ADDITIONAL INFORMATION
1. Incorporation and activity
1.1 The Company was incorporated under the Finnish Companies Act on 22 August 2003 and registered at the Finnish Trade Register on 9 September 2003 as a private company limited by shares with the name Talvivaaran Kaivososakeyhtiö, the parallel trade name in English being Talvivaara Mining Company Ltd, under the business identity code 1847894-2.
1.2 The domicile of the Company is Sotkamo, Finland. The registered office of the Company, which is also the head office, is located at Ahventie 4 B 47, FI-02170 Espoo, Finland. The telephone number of the Company is +358 20 712 9800.
1.3 The principal legislation under which the Company operates and under which the Shares have been created is the Finnish Companies Act (624/2006, as amended) and the currency of the Shares is euro. 1.4 The business of the Company is to engage in ore exploration, exploitation, excavation and other mining activities, including the development of metals mining, excavation and enrichment technologies and the ownership of the related intellectual property rights, as well as in the sale and purchase of mining rights. The Company may also attend to the organisation, financing and purchases of the group of companies and to other joint tasks of the same kind, and it may own real estate, shares and participations and carry on securities trading and other investment business. The Company operates either directly or through subsidiaries.
1.5 By a resolution of the Extraordinary General Meeting of the Shareholders passed on 23 September 2004, PricewaterhouseCoopers Oy, whose address is Itämerentori 2, FI-00101 Helsinki, Finland, was appointed as the statutory auditor of the Company with Ms. Kaarina Halonen as the responsible auditor.
1.6 The Company is the holding company of the Group. The Company has a subsidiary company, Talvivaara Projekti Oy, the parallel trade name in English being Talvivaara Project Ltd. The issued share capital of the Subsidiary is fully paid and is included in the consolidated accounts of the Group. The Subsidiary was incorporated under the Finnish Companies Act on 1 September 2003 and registered at the Finnish Trade Register on 9 September 2003 as a private company limited by shares with the name Aplivia Oy under the business identity code 1852002-0. Pursuant to an Extraordinary General Meeting of the Shareholders resolution passed on 27 February 2004, the name of the Subsidiary was changed to Talvivaara Projekti Oy, effective 10 March 2004. The domicile of the Subsidiary is Sotkamo, Finland.
1.7 The Company currently owns 80 per cent. of the shares of Hyena Holding AB. The issued share capital of Hyena Holding AB is fully paid for and is included in the consolidated accounts of the Group. Hyena Holding AB was incorporated under Swedish Companies Act on 3 July 2006 and registered on the Swedish Trade Register on 11 August 2006 as a private limited liability company by shares with the name Goldcup D 2060 AB under the registration number 556708-2994. The name change from Goldcup D 2060 AB to Hyena Holding AB was registered with the Swedish Companies House on 1 November 2006.
2. Share capital/number of Shares
Talvivaara Mining Company Ltd
2.1 The Company was incorporated with an issued share capital of €10,000 divided into 10,000 Shares. 2.2 By a resolution duly passed at the Extraordinary General Meeting of the Shareholders on 15 February
increased from €10,000 to €10,475 by issuing 475 new Shares of €1.00 each. The subscription price per Share was €1.00.
2.3 By a resolution duly passed at the Extraordinary General Meeting of the Shareholders on 4 June 2004 and subsequently registered at the Finnish Trade Register, the share capital of the Company was increased from €10,475 to €10,885 by issuing 410 new Shares of €1.00 each. The subscription price per Share was €1,000.
2.4 By a resolution duly passed at the Extraordinary General Meeting of the Shareholders on 7 December 2004 and subsequently registered at the Finnish Trade Register, the share capital of the Company was increased from €10,885 to €11,566 by issuing 681 new Shares of €1.00 each. The subscription price per Share was €1,000.
2.5 By a resolution duly passed at the Annual General Meeting of the Shareholders on 29 April 2005 and subsequently registered at the Finnish Trade Register, the nominal value of a Share was split 1:100 so that the nominal value of each Share was €0.01.
2.6 By a resolution duly passed by the Board of Directors on 7 November 2005, based on the authorization granted by the Annual General Meeting of the Shareholders on 29 April 2005, and which was subsequently registered at the Finnish Trade Register, the share capital of the Company was increased from €11,566 to €11,704 by issuing 13,794 new Shares of €0.01 each to Varma. The subscription price per Share was €14.50.
