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
* Nickel production of 2,317t and zinc production of 4,106t
* Production impacted by gypsum pond leakage in November and continuing
challenging water balance situation throughout the fourth quarter
* Metals plant operations stabilized following leakage
* Pekka Perä returned as CEO in November 2012
* Further 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
* Nickel production of 12,916t and zinc production of 25,867t
* Heavy rainfall and rapid spring melt aggravated water balance situation and
impacted production throughout the year
* Ore production temporarily suspended since September 2012; anticipated cost
savings have been realized
* Continued improvement in equipment utilization rates and availabilities
across processes
* A 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
* Kainuu 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
* Temporary lay-offs of 184 employees between 18 February and 30 June 2013 to
support Talvivaara's cost saving initiatives
* Promising development in production processes:

* All-time record average flow-rate of 1,422 m(3)/h through the metals
plant in January
* 98% process availability of the metals plant in January
* Strong 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


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:
* Underwritten rights issue to raise approximately EUR 260 million in gross
proceeds
* Renegotiated EUR 100 million revolving credit facility
* Increase of advance payment from Cameco by USD 10 million to USD 70 million
* EUR 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:

* that no dividend be paid for the financial year 2011;
* that 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;
* that 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;
* that 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;
* that 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
* that 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:
* All-time record average flow-rate of 1,422 m(3)/h through the metals plant
in January
* 98% process availability of the metals plant in January
* Strong 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:
* Mr Pertti Pekkala, formerly General Manager, Research and Development, was
appointed Chief Production Officer (Metals Recovery);
* Mr Kari Vyhtinen, formerly Chief Investment Officer, was appointed Chief
Mining Officer;
* Mr Mikko Korteniemi, formerly Chief Production Officer (Metals Recovery),
was appointed Chief Maintenance Officer with responsibility for maintenance,
procurement and warehousing; and
* Ms 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

Trading volume 1000 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

Trading volume 1000 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:
http://hugin.info/136227/R/1678128/547592.pdf



This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(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]




Unternehmen: Talvivaaran Kaivososakeyhtiö Oyj - ISIN: FI0009014716