TVI Pacific 2012 Year End Results and Operational Performance
TSX : TVI OTCQX: TVIPF
CALGARY, March 19, 2013 /CNW/ - TVI Pacific Inc. ("TVI" or "the Company") today released audited, consolidated financial and operational results for the year ended December 31, 2012. This press release should be read in conjunction with the audited consolidated financial statements that have been prepared in accordance with International Financial Reporting Standards ("IFRS") and management's discussion and analysis for the years ended December 31, 2012 and 2011, and filed with certain securities regulators in Canada on March 19, 2013, and also available on our web site (www.tvipacific.com and SEDAR www.sedar.com).
2012 Year-End Highlights
- $77.1 million in net revenue was realized from the sale of concentrates;
- $6.0 million in net income (before tax) / $5.3 million in net income (after tax)
- Cash balance at year-end was $16.0 million;
- Short term debts of $9.9 million (average interest rate of 2.0%); and
- A working capital surplus of $13.7 million
During the year ended December 31, 2012, the Canatuan mine generated net revenues of $77.1 million, made up of seven copper concentrate shipments and three zinc concentrate shipments, as compared to $83.0 million net revenue realized in 2011 representing seven completed shipments of copper concentrate and only one shipment of zinc concentrate. The 2012 revenue was affected by a lower average copper price of US$3.60, as compared to average copper price of US$3.90 realized in 2011. Net revenues are net of treatment, refining and penalties from the buyer which increased to 14.3% of the gross revenue in 2012 from 11.6% in 2011, based on the revised treatment and refining rates and freight charges, as negotiated and agreed with the metal off-take partner, taking into consideration the quality of the concentrates and the change in the destination of the copper concentrate shipments.
Mining, milling and other expenses for the year ended December 31, 2012, were $48.6 million which were lower compared to the $48.8 million incurred in 2011, despite the volume of Cu lb eq shipped in 2012 exceeding the 2011 volumes by 5%. Improved metal recoveries contributed to a 7% increase in (Cu lb eq) metal production in 2012 and, combined with a lower consumption of chemicals required for processing, resulted in lower unit of production costs. Mining, milling and other expenses do not include treatment, refining and penalties from the buyer as these costs are netted against revenues.
During the year ended December 31, 2012, the Company also had foreign exchange gains of $2.7 million arising from the settlement of intercompany loans through the year that had been provided at varying historical rates in years prior as compared to a $0.2 million foreign exchange loss in 2012.
On December 14, 2012, TVI Resource Development (Phils.) Inc. ("TVIRD") signed a memorandum of agreement ("MOA") with Rapu Rapu Group, which outlines terms for the settlement of outstanding net smelter return payments to TVIRD. The MOA confirms agreement of a gross sum amount of US$4,807,435 between TVIRD and the Rapu Rapu Group for the period 2005 through Q4 2012. TVIRD is to receive a total of US$3,845,948, which is net of 20% withholding taxes, of which US$2,217,184 has already been received to date.
At December 31, 2012, the Company held $16.0 million in cash that it can reinvest into further growth in the Company compared to $23.7 million at the end of 2011. The Company also held $9.9 million in various short term debts and term loan, at an average interest rate of 2.0%.
Operational Snapshot Quarter-Over-Quarter and Year to Date 2012
Dec. 31, 2012
|March 31, 2012||June 30, 2012||Sept. 30, 2012||Dec. 31, 2012|
Copper pound equivalent
("Cu lb eq") produced
|Copper produced (lbs)||3,356,555||3,750,947||3,924,034||3,923,719||14,955,255|
|Gold produced (oz)||2,061||2,745||3,085||3,539||11,430|
|Silver produced (oz)||123,917||127,685||109,055||143,969||504,626|
|Zinc produced (lbs)||4,841,896||4,197,683||1,789,459||2,790,187||13,619,225|
Production cash cost per
Cu lb eq (US$)(1)
Average copper price received
Average zinc price received
(1) Excludes selling expenses and amortization expenses. See MD&A for definition of this non-IFRS measure.
2012 Operations Summary
The average daily throughput for the year ended December 31, 2012, was 2,645 dry metric tonnes for a total mill feed in the year of 968,069 tonnes. TVI is currently targeting through 2013 an average daily throughput of 2,600 dry metric tonnes, which results in a remaining life of mine of approximately 0.8 years (subject to change in throughput to meet shipping commitments).
Only a portion of original ore reserves was consumed through the year due to the additional material found and mined during the period. This material, primarily mineralized schist, was used as a blending material to optimize mill recoveries and was located both inside and outside the pit shell and not included in the original ore reserves. Detailed metallurgical and ore reserve studies will continue to be undertaken to determine future processing scenarios and their potential impacts on the ore reserves and mine life.
