EDITOR: | November 15th, 2013

Talvivaara Mining Company Plc. To Apply For Corporate Reorganisation

| November 15, 2013 | No Comments
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November 15, 2013 (Source: Thomson Reuters One) — Talvivaara Mining Company Plc (“Talvivaara”) announced that, as the market price of nickel had declined by more than 20 per cent. since the first quarter of 2013 and as Talvivaara’s production had continued to be impacted by the prolonged effects of excess water on older ore heaps, Talvivaara’s liquidity position had weakened more than anticipated. In addition, on 7 November 2013, Talvivaara announced in its interim report for the nine months ended 30 September 2013 that it was in advanced discussions with certain stakeholders concerning a financing solution that would address Talvivaara’s current liquidity needs. These discussions have continued intensely since that time.

It has become evident as a result of such discussions that additional liquidity would not be available for Talvivaara as part of a voluntary restructuring. Therefore, Talvivaara and its operating subsidiary Talvivaara Sotkamo Ltd (together, the Talvivaara Group”) have concluded that each company should file for a corporate reorganisation. In order for Talvivaara and Talvivaara Sotkamo Ltd to qualify for a corporate reorganisation, the Talvivaara Group will require additional liquidity during the reorganisation proceedings for the payment of costs of the reorganisation proceedings and payment of new indebtedness incurred after the filing for reorganisation. Availability of additional funding would facilitate an orderly reorganisation process in a court-supervised environment with the objective of attracting long-term capital and right-sizing the capital structure of Talvivaara.

Towards this goal, Talvivaara yesterday made a financing proposal to a group of stakeholders for additional funding in the form of a €40 million restructuring facility with Talvivaara as the guarantor and Talvivaara Sotkamo Ltd as the borrower. However, such stakeholders informed Talvivaara late yesterday that, due to timing and other constraints, they were currently not in a position to make any decisions in respect of funding commitments to Talvivaara or Talvivaara Sotkamo Ltd. Talvivaara was also separately informed that a final decision with regard to such restructuring facility by certain stakeholders would not be available, unless and until Talvivaara and Talvivaara Sotkamo Ltd had filed for a corporate reorganisation. Although there can be no assurance that such additional financing will be obtained, Talvivaara will seek to work with the relevant stakeholders towards a definitive agreement in an expeditious manner. Availability of any funding under the restructuring facility would be expected to be subject to certain conditions and milestones, which would be agreed as part of the final documentation regarding the restructuring facility.

In part in reliance on the possible availability of the restructuring facility and confirmation by the Talvivaara Group’s major secured creditors of their support to a corporate reorganisation, the Board of Directors of Talvivaara has decided to apply for corporate reorganisation of Talvivaara pursuant to the Finnish Corporate Reorganization Act. In addition, shareholders of Talvivaara Sotkamo Ltd have unanimously decided to apply for corporate reorganisation of Talvivaara Sotkamo Ltd. Talvivaara expects that said applications will be filed with the district court of Espoo, Finland, during 15 November, 2013. The Board of Directors of Talvivaara will convene an Extraordinary General Meeting of shareholders to address the corporate reorganisation application of Talvivaara at a later time to be announced separately.

The Board of Directors of Talvivaara believes that bankruptcy proceedings of either company would have a material value destructing effect and, therefore, would not be in the best interests of Talvivaara and its stakeholders. Bankruptcy proceedings would endanger the employment of the employees of the Talvivaara Group and of many of its suppliers and contractors. Also, the environmental impact of a bankruptcy would be difficult to manage. Talvivaara believes that, under the circumstances, corporate reorganisation proceedings and continued production at the Sotkamo site will best facilitate water treatment and other environmental clean-up and will also provide the best possibility to preserve value for various stakeholders.

Although the Board of Directors believes that, subject to the availability of sufficient funding, a corporate reorganisation is a viable option for Talvivaara, there can be no assurance that Talvivaara will obtain the required funding through the restructuring facility or otherwise or that Talvivaara’s corporate reorganisation, if commenced, is ultimately successful. The corporate reorganisation process can fail for a number of reasons, including due to an insufficiency of funds to complete the reorganisation proceedings, unforeseen operational or environmental issues facing Talvivaara’s production facilities, changes in the operating environment affecting the financial viability of Talvivaara and various other factors. If the corporate reorganisation fails for these or any other reasons, Talvivaara would expect to file for bankruptcy proceedings unless other alternatives have materialised by that time.

Talvivaara will arrange a press conference on 15 November 2013 at 11.00 am (Finnish time) in Scandic Simonkenttä at Simonkatu 9, Helsinki, Finland.

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. Further information can be found at www.talvivaara.com.


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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