Talvivaara Mining Company Interim Report for January-June 2011

Wednesday, 17. August 2011 08:01
STOCK EXCHANGE RELEASE
17 August 2011


Talvivaara Mining Company Interim Report for January-June 2011
Focus on production reliability


Highlights

Q2 2011
* Nickel production of 3,951t despite an extended maintenance and upgrade
stoppage in April-May; all planned measures at the metals recovery plant
completed
* Net sales of EUR 37.6m adversely impacted by a high nickel inventory at the
end of the quarter caused by a maintenance stoppage at Norilsk Nickel
Harjavalta and a decrease in nickel price
* Operating loss EUR (1.2)m
* Acquisition of an additional 4% shareholding in the operating subsidiary
Talvivaara Sotkamo Ltd from Outokumpu Mining Oy for EUR 60 million in June;
option to acquire Outokumpu's remaining 16% shareholding in Talvivaara
Sotkamo Ltd for EUR 240 million


H1 2011
* Nickel production of 8,166t, up 245% versus H1 2010
* Net sales EUR 104.1m (H1 2010: EUR 46.9m)
* Operating profit EUR 10.4m (H1 2010: EUR 0.2m)



Highlights after the reporting period

* Talvivaara was included in the OMX Helsinki 25 index of the Helsinki Stock
Exchange from 1 August 2011 onwards



Key figures

--------------------------------------------+------+------+------+------+------
EUR million | Q2| Q2| Q1-Q2| Q1-Q2| FY
| 2011| 2010| 2011| 2010| 2010
--------------------------------------------+------+------+------+------+------
Net sales | 37.6| 35.2| 104.1| 46.9| 152.2
--------------------------------------------+------+------+------+------+------
Operating profit (loss) | (1.2)| 2.5| 10.4| 0.2| 25.5
--------------------------------------------+------+------+------+------+------
      % of net sales |(3.1%)| 7.2%| 10.0%| 0.4%| 16.7%
--------------------------------------------+------+------+------+------+------
Profit (loss) for the period | (4.6)|(16.8)| 8.1|(33.7)|(13.1)
--------------------------------------------+------+------+------+------+------
Earnings per share, EUR |(0.02)|(0.06)| 0.02|(0.12)|(0.06)
--------------------------------------------+------+------+------+------+------
Equity-to-assets ratio | 29.8%| 38.4%| 29.8%| 38.4%| 31.3%
--------------------------------------------+------+------+------+------+------
Net interest bearing debt | 417.0| 190.7| 417.0| 190.7| 315.0
--------------------------------------------+------+------+------+------+------
Debt-to-equity ratio |125.0%| 51.6%|125.0%| 51.6%| 82.8%
--------------------------------------------+------+------+------+------+------
Capital expenditure | 25.1| 36.3| 35.5| 55.3| 115.7
--------------------------------------------+------+------+------+------+------
Cash and cash equivalents at the end of the| 46.5| 35.4| 46.5| 35.4| 165.6
period | | | | |
--------------------------------------------+------+------+------+------+------
Number of employees at the end of the | 481| 382| 481| 382| 389
period | | | | |
--------------------------------------------+------+------+------+------+------

All reported figures in this release are unaudited.


CEO Pekka Perä comments: "Our second quarter operations were focused on
improving production reliability through an extensive upgrading and maintenance
programme at the metals recovery plant. Whilst this work necessitated holding
back our ramp-up plans, I am pleased to report that the upgrade has been
completed and that both production lines are now back in operation. However, I
must also underline the need for our continued improvement in running the plant
in an optimised fashion and minimising production disturbances through
preventative maintenance. These same targets hold true also for our other
processes, especially materials handling, where our efforts to get the primary
heap reclaiming to work at full capacity went on throughout the second quarter
and will continue into the third.

We are also placing continued emphasis on further mitigation of odour, dust and
water emissions to the environment. We have set ourselves the goal of becoming
an industry leader in environmentally sustainable mining and want to avoid
causing any environmental concerns in the nearby communities. Naturally, we must
also ensure we can comply with our environmental permit on a sustainable basis.

Our financial performance for the second quarter reflected our production
stoppage in April-May as well as declining nickel prices. Due to a maintenance
stoppage at Norilsk Nickel Harjavalta, we were also left with a sizeable nickel
inventory, which pushed close to EUR 20 million in net sales beyond the end of
the quarter. Norilsk Nickel is again receiving concentrate and we expect the
impact of this inventory increase to be fully recovered in the third quarter.

After the quarter end, market conditions have become challenging once again,
with nickel prices declining back to their 2011 lows seen earlier in the summer,
and the very recent financial markets volatility impacting business confidence.
We expect however to counter the difficult market environment with the continued
production ramp-up, and greater sustained production reliability during the
second half of the year."




Enquiries:

Talvivaara Mining Company Plc Tel. +358 20 712 9800
Pekka Perä, CEO
Saila Miettinen-Lähde, CFO

Merlin PR Tel. +44 20 726 8400
David Simonson
Anca Spiridon


Webcast and conference call on 17 August 2011 at 12:00 GMT/14:00 EET

A combined webcast and conference call on the January-June 2011 Interim Result
will be held on 17 August 2011 at 12:00 GMT/14:00 EET. The call will be held in
English.

The webcast can be accessed through the following link:

http://qsb.webcast.fi/t/talvivaara/talvivaara_2011_0817_Q2/

A conference call facility will be available for a Q&A with senior management
following the presentation.

Participant - Finland: +358 (0)9 2313 9201
Participant - UK: +44 (0)20 7162 0077
Participant - US: +1 334 323 6201

Conference id: 891449

The webcast will also be available for viewing on the Talvivaara website shortly
after the event.




Financial review

Q2 2011 (April-June)

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 three months ended 30 June 2011
amounted to EUR 37.6 million (Q2 2010: EUR 35.2 million). The net sales
decreased by 43.4% compared to Q1 2011 due to a high nickel inventory at the end
of the quarter, and adverse changes in the EUR/USD exchange rate and nickel
price. More specifically, substantial nickel and cobalt deliveries to Norilsk
Nickel were delayed into the third quarter due to a maintenance stoppage at
Norilsk Nickel Harjavalta. Also, the final settlement in Q2 2011 of sales that
were provisionally invoiced and recorded in Q1 2011, lead to foreign exchange
losses of EUR 2.0 million and to nickel price losses of EUR 12.0 million. During
the second quarter, the EUR/USD exchange rate increased from 1.3825 to 1.4453
and the LME nickel cash price decreased from 28,873 USD/tonne to 23,113
USD/tonne. Product deliveries during the period amounted to 2,705 tonnes of
nickel, 64 tonnes of cobalt and 6,682 tonnes of zinc.

