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
10 October 2013

                        Talvivaara Operational Update

Highlights

  *Talvivaara produced 2,595t of nickel and 5,645t of zinc in Q3 2013, and
    7,103t of nickel and 13,239t of zinc in Q1-Q3 2013 

  *Production continued to be impacted by low metal grades in leach solution
    due to prolonged effects of excess water in the older heaps 

  *Leaching of new ore stacked since the re-start of mining in May continues
    to proceed well;
    new heap section completed in September and anticipated to start
    contributing to metals production in late October

  *A scheduled maintenance stoppage to remove bottlenecks from the metals
    recovery plant successfully executed in September

  *Darin Cooper appointed COO from 16 September 

  *Company-wide efficiency and productivity programme continued with
    targeted cash flow effect of EUR 100 million by July 2014 

  *Owing to weak nickel price development since early 2013 and the prolonged
    effects of excess water on production levels, Talvivaara's liquidity
    position has weakened more than anticipated; as a result, the Company is
    undertaking an assessment of all available funding options to secure its
    financial flexibility and a sufficient level of liquidity going forward

Production and operational update

Metals production

Talvivaara produced 2,595t of nickel and 5,645t of zinc in Q3 2013, and 7,103t
of nickel and  13,239t of  zinc in January-September  2013. Metals  production 
continued to be impacted by low  metal grades in leach solution. However,  the 
average feed flow to the metals recovery plantduring Q3, excluding  scheduled 
maintenance, was 1,375  m3/h, which is  a new quarterly  record and  indicates 
continued improvement in plant availability and production stability.

A scheduled maintenance break at the metals recovery plant was held at the end
of September with  a total stoppage  time of seven  days. The maintenance  was 
primarily  designed  to  remove  bottlenecks   from  the  plant  and  it   was 
successfully executed to allow  feed flow rates of  up to 1,750m3/h  following 
the stoppage. Other works carried out  during the break included e.g.  reactor 
maintenance,  scheduledinspection  of  thickeners,   cleaning  of  vent   gas 
scrubbers and doubling of the critical process automation stations in order to
increase plant availability.

In the plant operation, focus has remained on improving chemical efficiency as
part of the broader efficiency and productivity programme.

Ore production

Ore production during  the quarter  amounted to  4.1Mt. The  amount of  nickel 
stacked during the period  was approximately 11,000t,  which exceeds the  2012 
quarterly average of 7,000t by 57%. The increase is both a result of increased
tonnages of ore production and of  improved grade control. The average  nickel 
grade of the ore stacked in Q3 was 0.27%.



Bioheapleaching

The excess water  in the  heaps stacked prior  to the  temporary shut-down  of 
mining in September 2012 has diluted  metal grades in leach solution,  reduced 
the efficiency of aeration,  slowed down the  leaching reactions and  impacted 
the rate of evaporation  throughout the current year.  Efforts to reverse  the 
effects of excess water  continued through the third  quarter and resulted  in 
the  release  of  substantial  amounts  of  solution  from  the  older  heaps. 
Consequently, aeration  has  become more  efficient  and signs  of  increasing 
reactivity in these heaps are emerging. The rate of improvement has,  however, 
remained below  expectations and  resulted in  the leach  solutions  remaining 
diluted throughout the third quarter. The  nickel grade in solution pumped  to 
metals recovery averaged  1.0 g/l  during the period,  reflecting the  subdued 
performance of the older heaps. 

Improved metal grades in leach solution are expected to be seen in the  fourth 
quarter as  a  result  of  the  newly  stacked  primary  heap  4  coming  into 
production. Stacking of this heap was completed in the beginning of  September 
and leach solution from it  will be pumped to  the metals recovery plant  from 
late October onwards.  Leaching of the  new heap  4 has progressed  well as  a 
result  of  efficient   aeration,  appropriate  water   balance  and   careful 
maintenance. Leach solution  temperature has remained  at around 45°C  despite 
the recent drop in ambient temperature. 

Following the  completion  of heap  4,  stacking of  a  new round  of  heap  1 
commenced in early September and has  progressed according to plan. This  heap 
section is anticipated  to be completed  at around the  year-end and to  start 
contributing to metals production in the middle of the first quarter of 2014.

Water management

Treatment and  discharge  of  excess  waters  from  the  mine  area  continued 
throughout the  quarter.  However,  the  discharge rate  was  limited  by  the 
reference flow  in the  Kalliojoki river,  which remained  low throughout  the 
quarter. The water balance  overall is currently at  an acceptable level,  but 
the discharge rate limitation  has particularly hindered Talvivaara's  ability 
to empty gypsum pond sections 5 and 6 from excess water by 31 October 2013, as
required by the environmental permit decision of the Northern Finland Regional
State Administrative Agency ("AVI") of 31 May 2013. Talvivaara has applied for
an extension to this time limit  from the Vaasa Administrative Court and  AVI, 
and filed  an  appeal against  the  discharge  rate limitation  to  the  Vaasa 
Administrative Court.

Efficiency and productivity programme



Talvivaara is  committed to  a broad  efficiency and  productivity  programme, 
which was launched in  June 2013 and  targets at achieving  a EUR 100  million 
cash flow effect from savings and productivity improvements within 12  months. 
As part  of the  programme, Talvivaara  conducted co-operation  consultations, 
which were  concluded in  August and  reduced the  number of  personnel by  68 
through terminations of employment and retirement, and by further 96 employees
through a decision not to renew temporary contracts.

The efficiency and productivity programme is headed by COO Darin Cooper  since 
16 September and is proceeding according to plan.

Production and financing outlook

Talvivaara continues to anticipate its  H2 2013 nickel production to  increase 
substantially compared to the  H1 2013 output of  4,508t as the newly  stacked 
heaps are taken into production in  the fourth quarter and start  contributing 
to the metals grades in leach solution. Following the recent maintenance work,
no scheduled stoppages are planned for the remainder of the year. 

As the market price of  nickel has declined by more  than 20% since the  first 
quarter of 2013 and the Company's  production has continued to be impacted  by 
the prolonged  effects  of  excess  water on  older  ore  heaps,  Talvivaara's 
liquidity position  has  weakened more  than  anticipated. As  a  result,  the 
Company is  undertaking an  assessment  of all  available funding  options  to 
secure its financial  and operational  flexibility and a  sufficient level  of 
liquidity going forward.

CEO Pekka Perä comments: "The  market environment remained challenging  during 
the third  quarter with  nickel price  persistently at  around USD  13,000  to 
14,000 per tonne. In the  short term, we can  unfortunately not expect to  see 
material improvements  in commodity  prices and  will therefore  have to  keep 
concentrating on our  efficiency and productivity  programme to conserve  cash 
and improve productivity.



I am  pleased to  report that  our  personnel is  achieving better  than  ever 
operational  performance  throughout  the  production  processes  despite  the 
challenges they have faced with the water balance issues as well as the recent
co-operation consultations. Of particular note are the consistent improvements
seen  in  mining  and  materials  handling  tonnages  and  the  good  leaching 
performance of the newly stacked  ore. However, despite our intensive  efforts 
to revive the  older heaps  from the  effects of  excess water,  we have  only 
achieved moderate success, which  in turn has  limited our production  volumes 
throughout the year. This, together with  the weak nickel price, has  impacted 
our liquidity position more than anticipated and in order to secure sufficient
financial flexibility and liquidity  going forward, we  are now assessing  all 
available options for additional funding."



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 Oct 10 2013

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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE
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