Estructura de procesos Formalización minera en Colombia

Shares* A-series Pekka Perä CEO, Board Member 57 043 960 174 500 G. Edward Haslam Chairman of the Board 301 086 28 000 Eero Niiva Board Member 1 937 950 28 000 Graham Titcombe Deputy Chairman of the Board 62 000 28 000 Eileen Carr Board Member 28 000 28 000 Antti Aaltonen Board Member 12 000 28 000 Saila Miettinen-Lähde CFO, Board Member 818 640 130 500 62 203 636 445 000

* Figures including holdings of closely associated persons and controlled corporations.

In addition, the members of the Executive Committee are entitled to a discretionary annual performance-based bonus, as decided by the Board of Directors based on a recommendation by the

Remuneration Committee. The annual performance bonuses range from 0-50% of the annual individual base salary.

Employee share option plans

By resolution passed at the General Meeting of Shareholders on 28 February 2007, the Company resolved to issue free stock options to the key personnel of the Company and its subsidiaries entitling them, after the split of the Company’s shares 1:70, to subscribe for a maximum

of 6,999,300 new shares in the Company (2007 Option Scheme). Pursuant to the terms and conditions of the 2007 Option Scheme, the Board of Directors shall decide upon the distribution of the stock options.

During 2008, the Board of Directors, based on the recommendation of the Remuneration Committee, allocated 2,214,000 2007B Options, giving the personnel of Talvivaara and its

subsidiaries an entitlement to subscribe for a total of 2,214,000 new shares in the Company (excluding options granted to the Directors and members of the Executive Committee). Of the options allocated during 2007 and 2008, 56,500 2007A Options entitling to a subscription in aggregate for 56,500 shares were returned to the Company during 2008. As no 2007A Options or 2007C Options were allocated during the year, the number of options available for allocation under the 2007 Option Scheme was as follows at the end of 2008: 104,600 2007A Options, 119,100 2007B Options and 2,333,100 2007C Options. The voting rights attached to the shares to be issued against the outstanding share options amount to 2.0 % of the total share capital of the Company. Relationship with the major shareholder

To date, Mr. Pekka Perä, Chief Executive Officer and Executive Board Member of the Company, owns, together with his associates, approximately 25.6 per cent of the Company. The relationship between Mr. Pekka Perä and

Talvivaara is governed by the Relationship Agreement, pursuant to which

Mr. Perä has undertaken, inter alia, to exercise all voting rights and any powers of control that he has in relation to the Company and any other members of the Talvivaara Group in such a way as to ensure that the Company and the other members of the Group are able at all times to carry on their businesses independently of Mr. Perä and his associates, and that any transaction or relationship (whether contractual or otherwise) between Mr. Perä or any of his associates, and the Talvivaara Group will be at arms length and on a normal commercial basis. The Relationship Agreement shall apply so long as Mr. Perä, collectively with his associates, controls 20 per cent or more of the voting rights at the General Meeting of the Shareholders of the Company. The

Board of Directors considers these to be adequate safeguards for securing Talvivaara’s ability to operate independently of Mr. Perä and his associates.

Insiders

The Company has a policy which covers dealings in securities and applies to public as well as company- and project- specific insiders. A comprehensive register of public insiders consisting of the Directors, the members of the Executive Committee, the auditor of the Company and any other person whose holding of shares shall be public according to the Finnish Securities Markets Act, is maintained by the Company and available on the Company website and headquarters. All insiders are notified of close periods. Talvivaara’s register of company-specific insiders includes individuals who are defined by the Company as such and who regularly possess insider information due to their position within the Company. The Company also maintains a project- specific insider register when necessary. Project-specific insiders are prohibited from trading in the Company’s securities until the termination of the relevant project.

Accountability and audit

Directors’ responsibilities

The Directors are responsible for preparing the Group and Parent company financial statements in accordance with applicable laws and regulations. The Finnish laws and regulations on companies and accounting require the Directors to prepare Group and Parent Company financial statements for each financial year. Under the law, the Directors are required to prepare the Group financial statements in accordance with IFRS as adopted by the European Union and applicable Finnish law, and they have elected to prepare the Parent Company financial statements, as well as the financial statements of its subsidiaries, in accordance with the Finnish Accounting Standards and applicable law forming Finnish Generally Accepted Accounting

Principles (“Finnish GAAP”).