Materials and services during the second quarter amounted to EUR (31.9) million
(Q2 2010: EUR (21.4) million) and, relative to the level of production, were in
line with the previous quarter. Other operating expenses were EUR (16.7) million
in Q2 2011 (Q2 2010: EUR (7.8) million), reflecting a 54.4% increase in
maintenance costs compared to the previous quarter due to the extended
maintenance programmes carried out in April-May.

Operating loss for Q2 2011 was EUR (1.2) million (Q2 2010: profit of EUR 2.5
million). Loss for the period amounted to EUR (4.6) million (Q2 2010: EUR (16.8)
million).

Balance sheet

Capital expenditure during the quarter totalled EUR 25.1 million (Q2 2010: EUR
36.3 million). The expenditure related primarily to the construction of
secondary heap foundations and a gypsum pond, equipment needed for secondary
leaching, and dust removal.

In June, Talvivaara Mining Company Plc acquired an additional 4% shareholding in
its operating subsidiary Talvivaara Sotkamo Ltd from Outokumpu Mining Oy for EUR
60 million. As a result of the acquisition, Talvivaara Mining Company's
ownership in Talvivaara Sotkamo increased from 80% to 84%. The equity effect of
the share acquisition is described below in the H1 2011 Balance sheet section.

H1 2011 (January-June)

Net sales and financial result

Talvivaara's net sales during the six months ended 30 June 2011 amounted to EUR
104.1 million (H1 2010: EUR 46.9 million). The revenues came from the deliveries
of 6,551 tonnes of nickel, 15,418 tonnes of zinc, and approximately 140 tonnes
of cobalt.

The Group's other operating income amounted to EUR 1.4 million (H1 2010: EUR
16.7 million) and came mainly from fair value gains on foreign exchange
derivatives and indemnities on losses relating to certain equipment failures.

Materials and services during the six months ended 30 June 2011 amounted to EUR
(68.2) million (H1 2010: EUR (41.4) million) with the rise from the previous
year stemming from increased level of production.

Employee benefit expenses including the value of employee expenses related to
the employee share option scheme of 2007 were EUR (13.4) million (H1 2010: EUR
(9.9) million). The increase was attributable to the increased number of
personnel.

Other operating expenses amounted to EUR (30.3) million (H1 2010: EUR (19.3)
million), of which energy and maintenance costs comprised over two thirds. The
impact of maintenance costs was particularly high in the second quarter due to
the maintenance and upgrading programmes carried out in April-May.

Operating profit amounted to EUR 10.4 million (H1 2010: EUR 0.2 million), which
represents 10.0% of the net sales during the period.

Finance income for the six month period was EUR 20.1 million (H1 2010: EUR 4.9
million) and consisted mainly of exchange rate gains of EUR 18.5 million
relating to the advance payment received from Nyrstar for the zinc streaming
agreement entered into in February 2010. Finance costs of EUR (18.5) million (H1
2010: EUR (50.3) million) were mainly caused by interests on borrowings.

The Company's profit for the period amounted to EUR 8.2 million (H1 2010: loss
of EUR (33.7) million).

The total comprehensive income for H1 of 2011 was EUR 3.3 million (H1 2010: EUR
(39.6) million), including a reduction in hedge reserves resulting from the
occurrence of the hedged sales.

Balance sheet

Capital expenditure during H1 2011 totalled EUR 35.5 million (H1 2010: EUR 55.3
million). The expenditure related primarily to secondary heap foundations,
secondary leaching, gypsum pond and dust removal. On the consolidated statement
of financial position as at 30 June 2011, property, plant and equipment totalled
EUR 741.0 million (31 December 2010: EUR 728.2 million).

In the Group's assets, inventories amounted to EUR 219.1 million on 30 June
2011 (31 December 2010: EUR 175.4 million). The increase in inventories
reflected the ramp-up of production and the consequent increase in the amount of
ore stacked on heaps, valued at cost.

Trade receivables amounted to EUR 25.4 million on 30 June 2011 (31 December
2010: EUR 52.4 million). The decrease in trade receivables reflected the
maintenance stoppage at Norilsk Nickel Harjavalta and the consequent high nickel
inventories at Talvivaara at the end of the period.

On 30 June 2011, cash and cash equivalents, including short-term deposits of EUR
11.9 million, totalled EUR 46.5 million (31 December 2010: EUR 165.6 million).

In equity and liabilities, the total equity amounted to EUR 333.6 million on 30
June 2011 (31 December 2010: EUR 380.3 million). Subsequent to Talvivaara Mining
Company's acquisition of an additional 4% shareholding in its operating
subsidiary Talvivaara Sotkamo, the equity decreased by EUR 61.5 million as the
acquisition price of EUR 60 million and the transaction costs of EUR 1.5 million
were deducted from equity under to IFRS. On the other hand, the equity component
of EUR 9.0 million for the EUR 225 million senior unsecured convertible bonds
due 2015 was recognised in equity during the period.

A total of 370,507 new shares were subscribed for during H1 2011 under the
company's stock option rights 2007A and 2007B and the convertible bonds due
2015. The entire subscription price of EUR 2.2 million was recognised in equity.

Borrowings decreased from EUR 480.6 million on 31 December 2010 to EUR 463.5
million at the end of June 2011. The changes in borrowings during the period
included determination of the equity component for the senior unsecured
convertible bonds due 2015 after an Extraordinary General Meeting of Talvivaara
resolved to approve the issue of special rights in January 2011.

Total advance payments as at 30 June 2011 amounted to EUR 252.5 million (31
December 2010: EUR 267.1 million). The changes in advance payments during H1
2011 included the addition of a EUR 7.0 million advance payment by Cameco
Corporation relating to the uranium off-take agreement and non-cash exchange
rate gains of approximately EUR 18.5 million on the Nyrstar advance payment. The
Nyrstar advance payment was also amortised by USD 4.1 million as a result of
15,418 tonnes of zinc deliveries during the first half of 2011. The remaining
USD equivalent of the Nyrstar advance payment amounted to USD 326.0 million on
30 June 2011.

Total equity and liabilities as at 30 June 2011 amounted to EUR 1,118.7 million
(31 December 2010: EUR 1,216.3 million).




Financing

In June, Talvivaara signed a EUR 80 million revolving credit facility with
Nordea Bank, primarily as back-up financing relating to the acquisition of
Talvivaara Sotkamo shares from Outokumpu Mining. The facility, which remains
undrawn, has an initial margin of 2.50%.