The following table details key operating statistics for the Canatuan Sulphide Mine for the year ended December 31, 2012.
|March 31, 2012||June 30, 2012||Sept. 30, 2012||Dec. 31, 2012|
|Total tonnes processed||246,998||229,281||237,383||254,407||968,069|
Average tonnes processed per
|Ore copper grade (%)||0.85||0.92||0.92||0.88||0.89|
|Copper recovery (%)||72.65||80.97||81.22||79.92||78.74|
Copper concentrate produced
(dry weight - t)
Average daily concentrates
produced (dry weight - t)
|Concentrate copper grade (%)||18.19||18.46||18.33||17.91||18.22|
|Concentrate gold grade (g/t)||7.70||9.48||9.41||10.51||9.33|
|Concentrate silver grade (g/t)||377.91||370.51||333.39||402.57||371.05|
|Zinc recovery (%)||55.29||61.77||41.98||47.43||52.99|
Zinc concentrate produced
(dry weight - t)
|Concentrate zinc grade (%)||48.88||49.64||48.40||46.77||48.59|
Copper concentrate shipped
(dry weight - t)
Zinc concentrates shipped
(dry weight - t)
Further exploration drilling was temporarily suspended through December 31, 2012, to ensure the deposit area was cleared of illegal miners. The corehouse and the drill cores were relocated to Ipil during this drilling activity suspension. The plan is to pursue the development of the starter mine. TVIRD has done extensive in-house feasibility studies which indicate robust stand-alone economics. A Preliminary Declaration of Mining Project Feasibilty (DMPF) has been filed with the Mines and Sciences Bureau (MGB), the responsible government agency. A final DMPF is expected to be filed in Q2.
The Balabag NI 43-101 technical report dated June 23, 2012, and entitled "NI 43-101 Technical Report on the Balabag Gold Project, Zamboanga Province, Philippines" is available on SEDAR at www.sedar.com and on TVI's website at www.tvipacific.com. The technical report, which incorporates results of drilling completed to the end of June 2011, provides estimates of an indicated mineral resource of 1.78 million tonnes averaging 2.34 grams per tonne of gold and 72.3 grams per tonne of silver containing 134,262 ounces of gold and 4,148,196 ounces of silver.
On March 12, 2013 TVIRD secured US $23 million low interest financing with a major Philippine bank to support the development of the proposed Balabag mine. This will provide TVIRD with additional working capital funding for construction and commissioning activities and support mining and processing activities. The facility includes a US $20 million term loan facility with the interest rate set at 90-day Libor plus 250 basis points (approximately 3%) and an additional US $3 million Letter of Credit available to TVIRD for a 180 day period at the prevailing market rate.
The exploration drilling program has recommenced at Balabag in January 2013 following the removal of all illegal miners from the area though implementation of a Cease and Desist Order ("CDO") against the illegal miners on 23-25 October 2012 by an Inter-Agency Alliance of national enforcement agencies. The Environmental Impact Statement (EIS) has also been endorsed in February 2013 by the Environmental Management Bureau (EMB) technical review committee to the Department of Environment and Natural Resources (DENR) office for the approval and issuance of the Environmental Compliance Certificate (ECC). The Declaration of Mining Project Feasibility document package is expected to be completed by the second quarter 2013 following the approval of the ECC, while plant design and equipment sizing has also been completed as part of an update of the internal feasibility study that was previously submitted to the MGB.
TVIRD continues to progress with success the critical elements to advance the development of the Balabag project, targeting plant construction by the second half of 2013 and first doré production by Q1 of 2014.
Greater Canatuan Tenement Area (GCTA)
Exploration of TVI's GCTA was limited to a ground reconnaissance survey to verify the Versatile Time Domain Electro-Magnetics (VTEM) geophysical survey interpretations. Potential exploration drilling sites have been identified from this reconnaissance work; however, mobilization of the rigs is currently on hold until the required permits are issued. Meanwhile, ground survey verification and a more detailed geologic surface mapping will continue to define potential drilling targets primarily at the neighboring tenement, which is within trucking distance of the current Canatuan mine/processing plant. Any mineable ore located in this area could be economically transported to the existing Canatuan plant for processing.
Malusok and SE Malusok (APSA-0023-IX)
Processing and approval of Mineral Production Sharing Agreement (MPSA) applications continued to be on hold because of the ongoing moratorium on new permit applications imposed by the Secretary of the Department of the Environment and Natural Resources (DENR). The moratorium on new permit applications is still in effect in spite of the signing of the much awaited Executive Order by the President of the Philippines. Timing as to the issuance of the required permits continues to be uncertain.
