TVI Pacific Inc. to Proceed with Amended Tranche 2 Subscription Agreement with Foyson Resources Limited

TSX: TVI  OTCQX: TVIPF

CALGARY, Feb. 14, 2013 /CNW/ - TVI Pacific Inc. (TSX: TVI) (OTCQX: TVIPF) (TVI or the Company) announces that it will proceed with an amended Tranche 2 subscription agreement with Foyson Resources Limited (Foyson). TVI originally signed a Tranche 2 subscription agreement and associated joint venture agreements on August 28, 2012. Both Foyson and TVI have agreed to amendments to the transaction documents and have also agreed on various associated issues. The amended Tranche 2 agreement is subject to approval by Foyson shareholders at a meeting that Foyson will convene on or before April 18, 2013.  All amounts stated in this news release are in Australian Dollars unless otherwise stated.

Based on discussions with Foyson and under the amended terms, TVI will:

  • subscribe for 142,857,143 Foyson shares at A$0.007 for a total $1.0 million investment and receive 80 million options from Foyson, exercisable at $0.015 prior to December 31, 2014, bringing TVI's ownership of Foyson to 29.5% on a fully diluted basis (subject to Foyson shareholder approval);

  • make a Convertible Loan to Foyson in the amount of A$600,000 with the right (but not the obligation) to request repayment from Foyson through the issuance of 75 million shares and 75 million options to TVI (subject to Foyson Shareholder approval);

  • focus resources on the Amazon Bay iron sands project with the intent of fast-tracking the development of an operating mine; and

  • work jointly with Foyson to identify a resource project with the potential of near-term development and cash flow potential.

Mr. Clifford M. James, Chairman and CEO of TVI, states: "We are very pleased with the amended agreement and arrangements with Foyson, which enable us to focus on the joint venture projects that will benefit the greatest from TVI's financial resources and technical expertise."

TVI originally signed agreements with Foyson on the following projects located in Papua New Guinea: the Amazon Bay Iron Sands Joint Venture Project, an Amazon Bay Royalty Agreement, the New Britain Gold/Copper Joint Venture Project, the Massau and Tanga Island Option Agreement, and the New Ireland Option Agreement. Along with amending the Tranche 2 agreement, TVI and Foyson also held discussions regarding these projects and the development strategies for each and have subsequently agreed to amendments relating to the projects. Specifically, TVI will focus its technical and financial resources on the Amazon Bay iron sands project and seek to fast track the development of an operating mine.

As TVI's focus is on projects with the opportunity for near-term development and production, the Company and Foyson have also agreed to jointly identify a resource project with near-term cash flow potential.

Tranche 2 Placement

TVI completed the Tranche 1 subscription agreement comprising the purchase by TVI of 68 million Shares through a private placement representing approximately 8.93% at a purchase price of A$0.013 per Share (A$884,000 in the aggregate) on September 3, 2012.

Under the original Tranche 2 agreement, TVI agreed to purchase 160 million shares of Foyson at a purchase price of A$0.015 per Share (A$2.4 million in the aggregate).  The original agreement also provided that (i) in connection with the closing of Tranche 2, TVI (or a subsidiary or other affiliate) would also be granted, for nominal aggregate consideration, options to subscribe for and purchase up to an additional 140 million Shares of Foyson; and (ii) each option will entitle the holder to purchase, subject to adjustment in accordance with the terms of the option, one Foyson share at a price of A$0.03.  On a fully diluted basis, this would have resulted in TVI owning approximately 34.7% of Foyson.

Under the amended Tranche 2 agreement, TVI will subscribe for 142,857,143 Foyson shares at A$0.007 (A$1.0 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 at 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). TVI and Foyson have agreed that in the period until June 30, 2014, TVI will not seek to increase its percentage holding, except as provided for under the current agreements, without prior approval of Foyson.

Loan repayment

Under the original agreement, TVI had agreed to make a loan to Foyson in the principal amount of A$400,000 with an interest rate of 8% per annum repayable before November 30, 2012.  As per the amended agreement, TVI has agreed to restructure the loan to a Convertible Loan in the amount of A$600,000, repayable on June 30, 2014 at zero interest, if not previously converted to securities.

In the six-month period prior to June 30, 2014, TVI will have the right (but not the obligation) to request repayment of the Convertible Loan by Foyson through the issuance of 75 million shares and 75 million options to TVI. The options will be exercisable prior to December 31, 2014 at $0.015. Foyson will seek the approval of its shareholders for this potential loan conversion at a shareholder meeting Foyson will convene on or before April 18, 2013.

Joint Venture Agreements

TVI will continue to proceed with the Amazon Bay joint venture. To date, the Company has invested over $725,000 in the project and has committed to a minimum project spend of A$2 million by December 31, 2013. TVI will leverage its strong technical expertise and experience in completing mining projects in the Philippines on time and on budget to seek ways to fast track the development of an operating project at Amazon Bay.

While Foyson successfully confirmed the presence of a copper porphyry system in the New Britain joint venture exploration program completed at Atui in New Britain, both TVI and Foyson agree the project would be best optimized by introducing a major copper/gold producer to replace TVI. Although TVI has invested over $790,000 in the New Britain Joint Venture, the Company's strategy is to advance projects with near-term production potential and will therefore focus its resources on Amazon Bay.

TVI will cooperate with Foyson in identifying a possible replacement joint venture partner and may choose to withdraw from the New Britain joint venture upon the earlier of Foyson introducing a new partner or September 30, 2013.

Appointment of Directors

Following completion of the Tranche 2 closing, TVI will be entitled to appoint two directors to the Foyson Board out of a maximum of five directors.

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 100% owned 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.

Forward Looking Statements

This news release contains certain forward-looking information (referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "intend", "estimate", "scheduled", "expect", "may", "will", "should", or similar words suggesting future activities or outcomes. The forward-looking statements set out in this news release include information relating to proposed transactions involving Foyson. Forward-looking statements relating to the proposed transactions involving Foyson are based upon the terms and conditions set out in the amendment agreement and joint venture related agreements noted above.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. With respect to the proposed transactions involving Foyson, those risks and uncertainties include a failure to close one or more of the proposed transactions on the terms outlined in this news release due to renegotiation of those terms by the parties prior to closing, or a failure to satisfy one or more conditions, such as conditions relating to the receipt of any necessary regulatory approvals and Foyson shareholder approval.  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.

The forward-looking statements contained in this news release are made as of the date hereof and TVI does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable Canadian securities law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

SOURCE TVI Pacific Inc.



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