Negotiations also commenced in June to amend the EUR 100 million revolving
credit facility signed in June 2010 with Nordea Bank, Svenska Handelsbanken and
Danske Bank to accommodate the share transaction with Outokumpu Mining and to
also otherwise amend the agreement to reflect Talvivaara's current stage of
development. Final bank approvals of the amendments are pending but expected in
August 2011. Upon approval of the amendment agreement, the EUR 100 million
revolving credit facility will replace the EUR 80 million commitment by Nordea
Bank.

In February, Talvivaara signed a uranium off-take agreement with Cameco
Corporation. According to the terms set forth in the agreement Cameco is to
provide an upfront investment of up to USD 60 million to cover the construction
costs of the uranium extraction circuit. Talvivaara will repay the investment
through deliveries of uranium concentrate during the initial years of the
agreement. Once the capital sum has been repaid all uranium concentrate produced
thereafter until 31 December 2027 will be bought by Cameco at a price based on
market prices at the time of delivery.

In January, an Extraordinary General Meeting of Talvivaara resolved to approve
the proposal of the Board of Directors for the issue of special rights in
relation to EUR 225 million senior unsecured convertible bonds due 2015 which
were issued on in December 2010. The bonds are convertible into 27.0 million
fully paid ordinary shares of the Company. The interest rate applied to the
convertible bond is 4.00% and the yield to maturity 6.50%, reflecting a
redemption price of 114.5% at maturity.

Currency option programme

In June 2011, Talvivaara entered into a currency option programme comprising USD
options for six months from July 2011 through December 2011. The monthly
obligation amounts to USD 7.5 million and protection to USD 5.0 million. The
collar ranges from 1.2884 to 1.4900.

Going concern

Talvivaara Group's forecasts and projections, taking account of the Group's
current liquidity position and reasonably possible changes in production, metal
prices and foreign exchange rates, indicate the Group to be able to continue in
operational existence with adequate financial resources for the foreseeable
future. The Group therefore continues to adopt the going concern basis in
preparing its consolidated financial statements.

Production review

During the second quarter, operations at the Sotkamo mine focused on improving
production reliability through an extensive maintenance and upgrading programme
carried out at the metals recovery plant. The programme involved the increasing
of sulphur melting and certain pumping capacities, cleaning and upgrading of
hydrogen sulphide generators, inspection and maintenance of reactors and
thickeners, and numerous small modification items, e.g. doubling up of selected
process pipelines, that will help improve production reliability and sustainable
capacity. The main findings from the thorough inspections included largely
anticipated levels of wear and tear; no unexpected or serious corrosion was
found. In the hydrogen sulphide generators large amounts of contamination were
found and identified as the main cause of the reduced hydrogen sulphide capacity
during the winter and spring. As the primary source of the contamination was
determined to be dust from crushing and screening, measures were also taken to
prevent dust from entering the sulphur storage area.

The maintenance and upgrading works commenced in early April and were completed
in late May. While most of the work was carried out while one production line at
the plant was operating, a full stoppage of fifteen days was also required. In
view of the length of the full stoppage and the fact that for most of April and
May only one production line at a time was operating, the achieved production
output in Q2 2011 of 3,951t of nickel (Q2 2010: 2,729t) and 7,662t of zinc (Q2
2010: 5,575t) can be considered satisfactory. Furthermore, operation of the
plant after the completion of the upgrading and maintenance programme has proven
the facility to have sufficient capacity for full scale operation.
For the half-year, nickel output amounted to 8,166t, representing an increase of
245% over the 3,339t of nickel production achieved during the first half of
2010. The corresponding half-year figures for zinc were 14,005t in 2011 and
8,535t in 2010.

The mining department produced 2.8Mt of ore (Q2 2010: 3.5Mt) and 5.3Mt of waste
(Q2 2010: 4.1Mt). The emphasis was again on waste mining to provide material for
levelling the ground for the secondary heap foundations. Ore mining continued to
be restricted due to the bottle-neck in primary heap reclaiming.

In materials handling, the focus was on primary heap reclaiming, which was
initially delayed by a contractor change in Q1 2011 and has subsequently
suffered from continued commissioning issues with the purpose-built reclaiming
system. Modifications to the reclaiming equipment were made during the second
quarter in order to improve the feeding of ore into the system. Additional
reclaiming capacity was also obtained by engaging a second contractor to
excavate and crush ore from the heap. Despite these efforts, crushing and
stacking of ore continued to be restricted by the limited reclaiming capacity
and amounted in Q2 2011 to 2.8Mt (Q2 2010: 3.7Mt) and during the first half of
the year to 4.7Mt (Q1-Q2 2010: 7.0Mt).

Bioheapleaching continued to progress well during the second quarter. The
average nickel grades in solution pumped to metals recovery increased from 2.3
g/l in April to 3.0 g/l in June. The main sources of leach solution were heap
sections 3 and 4. Leaching in the secondary heap also progressed well, but
solution from the secondary leaching was not yet pumped to metals recovery due
to the yet insufficient size of the secondary heap.


Production key figures

--------------------------+------+-----+-----+------+-----+------
  |  | Q2| Q2| Q1-Q2|Q1-Q2| FY
| | 2011| 2010| 2011| 2010| 2010
--------------------------+------+-----+-----+------+-----+------
Mining |  |  |  |  |  |
--------------------------+------+-----+-----+------+-----+------
     Ore production |Mt | 2.8| 3.5| 4.9| 6.6| 13.3
--------------------------+------+-----+-----+------+-----+------
     Waste production |Mt | 5.3| 4.1| 10.4| 6.5| 16.7
--------------------------+------+-----+-----+------+-----+------
Materials handling |  |  |  |  |  |
--------------------------+------+-----+-----+------+-----+------
     Stacked ore |Mt | 2.8| 3.7| 4.9| 7.0| 13.3
--------------------------+------+-----+-----+------+-----+------
Bioheapleaching |  |  |  |  |  |
--------------------------+------+-----+-----+------+-----+------
     Ore under leaching |Mt | 29.2| 18.0| 29.2| 18.0| 24.3
--------------------------+------+-----+-----+------+-----+------
Metals recovery |  |  |  |  |  |
--------------------------+------+-----+-----+------+-----+------
     Nickel metal content|Tonnes|3,951|2,729| 8,166|3,339|10,382
--------------------------+------+-----+-----+------+-----+------
     Zinc metal content |Tonnes|7,662|5,575|14,005|8,535|25,462
--------------------------+------+-----+-----+------+-----+------


Sustainable development and permitting

Emissions to the environment

Environmental monitoring during the second quarter confirmed Talvivaara to
comply with all of its environmental permit limits for water emissions.
Similarly, the hydrogen sulphide emissions have been within the permitted
limits. Despite the already achieved good results, work aimed at minimizing the
odour discharges continues with process and equipment modifications. Dust
emissions have been within permitted limits in all but one measurement point at
the screening building.

