Talvivaara Mining Company Interim Report for January-June 2015

Talvivaara Mining Company Interim Report for January-June 2015.

Requisite support for the draft restructuring programme received from the creditors
The negotiations on the Company's role in the future of the Sotkamo mining operations continue.

Key events:

• Following the bankruptcy of Talvivaara Sotkamo Ltd ("Talvivaara Sotkamo") on 6 November 2014, trading of Talvivaara Mining Company Plc's ("Talvivaara" or the "Company") shares on the Helsinki Stock Exchange was suspended. The suspension of trading continues on the date of publication of the Company's H1 2015 interim results on 27 August 2015
• This interim report has been prepared on a basis other than going concern. The chosen reporting basis results from the existence of material uncertainty that casts significant doubt upon the Company's ability to realise its assets and discharge its liabilities in the normal course of business and from the lack of visibility on the Company's operational environment twelve months beyond the date of reporting
• Talvivaara has continued to finance its operations by providing administrative and technical services and by leasing certain critical machinery and equipment to the bankruptcy estate of Talvivaara Sotkamo under agreements entered into by the Company and the bankruptcy estate on 19 November 2014. The other operating income from those activities amounted to EUR 3.4 million
• The creditors' voting procedure was completed on 6 May 2015 and the Administrator's draft restructuring programme was supported by approximately 97.5 percent of the creditors of unsecured debt participating in the voting. The requisite support from the creditors set forth in the Restructuring of Enterprises Act for the approval of the draft restructuring programme was obtained. The confirmation and entry into force of the draft restructuring programme still requires the fulfilment of certain other conditions
• Talvivaara's negotiations with the state of Finland and potential financiers and investors continue, with the target of securing a participation in the mining operations
• The Annual General Meeting of the Company held on 25 June 2015 authorised the Board of Directors to resolve on the share issue of up to 4,500,000,000 new shares in aggregate in deviation from the pre-emptive subscription rights of the shareholders through one or several share issues to conduct the conversion of the unsecured restructuring debts into new shares in the Company as provided by the Administrator's draft restructuring programme. The subscription price of the shares to be issued by virtue of the authorisation shall be EUR 0.1144 per share and the subscription price shall be paid by setting off the subscriber's unsecured restructuring debt claim
• Reported operating loss EUR -0.5 million

Events after the reporting period

• Talvivaara has signed a contract on 13 August 2015 with the state-owned company Terrafame Oy and its 100% subsidiary Terrafame Mining Oy, whereby Terrafame Mining Oy assumes the rights and obligations of the bankruptcy estate of Talvivaara Sotkamo under the agreements of 19 November 2014 on provision of administrative and technical services and leasing of certain critical machinery and equipment to the bankruptcy estate
• The transfer of the mining business from the bankruptcy estate of Talvivaara Sotkamo to Terrafame Mining Oy was completed on 14 August 2015

All reported half-yearly figures in this release are unaudited. Full year figures are audited.

CEO Pekka Perä comments: "When the unsecured creditors approved the draft restructuring programme, an important milestone was achieved. Although there are still significant challenges ahead, it was a major tick in the box in this prolonged restructuring process. As we have received continuous support from the shareholders and the creditors, the weakness in the commodities market is still effecting on the mining finance space as a whole. A good sign is that some investors are getting active with the view that the bottom has been found in the base metals market.

The operational result of the Company was in loss as anticipated, but as the restructuring costs will decrease, it is expected that the cash position will remain roughly on the same as level as at the end of the period for the next months to come or until a solution for the Company's future has been found.

The management and the staff have been working hard despite all the uncertainties around the Company. The transfer of the leasing and services contract to Terrafame provides visibility for the personnel in the short term.

I would like to thank departing board members Mr. Edward Haslam, Mr. Graham Titcombe and Mrs. Maija-Liisa Friman for their efforts. Their experience, skills, commitment, strength of character and sense of humour will be deeply missed."