososakeyhtiö Oyj : Talvivaara Mining Company annual results
                  review for the year ended 31 December 2012

Stock Exchange Release
Talvivaara Mining Company Plc
14 February 2013

Talvivaara Mining Company annual results review for the year ended 31 December
                                     2012

        Production and operations impacted by water balance situation

   Financing arrangements to secure liquidity for continued ramp-up to full
                                   capacity

Highlights of Q4 2012

  oNickel production of 2,317t and zinc production of 4,106t
  oProduction impacted by gypsum pond leakage in November and continuing
    challenging water balance situation throughout the fourth quarter
  oMetals plant operations stabilized following leakage
  oPekka Perä returned as CEO in November 2012
  oFurther increase in total Mineral Resources announced in November 2012;
    updated resources contain an estimated 3.0Mt of nickel in Measured and
    Indicated categories confirming Talvivaara's long mine life

Highlights of 2012

  oNickel production of 12,916t and zinc production of 25,867t
  oHeavy rainfall and rapid spring melt aggravated water balance situation
    and impacted production throughout the year
  oOre production temporarily suspended since September 2012; anticipated
    cost savings have been realized
  oContinued improvement in equipment utilization rates and availabilities
    across processes
  oA number of measures have been taken to manage the water balance in the
    future, including a new water recycling system and investments in reverse
    osmosis technology; over the medium term, the Company continues to target
    a nearly closed water circulation system

Highlights after the reporting period

  oKainuu ELY Centre has on 12 February 2013 decided to allow Talvivaara to
    pursue the treatment and release of excess waters from the mine area;
    mining operations expected to re-commence in July 2013
  oTemporary lay-offs of 184 employees between 18 February and 30 June 2013
    to support Talvivaara's cost saving initiatives
  oPromising development in production processes:

       oAll-time record average flow-rate of 1,422 m^3/h through the metals
         plant in January
       o98% process availability of the metals plant in January
       oStrong evidence of leaching performance quickly improving in heap
         sections from which excess water has been removed

  oActual year-to-date nickel production of 1,448t until 12 February

Financing arrangements

Talvivaara has  sought  a number  of  financing arrangements  to  de-risk  the 
Company's balance  sheet,  secure  liquidity  for  the  continued  ramp-up  of 
operations towards full capacity and provide an appropriate capital  structure 
to enable repayment or refinancing of short- and medium-term indebtedness.

The financing transactions consist of:

  oUnderwritten rights issue to raise approximately EUR 260 million in gross
    proceeds
  oRenegotiated EUR 100 million revolving credit facility
  oIncrease of advance payment from Cameco by USD 10 million to USD 70
    million
  oEUR 12 million up-front payment from Nyrstar

The financing transactions are described  in more detail in the  corresponding 
Stock Exchange Release published simultaneously  with this announcement and  a 
Shareholder Circular expected to be published in the afternoon of 14  February 
2013 on Talvivaara's website, www.talvivaara.com.

Guidance for 2013

Talvivaara anticipates producing approximately  18,000t of nickel and  39,000t 
of zinc in 2013. Metals production will  continue to be impacted by the  water 
balance issues in the first half of the  year, but is expected to return to  a 
clear ramp-up during the remainder of the  year driven by the re-start of  ore 
production in July. The operational expenditure including leasing for 2013  is 
estimated at  approximately  EUR  230 million,  including  EUR  10-15  million 
budgeted for the treatment  and release of excess  waters from the mine  area. 
Capital expenditure  is anticipated  to amount  to EUR  60 million,  including 
approximately EUR 20 million to be  spent in water management with the  target 
of reaching a sustainable water balance situation at the mine site.

Key figures

EUR million                                           Q4     Q4      FY     FY
                                                    2012   2011    2012   2011
Net sales                                           25.7   66.5   142.9  231.2
Operating profit (loss)                           (57.0)   14.9  (83.6)   30.9
 % of net sales                            (221.9%)  22.5% (58.5)%  13.4%
Profit (loss) for the period                      (59.4)    3.7 (103.9)  (5.2)
Earnings per share, EUR                           (0.22)   0.01  (0.38) (0.04)
Equity-to-assets ratio                             24.3%  27.9%   24.3%  27.9%
Net interest bearing debt                          563.8  455.7   563.8  455.7
Debt-to-equity ratio                              183.8% 141.3%  183.3% 141.3%
Capital expenditure                                 29.6   21.6    97.5   79.1
Cash and cash equivalents at the end of the         36.1   40.0    36.1   40.0
period
Number of employees at the end of the period         588    461     588    461

All reported figures in this release are audited.

CEO Pekka  Perä  comments:  "We  have today  announced  a  holistic  financing 
arrangement to de-risk  Talvivaara's balance sheet  and significantly  improve 
our liquidity position.  The challenges  encountered over the  past year  have 
resulted in  production shortfalls,  and  combined with  a weak  nickel  price 
environment, resulted in  the need  to raise additional  capital. Through  the 
measures announced today, we are both securing Talvivaara's liquidity position
as we resolve our  remaining operational challenges, but  also put in place  a 
more appropriate  capital structure  for  the longer  term  as we  resume  the 
ramp-up of production.



Our fundamental  strengths and  opportunities remain  unchanged.  Talvivaara's 
current  resources  contain  an  estimated  4.5  million  tonnes  of   nickel, 
sufficient  to  support  decades  of  operations.  We  have  proven  that  the 
bioheapleaching process  works  as  expected,  provided  that  it  is  managed 
optimally, and  a  number of  process  and organizational  changes  have  been 
implemented to ensure  delivery of consistent  and improved leaching  results. 
Our clear vision remains for Talvivaara to become a Finnish mining champion of
considerable international significance.  Talvivaara also  plays an  important 
role for the Kainuu region in Finland, and we employed close to 600 people  at 
the end of 2012 with  significant additional benefits through contractors  and 
follow-on effects. The announced capital raise is critical to secure resources
to achieve our vision for Talvivaara, and continue to create growth in Finland
and the local region in particular.



Notwithstanding our longer-term targets,  near-term challenges remain that  we 
are addressing. The water balance situation  caused by a year of  historically 
heavy rainfall and rapid snow melt had a material impact on our production  in 
2012, and ultimately  culminated in the  gypsum pond leakage  in November.  We 
expect to continue to see the water balance issues impacting our production in
the coming months, and our nickel production target of 18,000 tonnes for  2013 
reflects a more material production ramp-up only during the second half of the
year.  We  are  taking  a  number  of  measures  to  implement  a  sustainable 
longer-term water balance with the target  of operating a closed circuit,  but 
this will take some time. On 12  February we received a key decision from  the 
monitoring authority allowing the discharge of purified excess water from  the 
mine site, which  is a central  next step  to moderate the  water balance  and 
lower operational risk levels. While the discharged waters are neutralized  of 
metals and harmful substances, regrettably  some sulphate remains expected  to 
cause a temporary increase in the sulphate content of the nearest lakes.



Our disappointing financial  result for the  year, and in  particular for  the 
fourth quarter, mirrors the lower-than-expected production and EUR 23  million 
of costs  and  provisions  for  the gypsum  pond  leakage  and  water  balance 
management measures. Further, the nickel price environment was relatively weak
throughout the year, with nickel recording the weakest performance across base
metals. Whilst the backdrop  of a rapidly  unfolding European economic  crisis 
and the prospect of weakening demand from China depressed market sentiment  in 
2012, we remain  confident of the  long-term trajectory for  nickel driven  by 
rapid production cost escalation across the industry.



Finally, during the  fourth quarter I  returned as CEO  to work alongside  the 
management team and all of our employees as we overcome Talvivaara's near-term
challenges. I  would  like to  take  this  opportunity to  thank  everyone  at 
Talvivaara for their  considerable dedication and  our shareholders for  their 
on-going support."



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

Finnish language press conference on 14 February 2013 at 10:00 GMT / 12:00 EET

A Finnish  language  press conference  on  the annual  results  and  financing 
arrangements will be held on 14 February 2013 at 10:00 GMT / 12:00 EET at G.W.
Sundmans (auditorium), Helsinki, Finland.

English language presentation and  live webcast on 14  February 2013 at  11:30 
GMT / 13:30 EET

An English language combined presentation, conference call and live webcast on
the annual results and financing arrangements will be held on 14 February 2013
at 11:30 GMT / 13:30 EET at G.W. Sundmans (auditorium), Helsinki, Finland.

The webcast can be accessed through the following link:
http://qsb.webcast.fi/t/talvivaara/talvivaara_2013_0214_q4/

A conference call facility is available for participants joining via telephone
and there will be a Q&A following the presentation.

Listen via teleconference:
Europe & U.K. Participants: +44 (0)20 7162 0077
US Participants: +1 334 323 6203
Finnish Participants: +358 (0)9 2313 9202

Conference ID: 928245

Further details  on  the  event  can  be  found  on  the  Talvivaara  website, 
www.talvivaara.com. The  webcast will  also be  available for  viewing on  the 
Talvivaara website shortly after the event until the end of 2013.

Talvivaara's fourth quarter review

Metals production stabilized after the gypsum pond leakage

Talvivaara produced 2,317t of nickel (Q4 2011: 4,769t) and 4,106t of zinc  (Q4 
2011: 10,524t) in the fourth quarter  of 2012. Metals production was  impacted 
by the gypsum pond  leakage in November and  the continuing challenging  water 
balance situation throughout the quarter.

On 4 November,  Talvivaara announced  that it had  detected a  leakage in  the 
gypsum pond at the mine. The leakage  was located on 7 November, the  majority 
of it was stemmed during the following  days and it was completely stopped  on 
14 November. While most of the water  that leaked from the pond was  contained 
within the mining concession area by existing dams and the newly built  fourth 
safety dam, some  of the  leakage water  was discharged  into the  environment 
while the fourth  safety dam  was being  constructed. Most  of the  discharged 
water was however  successfully neutralised  with lime  to precipitate  metals 
from it and to increase its pH  close to neutral. The metal precipitates  were 
caught in  a swamp  area located  close to  the southern  edge of  the  mining 
concession area. Following the leakage, Talvivaara purchased the affected area
in December and commenced measures to remove and treat the contaminated soil.

