Duties of the Board of Directors and CEO

The Board of Directors

According to the Company’s Articles of Association, Talvivaara’s Board of Directors consists of at least three and not more than twelve members. The Board of Directors is quorate when more than half of the members appointed by the General Meeting of Shareholders are present.

All the members of the Board of Directors are appointed by the General Meeting of Shareholders. The term of the Directors ends with the conclusion of the Annual General Meeting following the appointment of the Director. A Director may be dismissed ahead of term by a General Meeting of Shareholders. The term of a dismissed Director ends with the conclusion of the General Meeting deciding on the dismissal, unless the General Meeting decides that the dismissal is effective from some other point in time. The annual remuneration payable for Board and Committee work and the basis for its determination are decided by the General Meeting of Shareholders. There are no contracts on notice periods, remuneration or any other terms of appointment relating to a person’s status as a member of the Board.

The Annual General Meeting of Shareholders held on 28 April 2011 in Sotkamo resolved the number of Board members to be seven and re-elected Mr. G. Edward Haslam, Mr. Eero Niiva, Ms. Eileen Carr, Mr. D. Graham Titcombe, Mr. Tapani Järvinen Mr. Pekka Perä and Ms. Saila Miettinen-Lähde as Board members. Mr. Roland Junck was a member of Board of Directors until the Annual General Meeting of 28 April 2011. The Board of Directors shall elect the Chairman and the Deputy Chairman amongst the members of the Board of Directors. The Board has been chaired by Mr. G. Edward Haslam and the Deputy Chairman (Senior Independent Director) has been Mr. D. Graham Titcombe.

The following board members Mr. Eero Niiva, Ms. Eileen Carr, Mr. D. Graham Titcombe and Mr. Tapani Järvinen are deemed to be independent of the Company and significant shareholders. The Chairman of the Board, Mr. Haslam, meets the independence criteria both in relation to the Company and to significant shareholders under the Finnish Code. The UK Code provision A.3.1 states that the Chairman should, on appointment, meet the independence criteria set out in the Code, but thereafter the test of independence is not appropriate in relation to the Chairman. Mr. G. Edward Haslam was considered independent at the time of his appointment.

The structure, size and composition of the Board of Directors were reviewed by the Nomination Committee. In addition, the Board carried out a self-assessment of its performance led by the Nomination Committee. In 2011 the results of the assessment are discussed by the Board and used in developing the Board work. These questionnaires comprised 19 subjects, which can be divided in three broad categories: the contribution to the Board of Directors, the contribution to Board Committees and the personal skills.

The main duties of the Board of Directors

The Board of Directors supervises the Company’s administration and the appropriate organisation of the Company’s operation. The Board also oversees the compliance of the operations with applicable rules and regulations and the Articles of Association of the Company as well as instructions given by General Meetings of Shareholders. The Board of Directors has general authority to decide on and act in any matters not specifically reserved by law or under the Articles of Association to any other governing body of the Company. The Board of Directors establishes the principles of the Company’s strategy, organisation, development, accounting and financial control and risk management as well as approves the budget of the Company. The Board of Directors also supervises and controls the operative management and appoints and dismisses the Chief Executive Officer of the Company. The Board of Directors approves the financial statements and quarterly interim reports of the Company. The Board decides upon matters not belonging to the day-to-day management of the Company led by the Chief Executive Officer and considered having major importance includingsignificant engagements and investments of the Company. The Chairman of the Board of Directors is responsible for the leadership of the Board and creating the conditions for effective decision-making and work of the Board. The Chairman shall, with help of the Company Secretary and Executive Directors, set the agenda for the meetings of the Board and ensure the timeliness and quality of the information to be circulated to the members of the Board.

The Board of Directors is always obliged to act in the best interest of the Company and in a manner such that any actions or measures taken by the Board of Directors are not likely to allow unjustified benefit to any shareholder of the Company or to any third party. A Director may not participate in the decision-making process where a contractual undertaking between such Director and the Company is being discussed. When votes are cast, the majority opinion will be the decision of the Board of Directors. In case of a tie, the Chairman will have the casting vote. A tie in connection with an election will be decided by drawing lots.

The Board of Directors is provided relevant and timely information of the Company’s operations and plans so as to enable the Directors to perform their duties. Regular information provided to the members of the Board includes monthly operational reports and management accounts, and other related information pertaining to the past and anticipated future performance of the Company and its subsidiaries. The Board holds annually a number of meetings at the Talvivaara mine site. During the site visits the members of the Board have an opportunity to tour the site and discuss any operational issues with the site management and employees.

The Directors and Officers of the Company and its subsidiaries are covered by Directors’ and Officers’ Liability Insurance.

The Chief Executive Officer

The Chief Executive Officer ("CEO") is responsible for the implementation of the Company's strategy and for the day-to-day management of the Company's affairs in accordance with instructions and directions given by the Board of Directors. The CEO may undertake acts considered unusual or extensive having regard to the scope and nature of the operations of the Company only with the authorisation of the Board. The CEO is also responsible for overseeing that the Company's financial administration is in compliance with applicable laws and has been arranged in a reliable manner. The CEO reports to the Board of Directors and provides the Board with information relating to the financial status of the Company, relevant business environment and other pertinent matters which are considered essential for the Board of Directors to fulfil its obligations. The CEO of the Company is Mr. Pekka Perä.