TVI's Philippine Affiliate JV Completes Two Shipments of Nickel Ore and Signs Offtake Agreement for Higher Grade Ore at Agata Project in December 2014
CALGARY, Jan. 8, 2015 /CNW/ - TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF) ("TVI" or "the Company") and TVI's Philippine affiliate, TVI Resource Development (Phils.), Inc. ("TVIRD"), are pleased to announce that Agata Mining Ventures Inc. ("AMVI"), a joint venture company in which TVIRD holds a 60% interest and is the operator, completed two shipments of high-iron/low-nickel direct shipping ore ("DSO") for gross proceeds of US$1.34 million during December 2014 from the Agata project located in northern Mindanao, the Philippines. TVI and TVIRD also announce that AMVI has signed an offtake agreement with Tewoo Hoperay (Singapore) Pte. Ltd. ("Tewoo") for two shipments of higher grade saprolite ore and that it has drawn funds from the earlier announced $8 million loan facility extended by China Banking Corporation to help fund the ramp up of the DSO operation and the exploration work underway at the Agata nickel laterite and limestone projects.
"We are very pleased that the Agata DSO operation continues to generate revenues and cash flows and that Tewoo continues to be a loyal buyer of both the nickel laterite and saprolite ore," stated Clifford James, Chairman and CEO of TVI and Chairman of TVIRD. "We are also pleased that AMVI has been able to access substantial funds to ensure the successful ramp up of production and continued resource updates at the Agata project as these developments all serve to further support TVIRD's goal of listing on the Philippine Stock Exchange in 2015 – the achievement of which could substantially enhance value for TVI and its shareholders."
December 2014 Shipments
During December 2014, AMVI completed two shipments (representing the fourth and fifth in the series of shipments that commenced in October 2014) of limonite high-iron/low nickel ore which left the port of Payong-Payong in Agusan del Norte, Mindanao, in accordance with an off-take arrangement with Tewoo. Details of the shipments are as follows:
- Fourth shipment totalling 55,300 wet metric tonnes (wmt) of ore containing 0.9% nickel and 48.49% completed on December 13, 2014. AMVI expects to receive gross revenue of US$691,000 for the shipment (pending final assay and price adjustments).
- Fifth shipment totalling 51,900 wmt of ore containing 0.89% nickel and 48.79% iron completed on December 20, 2014. AMVI expects to receive gross revenue of US$649,000 for the shipment (pending final assay and price adjustments).
As of December 20, 2014, production remained steady and remaining inventory was approximately 41,863 wmt of limonite high-iron/low nickel ore with nickel and iron content levels of 0.75% and 49.05%, respectively. AMVI expects to complete another two shipments of limonite ore during January 2015.
Saprolite Offtake Agreement
Further to news on November 26, 2014, AMVI has been mining higher grade saprolite ore (containing greater than 1.5% nickel) found in the deeper part of the Agata nickel laterite orebody to secure higher selling prices. In this respect, AMVI signed a new offtake agreement with Tewoo on December 15, 2014, for two shipments of 55,000 wmt of saprolite ore to be sold and delivered during the period between December 15, 2014 and December 31, 2015.
AMVI expects to complete both shipments of saprolite ore to Tewoo in the first quarter of 2015, after which it plans to mine and make shipments consisting of both high and low grade ore in order to ensure that a blended higher selling price is obtained.
Chinabank $8 Million Loan drawdown
Further to news on November 20, 2014, the AMVI Board approved an US$8 million term loan facility (the "Facility") extended by China Banking Corporation ("Chinabank") and has drawn down all of the funds in December 2014 to help finance the ramp up of the Agata DSO operations to 5 million wmt by 2016, to fund detailed exploration programs and resource updates underway at the Agata nickel laterite and limestone projects, and for general working purposes.
For more details on the terms of the Facility, please refer to news as announced on November 20, 2014.
About the Agata Project
The Agata project is held by AMVI, a joint venture company whose shares are owned by TVIRD and Mindoro Resources Ltd. ("Mindoro"), in which TVIRD holds a 60% interest and is operator. TVI has a 30.66% direct interest in TVIRD and thereby a 24.2% indirect ownership interest in AMVI through its ownership in TVIRD and its 14.4% direct interest in Mindoro, which holds a 15% interest and option to acquire a further 25% in AMVI. In TVI's consolidated financial statements, its interest in TVIRD is recorded as an investment in joint venture within the mining segment, and accounted for using the equity method. Revenues earned and related expenses incurred at the level of TVIRD and its subsidiaries, including net revenues generated by DSO shipments, now result in an adjustment to the investment account with corresponding adjustment in the consolidated income statement of TVI.
The Agata Project is located in Agusan del Norte province, within the Surigao mining region on the island of Mindanao, Philippines. The Surigao region is a major lateritic nickel producing region providing ore to processing plants in Australia, China, Korea and Japan. The Agata Project is well located and is expected to benefit from its deep protected seaport, the opportunity for year-round shipping and its proximity to main markets in Asia.