Talvivaara's metals recovery plant was temporarily suspended between 4 and  21 
November as a precautionary measure due  to the leakage. Since the  successful 
re-start on 21 November, plant  performance continued satisfactory during  the 
remainder of the year. However, some short term disturbances in the automation
systems impacted production in  December and these  are being investigated  to 
avoid future  re-occurrence. Solution  flow  rates at  the plant  varied  from 
around 800  m^3/h  to  1,400  m^3/h in  December  outside  of  the  short-term 
disturbances.

Bioheapleaching continued to suffer from the excess water in circulation which
has affected  the  process since  the  spring of  2012  due to  the  excessive 
rainfall experienced. The  water balance  issues were  further intensified  in 
November by  the  gypsum  pond  leakage, which  forced  the  Company  to  pump 
additional excess water  into the heap  circulation in order  to minimize  the 
environmental effects of  the leak.  As a  result, nickel  grades in  solution 
pumped to metals recovery continued to  decline during the fourth quarter  and 
reached a level of around 1.3 g/l at year-end. However, the Company  estimates 
it will take some months before  substantial improvement in the grades can  be 
expected.

As previously announced, Talvivaara's ore production has been suspended  since 
September 2012  due to  the prevailing  water balance  situation. The  Company 
anticipates re-commencing mining of new ore in July 2013 once the main part of
the Kuusilampi  open  pit  has  been  de-watered.  While  ore  production  was 
suspended, some waste mining  continued in the fourth  quarter and the  mining 
department produced 1.2Mt of waste rock which was used in the construction  of 
secondary heap foundations (Q4  2011: 2.0Mt). During  the quarter, the  mining 
fleet was also used in assisting  in primary heap reclaiming and  safeguarding 
measures related to the gypsum pond leakage.

Production key figures

                               Q4     Q4     FY     FY
                             2012   2011   2012   2011
Mining
Ore production       Mt         -    3.2    8.7   11.1
Waste production     Mt       1.2    2.0    5.3   17.0
Materials handling
Stacked ore          Mt         -    3.2    8.7   11.1
Bioheapleaching
Ore under leaching   Mt      44.3   35.6   44.3   35.6
Metals recovery
Nickel metal content Tonnes 2,317  4,769 12,916 16,087
Zinc metal content   Tonnes 4,106 10,524 25,867 31,815

Financial performance in the fourth quarter of 2012

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 31  December  2012 
amounted to  EUR  25.7 million  (Q4  2011:  EUR 66.5  million).  In  addition, 
Talvivaara commenced production of saleable  quantities of copper sulphide  in 
October and sold its first copper products under spot arrangements. Net  sales 
decreased by 42.6% compared to Q3 2012 primarily due to lower production as  a 
result of  the  gypsum  pond  leakage and  depressed  metal  grades  in  leach 
solution. Product deliveries in Q4 2012  amounted to 2,183t of nickel, 70t  of 
cobalt and 8,178t of zinc.

Changes in inventories of finished goods and work in progress amounted to  EUR 
(6.4) million (Q4  2011: EUR  17.5 million).  Due to  discontinued mining  and 
crushing operations no new ore was stacked during Q4 2012 and work in progress
increased less in  Q4 2012  than during  normal operations.  In addition,  the 
inventories of finished goods were  reduced due to year-end reconciliation  of 
the inventory.

The operating loss for Q4 2012 was EUR (57.0) million (Q4 2011: profit of  EUR 
14.9 million),  corresponding to  an operating  margin of  (221.9%) (Q4  2011: 
22.5%). During  the period,  materials and  services amounted  to EUR  (20.0) 
million (Q4 2011:  EUR (37.7)  million) and  other operating  expenses to  EUR 
(33.4) million (Q4 2011: EUR (13.1) million). Materials and services and other
operating expenses increased by 23.7% compared  to the third quarter of  2012. 
The increase was primarily due to the costs incurred as a result of the gypsum
pond leakage and water balance management. During Q4 2012, the costs  incurred 
as a result of the gypsum pond leakage amounted to EUR 1.7 million. Talvivaara
has also recognised EUR  12.2 million in provisions  for costs related to  the 
leakage, in particular those anticipated to be incurred in the clean-up of the
land contaminated with  metal precipitates, and  the treatment and  subsequent 
discharge of  waters stored  in the  safety dams.  A further  EUR 9.1  million 
provision has  been recognised  for the  necessary water  storage and  pumping 
arrangements and waste water neutralization  measures to secure a  sustainable 
water balance at the mine site.

Loss for the period amounted to EUR (59.4) million (Q4 2011: profit of EUR 3.7
million).



Balance sheet and financing

Capital expenditure during the last quarter  of 2012 totaled EUR 29.6  million 
(Q4 2011: EUR 21.6 million). The expenditure related primarily to the  uranium 
extraction circuit, secondary leaching  and pond and  dam structures built  to 
contain the  gypsum  pond  leakage and  minimise  any  environmental  effects. 
Talvivaara received advance payments of EUR  9.7 million from Cameco to  cover 
the construction costs of the uranium extraction circuit during the period.

Base metals prices recovered slightly towards the end of 2012

Base metals prices reached their lowest levels during 2012 in the autumn,  and 
recovered slightly  towards the  end  of the  year as  macroeconomic  concerns 
started to abate. Nickel  closed the year at  approximately USD 17,000/t,  and 
recorded an average of approximately USD 17,400/t for December.

London Metal Exchange  ("LME") nickel  stocks increased  throughout 2012.  The 
reported December stock level of approximately 138,000 tonnes was the  highest 
since early 2011.

Talvivaara's annual results review 2012

Nickel market impacted by macroeconomic concerns

In 2012,  the nickel  market along  with  other base  metals was  impacted  by 
concerns over global macroeconomic growth.  Having started the year at  around 
USD 20,000/t, the nickel  price declined to its  lowest monthly average  since 
mid-2009 of  approximately USD  15,700/t  in August,  as the  Eurozone  crisis 
intensified and  markets reacted  to concerns  over lower  commodities  demand 
growth in  China  in particular.  While  the  nickel price  recovered  to  USD 
17,000-18,000/t by  the  end  of  the  year,  nickel  had  the  weakest  price 
performance among the base metals complex in 2012.

Global primary nickel consumption grew by 4% to 1.66 million tonnes during the
year,  and  Chinese  consumption  totaled  0.77  million  tonnes  representing 
approximately 45% of the global market.  Chinese demand growth slowed down  to 
approximately 10% in 2012, as compared to 20% in 2011. (Source: CRU)

On the supply  side, global  primary nickel  supply amounted  to 1.71  million 
tonnes in 2012, leaving the market at  a surplus of some 46,000 tonnes.  China 
continued to be  a significant  importer of nickel,  with Chinese  consumption 
exceeding  supply  by  an  estimated  0.31  million  tonnes.  Delays  in   the 
commissioning of several large greenfield nickel projects has continued to  be 
a pertinent feature of the market. (Source: CRU)

The EUR/USD exchange  rate was  largely driven  by unfolding  of the  Eurozone 
crisis during the year.  The Euro traded at  1.30-1.35 U.S. dollars until  the 
spring, and declined  to its 2012  low of approximately  1.20 U.S. dollars  in 
August before returning to the 1.30-1.35 range by the end of the year.

Production and operations significantly impacted by water balance situation

Talvivaara closed the year having  produced 12,916t of nickel (2011:  16,087t) 
and 25,867t of zinc (2011: 31,815t). Over the course of 2012, Talvivaara faced
increasing challenges with the water balance  at the mine site, as rapid  snow 
melt in the spring  and historically heavy rainfall  in the spring and  summer 
materially increased the amount of excess water that had been accumulating  at 
the mine site. The challenging water balance forced Talvivaara to  temporarily 
cease the production of new ore as of September 2012, diluted metal grades  in 
leach solution  leading to  reduced metals  production and  culminated in  the 
gypsum pond leakage in November 2012.

Talvivaara took steps throughout the year to manage the excess water on  site, 
starting with the installation in early  2012 of a new water recycling  system 
reducing the need for raw water  intake. In April, the Company announced  that 
it will  invest in  reverse osmosis  technology for  purification of  sulphate 
containing waters.  The  first two  reverse  osmosis units  were  subsequently 
commissioned in November, enabling further increase in process water recycling
and substantial reduction in  raw water intake. A  third reverse osmosis  line 
will be installed during the spring of 2013. Despite these measures, the water
balance situation at the mine became increasingly more challenging as the year
progressed,  in  particular  due  to  rapid  snow  melt  in  the  spring   and 
historically heavy rainfall through  the summer and  early autumn. The  excess 
water on  site and  in solution  circulation diluted  metals grades  in  leach 
solution, thereby  impacting metals  production.  Talvivaara also  decided  to 
alter its  near-term production  scheme as  of September  2012 by  temporarily 
suspending the production of new ore, as excess water had to be stored in  the 
open pit  and Talvivaara  already  had a  substantial nickel  inventory  under 
leaching.

In November,  the  water balance  challenges  culminated in  the  gypsum  pond 
leakage, where a  portion of the  excess water  on site had  been stored.  The 
leakage, which was discovered  on 4 November, was  located on 7 November,  the 
majority of it  was stemmed during  the following days  and it was  completely 
stopped on 14 November. While most of the water that leaked from the pond  was 
contained within the  mining concession area  by existing dams  and the  newly 
built fourth safety  dam, some of  the leakage water  was discharged into  the 
environment while the  fourth safety dam  was being constructed.  Most of  the 
discharged water was however successfully neutralised with lime to precipitate
metals from it and to increase its pH close to neutral. The metal precipitates
were caught in a swamp area located  close to the southern edge of the  mining 
concession area. Following the leakage, Talvivaara purchased the affected area
in December and commenced measures to remove and treat the contaminated soil.

Talvivaara's metals recovery plant was temporarily suspended between 4 and  21 
November as a precautionary measure due  to the leakage. Since the  successful 
re-start on 21 November, plant  performance continued satisfactory during  the 
remainder of the year and became increasingly stable going into 2013.

