Stock Exchange Release Talvivaara Mining Company Plc 3 July 2012 Operational update Steady progress in production after re-start of metals plant in April Highlights * Nickel production of 3,194t and zinc production of 6,686t in Q2 2012 * Output impacted by dilution of leach solutions due to rapid spring flooding and excessive rain and scheduled maintenance and previously announced fatality related stoppage in April * New CEO Harri Natunen conducted operational review and will adopt a more sustainable production approach during ramp-up aimed at improving the efficiency and reliability of the operations and minimising environmental impact * Metals recovery plant in continuous and stable operation with close to 100% availability since late April * Substantial production increase from 2011 expected but 2012 guidance unlikely to be achieved. Guidance anticipated to be updated with Q2/2012 interim results on 16 August 2012 Production update The second quarter production output of 3,194t of nickel and 6,686t of zinc was impacted by dilution of leach solutions due to spring flooding and excessive rain, and a scheduled maintenance and a regrettable fatality related stoppage in April. After the re-start in late April, the metals plant has operated continuously and steadily, producing 1,477t of nickel in May and 1,519t in June. The average flow rate of metal containing leach solution to the plant reached a new monthly record of 1,318 m(3)/h in June, and the availability of the plant was effectively 100%. Nickel output in April only amounted to 198t with production at the plant restricted for most of the month due to the stoppage and subsequent changes to certain operating procedures, the implementation of which slowed down early ramp-up after the re-start. The production stoppage that followed the fatality at the plant in March continued through the early part of April whilst the occupational safety related clarifications and improvements requested by the Finnish Safety and Chemicals Agency were completed. Simultaneously the scheduled maintenance was brought forward from May to April in order to minimise the overall stoppage time. Throughout the second quarter, metals production was affected by flooding that followed the rapid melting of snow and the unusually heavy rainfall that has amounted to over 190mm during the spring in comparison to the long term average of approximately 100mm. The excess water in circulation has diluted the leach solutions such that the average nickel grade in solution pumped to the metals plant was 1.8 g/l in the second quarter. The Company estimates the dilutive effect of the recent rainfall having been around 25-30% compared to the long- term average water balance in the process. The water balance is expected to return to more normalised levels during the summer months, aided by increased evaporation and reduction of raw water intake for the metals recovery process. The Company is also implementing measures to prevent rainy seasons impacting production in the future. These include e.g. additional reverse osmosis capacity beyond the level announced on 24 April 2012, which enables the Company to further increase recycling of purified process waters and to reduce raw water intake. Elsewhere in the process, mining and materials handling continued to operate steadily at comparable levels to those achieved in the first quarter. With reclaiming of the primary heap continuously improving and thereby eliminating a bottle-neck from materials handling, the ore production volumes are expected to grow during the second half of the year. As mining and materials handling have progressed reasonably well during the first half of 2012 while metals recovery has had lower availability, the nickel inventory under leaching in the heaps has continued to grow, providing additional flexibility for increasing the metals production rates in the coming months. Operational review CEO Harri Natunen joined in mid-March and has since conducted a detailed operational review. Going forward the Company will adopt a more sustainable production approach during ramp-up aimed at improving the efficiency and the reliability of the operations. In practice this means implementing a relatively moderate rate of production increase in order to keep all processes operating in a stable manner such that good product quality can be maintained, environmental discharges can be minimised, and occupational safety can be continuously improved. In addition to previously announced management changes on 11 May 2012, two new task forces have been established to further develop the key processes of water management and bioheapleaching. Both task forces are headed by Lassi Lammassaari, Vice President of Strategic Projects. Production guidance The combination of the dilution effect of the excessive water in circulation and a more sustainable production approach during ramp-up means that the Company can no longer be confident of achieving the previous guidance of 25,000-30,000t of nickel in 2012. However, the Company continues to evaluate opportunities for production increases in the near term and anticipates that it will be in a position to give updated guidance for the current year at the interim results on 16 August 2012. The Company remains confident that a substantial production increase over last year's output of 16,087t of nickel can be delivered and anticipates the annualised production rate to sustainably reach more than 25,000tpa of nickel during the remainder of the year. Financial update Talvivaara's financial result for the second quarter will be impacted by the weak nickel price that has recently traded in the range of USD 16,000-17,000/t. The net sales for the period will also be affected by nickel product inventory build-up at the mine site due to an annual maintenance stoppage at the Company's off-taker Norilsk Nickel Harjavalta. The inventory build-up is anticipated to be fully recovered during the third quarter. Harri Natunen, Talvivaara's CEO commented: "After joining Talvivaara in mid- March, I have had the pleasure of getting to know and working with a very talented and motivated team. The management team has also been strengthened and restructured during the spring, and together we have set out to establish a sustainable ramp-up track that secures safe, efficient and reliable production with minimised environmental impact. I am confident that all the prerequisites for successful completion of the ramp- up are in place. Whilst all production processes still need some improvement, we have seen evidence that the stability of production has improved significantly and I don't see any reason why this trend would not continue. The improving reliability of operations helps us in achieving operating cost savings and, importantly, also minimises our environmental footprint. I am particularly happy to note that the month of May was the first month since we went into production when no complaints about hydrogen sulphide odours were recorded from the local residents; this is a record that we look forward to maintaining. Despite concluding that we are unlikely to achieve our previously stated production guidance for the year, we continue anticipating substantial ramp-up over last year's nickel output and also expect to sustainably reach annualised production rates of over 25,000tpa of nickel during the latter half of the year. Over the summer, we will focus on recovering from the water balance issues caused by the wettest spring recorded since 1983 in the Kainuu region, and we also continue evaluating our production outlook in more detail with the intention of re-establishing production guidance for 2012 in August at the time of our second quarter results." ENQUIRIES Talvivaara Mining Company Plc Tel: +358 20 712 9800 Harri Natunen, CEO Saila Miettinen-Lähde, Deputy CEO and CFO Merlin PR Tel: +44 207 726 8400 David Simonson Anca Spiridon Talvivaara Mining Company Plc Talvivaara Mining Company is an internationally significant base metals producer with its primary focus on nickel and zinc using a technology known as bioheapleaching to extract metals out of ore. Bioheapleaching makes extraction of metals from low grade ore economically viable. The Talvivaara deposits comprise one of the largest known sulphide nickel resources in Europe. The ore body is estimated to support anticipated production for several decades. Talvivaara has secured a 10-year off-take agreement for 100 per cent of its main output of nickel and cobalt to Norilsk Nickel and entered into a long-term zinc streaming agreement with Nyrstar NV. Talvivaara is listed on the London Stock Exchange Main Market and NASDAQ OMX Helsinki and is included in the FTSE 250 Index. Further information can be found at www.talvivaara.com. [HUG#1623678]