Exploration Permit Application 61 (EXPA 61)
Exploration Permit Application 61 (EXPA-000061-IX) is also affected by the moratorium and therefore there were no new activities in the area.
Tamarok Copper and Gold Prospect
Tamarok exploration work has been suspended since January 2012 as the initial scout drilling results were not encouraging. The decision to suspend the work was to focus exploration resources on other projects.
Heads of Agreement with Mindoro and Foyson
TVI has entered into two heads of agreements (HOA) with Mindoro Resources Ltd. (Mindoro or MRL), a TSX Venture Exchange ("TSXV") listed issuer (TSX VENTURE:MIO), also listed on the ASX (ASX:MDO), who is engaged in mining exploration in the Philippines, and Foyson Resources Limited (Foyson), an Australian Securities Exchange ("ASX") listed issuer (ASX:FRL) operating in the resource industry in Papua New Guinea. The HOA, dated July 6, 2012 and August 17, 2012, respectively, set out the terms of various proposed transactions consisting of loan to, acquisition of equity interests by way of private placement to be undertaken in two tranches for each company and joint ventures with Mindoro and Foyson (or affiliates).
On September 28, 2012, TVI acquired ownership and control of 18,779,353 units of Mindoro by way of a private placement (Tranche 1) at a price of $0.05 per unit, for a total of $938,968. On October 10, 2012, TVI completed the purchase of an additional 24 million units of Mindoro, at $0.05 per unit, for an aggregate purchase price of $1.2 million (Tranche 2A). As at December 31, 2012, TVI holds an interest of 14.4% in Mindoro and has spent $1,255,179 on option to purchase contracts towards gaining an interest in the previously reported Agata and Pan de Azucar joint ventures. Prior extensive pre-feasibility and engineering works have been conducted on the Mindoro properties and can be accessed on Mindoro's website at www.mindoro.com or on SEDAR at www.sedar.com.
The Mindoro properties offer significant growth opportunities, including near-term high iron (Fe) laterite and limestone direct shipping ore (DSO) operations for which development planning/permits are well-advanced, a medium-term pyrite material DSO operation, a medium-term lime production facility, and a medium-term nickel (Ni) processing plant for which a Project Execution/Technology Development team of highly experienced professionals is currently fast-tracking a Ni processing facility plant using an initial low-capex leaching technology approach.
An update to the NI 43-101 report prepared originally for Mindoro, together with a Feasibilty Study on the Hi Fe DSO operation, are now underway and are expected to be complete in the coming weeks.
An update to the NI 43-101 report for the Ni processing project, prepared originally for Mindoro, is initially planned and will be followed by a full feasibility study. The feasibility study is well underway and is expected to be completed by the end of 2013. Pending a positive feasibility study and a decision to proceed, plant construction is expected to commence in 2014 with the commissioning/commercial production of nickel hydroxide product in 2015, dependent on obtaining permits in a timely manner, among other things.
On August 28, 2012, TVI has completed the first tranche of the private placement (Tranche 1) with Foyson, wherein TVI acquired 68 million shares representing 8.93% of Foyson's issued capital, at a purchase price of AUD$0.013 per share, for a total of AUD$884,000 ($907,249). As at December 31, 2012, TVI holds an interest of 8.93% in Foyson and has spent AUD$690,109 ($706,343) on option to purchase contracts towards gaining an interest in the previously reported Amazon Bay and New Britain joint ventures. Amazon Bay is a vanadium/titanium rich mineral sands property while New Britain is a copper porphyry, and both are located in Papua New Guinea.
In February 2013, both Foyson and TVI have agreed to amendments to the Tranche 2 subscription agreement. Under the amended Tranche 2 agreement, TVI will subscribe for 142,857,143 Foyson shares at A$0.007 (A$1 million in the aggregate). Foyson will also issue 80 million options to TVI, exercisable at $0.015, prior to December 31, 2014. Completion of the Tranche 2 placement is subject to Foyson's shareholders' approval and a meeting that Foyson will convene on or before April 18, 2013. On completion of the Tranche 2 placement, TVI will hold approximately 29.5% of the listed shares in Foyson (on a fully diluted basis).
About TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF)
TVI Pacific Inc. is a Canadian resource company focused on the production, development, exploration and acquisition of resource projects in the Philippines and Southeast Asia. The Company produces copper and zinc concentrates from its Canatuan mine and is advancing its Balabag Gold-Silver project towards production in 2014. TVI is a partner/operator in several joint venture projects in the Philippines and Papua New Guinea and also has an interest in an offshore Philippine oil property.