Permitting

The environmental permit application for uranium extraction was submitted to the
regional environmental permitting agency in March. Application for the renewal
of the existing environmental permit was also submitted in March. Public notice
on both permit applications is expected during the autumn, following
Talvivaara's responses to the relevant authorities' requests for amendments by
the end of August.

In June 2011, Talvivaara submitted to the Ministry of Employment and Economy an
application in accordance with the Mining Act (503/1965) for the expansion of
the Talvivaara mining concession area by approximately 70 km(2). Subject to
approval of the expansion, the total area of the Talvivaara mining concession
will be approximately 130 km(2). The expansion of the mining concession area
relates to the previously announced increase in the Talvivaara mineral
resources, the full exploitation of which is not possible within the existing
mining concession area.

Baseline studies of the environment and preparations for the Environmental
Impact Assessment relating to the potential production expansion (Operation
Overlord) and the expansion of the mining concession area continued during the
second quarter. The Environmental Impact Assessment is anticipated to commence
during the fourth quarter of 2011 and to cover certain parallel process options,
as the final production processes and end products have not yet been chosen.
Following the EIA, Talvivaara expects to submit the environmental permit
application for the expansion in 2012.

In April 2010, Talvivaara applied to the Ministry of Employment and Economy for
a permit to extract uranium as a by-product, in accordance with the Nuclear
Energy Act. Processing of the permit application at the Ministry of Employment
and Economy is ongoing and the Talvivaara expects to obtain this permit in late
2011.

Safety and security

At the end of the second quarter, the injury frequency among the Talvivaara
personnel was 13.1 lost time injuries/million working hours on a rolling 12
month basis (31 December 2010: 10.7 lost time injuries/million working hours).

Planned uranium extraction and uranium off-take agreement with Cameco
Corporation

In February, Talvivaara signed a uranium off-take agreement with Cameco
Corporation. Under the terms of the agreement, Cameco will provide an up-front
investment, up to a maximum of USD 60 million, to cover the construction cost of
the uranium extraction circuit and related facilities. Cameco's capital
contribution will be repaid through deliveries of uranium concentrate in the
initial years of the agreement.

Once the capital is repaid, Cameco will purchase the uranium concentrate
produced at Sotkamo through a supply agreement that will be in effect until 31
December 2027. Cameco will provide Talvivaara with payment for the uranium based
on a formula that references market prices at the time of delivery.

Annual uranium production is estimated at 350tU (ca. 770,000 pounds),
corresponding to approximately 410t (900,000 pounds) of yellow cake (UO(4)).

Cameco is providing technical assistance to Talvivaara in the design,
construction, commissioning and operation of the uranium extraction circuit to
be constructed at the Sotkamo mine.

The agreements between Talvivaara and Cameco are subject to ratification by the
Euratom Supply Agency and the approval of the European Commission pursuant to
the Euratom Treaty. These approvals are expected during the current year.

During the second quarter, preparations for the construction of the uranium
recovery facility continued and the key components of the uranium extraction
circuit were ordered. Commissioning of the facility, subject to receiving the
necessary permits and authorizations, is expected during the second half of
2012.

Production expansion - Operation Overlord

Conceptual studies relating to production expansion beyond 50,000tpa of nickel
continued. Recruiting of a dedicated project team progressed during the second
quarter, strengthening the team to nine members with metallurgical,
infrastructure, bioheapleaching, materials handling and project coordination
expertise. Recruiting to the project team continues targeting added expertise in
environmental and water management issues, and automation.

Scoping studies are currently based on the target of doubling up 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. Production of cobalt metal is also an option, but refining of zinc to
zinc metal is currently not within the planning scope. For certain products and
raw materials, e.g. manganese and sulphuric acid, joint ventures or other
partnering arrangements will be investigated.

Investment into the expansion project is planned to be carried out in a modular
fashion to allow stretching of the expenditure over an estimated 5-6 year period
starting in 2013. The modular approach also allows commissioning of the
equipment and processes sequentially in the order of the process stages, which
is expected to reduce the risk of serious start-up issues.

Acquisition of an additional 4% shareholding in the operating subsidiary
Talvivaara Sotkamo Ltd from Outokumpu Mining Oy

Talvivaara Mining Company signed an agreement on 1 June 2011 with Outokumpu
Mining Oy and its parent company Outokumpu Oyj to acquire an additional 4%
shareholding in Talvivaara Sotkamo Ltd. As a result of the acquisition,
Talvivaara's ownership in Talvivaara Sotkamo increased from 80% to 84% and
Outokumpu Mining's ownership decreased to 16%. The acquisition price for the 4%
stake was EUR 60 million.

Simultaneously, Talvivaara entered into an exclusive option agreement with
Outokumpu Mining and Outokumpu Oyj (the "Option") whereby it will have the
right, at its sole discretion, in one or more instalments, to acquire Outokumpu
Mining's remaining 16% shareholding in Talvivaara Sotkamo for EUR 240 million at
any time prior to 31 March 2012. Should Talvivaara choose to exercise the
Option, entirely or partially, it will consider appropriate funding arrangements
for the payment of the exercise price at that time.

Fulfilment of minimum transportation requirement on Talvivaara-Murtomäki
railroad

In 2008-2009, Talvivaara constructed a 25 km railway connecting the Talvivaara
mine with the national railway grid. Subject to agreed minimum transportation
volumes on the railroad being achieved, the Finnish State agreed to reimburse
the construction expenses to Talvivaara Infrastructure Oy up to an amount of EUR
40 million (0% VAT) in two instalments and to redeem the railroad as part of the
national rail grid. The first agreed transportation milestone was reached in
2010 and the Finnish State subsequently paid EUR 20 million as a partial
reimbursement. The remaining minimum transportation volumes were reached in
January 2011 and documentation work with the relevant authorities has since been
ongoing in order to effect the final redemption payment during 2011.