In mid-March  2012, Talvivaara  experienced  a fatal  incident at  its  metals 
recovery plant  area, caused  by a  localised, temporary  discharge of  excess 
hydrogen  sulphide  gas  from  the  metals  recovery  process.  Following  the 
incident,  Talvivaara  immediately  lowered  solution  flow  into  the  metals 
recovery plant and subsequently also started a maintenance stoppage, which was
prolonged by an  unscheduled stoppage  with focus  on preventive  occupational 
safety-related modifications and improvements.  The metals recovery plant  was 
re-started by mid-April 2012; however,  production was restricted for most  of 
April due  to  the  stoppage  and  subsequent  changes  to  certain  operating 
procedures, the implementation of  which slowed down  early ramp-up after  the 
re-start.

Due to the extended stoppage following  the fatality and the water  management 
issues during the spring and summer, Talvivaara reduced its nickel  production 
guidance for  2012 from  25,000-30,000t to  approximately 17,000t  in  August. 
After the gypsum pond leakage  and related production suspension in  November, 
the Company was again forced to re-assess its full-year production target, and
reduced it to approximately 13,000t of nickel.

At  the  departmental  level,  mining  and  materials  handling  produced  and 
processed 8.7Mt of  ore (2011: 11.1Mt)  and 5.3Mt of  waste (2011: 17.0Mt)  in 
2012. The challenging water balance situation started to impact ore production
in the summer,  as excess  water had  to be  stored in  the open  pit and  the 
production of new ore was temporarily suspended as of September 2012.  Despite 
this, a record level of 1.5 million  tonnes of ore was mined and  subsequently 
crushed in  July  2012  and equipment  availabilities  in  materials  handling 
approached  the  levels  required   for  full-scale  production.  During   the 
suspension of ore production,  the mining fleet has  been partly mobilized  to 
assist in primary heap reclaiming, while some waste mining has also continued.

In bioheapleaching, the  excess water in  circulation and reduced  evaporation 
diluted the metal grades in leach solution, and the high water content in  the 
heaps also negatively affected leaching performance by reducing the efficiency
of aeration. As a result, the average  nickel grade in the solution pumped  to 
the metals recovery plant decreased throughout 2012, recording slightly  below 
2 g/l in early 2012, 1.8 g/l in the second quarter, between 1.5 and 1.6 g/l in
the third quarter and 1.3 g/l in  the fourth quarter. Measures to improve  the 
leaching performance  are being  taken based  on the  findings from  extensive 
operational bioheapleaching studies  carried out  during the  autumn of  2012. 
Multiple changes  are  being  implemented  to  ensure  constant  and  balanced 
distribution of air within the primary heaps, and additional aeration into the
secondary  heaps  is  being  introduced.  Attention  is  also  being  paid  to 
agglomeration and the quality and proper distribution of irrigation solutions.
Furthermore,  reclaiming  and  re-stacking  of  the  existing  primary   heaps 
continues in  order  to  enable  efficient recovery  of  the  existing  nickel 
inventory under leaching.

In  metals  recovery,  progress  continued  to  be  made  throughout  2012  in 
increasing utilization rates and maintaining stability. The average flow  rate 
at the plant  reached around 1,500  m^3/h for several  periods and  Talvivaara 
expects ramp-up to 1,600 m^3/h in  the near future. The stability of  hydrogen 
sulphide production  also  improved  following thorough  maintenance  of  both 
hydrogen sulphide  plants during  the year  and focus  on the  quality of  the 
sulphur  feed.  Further,  the  overall  improved  process  control  helped  in 
minimising the odour discharges such that noticeable odour discharges are  now 
only associated with  process disturbances,  or start-up  or shut-down  phases 
relating to production stoppages.

Construction of the uranium recovery plant progressed according to plan during
the year, with completion rate at  close to 100% at year-end. Talvivaara  also 
commenced production  of saleable  quantities of  copper sulphide  in  October 
2012. For the time being, the product is being sold under spot arrangements.

Financial review

Net sales and financial result

Talvivaara's net sales for nickel and cobalt deliveries to Norilsk Nickel  and 
for zinc  deliveries to  Nyrstar during  2012 amounted  to EUR  142.9  million 
(2011: EUR  231.2 million).  Net sales  decreased by  38.2% compared  to  2011 
mainly due to  lower deliveries  and the  lower nickel  price. Production  was 
impacted by the challenging water situation  at the mine throughout the  year, 
the fatality at the metals  recovery plant area in  March and the gypsum  pond 
leakage in November. Product deliveries amounted to 12,641t of nickel, 29,256t
of zinc and 355t of cobalt (2011: 15,795t of nickel, 35,935t of zinc, 400t  of 
cobalt).

The Group's other operating income amounted to EUR 4.1 million (2011: EUR  2.3 
million) and mainly consisted of indemnities on losses and fair value gains on
biological assets.

Materials and services  were EUR (117.8)  million in 2012  (2011: EUR  (135.0) 
million) and  other operating  expenses  were EUR  (81.2) million  (2011:  EUR 
(55.2) million). The  largest cost items  were production chemicals,  external 
services, electricity and maintenance.  The costs of  the gypsum pond  leakage 
and water balance management measures amounted to EUR 23.0 million,  including 
provisions.

Employee benefit expenses were EUR (28.1) million (2011: EUR (25.5)  million). 
The increase was attributable to the increased number of personnel.

The operating loss for 2012 was EUR  (83.6) million (2011: profit of EUR  30.9 
million). The operating  margin for  2012 was  (58.5%) and  was in  particular 
affected by the water balance challenges  and gypsum pond leakage in  November 
(2011: 13.4%).

Finance income  for 2012  was EUR  0.8  million (2011:  EUR 1.2  million)  and 
consisted mainly of exchange rate gains.  Finance costs of EUR (46.5)  million 
(2011: EUR (39.1) million) mainly resulted from interest and related financing
expenses on borrowings.

The loss  for  the 2012  amounted  to EUR  (103.9)  million (2011:  EUR  (5.2) 
million) reflecting the challenging  nickel price, elevated  costs due to  the 
water balance challenges and  gypsum pond leakage  and lower than  anticipated 
level of product  deliveries. Earnings  per share  was EUR  (0.38) (2011:  EUR 
(0.04).

The total comprehensive  income for 2012  was EUR (103.9)  million (2011:  EUR 
(14.6) million). In 2011, it included a reduction in hedge reserves  resulting 
from the occurrence of the hedged sales.

Balance sheet

Capital expenditure in 2012 totaled EUR 97.5 million (2011: EUR 79.1 million).
The  expenditure  related  primarily   to  the  uranium  extraction   circuit, 
earthworks in secondary leaching  and secondary heap  foundations and the  dam 
and pond structures constructed due to  the gypsum pond leakage. In  addition, 
major investments were made in environmental technology toimprove the  quality 
of effluent waters and limit dust emissions. On the consolidated statement  of 
financial position  as at  31  December 2012,  property, plant  and  equipment 
totaled EUR 809.5 million (31 December 2011: EUR 762.0 million).

In the  Group's  assets, inventories  amounted  to  EUR 297.8  million  on  31 
December  2012  (31  December  2011:  EUR  240.4  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  alteration 
to the near-term production scheme also affected the amount of inventories  in 
the second half of 2012. The inventories of finished goods were reduced due to
year-end reconciliation of the inventory.

Trade receivables  amounted  to EUR  32.2  million  on 31  December  2012  (31 
December 2011: EUR 64.0 million). The  trade receivables decreased due to  the 
suspension of metals production  in connection with  the gypsum pond  leakage, 
which led to reduced product deliveries  to customers during the last  quarter 
of 2012.

On 31 December 2012,  cash and cash equivalents  totaled EUR 36.1 million  (31 
December 2011: EUR 40.0 million).

In equity and liabilities,  total equity amounted to  EUR 306.8 million on  31 
December 2012 (31  December 2011:  EUR 322.6 million).  Talvivaara raised  EUR 
81.5 million, net of transaction costs, from an issue of 24,589,050 new shares
in Q1 2012.  In addition,  interest cost  of EUR  2.8 million  of a  perpetual 
capital loan was capitalized in equity.  A total of 1,830,087 new shares  were 
subscribed and paid for in 2012 under the company's stock option rights  2007A 
and the entire subscription price amounting to EUR 4.9 million was  recognized 
in equity.

Borrowings increased from EUR 495.7 million  on 31 December 2011 to EUR  599.8 
million at the  end of December  2012. The changes  in borrowings during  2012 
mainly resulted from the issue of a senior unsecured bond of EUR 110  million, 
a draw-down of EUR 20 million from the revolving credit facility, a  repayment 
of commercial  paper notes  amounting to  EUR 8.5  million and  a buy-back  of 
senior unsecured convertible  bonds due  2013 with a  nominal value  of EUR  8 
million.

Total advance payments as at 31  December 2012 amounted to EUR 273.7  million, 
representing an increase  of EUR  26.5 million from  EUR 247.3  million on  31 
December 2011. During 2012, Talvivaara received a total of EUR 32.1 million in
advance payments from Cameco based  on the uranium off-take agreement  between 
the companies, whilst the  advance payment from Nyrstar  was amortised by  EUR 
5.6 million as a result of zinc deliveries.

Total equity and liabilities  as at 31 December  2012 amounted to EUR  1,260.8 
million (31 December 2011: EUR 1,156.7 million).

Financing

In June, Talvivaara's EUR 130  million revolving credit facility was  amended. 
In December, Talvivaara requested and was granted a covenant holiday from  the 
banks. In addition,  the total  commitments of the  revolving credit  facility 
were reduced to EUR 100 million. As at 31 December 2012, EUR 70 million of the
facility was drawn.

In April and May, Talvivaara conducted a buy-back for a portion amounting to a
nominal value of EUR 8 million  of the Company's senior unsecured  convertible 
bonds due 2013. The  remaining convertible bonds have  a nominal value of  EUR 
76.9 million and are due in May 2013.

In March,  Talvivaara issued  a EUR  110 million  senior unsecured  bond.  The 
5-year bond has an issue price of 100%, pays a coupon of 9.75% and is callable
after 3  years. The  bond issue  was sold  to both  Finnish and  international 
institutional and private investors. The bond  was settled and the notes  were 
listed on NASDAQ OMX Helsinki in April.

In  February,  Talvivaara  completed  an   issue  of  24,589,050  new   shares 
representing approximately 10 per cent of the number of the existing shares of
the Company. The  proceeds of  the share issue  amounted to  EUR 82.6  million 
before commissions  and expenses  and to  EUR 81.5  million net  of costs.  An 
Extraordinary General Meeting  of Talvivaara  Mining Company  Plc resolved  to 
approve the  share  issue in  March,  and  the new  shares  were  subsequently 
registered in the Finnish Trade Register.