2.7 By a resolution duly passed by the Board of Directors on 22 November 2005, based on the authorization granted by the Annual General Meeting of the Shareholders on 29 April 2005, and which was subsequently registered at the Finnish Trade Register, the share capital of the Company was increased from €11,704 to €12,715 by issuing 101,149 new Shares to OMG Finland Oy (currently held by Norilsk Nickel) (68,966 Shares) and Varma (32,183 Shares). The subscription price per Share was €14.50.
2.8 By a resolution duly passed at the Extraordinary General Meeting of the Shareholders on 3 November 2006, 11,786 new Shares of the Company were issued to J.P. Morgan Plc. The subscription price per Share was €70. With the subscription, J.P. Morgan Plc set off a receivable of €825,020 from the Company relating to professional services rendered in connection with the issue of the 2006 Convertible Bond.
2.9 By a resolution duly passed by the Annual General Meeting of Shareholders on 28 February 2007, the Board of Directors was authorised to increase the number of Shares outstanding by issuing a minimum of 24,383,251 Shares and a maximum of 255,382,471 Shares (share split). It was also resolved to abolish the nominal value of the Share. By a resolution duly passed by the Board of Directors on 5 May 2007, based on the authorisation granted by the Annual General Meeting of the Shareholders on 28 February 2007, and which was registered at the Finnish Trade Register on 16 May 2007, the number of Shares issued and outstanding was increased to 89,833,030. The share capital did not increase as a result of the issue of new Shares.
2.10 By a resolution duly passed by the Annual General Meeting of Shareholders on 28 February, the Board of Directors was authorised to issue a minimum of 20,000,000 and a maximum of 200,000,000 new Shares (on a post-split basis) to JPMorgan Cazenove Limited and Nordea Corporate Finance Oy (or to such persons as they shall direct) in connection with First Admission. The Board of Directors decided on 17 May 2007 to commence the Offering in accordance with the authorisation. The share capital will not increase as a result of the issue of the new Shares in the Offering (including the issue of the Outokumpu Option Shares), the issue of the Conversion Shares and the issue of the Capitalisation Shares. The Board of Directors approved the Offer Price and the allocation on 30 May 2007 based on the authorisation.
2.11 The authorised, issued and fully paid shares of the Company as at Second Admission, is as follows:
Issued and outstanding
Authorised maximum share capital______________________________ ____________________number of Shares
€1,000,000(1) 222,896,718
(1) Under the Articles of Association of the Company, the Shares do not have a nominal value.
2.12 Share reconciliation:
Number of Shares issued Number of Shares issued as at
as at 1 January 2006 Second Admission
_____________________ __________________________
1,283,329 222,896,718
2.13 By a resolution duly passed at the Extraordinary General Meeting of the Shareholders on 28 November 2005, the Company resolved to issue the 2005 Convertible Loan to OMG Finland Oy (currently held by Norilsk Nickel), Metso Minerals Oy and Varma. The 2005 Convertible Loan was registered at the Finnish Trade Register on 9 June 2006.
2.13.1 The 2005 Convertible Loan is divided into three separate loans, whereby the first loan amounts to €666,666.50 (“Loan I”); the second loan to €2,333,331 (“Loan II”) and the third loan to €2,333,320 (“Loan III”).
2.13.2 For Loan I, the conversion price is €14.50 per Share, for Loan II €18.20 per Share and for Loan III €20.00 per Share.
2.13.3 As at the date of this Prospectus, the following amounts are outstanding under the 2005 Convertible Loan:
• €666,666.50 to Metso Minerals Oy under Loan I, €666,666 under Loan II and €666,660 under Loan III;
• €999,999 to OMG Finland Oy (currently held by Norilsk Nickel) under Loan II and €1,000,000 under Loan III; and
• €666,666 to Varma under Loan II and €666,660 under Loan III.
2.13.4 Pursuant to the terms and conditions of the 2005 Convertible Loan, the conversion period for the 2005 Convertible Loan will expire after 30 days has lapsed from the date of public listing of the Shares on the London Stock Exchange or another recognised stock exchange. However all holders of the 2005 Convertible Loan have notified the Company that they will convert the outstanding amounts into the 2005 Conversion Shares upon First Admission. The Company has made an application to the UK FSA for the 2005 Conversion Shares to be admitted to trading on the London Stock Exchange’s main market at Second Admission. Pursuant to the terms and conditions of the 2005 Convertible Loan, the number of Shares will increase by 20,359,360 Shares as a result of converting all the amounts outstanding under the 2005 Convertible Loan. 2.14 In addition to the 2005 Convertible Loan referred to in paragraph 2.13 above, the Company also has the 2006 Convertible Bond with a principal amount of €33 million outstanding as at the date of this Prospectus. Each 2006 Convertible Bond with a denomination of €1,000 entitles the holder to one stock option. The exercise price for the 2006 Conversion Shares subscribed by virtue of the stock options may be paid only by setting-off the related convertible note against the subscription price. The 2006 Convertible Bond was approved by the Extraordinary General Meeting of Shareholders on 6 October 2006.