The Group financial statements are required by law and IFRS to present fairly the financial position and the performance of the group. Under the Finnish GAAP, the Parent Company financial statements are required to give true and fair view of the state of affairs of the parent company.

In preparing each of the Group and Parent Company financial statements, the Directors are required to:

● _{select suitable accounting policies}

and then apply them consistently;

● _{make judgments and estimates that}

are reasonable and prudent;

● _{for the Group financial statements,}

state whether they have been prepared in accordance with IFRS as adopted by the European Union;

● _{for the Parent Company financial}

statements, state whether applicable Finnish Accounting Standards have been followed, subject to any material departures disclosed and explained in the Parent Company financial statements; and

● _{prepare the financial statements on}

a going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Parent Company and its subsidiaries and enable them to ensure that its financial statements comply with the Finnish Companies Act and Accounting Act. The Board of Directors have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Risk management

The objective of Talvivaara’s risk management is to support the

achievement of the Group’s strategic and operational targets while protecting the Company against loss, uncertainty and

Corporate Governance

lost opportunity. There is an ongoing process in place, supported where necessary by external advisors, for identifying, evaluating and managing the significant risks facing the Talvivaara Group. The Board of Directors is responsible for reviewing the effectiveness of the systems for the identification and management or risk and has, with the assistance of the Audit Committee and external advisors, undertaken such a review as part of the process of compiling this report.

The Chief Executive Officer, the Executive Committee and the Company management are responsible for defining and implementing daily risk management procedures and ensuring that risks are taken into account in the Group’s strategic planning. The Executive Committee coordinates risk management activities and risk reporting in the Group. Whilst risks are generally managed within the business units or functions where risks may occur, certain risk management functions, in particular the management of financial risks and administration of insurances are centralised in order to realize economies of scale and to ensure appropriate Group-level control.

Risks specific to Talvivaara, its business and the industry in which it operates are discussed in more detail in section “Principal risks and uncertainties” on page 48.

Auditor

According to its Articles of Association, Talvivaara has one auditor elected by the Annual General Meeting of the

Shareholders. The term of an auditor terminates at the close of the Annual General Meeting of the Shareholders following the election. The auditor shall be a company of auditors authorized by the Central Chamber of Commerce of Finland.

The auditor of the Company has been the Authorized Public Accountants PricewaterhouseCoopers. Ms. Ylva Eriksson, APA, has principal responsibility for the conduct of the audit. The auditors are paid based on an approved invoice. In 2008, the compensation for auditing services amounted to € 67,000 in Audit fees and to €145,000 in Non-audit fees.

The relatively large proportion of non- audit fees stems from the Company’s implementation of commodity hedge accounting in 2008 and the related work performed by PricewaterhouseCoopers Capital Markets Group in London, UK.

The auditor is responsible for auditing the Company’s and the Group’s accounting records for the financial period, the financial statements and the report of the Board of Directors. In addition, Finnish law requires that the auditor also monitor the legality of the Company’s administration.

Internal control and internal audit

The objective of internal control is to provide reasonable assurance concerning the achievement of the Company’s objectives with regard to the reliability of financial reporting,

effectiveness and efficiency of operations and compliance with applicable laws and regulations. The Chief Executive Officer, the Executive Committee and the members of Senior Management of Talvivaara and its subsidiaries ensure, under the supervision of the Board of Directors of the Company, that the accounting and governance in their sphere of responsibility comply with the law as well as with the instructions and rules issued by the Board of Directors.

Currently, the Talvivaara Group does not have a separate internal audit function, but has a robust team of controllers overseeing the construction and operations of the Talvivaara mine site and the commitments entered into in connection therewith. The Group’s system of internal controls has also been established to ascertain appropriate conduct in all operations and is continuously being improved and updated along with the Group’s growing scale of business. The establishment of the Internal audit function is considered at each Audit Committee meeting and is regularly discussed in detail with the Company’s external auditors. So far, an internal audit function, either in-house or outsourced, has not been considered necessary due to the stage of development of the Company.