Annual General Meeting

Talvivaara's Annual General Meeting was held on 28 April 2011 in Sotkamo,
Finland. The resolutions of the AGM included:

* that no dividend be paid for the financial year 2010;
* that the annual fee payable to the members of the Board in 2012 be as
follows: Chairman of the Board EUR 160,000, Deputy Chairman (Senior
Independent Director) EUR 69,000, Chairman of the Audit Committee EUR
69,000, Chairman of the Nomination Committee EUR 53,000, Chairman of the
Remuneration Committee EUR 53,000, Chairman of the Sustainability Committee
EUR 53,000, other Non-executive Directors and Executive Directors EUR
48,000;
* that the number of Board members be seven and that Mr. Edward Haslam, Mr.
Eero Niiva, Ms. Eileen Carr, Mr. D. Graham Titcombe, Mr. Pekka Perä, Mr.
Tapani Järvinen and Ms. Saila Miettinen-Lähde be re-elected as Board
Members;
* 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 2011;
* 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
repurchase authorisation is valid until 27 October 2012. The proposed
authorisation replaces the authorisation to repurchase 10,000,000 shares
granted by the Annual General Meeting of 15 April 2010; and
* that the Company shall issue stock options partly to the key employees and
partly to the personnel of the Company and its subsidiaries. The maximum
total number of stock options issued will be 5,500,000 and the stock options
entitle their owners to subscribe for a maximum total of 5,500,000 new
shares in the Company or to receive existing shares held by the Company. The
beginning of the share subscription period shall require attainment of
certain operational or financial targets determined by the Board annually.


Risk management and principal risks

In line with current corporate governance guidelines on risk management,
Talvivaara carries out an ongoing 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 counter parties,
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 relate to the ongoing
ramp-up of operations. While the Company has demonstrated that all of its
production processes work and can be operated on an industrial scale, the rate
of ramp-up is still subject to risk factors, including various technical and
operational risks, that may currently be unknown or are beyond the Company's
control. In order to better mitigate operational risks going forward, Talvivaara
has in place an ongoing production reliability programme, which targets at
reducing downtime and risk of accidents through detailed evaluation of all
equipment and processes and subsequent improvement of operating procedures and
maintenance. The Company has also recently carried out and is planning further
maintenance and upgrading programmes at the metals recovery plant in order to
improve plant availability and capacity in the future.

The market price of nickel is, together with production volumes, the main
determinant of Talvivaara's revenues. The volatility of nickel price has
historically been high and the volatility is in the Company's view likely to
persist also in the future. Talvivaara is unhedged against variations in nickel
prices, which means that nickel price volatility will have a substantial effect
on the Company's revenues and result. 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 profitably also during
the lows of commodity price cycles.

Talvivaara's revenues are determined mostly 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
currency exchange risk relating 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.

Personnel

The number of personnel employed by the Group on 30 June 2011 was 481 (Q2
2010: 382), including 65 summer trainees.

Wages and salaries paid during the first three months of the year totalled EUR
8.7 million (Q2 2010: EUR 6.7 million).

As part of the Group's long term incentive plan, the employees of Talvivaara
resolved on 18 June 2011 to establish a Group personnel fund to manage the
earnings bonuses paid by Talvivaara. In accordance with its byelaws, the fund
will invest a substantial proportion of its assets in Talvivaara Mining Company
shares. The fund is managed by personnel representatives elected by the
employees. Registration of the fund is pending at the Ministry of Employment and
Economy.

Shares and shareholders

The number of shares issued and outstanding and registered on the Euroclear
Shareholder Register as of 30 June 2011 was 245,727,603. Including the effect of
the EUR 85 million convertible bond of 14 May 2008, the EUR 225 million
convertible bond of 16 December 2010 and the Option Scheme of 2007, the
authorised full number of shares of the Company amounted to 290,636,391.

The share subscription period for stock options 2007A is between 1 April 2010
and 31 March 2012 and for stock options 2007B between 1 April 2011 and 31 March
2013. By 30 June 2011 a total of 292,586 Talvivaara Mining Company's new shares
had been subscribed for under the stock option rights 2007A and a total of
2,040,514 stock option rights 2007A remain unexercised. A total of 42,763 new
shares of Talvivaara were subscribed for under the stock option rights 2007B and
a total of 2,290,337 stock option rights 2007B remain unexercised. In addition,
a total of 214,736 new shares of the Company were subscribed for under the
convertible bonds due 2015.

As at 30 June 2011, the shareholders who held more than 5% of the shares and
votes of Talvivaara were Pekka Perä (23.0 %), Varma Mutual Pension Insurance
Company (8.6%), BlackRock Investment Management (6.0%) and Ilmarinen Mutual
Pension Insurance Company (5.4%).

Events after the review period

Inclusion of Talvivaara Mining Company in the OMX Helsinki 25 index

Talvivaara was included in the OMX Helsinki 25 index of the Helsinki Stock
Exchange from 1 August 2011.

Short-term outlook

Operational outlook

The nickel inventory build-up of the second quarter is expected to be recovered
during the third quarter, which in turn is likely to have a substantial positive
impact on the Group's Q3 2011 financial result.

The maintenance and upgrading stoppage planned for the second half of 2011 is
likely to be scheduled for the fourth quarter.

Production ramp-up at the Sotkamo mine has continued and Talvivaara expects its
nickel production for the current year to report towards the lower end of the
previously given guidance range of 22,000-28,000t.

Near term progress in the reclaiming and stacking of the primary heap is
critical in view of the 2012 production targets. The production guidance for the
coming year will be reassessed based on the performance of these processes over
the next 2-3 months. The availability and utilization rate of the metals
recovery plant in the near future will also be a factor.

Market outlook

The third quarter of 2011 started relatively positively for base metals with
nickel price climbing to around USD 25,000 per tonne and zinc reaching USD
2,500 per tonne. However, the recently heightened macroeconomic concerns over,
amongst others, a slowdown of economic growth, the US debt burden and the
Eurozone sovereign debt issues, have impacted also the commodity markets. This
has resulted in the whole base metals complex retracting lower and in nickel
price declining to its lowest level in 2011 at around USD 21,000 per tonne.
Whilst this movement has been predominantly driven by speculative trading and
the overall de-risking taking place across asset classes, prolonged
macroeconomic concerns may also begin to impact the fundamental supply-demand
balance and hence the nickel price. On the other hand, the global nickel market
has remained in a deficit throughout the first half of the year with LME nickel
stocks currently around their lowest levels since early 2009. An increase in
production especially from ferronickel and nickel pig iron is predicted, but a
significant shift of the supply-demand balance is not expected in the near term.

Overall, the short-term outlook for nickel is uncertain and volatility across
the base metals complex is likely to remain high. The macroeconomic
uncertainties create downside risks, but longer term fundamentals, including
marginal cost of production, would appear to support the nickel price at around
USD 20,000 per tonne.