Yulo Perez, Chief Operations Officer, TVIRD, a qualified person as defined by NI 43-101, has approved the scientific and the technical information contained within this press release.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
Cautionary Statement - Forward-Looking Information
Certain statements in this Press Release constitute forward-looking information. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "should", "believe", "schedule" and similar expressions. Forward-looking statements are based upon the opinions and expectations of TVI as at the effective date of such statements and, in certain cases, information received from or disseminated by third parties. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from or disseminated by third parties is reliable, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties (known and unknown) that could cause actual outcomes to differ materially from those anticipated or implied. These factors include, but are not limited to, such things as general economic conditions in Canada, the Philippines and elsewhere; volatility of prices for precious metals, base metals, oil and gas; commodity supply and demand; fluctuations in currency and interest rates; inherent risks associated with the exploration and development of mining properties; inherent risks associated with the exploration and development of oil and gas properties; ultimate recoverability of reserves; production, timing, results and costs of exploration and development activities; political or civil unrest; availability of financial resources or third-party financing; new laws (domestic or foreign); changes in administrative practices; changes in exploration plans or budgets; and availability of personnel and equipment (including mechanical problems).
Forward-looking statements regarding forward production costs and shipping and refining costs are based on current and previous mineral reserve and resource estimates, current mining and processing activities, prior experiences of management with mining and processing activities, the current development and operating plan, efficiency and effectiveness of the sulphide plant, and the Company's overall plans, budget and strategy for Canatuan (which are all subject to change). Forward-looking statements regarding the remaining mine life and resources/reserves of the Canatuan deposit are based on current and previous mineral reserve and resource estimates, current mining and processing activities, prior experiences of management with mining and processing activities, the current development and operating plan, efficiency and effectiveness of the sulphide plant, and the Company's overall plans, budget and strategy for Canatuan (which are all subject to change). Forward-looking statements respecting the copper and zinc concentrate shipping volumes and the timing of future shipments are based on the Company's previous experience with concentrate shipments, current mining and processing activities, current and previous mineral reserve and resource estimates, discussions to date with the off-take partner, efficiency and effectiveness of the sulphide plant, and the Company's overall plans, budget and strategy for Canatuan (which are all subject to change). Forward-looking statements regarding the timing and nature of exploration and drilling activities in the Greater Canatuan Tenement Area (including EXPA 61, Malusok and SE Malusok), Tamarok and the Company's other tenements in the Philippines and Papua New Guinea are based upon current and previous exploration activities, management's experience with other exploration programs undertaken in the Philippines, Papua New Guinea and elsewhere, and the Company's overall plans, budget and strategy (which are all subject to change). In certain cases, the timing of exploration activities in the Philippines and Papua New Guinea is dependent upon the receipt of free prior informed consent from indigenous communities and regulatory approvals from the governments of the Philippines and Papua New Guinea. Forward-looking statements regarding expectations that the Company will be able to find additional ore in the Greater Canatuan Tenement Area (including EXPA 61, Malusok and SE Malusok) and that this ore can be economically transported to the existing Canatuan mill are based upon current and previous exploration activities, management's experience with other exploration programs undertaken in the Philippines and elsewhere, management's current and previous experience with mining and processing activities at Canatuan, and the Company's overall plans, budget and strategy (which are all subject to change). Forward-looking statements regarding the Company's expected metal production and capital expenditures for 2013, and its ability to continue to generate revenue from its operations are based on current mining and processing activities at Canatuan, current throughput of the sulphide plant, anticipated recoveries, efficiency and effectiveness of the sulphide plant, management's prior experiences with mining and processing at Canatuan, the estimated copper and zinc mineralization of the sulphide zone at Canatuan, current and previous exploration, and the Company's overall plans, budget and strategy (which are all subject to change).
The forward-looking statements of the Company contained in this News Release are expressly qualified, in their entirety, by this cautionary statement. Various risks to which the Company is exposed in the conduct of its business are described in detail in the Company's management's discussion and analysis for the year ended December 31, 2012 which was filed on SEDAR on March 19, 2013 and is available under the Company's profile at www.sedar.com. Subject to applicable securities laws, the Company does not undertake any obligation to publicly revise the forward-looking statements included in this news release to reflect subsequent events or circumstances. Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this news release and such forward-looking statements should not be interpreted or regarded as guarantees of future outcomes.
SOURCE TVI Pacific Inc.