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Talvivaaran Kaivososakeyhtiö Oyj : Talvivaara Mining Company Plc Operational Update

 Talvivaaran Kaivososakeyhtiö Oyj : Talvivaara Mining Company Plc Operational
                                    Update

Stock Exchange Release
Talvivaara Mining Company Plc
19 July 2013

                        Talvivaara Operational Update

Highlights

  *Talvivaara produced 1,776t of nickel and 4,465t of zinc in Q2 2013, and
    4,508t of nickel and 7,593t of zinc in H1 2013 

  *Production impacted by a planned maintenance stoppage and low metal grades
    in leach solution due to continued effect of excess water in the older
    heaps

  *Successful re-start of ore production in May with monthly output of 1.2Mt
    in June and current monthly run-rate exceeding 1.6Mt; promising early
    leaching results from newly stacked ore

  *Flow rate at the metals plant reached a record 1,650 m^3/h in June and
    plant availability remains good

  *Risk level related to excess water on site reduced by continued discharge
    of treated water within permitted limits 

  *Extensive cost reduction and efficiency programme ongoing with aim of
    increasing overall cost efficiency and improving productivity levels;
    organizational changes likely to be included

  *Production guidance for full year 2013 withdrawn, but significant
    improvement in production expected in H2 2013 compared to H1 2013

Production and operational update

Metals production

Talvivaara produced 1,776t of nickel and 4,465t of zinc in Q2 2013, and 4,508t
of nickel and 7,593t  of zinc in  H1 2013. Metals  production continued to  be 
impacted by low metal grades in leach solution. Talvivaara also carried out  a 
scheduled maintenance stoppage in  late May and early  June, due to which  the 
metals plant was shut down or running at substantially restricted capacity for
approximately two and a  half weeks. In addition,  planned maintenance of  the 
hydrogen sulphide  plants  caused  some  capacity  restrictions  already  from 
mid-April onwards.

Following re-start of the plant after the scheduled maintenance stoppage,  the 
flow rate  reached  a  record level  of  1,650  m^3/h in  June.  Metals  plant 
operation has been relatively stable throughout H1 2013 and is not anticipated
to restrict production levels going forward.

Ore production

Ore production was successfully  re-commenced in May  and has since  proceeded 
according to plan. 1.2Mt  of new ore  was crushed and stacked  in June, and  a 
record monthly  run-rate  exceeding  1.6Mt  has  been  reached  in  July.  The 
reclaiming process  is also  operating at  planned capacity  levels  following 
process modifications carried out during the spring and the addition of a  jaw 
crusher unit.

Bioheapleaching

As anticipated in Talvivaara's previous operational outlook in connection with
the Q1 2013 interim results, metals production and bioheapleaching performance
continued to  be impacted  by water  balance issues  throughout H1  2013.  The 
excess water  in  the  heaps stacked  prior  to  the shut-down  of  mining  in 
September 2012 continued to dilute metal grades in leach solution, reduce  the 
efficiency of aeration, slow down the  leaching reactions and impact the  rate 
of evaporation.  The  nickel  grade  in solution  pumped  to  metals  recovery 
declined to a low of  approximately 1.0 g/l during  April, and increased to  a 
level of 1.1-1.2 g/l by June. 

Whilst the impact  of excess water  on the leaching  process has been  greater 
than expected and  the recovery from  it somewhat slower  than hoped for,  the 
process has  nevertheless  started showing  signs  of improvement  during  the 
recent months. Heap temperatures have materially increased, indicating growing
levels of chemical and  biological activity, and there  is strong evidence  of 
significantly  improved  leaching   results  in   de-watered  heap   sections. 
De-watering of all existing heaps  is ongoing by intermittent  discontinuation 
of irrigation, but due  to limited space available  for the solution  draining 
from the heaps  during irrigation  stoppages, this process  is anticipated  to 
take several more months  to completion. In  the meantime, securing  efficient 
aeration and high quality management of  the process overall will continue  to 
be in focus.

Metals production from fresh ore stacked  after the re-start of mining in  May 
will become  increasingly  important  during  the latter  half  of  the  year. 
Therefore, special attention is paid to securing efficient start-up of the new
heaps, the  first one  of which  (primary heap  no. 4)  is anticipated  to  be 
completed in the beginning of September. Whilst still being stacked, the early
leaching of  this  heap has  been  very  promising with  temperatures  of  the 
circulating solution already exceeding 50°C. This proves very active oxidation
reactions in  the  heap  and  exceeds the  corresponding  performance  of  any 
previous heap historically. 