17 August 2011


Talvivaara Mining Company Plc
Board of Directors

CONSOLIDATED INCOME STATEMENT

Unaudited Unaudited Unaudited Unaudited
(all amounts in three months three months six months six months
EUR '000) to 30 Jun 11 to 30 Jun 10 to 30 Jun 11 to 30 Jun 10
--------------------------------------------------------------
Net sales 37,647 35,248 104,114 46,854



Other operating
income 1,085 1,283 1,421 16,711

Changes in
inventories of
finished goods and
work in progress 26,893 13,084 39,674 32,159

Materials and
services (31,894) (21,439) (68,204) (41,369)

Personnel expenses (6,626) (5,004) (13,421) (9,856)

Depreciation,
amortization,
depletion and
impairment charges (11,618) (12,786) (22,816) (25,032)

Other operating
expenses (16,671) (7,843) (30,335) (19,268)


--------------------------------------------------------------
Operating profit
(loss) (1,184) 2,543 10,433 199

Finance income 4,320 3,713 20,053 4,864

Finance cost (9,125) (28,988) (18,512) (50,316)
--------------------------------------------------------------
Finance income
(cost) (net) (4,805) (25,275) 1,541 (45,452)

Profit (loss)
before income tax (5,989) (22,732) 11,974 (45,253)



Income tax expense 1,356 5,968 (3,823) 11,553


--------------------------------------------------------------
Profit (loss) for
the period (4,633) (16,764) 8,151 (33,700)
--------------------------------------------------------------
Attributable to:

Owners of the
parent (3,937) (15,025) 4,902 (28,886)

Non-controlling
interest (696) (1,739) 3,249 (4,814)
--------------------------------------------------------------
  (4,633) (16,764) 8,151 (33,700)
--------------------------------------------------------------
Earnings per share
for profit (loss)
attributable to
the owners of the
parent expressed
in EUR per share)

Basic and diluted (0.02) (0.06) 0.02 (0.12)



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Unaudited Unaudited Unaudited Unaudited
three months three months six months six months
(all amounts in EUR '000) to 30 Jun 11 to 30 Jun 10 to 30 Jun 11 to 30 Jun 10
----------------------------------------------------
Profit (loss) for the period (4,633) (16,764) 8,151 (33,700)

Other comprehensive income,

items net of tax

Cash flow hedges (2,335) (2,857) (4,879) (5,876)
----------------------------------------------------
Other comprehensive income,
net of tax (2,335) (2,857) (4,879) (5,876)


----------------------------------------------------
Total comprehensive income (6,968) (19,621) 3,272 (39,576)
----------------------------------------------------


Attributable to:

Owners of the parent (6,000) (17,311) 804 (33,587)

Non-controlling interest (968) (2,310) 2,468 (5,989)
----------------------------------------------------
  (6,968) (19,621) 3,272 (39,576)
----------------------------------------------------




CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited as Audited as Unaudited as
(all amounts in EUR '000) at 30 Jun 11 at 31 Dec 10 at 30 Jun 10

ASSETS

Non-current assets

Property, plant and equipment 741,006 728,226 663,154

Biological assets 8,317 8,464 8,112

Intangible assets 7,559 7,737 7,734

Deferred tax assets 21,104 22,421 35,199

Other receivables 2,970 7,626 7,600

Available-for-sale financial assets 590 464 -

  781,546 774,938 721,799

Current assets

Inventories 219,105 175,361 136,824

Trade receivables 25,352 52,354 26,736

Other receivables 6,094 8,702 3,680

Financial assets at fair value
through profit or loss 11,898 - -

Derivative financial instruments 703 40 -

Cash and cash equivalent 34,628 165,555 35,431

  297,780 402,012 202,671

Assets held for sale 39,395 39,391 39,372

Total assets 1,118,721 1,216,341 963,842

EQUITY AND LIABILITIES

Equity attributable to equity
holders of the parent

Share capital 80 80 80

Share issue - 91 340

Share premium 8,086 8,086 8,086

Hedge reserve 3,770 7,494 11,866

Other reserves 447,929 433,012 439,020

Retained earnings  (142,032)  (84,322)  (100,254)

  317,833 364,441 359,138

Non-controlling
interest in equity 15,802 15,831 10,777

Total equity 333,635 380,272 369,915

Non-current liabilities

Borrowings 423,903 437,623 196,756

Advance payments 218,454 231,812 259,559

Trade payables - 17 -

Derivative financial instruments - - 1,557

Provisions 5,278 3,935 2,453

  647,635 673,387 460,325

Current liabilities

Borrowings 39,622 42,934 29,404

Advance payments 34,093 35,243 32,012

Trade payables 40,035 39,408 31,580

Other payables 22,644 43,820 39,788

Derivative financial instruments 1,057 1,277 818

  137,451 162,682 133,602

Total liabilities 785,086 836,069 593,927

Total equity and liabilities 1,118,721 1,216,341 963,842



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 A B C D E F G H I J
EUR '000)
--------------------------------------------------------
1 Jan 10 16, (71, 370, 11, 382,
80 - 8,086 16,567 401,248 200 368) 813 784 597

Profit (loss) (28, (28, (4, (33,
for the period - - - - - - 886) 886) 814) 700)

Other
comprehesive
income

(4, (1, (5,
- Cash flow hedges - - - (4,701) - - - 701) 175) 876)
--------------------------------------------------------
Total
comprehensive
income for (28, (33, (5, (39,
the period - - - (4,701) - - 886) 587) 989) 576)

Transactions
with owners

Stock options
- 340 - - 11 - - 351 - 351

Perpetual 19, 19, 4, 24,
capital loan - - - - - 925 - 925 982 907

Employee share
option scheme

- value of
employee 1, 1, 1,
services - - - - - 636 - 636 - 636
--------------------------------------------------------
Total
contribution by
and distribution 21, 21, 4, 26,
to owners - 340 - - 11 561 - 912 982 894

Total
transactions 21, 21, 4, 26,
with owners - 340 - - 11 561 - 912 982 894

30 Jun 11 37, (100, 359, 10, 369,
80 340 8,086 11,866 401,259 761 254) 138 777 915
--------------------------------------------------------
31 Dec 10 31, (84, 364, 15, 380,
80 91 8,086 7,494 401,612 400 322) 441 831 272
--------------------------------------------------------
1 Jan 11 31, (84, 364, 15, 380,
80 91 8,086 7,494 401,612 400 322) 441 831 272
--------------------------------------------------------
Profit (loss) 4, 4, 3, 8,
for the period - - - - - - 902 902 249 151

Other
comprehesive
income

(4, (4,
- Cash flow hedges - - - (4,098) - - - 098) (781) 879)
--------------------------------------------------------
Total
comprehensive
income for 4,   2, 3,
the period - - - (4,098) - - 902 804 468 272