Going concern

The Board considers that the Company and the Group will be able to meet their financial commitments for the foreseeable future and that it is, therefore, appropriate for the financial statements to be prepared on a ‘going concern’ basis. Dialogue with Institutional Shareholders

The Board of Directors recognizes that meetings with analysts and shareholders constitute an important element of the Company’s investor relations programme. Meetings take place with major investors either individually or on a group basis, as required. These meetings may be initiated either by the Company or analysts and investors, and are managed at the Group level by the Chairman, the Chief

Executive Officer and the Chief Financial Officer, who brief the rest of the Board of Directors regularly on the Company’s relationships with its shareholders.

The Company announces its annual and half-year results as well as the Interim Management Statements to the London Stock Exchange and the press in advance of the publication of the Annual and Interim Reports. The Board of Directors has resolved to release Interim Management Statements in accordance with Chapter 2 Section 5C of the Finnish Securities Markets Act for the first three and nine months of the fiscal year 2009 instead of Interim Reports for the respective periods. Other price-sensitive information is announced as and when appropriate. The Board of Directors has adopted a communications policy to ensure that this is done in a timely and considered manner. Presentations are made to analysts and the press by the Chief Executive Officer and the Chief Financial Officer following the release of the Interim and Preliminary Results Announcements.

The Interim and Annual Reports, as well as the Interim Management Statements are the primary means of communicating with all shareholders. Financial reports, press releases and other information about Talvivaara released in 2008 are summarized in the following chapter. They are also available on the Company’s website

G. Edward Haslam Born 1944

Non-Executive Chairman of the Board since 2006

Other key positions of trust: Non-Executive Director of Aquarius Platinum Ltd, Chairman of the Remuneration and Succession planning committee and member of the Audit Committee at Aquarius Platinum Ltd, Senior non-executive Director of Namakwa Diamonds Ltd.

Primary experience: CEO of Lonmin Plc until 2004, various positions with Lonmin Plc, Falconbridge Nickel Mines and British Steel Corporation.

Pekka Perä

Born 1964, M.Sc. (Mining) Helsinki University of Technology

Executive Director and CEO of the company since its incorporation 2003

Primary experience: Project Manager of Mining at Arctic Platinum Partnership from 2001 to 2003 and as a Project Manager at Pyhäsalmi Mine Oy, various positions with the Outokumpu Group in Finland and elsewhere from 1991 to 1999.

Saila Miettinen-Lähde Born 1962, M.Sc.(Eng.)

Executive Director and CFO of the company since 2005

Primary experience: Founding partner of SIDOS Partners Ltd (Jan 2004 to Dec 2004), Director at D. Carnegie AB (2000 to 2003), Vice President of Business Development at Orion Pharma (Jan 2000 to Oct 2000), Director of the Finnish National Fund for Research and Development (1998 to 1999) and various positions at Leiras Oy (1993 to 1998).

D. Graham Titcombe Born 1942

Non-Executive Director since 2007

Other key positions of trust: Senior Independent Director of the Board at Cap-XX Ltd.

Primary experience: Number of senior positions at Johnston Matthey Plc, retired as Group Managing Director in 2002, member of the Board of Directors of Johnston Matthey Plc for 12 years, Non-Executive Director of Wagon Plc (1996 to 2003), Chairman of the Board of Infast Plc (2002 to 2005), Senior Independent Director of the board at PolyFuel Inc.

Eileen Carr

Born 1957, M.Sc. (Management) London University, Sloan Fellow, FCCA Non-Executive Director since 2007

Other key positions of trust: Deputy Chairman of Board of Directors and FD at Cluff Gold Plc

Primary experience: Number of senior positions within the mining industry including FD and Company Secretary at Cluff Resources plc (1993 to 1996) and at Cluff Mining plc (1997 to 1999); CFO and Company Secretary at Monterrico Metals plc (2002 to 2007); CFO at European Goldfields (2002 to 2003); Non-executive director at Goldstar Resources NL (2003 to 2009); CFO and Company Secretary at Alexander Mining plc (2005 to 2008); Deputy Chairman and FD at Cluff Gold plc (2008 to date); Founder and Director of Bunree Resource Management Ltd.

Eero Niiva

Born 1960, M.Sc. (Industrial Management) Lappeenranta University of Technology Non-Executive Director since 2005

Other key positions of trust: Partner and member of Board of Directors at MB Funds (since 2003), Chairman of the