Water management

Treatment and discharge  of excess  waters from  the mine  area has  continued 
throughout the period, reducing the water management related risk level whilst
also allowing  mining  activities  to  be  re-started  and  other  operational 
processes to  continue according  to plan.  Until  the end  of May  2013,  the 
treatment  and  discharge  of  water  was  carried  out  under  the  Company's 
notification of exception under the  Environmental Protection Act and  related 
decision by  the Kainuu  Centre for  Economic Development,  Transport and  the 
Environment in  February  2013.  From  the  beginning  of  June  onwards,  the 
discharge has  continued under  the  permit granted  by the  Northern  Finland 
Regional State Administrative Agency ("AVI") on 31 May 2013.

Efficiency and productivity programme

Talvivaara launched a broad efficiency  and productivity programme in June  in 
circumstances where the price development  of nickel has remained weak  during 
the first half of  2013. The programme is  targeted at increasing the  overall 
cost efficiency and improving productivity levels across all functions of  the 
Company. The programme commenced with an intensive five-week diagnostics phase
which was completed  in early  July. Approximately 30  initiatives to  enhance 
efficiency  and  productivity  were  identified,  and  the  programme  is  now 
progressing into full-scale implementation of the identified initiatives.  The 
co-operation consultations announced on  2 July 2013  may potentially lead  to 
organizational changes which form a part of the programme.

Production guidance

Talvivaara withdraws  its 2013  nickel  production guidance  of  approximately 
18,000t due to  remaining uncertainties  relating to  the short-term  leaching 
performance of the existing heaps. However, H2 2013 production is expected  to 
increase substantially compared  to H1  2013 as  the newly  stacked heaps  are 
taken into  production  and  the overall  leaching  performance  continues  to 
improve.

CEO Pekka Perä comments:  "The challenge we have  faced with the excess  water 
has been  remarkable, but  our team  has worked  tirelessly to  stabilize  the 
operations and to minimize  the environmental risks.  The systematic work  has 
now started  to  bear fruit  with  mining and  materials  handling  operations 
running at all-time  record levels,  and the metals  recovery plant  recording 
higher than ever flow rates. Revival of the leaching performance in our  older 
heaps has  however  been  somewhat slower  than  we  had hoped  for  and  some 
uncertainties relating to the short-term leaching rates still remain. This has
forced us to withdraw  our production guidance for  the current year until  we 
get more clarity into the near term leaching recoveries. This said, our recent
success in water management and  materials handling operations will now  allow 
us to accelerate the dewatering  and revival of the  old heaps, and the  newly 
constructed heap will start contributing metals within the next few weeks.  As 
a result, we expect production in the second half of the year to significantly
exceed the amounts achieved during the first six months of 2013.

The challenging market environment and poor nickel price development over  the 
recent months  have  also  made us  take  a  particularly close  look  at  the 
efficiency and productivity of our operations. Although I regret that we  have 
had to start  co-operation consultations  with our  personnel as  part of  the 
ongoing efficiency programme, I believe the targeted productivity  improvement 
is necessary  in order  for us  to succeed  in the  current low  nickel  price 
environment."

Enquiries
Talvivaara Mining Company Plc Tel +358 20 7129 800
Pekka Perä, CEO
Saila Miettinen-Lähde, Deputy CEO and CFO

Talvivaara Mining Company Plc
Talvivaara Mining  Company  is  an  internationally  significant  base  metals 
producer with its primary focus on nickel and zinc using a technology known as
bioheapleaching to extract metals out of ore. Bioheapleaching makes extraction
of metals  from low  grade ore  economically viable.  The Talvivaara  deposits 
comprise one of the largest known sulphide nickel resources in Europe. The ore
body is  estimated  to support  anticipated  production for  several  decades. 
Talvivaara has secured a  10-year off-take agreement for  100 per cent of  its 
main output  of  nickel  and cobalt  to  Norilsk  Nickel and  entered  into  a 
long-term zinc streaming agreement  with Nyrstar NV.  Talvivaara is listed  on 
the London  Stock  Exchange  Main  Market and  NASDAQ  OMX  Helsinki.  Further 
information can be found at www.talvivaara.com.

Talvivaara Operational Update 19 July 2013

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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
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