Transactions
with owners

Stock options
- (91) - - 502 - - 411 - 411

Conversion
of convertible 1, 1,
bond - - - - 1,800 - - 800 - 800

Acquisition of   (60, (59, (2, (61,
subsidiary - - - 374 - 996 721) 351) 137) 488)

Perpetual (1, (1, (2,
capital loan - - - - - - 891) 891) (360) 251)
--------------------------------------------------------
Incentive
arrangement
for Executive
Management - - - - - 47 - 47 - 47

Convertible
bond,
equity 9, 9, 9,
component - - - - - 018 - 018 - 018

Employee
share
option
scheme

- value of
employee 2, 2, 2,
services - - - - - 554 - 554 - 554

Total
contribution
by and
distribution 12, (62, (47, (2, (49,
to owners - (91) - 374 2,302 615 612) 412) 497) 909)

Total
transactions 12, (62, (47, (2, (49,
with owners - (91) - 374 2,302 615 612) 412) 497) 909)
--------------------------------------------------------
30 Jun 2011 44, (142, 317, 15, 333,
80 - 8,086 3,770 403,914 015 032) 833 802 635
--------------------------------------------------------


CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited Unaudited Unaudited Unaudited
three months three months six months six months
(all amounts in EUR '000) to 30 Jun 11 to 30 Jun 10 to 30 Jun 11 to 30 Jun 10
----------------------------------------------------
Cash flows from operating
activities

Profit (loss) for the period (4,633) (16,764) 8,151 (33,700)

Adjustments for

Tax (1,357) (5,968) 3,822 (11,553)

Depreciation and
amortization 11,618 12,786 22,816 25,032

Other non-cash income and
expenses (12,012) (2,459) (17,992) (2,320)

Interest income (4,320) (3,713) (20,053) (4,864)

Fair value gains (losses) on
financial
assets at fair value through
profit or loss (240) (2,987) (385) (16,642)

Interest expense 9,125 28,988 18,512 50,316
----------------------------------------------------
  (1,819) 9,883 14,871 6,269

Change in working capital

Decrease(+)/increase(-)
in other receivables 36,364 (14,063) 37,707 (9,744)

Decrease (+)/increase (-)
in inventories (28,221) (12,517) (43,743) (27,312)

Decrease(-)/increase(+) in
trade and other payables (8,254) 39,181 (22,647) 34,293
----------------------------------------------------
Change in working capital (111) 12,601 (28,683) (2,763)
----------------------------------------------------
  (1,930) 22,484 (13,812) 3,506

Interest and other finance
cost paid (9,704) (8,809) (11,514) (13,210)

Interest and other finance
income 70 3,702 339 50,818
----------------------------------------------------
Net cash generated (used)
in operating activities (11,564) 17,377 (24,987) 41,114

Cash flows from investing
activities

Acquisition of subsidiary,
net of cash acquired (61,487) - (61,487) -

Purchases of property,
plant and equipment (25,013) (36,218) (35,384) (55,178)

Purchases of biological
assets (35) (7) (35) (7)

Purchases of intangible
assets (81) (110) (104) (124)

Proceeds from sale
of biological assets 48 33 232 92

Purchases of financial
assets at
fair value through profit or
loss (12,010) - (12,010) -

Purchases of available-for-
sale
financial assets (90) - (128) -
----------------------------------------------------
Net cash generated (used)
in investing activities (98,668) (36,302) (108,916) (55,217)

Cash flows from financing
activities

Realised stock options 377 351 411 351

Proceeds from interest-
bearing liabilities 1,067 1,539 1,067 6,539

Perpetual capital loan - - (3,042) 24,875

Proceeds from advance
payments - 20,000 7,000 263,419

Payment of interest-bearing
liabilities (1,234) (23,448) (2,460) (257,527)
----------------------------------------------------
Net cash generated (used)
in financing activities 210 (1,558) 2,976 37,657

Net increase (decrease) in
cash and cash equivalents (110,022) (20,483) (130,927) 23,554

Cash and cash equivalents
at beginning of the period 144,650 55,914 165,555 11,877
----------------------------------------------------
Cash and cash equivalents
at end of the period 34,628 35,431 34,628 35,431
----------------------------------------------------


NOTES

 1.       Basis of preparation


  This interim 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 2010.

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 11 336,598 21,035 257,613 206,227 821,473

Additions 275 35,038 67 4 35,384

Disposals - - (66) - (66)

Transfer to assets held
for sale - - - (4) (4)

Transfers 10,591 (13,931) 2,583 757 -
--------------------------------------------------------------------------------
Gross carrying amount at
30 Jun 11 347,464 42,142 260,197 206,984 856,787
-------------------------------------------------------
Accumulated depreciation
and impairment losses

at 1 Jan 11 39,793 - 21,150 32,304 93,247

Depreciation for the
period 9,522 - 9,254 3,758 22,534
--------------------------------------------------------------------------------
Accumulated depreciation
and impairment losses at
30 Jun 11 49,315 - 30,404 36,062 115,781
-------------------------------------------------------
Carrying amount at 1 Jan
11 296,805 21,035 236,463 173,923 728,226
-------------------------------------------------------
Carrying amount at 30 Jun
11 298,149 42,142 229,793 170,922 741,006

3. Trade
receivables

(all amounts in
EUR '000)

  30 Jun 11 31 Dec 10
-------------------------
Nickel-Cobalt
sulphide 23,377 50,437

Zinc sulphide 1,975 1,917
-------------------------
Total trade
receivables 25,352 52,354


4. Inventories

(all amounts in EUR '000)

  30 Jun 11 31 Dec 10
--------------------
Raw materials and consumables 12,738 8,668

Work in progress 178,990 154,632

Finished products 27,377 12,061
--------------------
Total inventories 219,105 175,361
--------------------



5. Borrowings

(all amounts in EUR '000)

Non-current 30 Jun 11 31 Dec 10
--------------------
Capital loans 1,405 1,405

Investment and Working Capital loan 57,732 57,324

Senior Unsecured Convertible
Bonds due 2013 79,452 78,086

Senior Unsecured Convertible
Bonds due 2015 212,955 219,426

Finance lease liabilities 46,456 53,018

Other 25,903 28,364
--------------------
  423,903 437,623
--------------------
Current

Investment and Working Capital loan 715 -

Railway Term Loan Facility 18,700 18,527

Finance lease liabilities 16,007 20,211

Interest Subsidy Loans 4,200 4,196
--------------------
  39,622 42,934
--------------------
Total borrowings 463,525 480,557
--------------------