Going concern

The Group's  financial  statements  for  the financial  year  2012  have  been 
prepared on  a going  concern basis  taking account  of the  Group's  on-going 
financing transactions, production  forecasts and  financial projections,  and 
reasonably possible changes in production,  metal prices and foreign  exchange 
rates.

The Group has  experienced a  number of  operational challenges  in 2012,  the 
prevailing water balance issues are  continuing to impact production, and  the 
recent nickel price environment has been weak. The Group is taking a number of
measures to overcome its near-term operational challenges, but the full effect
of these actions  will only  materialise over several  months. Therefore,  the 
Board believes that the Group must secure additional funds in order to be able
to finance its operations and to repay its debts over the coming 12 months.

In order to address its liquidity  situation, the Group has taken measures  to 
reduce its costs  and improve  its overall  efficiency, including  temporarily 
suspending ore  production  since  September 2012  and  undertaking  temporary 
layoffs due to  the suspension  of ore  production. Further,  the Company  has 
renegotiated its EUR 100 million revolving credit facility and entered into an
amended facility agreement  on 14  February 2013, which,  among other  things, 
amended the  financial  and  production covenants  in  the  previous  facility 
agreement to  be more  appropriate  for the  Group's current  operations  and, 
therefore, reduces  the Company's  risk  in relation  to compliance  with  its 
covenants.  The  amended  facility  remains  subject  to  certain   conditions 
subsequent, including the  completion of the  proposed rights issue  discussed 
below and the  Company receiving net  proceeds therefrom of  at least EUR  240 
million by 30 April 2013.

To  improve  its  liquidity  and  capital  structure,  the  Company  is   also 
undertaking a rights issue. In connection with the proposed rights issue,  the 
Company has on  14 February entered  into a standby  underwriting letter  with 
banks, pursuant to which the banks  have undertaken to underwrite, subject  to 
certain conditions, such  portion of  the proposed  rights issue  that is  not 
subject to shareholder commitments. The Company's three key shareholders  have 
given their irrevocable commitments  to subscribe in total  31.06 per cent  of 
the proposed rights issue, which the Board is confident will be able to  raise 
approximately  EUR  260  million  in  gross  proceeds.  Proceeding  with   and 
completion of the rights issue remains  subject to shareholder approval at  an 
Extraordinary General Meeting to be held on 8 March 2013.

In order to ensure that the  Group has sufficient liquidity until the  Company 
receives the proceeds from the  proposed rights issue, Talvivaara Sotkamo  has 
on 12 February 2013 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  is  to pay  to  Talvivaara Sotkamo  for  the 
construction of  the  uranium extraction  facility  was increased  by  USD  10 
million to USD 70 million,  and the duration of  the agreement extended to  31 
December  2017  and  commercial   terms  revised  accordingly.  In   addition, 
Talvivaara Sotkamo has on 14 February 2013 entered into an amendment agreement
with Nyrstar regarding the zinc in concentrate streaming agreement pursuant to
which Nyrstar is to make an 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 Board believes  that taking into  account receipt of  the proceeds of  the 
proposed rights  issue and  subject  to the  conditions subsequent  under  the 
amended facility agreement  having been  satisfied, the  Group has  sufficient 
working capital for its present purposes, that is for at least 12 months  from 
the date of these financial statements.

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 main products. Annual uranium production is  estimated 
at 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.

Following receipt  of  the  construction permit  in  August  2011,  Talvivaara 
commenced construction of the  uranium recovery facility,  which was close  to 
completion at the end of 2012.  The permitting process for uranium  production 
is on-going and the start of  uranium production is further subject to,  among 
others, environmental permit approval and chemical authorisation. The decision
on the  environmental  permit  is  expected  in the  first  half  of  2013  in 
connection with the general update of the mine's environmental permit.

Production expansion - Operation Overlord

Conceptual studies relating to production expansion beyond 50,000tpa of nickel
continued during the year,  with a particular emphasis  on permitting and  the 
on-going Environmental Impact Assessment. The scoping studies are based on the
target  of  doubling  the   presently  planned  production  to   approximately 
100,000tpa of nickel.  Whilst studies relating  to various processing  options 
continue, it appears relatively likely that a substantial part of the expanded
production would be LME-quality nickel metal, i.e. Talvivaara would  integrate 
its production one step further downstream.

No investment decisions  relating to  the production expansion  have yet  been 
taken and are unlikely to be taken in the near term. 

Energy strategy

Talvivaara's energy strategy is focused  on building an environmentally  sound 
portfolio  of   low-cost  capacity   allowing  the   Company  to   be   energy 
self-sufficient in the longer term. Talvivaara's electricity need is currently
approximately 45MW, and is expected  to increase significantly if the  Company 
proceeds with the planned  capacity expansion and  further refining of  nickel 
into LME-quality metal.

Talvivaara increased its capacity share  in the Fennovoima nuclear project  in 
Finland from approximately 10MW to approximately 60MW in 2012. The Company  is 
also studying,  amongst others,  on-site windpower  production, bioenergy  and 
utilization of energy generated in the production process.

Geology

Talvivaara updated its  total Mineral Resources  estimation in November  2012. 
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. Contained nickel and zinc in the Measured and Indicated
categories amount to 3.0Mt and 6.6Mt, 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.

Research and development

Talvivaara's research  and development  activities in  2012 focused  on  water 
management, enhancing bioheapleaching performance and further optimization  of 
the metals plant operations.

During the year, Talvivaara carried out 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 were  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  the  elimination  of 
aeration pipe blockages, alterations in the physical design of future  primary 
heaps and aeration pipes, and an improved drainage system.

Development work is  also on-going  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.

Talvivaara also continued to conduct pilot  heap tests throughout the year  to 
determine the impact of various process conditions on leaching performance and
test new measurement technologies. Localized tests were also carried out  with 
production leaching pads.

At the metals recovery plant,  research and development activities focused  on 
pilot-testing of the reverse osmosis  -based water treatment plant, which  was 
commissioned for operational use in  November 2012. Talvivaara also  continued 
to study  and test  catalytic burners  for metals  recovery plant  ventilation 
gases containing hydrogen sulphide and carbon dioxide.

Talvivaara participates in various  co-operation and networking projects  with 
universities,  research  centres  and   other  companies.  The  research   and 
development function was re-organized  in July 2012  and the plant  laboratory 
was included in research and development.

Sustainable development, safety and permitting

Sustainable development and environment

Whilst Talvivaara  continued  to  make  underlying progress  in  the  area  of 
sustainable development during 2012, significant challenges were faced in  the 
area of  water management.  Due to  a persistently  challenging water  balance 
situation throughout  the year,  the  Company had  to  store excess  water  in 
solution circulation, process ponds,  the open pit and  the gypsum ponds.  The 
gypsum pond  leakage that  occurred in  November resulted  in elevated  nickel 
concentrations in the  nearby waters, but  the effects were  only seen in  the 
vicinity of  the  mining  concession  area.  Talvivaara  and  the  authorities 
continue to  monitor the  situation and  expect to  be able  to determine  the 
eventual impact of the leak during the summer of 2013.

Despite the  water management  challenges faced  during the  year,  Talvivaara 
continued to develop its operations  in line with its sustainable  development 
policy which focuses on continuous improvement and operational excellence.  In 
2012, the  Company  paid  special  attention  to  improved  control  of  water 
discharges, dust emissions, odour emissions, active stakeholder  communication 
and continued implementation of  management systems supportive of  sustainable 
development.

Talvivaara continued to make significant progress in reducing its sulphate and
sodium discharges into nearby  lakes as a result  of process improvements  and 
increased water recycling. Furthermore, the  new reverse osmosis -based  water 
treatment plant was commissioned in November, reducing the need for raw  water 
intake from  the environment.  In the  medium term,  Talvivaara's goal  is  to 
implement a closed water circulation system,  which is expected to reduce  the 
risk of weather conditions impacting Talvivaara's operations or  environmental 
safety. Key elements of the  targeted closed water circulation system  include 
additional purification of  process waters  and more  efficient separation  of 
process waters and captured rain and natural run-off water.

During the  year, dust  emissions  were further  reduced  through a  new  dust 
removal system at the  materials handling screening  hall, implemented in  the 
summer. Talvivaara  also  continues  to study  new  technologies  for  further 
reducing odour  emissions, including  catalytic burning  of hydrogen  sulphide 
gases.Odour complaints from nearby residents decreased from 131 in 2011 to  77 
in 2012, and only isolated complaints have been received in recent months.

Talvivaara again took part in  the CDP carbon footprint reporting  initiative. 
This data gathering and reporting exercise  will help the Company to  optimize 
its greenhouse  gas emissions  in  the future.  Talvivaara also  continued  to 
develop its  Global  Reporting Initiative  (GRI)  reporting and  related  data 
verification.

Talvivaara prepared for ISO 9001 standard compliant quality management  system 
and OHSAS 18001 standard compliant  occupational health and safety  management 
system during the year. Certification for both management systems is currently
expected to  be  sought  later  in 2013.  Talvivaara  was  awarded  ISO  14001 
certification for its environmental management system in 2010. The Company has
also commenced implementation of a  risk management system in accordance  with 
the ISO 31000 standard.

The environmental  security placed  for  future restoration  of the  area  and 
monitoring obligations amounted to EUR 31.9 million at the year-end (2011: EUR
31.2 million).

During the year,  Talvivaara continued  to focus on  its community  programme. 
Meetings with  the  local residents  continued,  and a  new,  locally  focused 
internet site  (www.paikanpaalla.fi) was  launched in  early 2012  to  provide 
up-to-date environmental information and a discussion and feedback channel for
the local  residents. Talvivaara  also commenced  regular sessions  in  nearby 
cities and towns to review recent events and the Company's performance with  a 
particular focus on local communities.

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 
zero accident philosophy.

In March 2012, one of Talvivaara's employees regrettably lost his life in  the 
vicinity  of   the  metals   recovery  plant.   Increased  hydrogen   sulphide 
concentrations had been detected in the  area, and work had been suspended  in 
accordance  with  occupational  safety  guidelines.  The  fatality  has   been 
distressing for  everyone  at  Talvivaara, and  crisis  counselling  was  made 
available for  personnel. The  Company held  an unscheduled  stoppage in  late 
March and early April with  focus on preventative occupational  safety-related 
improvements.