Pursuant to the terms of the instrument constituting the 2006 Convertible Bond dated 6 October 2006, the 2006 Convertible Bond will be partially redeemed and partially converted into the 2006 Conversion Shares in connection with the First Admission. The amount of the redemption payment is dependent on the Company’s equity valuation at and the timing of First Admission. The redemption
payment varies between zero (assuming First Admission taking place during the first quarter of 2007 and at equity valuation of €487.5 million or more) and €33.3 million (assuming First Admission taking place during the fourth quarter of 2007 and at equity valuation of €187.5 million). For information on the applicable redemption payments, see Note 15 to Part IX: “IFRS Historical Financial Information”.
With the Offer Price of 250 pence, the aggregate redemption payment will be €6.7 million, which amount will be divided pro rataamong the bondholders based on the amounts invested. In addition, the holders of the 2006 Convertible Bond will receive 2006 Conversion Shares corresponding to 12.38 per cent. of the Company’s fully diluted share capital. With the Offer Price of 250 pence, the aggregate number of 2006 Conversion Shares issued to the holders of the 2006 Convertible Bond will be 28,451,690, which Shares will be divided pro rata among the bondholders based on the amounts invested. The Company has made an application for the 2006 Conversion Shares to be admitted to trading on the London Stock Exchange’s main market at Second Admission.
2.15 By resolution duly passed at the Extraordinary General Meeting of the Shareholders on 28 February 2007, the Company resolved to issue 99,990 stock options under the Talvivaara 2007 Stock Option Programme to the key personnel of the Company and its subsidiaries entitling to subscribe for a maximum of 6,999,300 new Shares in the Company. Pursuant to the terms and conditions of the stock options, the Board of Directors shall decide on the distribution of the stock options.
Number of Start of the Date of Number of Shares under Exercise price (share subscription
Option establishment options one option subscription price)(1) period Expiry date
______ ______________ _______ _________ __________________ ___________ ____________
2007A 28 February 2007 33,330 70 Offering Price with a 1 April 2010 31 March 2012
deduction of 10 per cent.
2007B 28 February 2007 33,330 70 Offering Price with an 1 April 2011 31 March 2013
addition of 5 per cent.
2007C 28 February 2007 33,330 70 Offering Price with an 1 April 2012 31 March 2014
addition of 10 per cent.
(1) The subscription price of the 2007 stock options must always amount to a minimum of €0.01.
2.16 Outokumpu had the right to subscribe for up to 5.0 per cent. of the Company’s fully diluted share capital (excluding any stock options issued to employees of the Group). Outokumpu subscribed for a total of 10,921,939 Outokumpu Option Shares in connection with the Offering. The subscription price for the Outokumpu Option Shares is 200 pence per Outokumpu Option Share, representing a discount of 20 per cent. to the Offer Price.
2.17 The Company, Varma and Tesi have entered into a bridge loan agreement. The aggregate amount of the loan is €20,000,000, of which Varma provided €15,000,000 and Tesi €5,000,000. The lenders must set off the loan (and the accrued interest, in their sole discretion instead of receiving cash) in full against the subscription price for the Capitalisation Shares to be issued in connection with the Offering. See paragraph 12.2.3 of Part XII: “Additional Information”.
Talvivaara Project Ltd
2.18 The Subsidiary was incorporated with an issued share capital of €8,000 divided into 1,000 shares of €8,00 each, which share capital has not been changed.
2.19 The authorised, issued and fully paid share capital of the Subsidiary as at 30 May 2007, being the last practicable date prior to publication of this Prospectus, is as follows:
Authorised maximum under the
Articles of Association Issued
____________________________ ________________________
Number Amount Number Amount
––––––– ––––––– ––––––– –––––––
12,500 €100,000 1,000 €8,000
2.20 Pursuant to the Sale and Option Agreement, as amended, Outokumpu had an option to acquire a 20 per cent. interest in the Subsidiary for one euro. Outokumpu exercised this option on 14 May 2007 and, consequently, owns 20 per cent. of the Subsidiary.
Hyena Holding AB
2.21 Hyena Holding AB was incorporated with an issued share capital of €11,000 divided into 11,000 shares with nominal value of €1.00 each.
