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2016-01-28

Talvivaaran Kaivososakeyhtiö Oyj: Talvivaara has signed a letter of intent for the sale of mining-related assets to Terrafame

Stock Exchange Release

Talvivaara Mining Company Plc

28 January 2016

Talvivaara has signed a letter of intent for the sale of mining-related assets
to Terrafame

Talvivaara Mining Company Plc ("Talvivaara"), Terrafame Group Ltd, Terrafame
Ltd and Winttal Ltd, a subsidiary of Terrafame Group Ltd, have signed a
letter of intent, in which the parties provisionally agree on the essential
terms and conditions for the sale of Talvivaara's assets related to the
Sotkamo mining operations. Assets to be sold include, among others, the lime
plant needed in the Sotkamo operations, laboratory business, as well as
ownership of the geological data associated with the mine. In addition, the
parties have agreed on the transfer of the laboratory personnel to Terrafame
Ltd as old employees, as well as on the possibility of Terrafame Ltd to
recruit Talvivaara's key personnel working at the mine.

Upon completion of the arrangements set out in the Letter of Intent, Terrafame
Ltd shall pay to Talvivaara a total net purchase price of EUR 3.8 million.
The transaction is subject to certain conditions, which are described in more
detail under the heading "Timetable and conditions for the completion of the
arrangements".

As part of the Letter of Intent, it has also been provisionally agreed that,
Talvivaara will have a possibility to become owner of Terrafame Ltd with a
stake of at least 10.1 per cent of the shares and votes, if Talvivaara can
successfully raise the necessary funds for the investment. Talvivaara would
have right to use the option between 1 November 2016 and 30 April 2017, prior
to which period the parties would agree on the terms and conditions of the
investment, including the applicable subscription price and the key terms of
the shareholders' agreement. The parties may also agree on a stake greater
than 10.1 per cent. Terrafame Group Ltd may redeem the Talvivaara share
subscription option by notifying Talvivaara of the redemption no later than
31 October 2016 and by paying a separate redemption fee of EUR 3.8 million to
Talvivaara. The intention of the parties is to agree on more detailed terms
and conditions for Talvivaara's share subscription option separately in a
subscription right agreement to be negotiated as a part of the detailed
agreements.

The essential terms for the sale of Talvivaara's assets

It has been preliminarily agreed that the contemplated arrangement under the
Letter of Intent would consist of two separates phases:

In the first phase, Terrafame Ltd will buy the laboratory business required in
the production process, and the geological data associated with the Sotkamo
mine. The laboratory personnel will be transferred to Terrafame Ltd's
employment as old employees. In addition, the possibility for Talvivaara's
key personnel working at the mine to transfer to Terrafame Ltd's service will
be agreed. In the first phase of the arrangement, Terrafame Ltd will pay a
purchase price of EUR 3.8 million to Talvivaara.

Upon completion of the second phase of the arrangement, Terrafame Ltd will buy
from Talvivaara the lime plant required in the production process of the
mine. Terrafame Ltd shall pay to Talvivaara a purchase price of EUR 12.5
million. Simultaneously, Talvivaara will pay to Winttal Ltd EUR 3.8 million
as a full and final settlement of Talvivaara's debts and liabilities, which
were transferred to Winttal Ltd from Nyrstar Sales&Marketing AG in December
2015. These debts and liabilities comprise of Talvivaara's guarantee
liability of approximately EUR 12.8 million under the Loan and Streaming
Holiday Agreement and a guarantee liability for a termination sum of
approximately EUR 203.4 million the Zinc in Concentrate Purchase Agreement,
which thereby shall be considered fully and finally settled upon completion
of the arrangement.

In addition, as part of the arrangements, Terrafame Group Ltd will acquire
debts of Talvivaara from certain commercial banks and Finnvera Plc, with a
nominal value of approximately EUR 129.6 million. These debts are considered
restructuring debts under Talvivaara's draft restructuring programme, which
will receive a payment of EUR 7.5 million under the business mortgage claims,
whilst the unsecured part of the debts would be paid approximately EUR 1.2
million. Upon completion of the second phase of the arrangements, Talvivaara
shall pay to Terrafame Group Ltd for the debts transferred by the commercial
banks and Finnvera Plc a total sum of EUR 8.7 million in accordance with the
final restructuring programme.

The difference between the total purchase price and the sums payable by
Talvivaara to Terrafame entities on the basis of Talvivaara's debts is thus
EUR 3.8 million, which Terrafame Ltd will pay to Talvivaara as a net purchase
price for all assets transferred.

Upon completion of the arrangements under the Letter of Intent, all main
assets of Talvivaara currently generating income for Talvivaara would
transfer to Terrafame Ltd. However, the completion of the arrangements would
enable the completion of Talvivaara's corporate restructuring proceedings and
the payments to the creditors under the restructuring programme, and it would
facilitate the development of Talvivaara's existing and potential new
business opportunities.

In connection with arrangements, Terrafame entities undertake to accept the
cuts proposed in Talvivaara's draft restructuring programme and not to appeal
the district court decision confirming the restructuring programme.

Timetable and conditions for the completion of the arrangements

The signed Letter of Intent is, with certain limited exceptions, legally
non-binding and conditional upon the detailed agreements concerning the
arrangement being finalized and accepted by all parties no later than 3
February 2016, or on another date agreed by the parties, at which instant the
first phase of the arrangements would be completed.

The second phase of the arrangements is also conditional on the approval by
Talvivaara's General Meeting of Shareholders and on confirmation of
Talvivaara's restructuring programme with a targeted dead line of 30 April
2016. The whole arrangement under the Letter of Intent is also conditional on
a favorable decision by the Vaasa Administrative Court on Nuasjärvi discharge
pipe line, enabling the continuance of Terrafame's mining operations.

However, there is no guarantee that Talvivaara and Terrafame entities will be
able to successfully agree on the detailed contracts required by the
arrangement or, if the said contracts are entered into, that the arrangements
can be successfully completed in their entirety. If Talvivaara and Terrafame
entities fail to enter into the above mentioned detailed agreements for any
reason, or if the arrangements do not reach completion in their entirety,
this is likely to result in Talvivaara's bankruptcy, unless other options
have become available by then.

Enquiries

Talvivaara Mining Company Plc.
Tel. 020 7129 800

Pekka Perä, CEO
Pekka Erkinheimo, Deputy Ceo

Talvivaara has signed a letter of intent for the sale of assets
http://hugin.info/136227/R/1981951/726217.pdf

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Talvivaaran Kaivososakeyhtiö Oyj via Globenewswire

HUG#1981951

Författare WKR

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