In order  to further  improve occupational  safety and  minimise the  risk  of 
incidents at the  mine site, a  number of measures  were implemented in  2012. 
Operationally, safety instructions were further refined and developed,  access 
practices in the vicinity of the  metals recovery were altered and  additional 
fixed gas detectors were installed. Occupational safety-related  modifications 
in the metals recovery process  include, among others, increased scrubbing  of 
hydrogen sulphide gases and  improved control of  hydrogen sulphide feed  into 
the process.

The injury frequency in 2012 was 16.6 lost time injuries/million working hours
(2011: 16.1 lost time injuries/million working hours).

Permitting

In January  2012,  Talvivaara  received  a positive  opinion  on  its  uranium 
recovery process from the European Commission under the Euratom Treaty. In its
opinion, the  European  Commission considered  that  uranium recovery  at  the 
Talvivaara mine complies  with the  goals set by  the Euratom  Treaty and  may 
improve the supply security of nuclear  fuel in the European Union. In  March, 
Talvivaara also  received a  licence from  the Finnish  Government to  extract 
uranium as a by-product from its  existing operations pursuant to the  Nuclear 
Energy Act. The permit is valid throughout  the life of the mine, however,  no 
longer than until the end of 2054.

In April 2012, Talvivaara was informed by the Northern Finland Regional  State 
Administrative Agency  that the  Company's  environmental permit  for  uranium 
extraction and the  general update of  Talvivaara mine's environmental  permit 
are to be processed together. Decisions on the permits are expected during the
first half  of  2013. Talvivaara  continues  to operate  under  the  Company's 
existing  environmental  permit  until  the  renewal  process  is   completed. 
Talvivaara aims to start uranium recovery as soon as all the necessary permits
have been obtained.

Following completion of the Environmental Impact Assessment ("EIA") programme,
the EIA  process  for the  potential  expansion  of the  Talvivaara  mine  was 
initiated during the first quarter of  2012. The EIA covers options to  expand 
production capacity up to 100,000t of nickel per annum, and also the option to
refine nickel sulphide  into LME-quality nickel  metal. Talvivaara expects  to 
submit the environmental permit application  for production expansion in  2013 
following completion of the EIA process.

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 
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 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

The growth in Talvivaara's personnel continued in 2012, with the total  number 
of employees increasing  from 461 to  588. The personnel  is mostly  recruited 
locally from the Kainuu  region, where Talvivaara is  the largest provider  of 
new job  opportunities.  The Company  also  employed approximately  90  summer 
trainees.

The average age  of Talvivaara's personnel  was 38 years.  In its  recruitment 
process, Talvivaara seeks to maintain a representative staff age structure.

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.

During  the  year,  Talvivaara  held  its  first  organization-wide   employee 
satisfaction review to  identify organizational  strengths and  key areas  for 
improvement. Human resources  processes were  also defined  and developed  and 
leadership training was  increased. Personnel development  is based on  annual 
training and development plans, and all employees attend performance appraisal
discussions with  their  managers.  All Talvivaara  personnel  participate  in 
induction training with work safety as  a key component. The Company's  target 
is also that all of its employees will have first aid competence.

Corporate governance statement

Talvivaara issues its Corporate Governance Statement of 2012 and publishes  it 
on  the  Company's  website  at   www.talvivaara.com  on  the  date  of   this 
announcement. The Corporate  Governance Statement  does not form  part of  the 
Board of Directors' Report.

Resolutions of the Annual General Meeting

Talvivaara's Annual General Meeting was held on 26 April 2012 in Sotkamo,
Finland. The resolutions of the AGM included:

  othat no dividend be paid for the financial year 2011;
  othat the annual fee payable to the members of the Board for the term until
    the close of the Annual General Meeting in 2013 be as follows: Executive
    Chairman of the Board EUR 280,000, Deputy Chairman (Senior Independent
    Director) EUR 69,000, Chairmen of the Board Committees EUR 69,000 and
    other Non-executive Directors EUR 48,000;
  othat the number of Board members be eight and that Mr. Edward Haslam, Ms.
    Eileen Carr, Mr. D. Graham Titcombe, Mr. Tapani Järvinen and Mr. Pekka
    Perä be re-elected as Board members and Mr. Stuart Murray, Mr. Michael
    Rawlinson and Ms. Kirsi Sormunen be appointed as new members of the Board;
  othat 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 2012;
  othat the Board be authorised to decide on the repurchase, in one or
    several transactions, of a maximum of 10,000,000 of the Company's own
    shares. The authorisation is valid until 25 October 2013 and replaces the
    authorisation to repurchase 10,000,000 shares granted by the Annual
    General Meeting of 28 April 2011; and
  othat the Board be authorised to decide on the conveyance, in one or
    several transactions, of a maximum of 10,000,000 of the Company's own
    shares.The shares may be conveyed to the Company's shareholders in
    proportion to their present holding or by waiving the pre-emptive
    subscription rights of the shareholders and the authorisation is valid
    until 25 April 2014.

Shares and shareholders

The number of shares  issued and outstanding and  registered on the  Euroclear 
Shareholder Register as  of 31  December 2012 was  272,309,640. Including  the 
effect of the  EUR 85 million  convertible bond of  14 May 2008,  the EUR  225 
million convertible bond of 16 December  2010, the Option Schemes of 2007  and 
2011 and  share  subscriptions registered  during  2012, the  authorised  full 
number of shares of the Company amounted to 321,285,376.

The share subscription period for stock options 2007A was between 1 April 2010
and 31 March 2012. By the end of the subscription period a total of  2,279,373 
Talvivaara Mining Company's  new shares  were subscribed for  under the  stock 
option rights 2007A.  A total  of 53,727  stock option  rights 2007A  remained 
unexercised following the end of the subscription period and expired.

The share subscription period for stock options 2007B is between 1 April  2011 
and 31 March 2013. No new shares  of Talvivaara were subscribed for under  the 
stock option rights 2007B in 2012 and a total of 2,284,337 stock option rights
2007B remain unexercised. A total of  2,327,000 option rights 2007C have  been 
issued to 250  key employees  and the  subscription period  for stock  options 
2007C is between 1 April  2012 and 31 March 2014.  A total of 2,327,000  stock 
options 2007C remain unexercised.

In February 2012, Talvivaara completed an  issue of 24,589,050 new shares.  An 
Extraordinary General Meeting of Talvivaara Mining Company Plc. resolved on 12
March 2012 to  approve the proposal  by the  Board of Directors  on the  share 
issue in deviation from the shareholders' pre-emptive subscription rights. The
new shares were registered with the Finnish Trade Register on 13 March 2012.

In addition,  the  Board  of Directors  has  resolved,  on the  basis  of  the 
authorisation granted by the  Extraordinary General Meeting  held on 12  March 
2012, to issue special rights entitling to subscribe up to 184,428 new shares,
in order to carry out  an adjustment to the conversion  price, as a result  of 
the equity  placing,  in accordance  with  the  terms and  conditions  of  the 
convertible bonds due 2013. Accordingly the maximum number of ordinary  shares 
that may be issued upon conversion is 11,677,591 shares. Due to an  adjustment 
to the conversion price of the convertible bonds due 2015, as a result of  the 
placing, the  maximum  number of  ordinary  shares  that may  be  issued  upon 
conversion is 27,180,708 shares.

As at 31 December 2012, the shareholders  who held more than 5% of the  shares 
and votes of  Talvivaara were Pekka  Perä (20.7%), Solidium  Oy (8.9%),  Varma 
Mutual Pension Insurance Company (8.7%) and Ilmarinen Mutual Pension Insurance
Company (8.7%).

Share based incentive plans

The Annual General Meeting held on 3 May 2007 approved the Board of Directors'
proposal to issue share  options to the Group's  key personnel. The number  of 
share options is 6,999,300, each entitling to subscribe one new share. A total
of 2,333,100  of  the  share  options  are  designated  2007A,  2,333,100  are 
designated as 2007B and 2,333,100 are designated as 2007C.

The Annual  General  Meeting held  on  28 April  2011  approved the  Board  of 
Directors' proposal to issue share options  to the Group's key personnel.  The 
number of share  options is  5,500,000, each  entitling to  subscribe one  new 
share. A  total  of 2,500,000  of  the  share options  are  designated  2011A, 
1,500,000 are designated as 2011B and  1,500,000 are designated as 2011C.  The 
share subscription  periods  for stock  options  2011A, 2011B  and  2011C  are 
between 1 April 2014 and 31 March 2016,  1 April 2015 and 31 March 2017 and  1 
April 2016 and 31 March 2018.

In December 2010,  The Board  of Directors  of the  Company decided  on a  new 
shareholding plan  directed to  members of  executive management  and  certain 
other  key  employees.  The  plan  enabled  the  participants  to  acquire   a 
considerable long-term shareholding  in the  Company. Through  this plan,  the 
participants personally invested a  significant amount of  their own funds  in 
the Company shares. Part of the investment  is financed by a loan provided  by 
the Company.

The EUR 5.7 million  loan granted by the  Company to Talvivaara Management  Oy 
for the purpose of  acquiring Company shares carries  an interest of 3.0%  and 
shall be  repaid in  full by  2014. The  1,104,000 shares  held by  Talvivaara 
Management Oy have been pledged to the Company as security for the loan.
During 2011,  the Board  of  Directors, based  on  the recommendation  of  the 
Remuneration Committee, allocated 952,000 2007C options, giving an entitlement
to subscribe  for  a total  of  952,000 new  shares  in the  Company,  to  the 
personnel of Talvivaara and its  subsidiaries. Of the options allocated  since 
2007, 78,000  2007C options  entitling  to subscribe  for 78,000  shares  were 
returned back to  the Company during  2011. In  2011, a total  of 274,908  new 
shares were subscribed for under the stock option rights 2007A and 48,763 with
2007B. At the end  of 2011, 100 2007C  options were available for  allocation 
under the 2007 Option  Scheme. The voting  rights of the  shares to be  issued 
against the  outstanding share  options  amount to  2.6%  of the  total  share 
capital.