6. Changes in the number of shares issued
Number of
shares issued
--------------
31 Dec 10 245,316,718

Stock options 2007A and 2007B 189,149

Conversion of senior unsecured 215,736
Convertible Bonds due 2015
--------------
30 Jun 11 245,721,603
--------------


7. Contingencies and commitments

(all amounts in EUR '000)

The future aggregate minimum lease payments under non-cancellable operating
leases

  30 Jun 11 31 Dec 10
---------------------------------------
Not later than 1 year 1,724 1,175

Later than 1 year and not later than 5
years 2,089 1,993

Later than 5 years - 11
---------------------------------------
  3,813 3,179



Capital commitments

At 30 June 2011, the Group had capital commitments 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 Three Three Six Six Twelve
the Group months to months to months to months to months to
30 Jun 11 30 June10 30 Jun 11 30 Jun 10 31 Dec 10
--------------------------------------------------
EUR
Net sales '000 37,647 35,248 104,114 46,854 152,163

EUR
Operating profit (loss) '000 (1,184) 2,543 10,433 199 25,456

Operating profit (loss)
percentage   -3.1 % 7.2 % 10.0 % 0.4 % 16.7 %

EUR
Profit (loss) before tax '000 (5,989) (22,732) 11,974 (45,253) (9,908)

Profit (loss) for the EUR
period '000 (4,633) (16,764) 8,151 (33,700) (13,052)

Return on equity -1.3 % -4.4 % 2.3 % -9.0 % -3.4 %

Equity-to-assets ratio 29.8 % 38.4 % 29.8 % 38.4 % 31.3 %

EUR
Net interest-bearing debt '000 416,999 190,729 416,999 190,729 315,002

Debt-to-equity ratio 125.0 % 51.6 % 125.0 % 51.6 % 82.8 %

Return on investment 0.5 % 2.0 % 3.2 % 2.3 % 3.1 %

EUR
Capital expenditure '000 25,129 36,335 35,523 55,308 115,658

Research & development EUR
expenditure '000 - 63 - 63 365

Property, plant and EUR
equipment '000 741,006 663,154 741,006 663,154 728,226

Derivative financial EUR
instruments '000 (354) (2,375) (354) (2,375) (1,237)

EUR
Borrowings '000 463,525 226,160 463,525 226,160 480,557

Cash and cash equivalents
at EUR
the end of the period(1) '000 46,526 35,431 46,526 35,431 165,555



'1) including financial assets at fair value through profit or loss


Share-related key
figures

Three Three Six Six Twelve
months to months to months to months to months to
  30 Jun 11 30 Jun 10 30 Jun 11 30 Jun 10 31 Dec 10
---------------------------------------------------------------
Earnings per
share EUR (0.02) (0.06) 0.02 (0.12) (0.06)

Equity per share EUR 1.29 1.46 1.29 1.46 1.55

Development of
share price
at London Stock
Exchange

Average trading
price(1) EUR 5.50 4.60 6.12 4.48 4.89

  GBP 4.86 4.00 5.31 3.90 4.20

Lowest trading
price(1) EUR 4.56 3.94 4.64 3.94 3.99

  GBP 4.03 3.42 4.03 3.42 3.42

Highest trading
price(1) EUR 6.59 5.63 7.16 5.63 7.11

  GBP 5.82 4.90 6.22 4.90 6.10

Trading price at
the
end of the
period(2) EUR 5.15 4.47 5.15 4.47 6.92

  GBP 4.65 3.65 4.65 3.65 5.96

Change during the
period   -20.0 % -17.8 % -21.9 % -5.5 % 54.2 %

Price-earnings
ratio    neg.  neg. 258  neg.  neg.

Market
capitalization at
the end of the EUR
period(3) '000 1,265,975 1,094,758 1,265,975 1,094,758 1,697,196

GBP
  '000 1,142,605 894,910 1,142,605 894,910 1,460,861

Development in
trading volume

1000
Trading volume shares 14,927 26,722 26,347 65,827 93,802

In relation to
weighted
average number of
shares   6.1 % 10.9 % 10.8 % 26.8 % 38.2 %

Development of
share
price at OMX
Helsinki

Average trading
price EUR 5.55 4.71 6.16 4.55 5.18

Lowest trading
price EUR 4.53 4.04 4.53 3.99 3.99

Highest trading
price EUR 6.63 5.62 7.34 5.62 7.18

Trading price at
the
end of the period EUR 5.16 4.45 5.16 4.45 7.07

Change during the
period -21.8 % -10.4 % -27.0 % 2.8 % 63.3 %

Price-earnings
ratio  neg.  neg. 258  neg.  neg.

Market
capitalization at
the end of the EUR
period '000 1,267,923 1,091,545 1,267,923 1,091,545 1,734,389

Development in
trading volume

1000
Trading volume shares 44,708 36,300 82,728 76,392 140,115

In relation to
weighted
average number of
shares   18.3 % 14.8 % 33.9 % 31.2 % 57.1 %

Adjusted average 245,177, 245,241,
number of shares   244,339,128 245,177,646 244,339,128 646 660

Fully diluted
average 245,177, 245,241,
number of shares   244,339,128 245,177,646 244,339,128 646 660

Number of shares
at the 245,180, 245,316,
end of the period   245,721,603 245,180,718 245,721,603 718 718




1.
2.
3.





Employee-related key figures

Three Three Six Six Twelve
months to months to months to months to months to
  30 Jun 11 30 Jun 10 30 Jun 11 30 Jun 10 31 Dec 10
---------------------------------------------------------
EUR
Wages and salaries '000 5,405 4,145 11,262 8,381 16,652

Average number of
employees   451 365 429 344 362

Number of employees at
the end of the period   481 382 481 382 389



Other figures

Three Three Six Six Twelve
months to months to months to months to months to
30 Jun 11 30 Jun 10 30 Jun 11 30 Jun 10 31 Dec 10
--------------------------------------------------
Share options outstanding
at the end of the period 5,796,111 5,333,100 5,796,111 5,333,100 5,950,822

Number of shares to
be issued against the
outstanding share options 5,796,111 5,333,100 5,796,111 5,333,100 5,950,822

Rights to vote of shares to
be issued against the
outstanding share options 2.4 % 2.1 % 2.4 % 2.1 % 2.4 %



Talvivaara Mining Company Plc

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


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


Market capitalization at Number of shares at the end of the period * trading
the end of the period price at the end of the period








Talvivaara Interim Report January-June 17.8.2011:
http://hugin.info/136227/R/1537852/470094.pdf




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Source: Talvivaaran Kaivososakeyhtiö Oyj via Thomson Reuters ONE

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