2.22 By a resolution duly passed at the Extraordinary General Meeting of Shareholders on 17 October 2006 and subsequently registered at the Swedish Trade Register, the share capital of Hyena Holding AB was increased from €11,000 to €15,890 by issuing 4,890 new shares of €1.00 each. The subscription price per share was €100.
2.23 The authorised, issued and fully paid share capital of Hyena Holding AB as at 30 May 2007, being the last practicable date prior to publication of this Prospectus, is as follows:
Authorised maximum under the
Articles of Association Issued
____________________________ ________________________
Number Amount Number Amount
––––––– ––––––– ––––––– –––––––
44,000 €44,000 15,890 €15,890
2.24 Save as disclosed in this paragraph 2:
2.24.1 there has been no change in the amount of the issued share or loan capital of the Company and no material change in the amount of the issued share or loan capital of any other member of the Group (other than intra group issues by wholly-owned subsidiaries) within three years of the date of this Prospectus; and
2.24.2 no share or loan capital of the Company or any other member of the Group is under option or is, or will, immediately following First Admission, be agreed, conditionally or unconditionally, to be put under option.
3. Articles of association
3.1 The following is a brief summary of the material provisions of the Articles of Association of the Company. Certain matters which would be typically governed by the Articles of Association of an English company are, under Finnish law, governed directly by the provisions of the Finnish Companies Act. A summary of certain provisions of the Finnish Companies Act, as applicable to the Company, is set out in Part XIII: “Summary of Certain Provisions of the Finnish Companies Act and the Articles of Association” of this Prospectus.
3.2 Trade names
The official and parallel name of the Company are described in paragraph 1.1 above. 3.3 Line of business
The line of business of the Company is described in paragraph 1.4 above. 3.4 Share capital
The minimum share capital of the Company is €10.000 and the maximum share capital €1,000,000. The share capital can be increased or decreased within the minimum and maximum share capital without amending the Articles of Association.
3.5 Board of Directors
3.5.1 The number of members of the Board of Directors is between three and 12. The Board of Directors is quorate when more than half of the Directors appointed by the General Meeting
are present. If the number of members of the Board of Directors appointed by the General Meeting decreases for whatever reason, the remaining Directors shall convene a General Meeting to appoint an additional member or members of the Board of Directors. Any additional Director appointed will hold office (subject to the Articles of Association) only until the dissolution of the Annual General Meeting of the Shareholders next following such appointment unless he is re-appointed during such meeting.
3.5.2 The Board of Directors is appointed by a simple majority of votes cast at the General Meeting of Shareholders and each Director is subject to retirement by rotation in accordance with the Articles of Association. The Board of Directors elects the Chairman amongst the members Board of Directors.
3.6 Restriction on the borrowing powers of the Board of Directors
3.6.1 The Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital, and to issue debentures and other debt securities.
3.6.2 The Directors must ensure that the aggregate amount for the time being remaining outstanding of all monies borrowed by the Group shall not at any time, without the previous sanction of a simple majority of votes cast at the General Meeting of the Shareholders, exceed €600 million. 3.7 Committees
The Company has audit, remuneration and nomination committees. 3.8 Convening the General Meeting of Shareholders
3.8.1 The shareholders are convened to an Annual or Extraordinary General Shareholders’ Meeting by a notice sent at the earliest two months and at the latest one month before the meeting. The notice convening the meeting must be delivered by a newspaper announcement, which is published in at least one newspaper published in the area of Kainuu, in one newspaper published in the area of Helsinki, and in one national newspaper published in the United Kingdom (such newspapers to be chosen by the Board of Directors).
3.8.2 To be allowed to take part in a General Meeting of Shareholders, a shareholder must register with the Company at the latest by the date mentioned in the notice convening the meeting and such date may not be earlier than five days before the shareholders’ meeting. After the Shares have been entered in the book-entry system the additional provisions in the Finnish Companies Act regarding the right to take part in the General Meeting have to be followed.
3.8.3 The General Meeting of Shareholders shall be held either in the domicile of the Company or in Helsinki or Espoo.
3.9 Deviation from the pre-emptive rights of the Shareholders
A decision to deviate from the shareholders’ pre-emptive rights is valid only if three quarters of the Shares represented and votes cast at the General Meeting has supported the decision.
3.10 Disclosure notices
3.10.1 Each holder of the Shares, securities entitling to Shares and holders of depository receipts has the obligation to notify the Company in writing of the level of his ownership when so requested by the Board of Directors within a time limit specified in such request, which shall not be less