During 2012,  the Board  of  Directors, based  on  the recommendation  of  the 
Remuneration Committee, allocated 42,000 2007C options, giving an  entitlement 
to subscribe for a total  of 42,000 new shares  in the Company, and  1,347,500 
2011B options, giving an entitlement to subscribe for a total of 1,347,500 new
shares in the Company, to the personnel of Talvivaara and its subsidiaries. Of
the options allocated since 2007, 48,000 2007C options entitling to  subscribe 
for 48,000 shares were returned  back to the Company  during 2012. In 2012,  a 
total of  1,938,787 new  shares were  subscribed for  under the  stock  option 
rights 2007A.  At the  end of  2012, 2,500,000  2011A options,  152,500  2011B 
options and 1,500,000 2011C  options were available  for allocation under  the 
2011 Option Scheme. The voting rights of  the shares to be issued against  the 
outstanding share options amount to 2.1% of the total share capital.

Events after the review period

Notification under the Environmental Protection Act §62 to treat and release
excess waters from the mine area
Talvivaara submitted on 22 January 2013 a notification to the Kainuu Centre
for Economic Development, Transport and the Environment ("Kainuu ELY Centre")
under the Environmental Protection Act §62 to treat and release excess waters
from the mine area. Under the notification, Talvivaara intends to treat and
release to nature by 30 June 2013 approximately 3.8 million m3 of water
currently stored in emergency dams and the open pit. The water will be treated
with neutralization agents, primarily lime compounds, to remove metals from it
and to increase its pH close to neutral. The Group considers treatment and
release of the water necessary in order to mitigate the risk of flooding or
uncontrolled leakages during the spring melt. De-watering of the open pit is
also necessary for the Group to be able to re-start its ore production, which
has been suspended since September 2012 due to the prevailing water balance
situation.

Kainuu ELY Centre has  on 12 February 2013  permitted Talvivaara to  discharge 
1.8 million  m3  of neutralised  waste  water  into the  Vuoksi  and  Oulujoki 
waterways, such that 0.9  million m3 is discharged  into each direction by  30 
June 2013.  Additionally  Talvivaara  can  direct 0.5  million  m3  of  waters 
currently in the open pit into the Kuusilampi pond in the vicinity of the pit,
and continue to  discharge within the  1.3 million m3  discharge quota in  its 
existing environmental permit.

Talvivaara's original  notification  under  Section 62  of  the  Environmental 
Protection Act proposed a  discharge requirement of 3.8  million m3 in  total. 
However, Talvivaara considers these arrangements and the 1.3 million m3  quota 
in the existing  environmental permit  to enable the  commencement of  planned 
water management  arrangements and  their implementation  in the  short  term. 
Talvivaara will commence the neutralisation  and discharge of waters from  the 
mine site without delay in accordance with the Kainuu ELY Centre decision.

Temporary lay-offs
Talvivaara announced  on 16  January 2013  that to  support the  Group's  cost 
savings initiatives  and  overall  efficiency,  and to  adjust  the  level  of 
personnel  to  the  temporarily   suspended  ore  production,  Talvivaara   is 
considering  temporary  lay-offs.  Co-operation  consultations  with  employee 
representatives were  held  between 17  and  31 January  2013  concerning  all 
personnel groups in  all three corporate  entities, Talvivaara Mining  Company 
Plc, Talvivaara Sotkamo Ltd and Talvivaara Exploration Ltd.

Following the consultations, Talvivaara will temporarily lay off 184 employees
between 18 February  and 30  June 2013. The  maximum duration  of the  lay-off 
period is  90  days  per individual  employee.  Talvivaara  currently  employs 
approximately 580 people in total.



Recent operational highlights
Promising development in production processes:

  oAll-time record average flow-rate of 1,422 m^3/h through the metals plant
    in January
  o98% process availability of the metals plant in January
  oStrong evidence of leaching performance quickly improving in heap sections
    from which excess water has been removed

Actual year-to-date nickel production of 1,448t until 12 February.



Management re-organisation
The Company has re-organised its management during January and February as
follows:

  oMr Pertti Pekkala, formerly General Manager, Research and Development, was
    appointed Chief Production Officer (Metals Recovery);
  oMr Kari Vyhtinen, formerly Chief Investment Officer, was appointed Chief
    Mining Officer;
  oMr Mikko Korteniemi, formerly Chief Production Officer (Metals Recovery),
    was appointed Chief Maintenance Officer with responsibility for
    maintenance, procurement and warehousing; and
  oMs Maija Vidqvist was appointed General Manager, Water Management
    (position previously held by Mr Jari Voutilainen).

All four appointees  are members of  the Executive Committee,  with Mr  Pertti 
Pekkala and Ms Maija Vidqvist being new additions to it. Pertti Pekkala,  Kari 
Vyhtinen and Mikko  Korteniemi report  to the COO,  Mr Harri  Natunen, and  Ms 
Maija Vidqvist reports to the CEO, Mr Pekka Perä

Ms Maija Vidqvist,  M. Sc. (Chem.  Eng.), appointed General  Manager of  Water 
Management, is  Managing  Director of  Teollisuuden  Vesi Oy  since  2003.  Ms 
Vidqvist  has  extensive  experience  in  environmental  and  water  treatment 
technologies and processes across various industries and countries,  including 
e.g. membrane technology and reverse osmosis -based water treatment.

With the reorganisation and formation of a central maintenance unit comprising
procurement, warehousing  and  all  maintenance activities,  Iniesta  aims  to 
optimise its  maintenance  operations  and increasingly  focus  on  preventive 
maintenance for increased operational and cost efficiency.



Financing arrangements

Proposed rights issue
To improve its liquidity and capital structure, the Company is undertaking an
underwritten Rights Issue. In connection with the proposed Rights Issue, the
Company has on 14 February 2013 entered into a Standby Underwriting Letter
with a group of banks, pursuant to which the banks have undertaken to
underwrite such portion of the proposed Rights Issue that is not subject to
shareholder commitments. The Company's three key shareholders have given their
irrevocable commitments to subscribe in total 31.06 per cent of the proposed
Rights Issue, which the Board is confident will be able to raise approximately
EUR 260 million in gross proceeds. Proceeding with and completion of the
Rights Issue remains subject to shareholder approval at an Extraordinary
General Meeting to be held on 8 March 2013.

Revolving credit facility
The Company has renegotiated its EUR 100 million Revolving Credit Facility and
entered into an amended Facility Agreement  on 14 February 2013, which,  among 
other things, amended the financial  and production covenants in the  previous 
Facility Agreement to be more  appropriate for the Group's current  operations 
and, therefore, reduces the Company's risk in relation to compliance with  its 
covenants. Successful completion of the  Company's proposed Rights Issue is  a 
Condition Subsequent to the amended Facility.

Amendment Agreement with Cameco
In order to ensure that the  Group has sufficient liquidity until the  Company 
receives the proceeds from the  proposed Rights Issue, Talvivaara Sotkamo  has 
on 12 February 2013 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  is  to pay  to  Talvivaara Sotkamo  for  the 
construction of  the  uranium extraction  facility  was increased  by  USD  10 
million to USD 70 million,  and the duration of  the agreement extended to  31 
December 2017 and commercial terms revised accordingly.

Amendment Agreement with Nyrstar
Talvivaara Sotkamo has on14 February 2013 entered into an amendment  agreement 
with Nyrstar regarding the zinc in concentrate streaming agreement pursuant to
which Nyrstar is to make an 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.



Short-term outlook

Market outlook

The LME nickel price has somewhat  recovered in recent months, having  reached 
its lowest monthly  average since  mid-2009 of approximately  USD 15,700/t  in 
August. In late January and early  February 2013, nickel has traded at  around 
USD 18,000/t. Talvivaara expects volatility to  remain high in the near  term, 
and nickel  price development  to be  driven by  global growth  prospects  and 
forecast Chinese commodity demand in particular.

Talvivaara foresees  the nickel  industry fundamentals  to support  favourable 
nickel price development  in the  longer term, 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.  Talvivaara 
continues to see  the longer  term nickel price  support level  at around  USD 
20,000/t.

Operational outlook

Talvivaara anticipates producing approximately  18,000t of nickel and  39,000t 
of zinc in 2013. Metals production will  continue to be impacted by the  water 
balance issues in the first half of the  year, but is expected to return to  a 
clear ramp-up during the remainder of the  year driven by the re-start of  ore 
production in July. The operational expenditure including leasing for 2013  is 
estimated at  approximately  EUR  230 million,  including  EUR  10-15  million 
budgeted for the treatment  and release of excess  waters from the mine  area. 
Capital expenditure  is anticipated  to amount  to EUR  60 million,  including 
approximately EUR 20 million to be  spent in water management with the  target 
of reaching a sustainable water balance situation at the mine site.

Board of Directors proposal for profit distribution

The Board of Directors is proposing to the Annual General Meeting to be held
on 25 April 2013 that no dividend is declared in respect of the year 2012.