An initial Offtake Agreement was signed by AMVI in June 2014 with Tewoo Hoperay (Singapore) Pte. Ltd, a subsidiary of Tianjjn Hoperay Mineral Limited Company, a major Chinese State Owned Enterprise, to sell one million wmt of high-iron/low nickel DSO, and a second Agreement was signed in August 2014 to sell 500,000 wmt. Advance payments of US$3 million have now been received by AMVI against both agreements to fund initial operating costs.
AMVI is currently planning to ramp up its nickel DSO operations from the previously stated goal of 2.5 million wmt per year to 5 million wmt by 2016 once it secures an amended and expanded Environmental Compliance Certificate and Declaration of Mining Project Feasibility with the Department of Environment and Natural Resources. By doubling initially planned production capacity, AMVI expects to achieve economies of scale that would significantly enhance operating margins. Once production has been fully ramped up, the resulting shipment schedule would be approximately one to three shipments of 55,000 wmt of DSO being dispatched every week.
In addition to the ramp up of its DSO operations, AMVI is carrying out detailed exploration programs consisting of in-fill, data verification and step-out drilling on the Agata nickel laterite orebody to define ore extension within and outside the current pit design and to upgrade and increase the resources at the project (see news on November 26, 2014).
AMVI also commenced exploration activities on the Agata limestone project in early November 2014, including a detailed review and verification of previous work carried out as well as more detailed surface mapping and sampling of the area by the geological team (see news on November 27, 2014).
Based on the National Instrument ("NI") 43-101 compliant Feasibility Study completed by TVIRD on September 10, 2013, robust economics were indicated for a DSO operation of the high-iron laterite resources at the Agata Project. The Feasibility Study concluded:
- Low initial start-up capital of US$10.1 million, high Internal Rate of Return of 187% and payback within the first year of operation;
- Post-tax Net Present Value (10% discount) of US$37.9 million; and,
- DSO product to grade 48% Fe and 0.9% Ni - a product in consistent demand.
An NI 43-101 compliant mineral resource estimate released on April 10, 2013 shows the Agata DSO project to have reported Proven and Probable Reserves of 9.7 million wmt with a grade of 48% Fe with 0.9% Ni. The report is available for viewing on http://www.sedar.com and www.tvipacific.com.
About TVI Pacific Inc.
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. TVI's affiliate, TVIRD, has to date produced copper and zinc concentrates as well as gold and silver doré from its Canatuan mine and has now commenced shipping high-iron/low nickel ore at the Agata DSO project, which is 60% held by TVIRD. TVIRD is also in the final stages of completing a definitive feasibility study ("DFS") on the innovative Agata nickel processing project, in which TVIRD has the right to earn a 60% interest upon completion of the DFS, and continues to advance its 100% owned Balabag Gold-Silver project. TVI is a direct or indirect participant/operator in several joint venture projects in the Philippines, Papua New Guinea and Fiji and also has an interest in an offshore Philippine oil property.
In addition to retaining a 30.66% indirect interest in TVIRD and other Philippine subsidiaries, TVI continues to directly hold (i) 20.04% equity interest in Foyson Resources Limited ("Foyson") (ii) a 14.4% equity interest in Mindoro; (iii) its 10% interest in the Amazon Bay Iron Sands project (for which the exploration license is held by Titan Mines Limited, a company in which Foyson holds 50% shareholding and has an option to acquire the remaining 50%); and (iv) its 100% investment in shares of TG World Energy Corp.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain information set out in this News Release constitutes 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", "scheduled", "to be", "will be" and similar expressions. Forward-looking statements in this News Release are based upon the opinions and expectations of management of the Company as at the effective date of such statements. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, 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 by such forward-looking statements. These factors include, but are not limited to, such things as inherent risks associated with the exploration and development of mining properties, ultimate recoverability of mineral reserves, timing, results and costs of exploration and development activities, 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 equipment and personnel.
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. Forward-looking information respecting cash flows anticipated from future production of high-iron/low nickel DSO at the Agata Mining Project, is based upon high-iron/low nickel DSO prices in effect as at the date of this News Release, management's forecasts of trends in prices of high-iron/low nickel DSO, current mining rates of high-iron/low nickel DSO from the Agata Mining Project, estimates of the size of the high-iron/low nickel DSO reserves at Agata Mining Project, the current development plan for Agata Mining Project, TVIRD's current budget and overall strategy for Agata Mining Project, which plans, budget and strategy are all subject to change. Forward-looking information respecting the anticipated timing of future shipments of high-iron/low nickel DSO from the Agata Mining Project, is based upon current mining rates of high-iron/low nickel DSO from the Agata Mining Project, the terms of the third party offtake agreement for the purchase of high-iron/low nickel DSO produced at the Agata Mining Project, estimates of the size of the high-iron/low nickel DSO reserves at the Agata Mining Project, the current development plan for the Agata Mining Project, TVIRD's current budget and overall strategy for the Agata Mining Project, which plans, budget and strategy 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 (including mining activities) are described in detail in the Company's Annual Information Form for the year ended December 31, 2013, which was filed on SEDAR on March 19, 2014 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.
SOURCE TVI Pacific Inc.
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