Talvivaara Mining Company Plc
Board of Directors

CONSOLIDATED INCOME STATEMENT
                                    Unaudited  Unaudited    Audited    Audited
                                        three      three     twelve     twelve
                                    months to  months to  months to  months to
(all amounts in EUR '000)           31 Dec 12  31 Dec 11  31 Dec 12  31 Dec 11
Net sales                              25,694     66,492    142,948    231,226
Other operating income                     65        268      4,061      2,304
Changes in inventories of finished
goods
and work in progress                  (6,425)     17,491     50,264     59,727
Materials and services               (20,057)   (37,687)  (117,848)  (135,022)
Personnel expenses                    (7,470)    (6,353)   (28,132)   (25,482)
Depreciation, amortization,
depletion and
impairment charges                   (15,424)   (12,158)   (53,698)   (46,642)
Other operating expenses             (33,390)   (13,121)   (81,183)   (55,211)
Operating profit (loss)              (57,007)     14,932   (83,588)     30,900
Finance income                             31        236        811      1,196
Finance cost                         (13,794)   (11,279)   (46,515)   (39,060)
Finance income (cost) (net)          (13,763)   (11,043)   (45,704)   (37,864)
Profit (loss) before income tax      (70,770)      3,889  (129,292)    (6,964)
Income tax expense                     11,380      (161)     25,381      1,748
Profit (loss) for the period         (59,390)      3,728  (103,911)    (5,216)
Attributable to:
Owners of the parent                 (57,644)      1,915   (98,460)    (8,263)
Non-controlling interest              (1,746)      1,813    (5,451)      3,047
                                    (59,390)      3,728  (103,911)    (5,216)
Earnings per share for profit (loss) attributable to the owners of the parent
(expressed
in EUR per share)
Basic and diluted                      (0,22)       0,01     (0,38)     (0,04)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                             Unaudited Unaudited   Audited   Audited
                                 three     three    twelve    twelve
                             months to months to months to months to
(all amounts in EUR '000)    31 Dec 12 31 Dec 11 31 Dec 12 31 Dec 11
Profit (loss) for the period  (59,390)     3,728 (103,911)   (5,216)
Other comprehensive income,
items net of tax
Cash flow hedges                     -   (1,983)         -   (9,368)
Other comprehensive income,
net of tax                           -   (1,983)         -   (9,368)
Total comprehensive income    (59,390)     1,745 (103,911)  (14,584)
Attributable to:
Owners of the parent          (57,644)       249  (98,460)  (16,132)
Non-controlling interest       (1,746)     1,496   (5,451)     1,548
                             (59,390)     1,745 (103,911)  (14,584)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                              Audited   Audited
                                                as at     as at
(all amounts in EUR '000)                   31 Dec 12  31 Dec11
ASSETS                                               
Non-current assets                                   
Property, plant and equipment                 809,452   761,985
Biological assets                               9,125     7,688
Intangible assets                               7,014     7,371
Investments in associates                       5,694         -
Deferred tax assets                            52,588    26,398
Other receivables                               2,940     2,902
Available-for-sale financial assets                 2       630
                                             886,815   806,974
Current assets                                       
Inventories                                   297,761   240,436
Trade receivables                              32,174    64,027
Other receivables                               7,980     5,249
Derivative financial instruments                    -        10
Cash and cash equivalent                       36,058    40,019
                                             373,973   349,741
Total assets                                1,260,788 1,156,715
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital                                      80        80
Share issue                                         -       278
Share premium                                   8,086     8,086
Other reserves                                539,559   449,532
Retained earnings                           (251,365) (151,129)
                                             296,360   306,847
Non-controlling interest in equity             10,392    15,733
Total equity                                  306,752   322,580
Non-current liabilities                              
Borrowings                                    506,028   467,161
Advance payments                              265,847   235,568
Other payables                                    228         -
Provisions                                     11,290     6,036
                                             783,393   708,765
Current liabilities                                  
Borrowings                                     93,793    28,515
Advance payments                                7,857    11,684
Trade payables                                 25,577    33,678
Other payables                                 27,178    51,478
Provisions                                     16,238         -
Derivative financial instruments                    -        15
                                             170,643   125,370
Total liabilities                             954,036   834,135
Total equity and liabilities                1,260,788 1,156,715

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
A. Share capital
B. Share issue
C. Share premium
D. Hedge reserve
E. Invested unrestricted equity
F. Other reserves
G. Retained earnings
H. Total
I. Non-controlling interest
J. Total equity

(all amounts in EUR
'000)
              A     B     C       D       E      F         G     H     I     J
1 Jan 11                                                       368,   16,  385,
              80    91 8,086   7,494 401,612 31,400  (80,068)   695   894   589
Profit (loss)
for the                                                         (8,    3,   (5,
period         -     -     -       -       -      -   (8,263)  263)   047  216)
Other
comprehensive
income
- Cash flow                                                     (7,   (1,   (9,
hedges         -     -     - (7,869)       -      -         -  869)  499)  368)
Total
comprehensive
income for                                                     (16,    1,  (14,
the period     -     -     - (7,869)       -      -   (8,263)  132)   548  584)
Transactions
with owners
Stock options  -   187     -       -     657      -         -   844     -   844
Senior
unsecured
convertible
bonds                                                            1,          1,
due 2015       -     -     -       -   1,800      -         -   800     -   800
Acquisition                                                    (59,   (2,  (61,
of subsidiary  -     -     -     375       -    997  (60,907)  535)  349)  884)
Perpetual                                                       (1,         (2,
capital loan   -     -     -       -       -      -   (1,891)  891) (360)  251)
Incentive
arrangement
for Executive
Management     -     -     -       -       -     94         -    94     -    94
Senior
unsecured
convertible
bonds
due 2015,
equity                                                           9,          9,
component      -     -     -       -       -  9,018         -   018     -   018
Employee
share
option scheme
- value of
employee                                                         3,          3,
services       -     -     -       -       -  3,954         -   954     -   954
Total
contribution
by and
distribution                                                   (45,   (2,  (48,
to owners      -   187     -     375   2,457 14,063  (62,798)  716)  709)  425)
Total
transactions                                                   (45,   (2,  (48,
with owners    -   187     -     375   2,457 14,063  (62,798)  716)  709)  425)
31 Dec 11                                                      306,   15,  322,
              80   278 8,086       - 404,069 45,463 (151,129)   847   733   580
1 Jan 12                                                       306,   15,  322,
              80   278 8,086       - 404,069 45,463 (151,129)   847   733   580
Profit (loss)
for the                                                        (98,   (5, (103,
period         -     -     -       -       -      -  (98,460)  460)  451)  911)
Other
comprehensive
income
- Cash flow
hedges         -     -     -       -       -      -         -     -     -     -
Total
comprehensive
income for                                                     (98,   (5, (103,
the period     -     -     -       -       -      -  (98,460)  460)  451)  911)
Transactions
with owners
Stock options                                                    4,          4,
               - (278)     -       -   5,198      -         -   920     -   920
Senior
unsecured
convertible
bonds
due 2013       -     -     -       -       -  (252)         - (252)     - (252)
Perpetual
capital loan   -     -     -       -       -  2,354   (1,776)   578   110   688
                                                                81,         81,
Share issue    -     -     -       -  81,482      -         -   482     -   482
Incentive
arrangement
for Executive
Management     -     -     -       -       -     94         -    94     -    94
Employee
share
option scheme                                                     
- value of
employee                                                         1,          1,
services       -     -     -       -       -  1,151         -   151     -   151
Total
contribution
by and
distribution                                                    87,         88,
to owners      - (278)     -       -  86,680  3,347   (1,776)   973   110   083
Total
transactions                                                    87,         88,
with owners    - (278)     -       -  86,680  3,347   (1,776)   973   110   083
31 Dec 12                                                      296,   10,  306,
              80     - 8,086       - 490,749 48,810 (251,365)   360   392   752
                                                                   

CONSOLIDATED STATEMENT OF CASH FLOWS
                                      Unaudited Unaudited   Audited    Audited
                                          three     three    twelve     twelve
                                      months to months to months to  months to
(all amounts in EUR '000)             31 Dec 12 31 Dec 11 31 Dec 12  31 Dec 11
Cash flows from operating activities
Profit (loss) for the period           (59,390)     3,728 (103,911)    (5,216)
Adjustments for
Tax                                    (11,380)       161  (25,381)    (1,748)
Depreciation and amortization            15,424    12,158    53,698     46,642
Other non-cash income and expenses       16,526   (8,171)   (2,813)   (34,987)
Interest income                            (31)     (235)     (811)    (1,196)
Fair value gains on financial assets
at fair value through profit or loss         11     (195)       (5)      (522)
Interest expense                         13,794    11,279    46,515     39,060
                                      (25,046)    18,725  (32,708)     42,033
Change in working capital
Decrease(+)/increase(-) in other
receivables                              19,043  (16,762)    29,336    (2,379)
Decrease (+)/increase (-) in
inventories                               4,166  (15,398)  (57,325)   (65,075)
Decrease(-)/increase(+) in trade and
other payables                         (12,440)   (8,430)  (37,843)      (404)
Change in working capital                10,769  (40,590)  (65,832)   (67,858)
                                      (14,277)  (21,865)  (98,540)   (25,825)
Interest and other finance cost paid   (15,279)  (10,579)  (28,654)   (24,666)
Interest and other finance income            78       274       554      1,329
Income taxes paid                             -      (15)         -       (15)
Net cash generated (used) in
operating activities                   (29,478)  (32,185) (126,640)  (49,177)
Cash flows from investing activities
Acquisition of subsidiary, net of
cash acquired                                 -     (398)         -   (61,885)
Investments in associates                  (93)         -   (5,066)          -
Purchases of property, plant and
equipment                              (29,531)  (21,511)  (97,171)   (78,833)
Purchases of biological assets             (55)      (18)      (55)       (82)
Purchases of intangible assets             (12)      (54)     (225)      (229)
Proceeds from sale of property, plant
and equipment                                 -         -        18     19,995
Proceeds from sale of biological
assets                                      207         -       308        257
Proceeds from sale of intangible
assets                                        -         -         -          5
Purchases of financial assets at fair
value through profit or loss                  -         -         -   (12,010)
Purchases of available-for-sale
financial assets                              -         -         -      (167)
Proceeds from sale of
financial assets at fair value
through profit or loss                        -         -         -     12,022
Net cash generated (used) in
investing activities                   (29,484)  (21,981) (102,191)  (120,927)
Cash flows from financing activities
Proceeds from share issue net of
transactions costs                            -         -    81,108          -
Realised stock options                        -       278     4,920        845
Proceeds from interest-bearing
liabilities                                   -    59,226   130,000     70,242
Perpetual capital loan                        -         -         -    (3,042)
Proceeds from advance payments            9,731     7,381    32,080     14,381
Buy-back of convertible bonds                 -         -   (8,168)          -
Payment of interest-bearing
liabilities                             (2,017)  (11,255)  (15,070)   (37,858)
Net cash generated (used) in
financing activities                      7,714    55,630   224,870     44,568
Net increase (decrease) in cash and
cash equivalents                       (51,248)     1,464   (3,961)  (125,536)
Cash and cash equivalents at
beginning of the period                  87,306    38,555    40,019    165,555
Cash and cash equivalents at end of
the period                               36,058    40,019    36,058     40,019
                                                                    

NOTES

1. Basis of preparation

This year-end 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
                           Machinery Construction   Land     Other
                              and         in         and    tangible
(all amounts in EUR '000)  equipment   progress   buildings  assets    Total
Gross carrying amount at 1
Jan 12                       361,245       41,344   273,921  224,796   901,306
Additions                      2,464       98,108        28        -   100,600
Disposals                       (35)            -         -        -      (35)
Transfers                     13,067     (25,074)     7,260    4,683      (64)
Gross carrying amount at
31 Dec 12                    376,741      114,378   281,209  229,479 1,001,807
Accumulated depreciation
and
impairment losses at 1 Jan
12                            66,791            -    32,644   39,886   139,321
Disposals                       (17)            -         -        -      (17)
Depreciation for the
period                        29,903            -    12,274    8,321    50,498
Accelerated depreciation
charges                            -            -         -    2,553     2,553
Accumulated depreciation
and
impairment losses at 31
Dec 12                        96,677            -    44,918   50,760   192,355
Carrying amount at 1 Jan
12                           294,454       41,344   241,277  184,910   761,985
Carrying amount at 31 Dec
12                           280,064      114,378   236,291  178,719   809,452

3. Trade receivables
(all amounts in EUR '000)
                         31 Dec 12 31 Dec 11
Nickel-Cobalt sulphide       25,254    55,258
Zinc sulphide                 6,912     8,769
Copper sulphide                   8         -
Total trade receivables      32,174    64,027

4. Inventories
(all amounts in EUR '000)
                             31 Dec 12 31 Dec 11
Raw materials and consumables    21,077    14,016
Work in progress                272,775   213,629
Finished products                 3,909    12,791
Total inventories               297,761   240,436

5. Borrowings
(all amounts in EUR '000)
Non-current                                 31 Dec 12 31 Dec 11
Capital loans                                   1,405     1,405
Investment and Working Capital loan            51,600    57,863
Senior Unsecured Bonds due 2017               108,683         -
Revolving Credit Facility                      69,451    49,110
Senior Unsecured Convertible Bonds due 2015   225,875   217,138
Senior Unsecured Convertible Bonds due 2013         -    80,796
Finance lease liabilities                      30,748    37,444
Other                                          18,266    23,405
                                             506,028   467,161
Current
Investment and Working Capital loan             6,430     1,430
Senior Unsecured Convertible Bonds due 2013    75,805         -
Commercial papers                                   -     8,481
Finance lease liabilities                      11,558    18,604
                                              93,793    28,515
Total borrowings                              599,821   495,676
Non-current                                 31 Dec 12 31 Dec 11
Deferred zinc sales revenue                   219,385   221,187
Deferred uranium sales revenue                 46,462    14,381
                                             265,847   235,568
Current
Deferred zinc sales revenue                     7,790    11,684
Other                                              67         -
                                               7,857    11,684
Total advance payments                        273,704   247,252

6. Advance payments
(all amounts in EUR '000)
Non-current                    31 Dec 12 31 Dec 11
Deferred zinc sales revenue      219,385   221,187
Deferred uranium sales revenue    46,462    14,381
                                265,847   235,568
Current
Deferred zinc sales revenue        7,790    11,684
Other                                 67         -
                                  7,857    11,684
Total advance payments           273,704   247,252

7. Provisions                   
                                 Gypsum      Water
                                   pond    balance Environmental Mining
                               leakage management   restoration    fee  Total
31 Dec 10                             -          -         3,784    151  3,935
Charged/(credited) to the
income statement:
Additional provisions                 -          -         2,098      -  2,098
Unused amounts reversed               -          -             -   (40)   (40)
Unwinding of discount                 -          -            43      -     43
31 Dec 11                             -          -         5,925    111  6,036
Charged/(credited) to the
income statement:
Additional provisions            12,156      9,082           216     43 21,497
Unwinding of discount                 -          -           (5)      -    (5)
31 Dec 12                        12,156      9,082         6,136    154 27,528

The non-current and current portions of provisions
are as follows:
                                   2012      2011
Non-current
Gypsum pond leakage                5,000         -
Environmental restoration          6,136     5,925
Mining fee                           154       111
                                 11,290     6,036
Current
Gypsum pond leakage                7,156         -
Water balance management           9,082         -
                                 16,238         -
Total                             27,528     6,036

8. Changes in the number of shares issued
                    Number of shares  
31 Dec 11                  245,781,803 
Stock options 2007A          1,938,787 
Share issue                 24,589,050 
31 Dec 12                  272,309,640 

9. Contingencies and commitments
(all amounts in EUR '000)
The future aggregate minimum lease payments under
non-cancellable operating leases
                                            31 Dec 12 31 Dec 11
Not later than 1 year                            1,910     1,919
Later than 1 year and not later than 5 years     1,036       929
Later than 5 years                                  47        37
                                                2,993     2,885

Capital commitments

At 31 December 2012, the Group  had capital commitments amounting to EUR  15.1 
million (31  December 2011:  EUR  14.5 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
Group
                                           Three     Three    Twelve    Twelve
                                       months to  monthsto months to months to
                                     31 Dec 12 31 Dec 11  31 Dec12 31 Dec 11
Net sales                     EUR '000    25,694    66,492   142,948   231,226
Operating profit (loss)       EUR '000  (57,007)    14,932  (83,588)    30,900
Operating profit (loss)
percentage                             -221,9 %    22,5 %   -58,5 %    13,4 %
Profit (loss) before tax      EUR '000  (70,770)     3,889 (129,292)   (6,964)
Profit (loss) for the period  EUR '000  (59,390)     3,728 (103,911)   (5,216)
Return on equity                        -17,7 %     1,2 %   -33,0 %    -1,5 %
Equity-to-assets ratio                   24,3 %    27,9 %    24,3 %    27,9 %
Net interest-bearing debt     EUR '000   563,763   455,657   563,763   455,657
Debt-to-equity ratio                    183,8 %   141,3 %   183,8 %   141,3 %
Return on investment                     -4,9 %     1,9 %    -6,7 %     4,0 %
Capital expenditure           EUR '000    29,598    21,583    97,451    79,144
Property, plant and equipment EUR '000   809,452   761,985   809,452   761,985
Derivative financial
instruments                   EUR '000         -       (5)         -       (5)
Borrowings                    EUR '000   599,821   495,676   599,821   495,676
Cash and cash equivalents
at the end of the period      EUR '000    36,058    40,019    36,058    40,019

Share-related key
figures                                                        
                                     Three       Three      Twelve      Twelve
                                 months to   months to   months to   months to
                                31 Dec 12   31 Dec 11   31 Dec 12   31 Dec 11
Earnings per share         EUR      (0,22)        0,01      (0,38)      (0,04)
Equity per share           EUR        1,11        1,25        1,11        1,25
Development of share
price at London Stock
Exchange
Average trading
price^1                    EUR        1,35        2,57        2,50        4,22
                          GBP        1,09        2,20        2,02        3,66
Lowest trading
price^1                    EUR        1,03        2,28        1,03        2,25
                          GBP        0,83        1,95        0,83        1,95
Highest trading
price^1                    EUR        1,99        2,98        4,43        7,17
                          GBP        1,61        2,55        3,59        6,22
Trading price at the
end of the period^2        EUR        1,25        2,39        1,25        2,39
                          GBP        1,02        2,00        1,02        2,00
Change during the
period                             -32,8 %     -20,6 %     -48,8 %     -66,4 %
Price-earnings ratio                  neg.       463,2        neg.        neg.
Market capitalization
at the end
of the period^3       EUR '000     341,597     588,487     341,597     588,487
                     GBP '000     278,777     491,564     278,777     491,564
Development in
trading volume
                          1000
Trading volume          shares      23,737      25,743     103,218      67,799
In relation to
weighted average
number of shares                    8,9 %      10,5 %      38,7 %      27,6 %
Development of share
price at
OMX Helsinki
Average trading price      EUR        1,31        2,55        2,31        4,33
Lowest trading price       EUR        1,08        2,27        1,08        2,27
Highest trading price      EUR        2,00        2,98        4,35        7,34
Trading price at the
end of the
period                     EUR        1,24        2,49        1,24        2,49
Change during the
period                            -34,5 %     -16,2 %     -50,2 %     -64,8 %
Price-earnings ratio                 neg.       459,3        neg.        neg.
Market capitalization
at the end
of the period         EUR '000     338,209     612,488     338,209     612,488
Development in
trading volume
                          1000
Trading volume          shares      62,472      73,918     209,565     190,901
In relation to
weighted average
number of shares                   23,4 %      30,1 %      78,5 %      77,7 %
Adjusted average
number of shares              266,846,084 245,601,204 266,846,084 245,601,204
Fully diluted average
number
of shares                     265,742,084 244,497,204 265,742,084 244,497,204
Number of shares at
the end
of the period                 272,309,640 245,781,803 272,309,640 245,781,803

^1) Trading price is calculated on the average of EUR/GBP exchange rates
published by the European Central Bank during the period.
^2) Trading price is calculated on the EUR/GBP exchange rate published by the
European Central Bank at the end of the period.
^3) 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 figures                                    
                                          Three     Three    Twelve    Twelve
                                      months to months to months to months to
                                    31 Dec 12 31 Dec 11 31 Dec 12 31 Dec 11
Wages and salaries           EUR '000     5,982     5,385    23,080    21,574
Average number of employees                584       451       547       445
Number of employees at the
end of the period                          588       461       588       461

Other figures                                                    
                                          Three     Three    Twelve    Twelve
                                      months to months to months to months to
                                     31 Dec 12 31 Dec 11 31 Dec 12 31 Dec 11
Share options outstanding
at the end of the period              5,958,837 6,501,151 5,958,837 6,501,151
Number of shares to be issued
against the outstanding share options 5,958,837 6,501,151 5,958,837 6,501,151
Rights to vote of shares to be issued
against the outstanding share options     2,1 %     2,6 %     2,1 %     2,6 %

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 
                         
                          Profit (loss) attributable to equity holders of the
Earnings per share        Company
                         Adjusted average number of shares
                         
Equity per share          Equity attributable to equity holders of the Company
                         Adjusted average number of shares
                         
Price-earnings ratio      Trading price at the end of the period
                         Earnings per share
                         
Market capitalization     Number of shares at the end of the period * trading
at the end of the period  price at the end of the period

Talvivaara annual results review for the year ended 31 Dec 12

------------------------------------------------------------------------------

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Reuters clients.

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(i) the releases contained herein are protected by copyright and other
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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#1678128
 
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