TVI Pacific Provides Third Quarter 2013 Financial and Operational Results
TSX: TVI OTCQX: TVIPF
CALGARY, Nov. 12, 2013 /CNW/ – TVI Pacific Inc. (TSX: TVI) (OTCQX:
TVIPF) (“TVI” or the “Company”) today announced its unaudited, consolidated financial and operational
results for the quarter ended September 30, 2013.
For a thorough explanation of the points discussed in this news release,
shareholders are encouraged to read the unaudited interim consolidated
financial statements, prepared in accordance with International
Financial Reporting Standards (IFRS), and the management’s discussion
and analysis for the periods ended September 30, 2013 and 2012 and the
audited consolidated financial statements for the years ended December
31, 2012 and 2011. These documents were filed with certain securities
regulators in Canada, and are available on our website (www.tvipacific.com) or under our profile on SEDAR (www.sedar.com).
September 30, 2013 Year-to-date Highlights
-- Total net revenue of $39.3 million. -- Earnings before interest, tax, depreciation and share of loss of associates of $4.1 million. -- Net loss of $4.6 million. -- Cash balance of $4.9 million at September 30th, 2013. -- Short-term debt facilities of $3.9 million (average interest rate of 2.0%). -- A working capital surplus of $6.4 million.
Quarter ended Quarter ended Quarter ended September 30, September 30, June 30, 2013 2012 2013 Gross revenue ($ I million) $14.6 $22.4 $20.1 I Net revenue ($ million) $12.1 $19.8 $17.0 Total cost per Copper Pound Equivalent (1) I (US$) $2.71 $2.41 $3.27 I Production cash cost per Copper Pound Equivalent (2) (US$) $1.60 $1.29 $1.89 I Total cash cost per Copper Pound Equivalent net of by-products (3) (US$) $0.91 $0.81 $1.48 I Net income ($ million) $0.34 $0.53 ($4.32) Basic net income per I share $0.000 $0.000 ($0.007) Average copper price I received (US$/lb) $3.23 $3.48 $3.25 Cash balance at quarter I end ($ million) $4.9 $9.5 $9.1 Letters of credit and loan facilities ($ I million) (4) $3.9 $7.6 $9.2 Working capital surplus I ($ million) $6.4 $12.2 $6.3 (1) Includes selling expenses and amortization expenses (2) Excludes selling expenses and amortization expenses (3) Includes selling expenses and excludes amortization expenses (4) Average interest rate of: 2.00% for Q3 2013 and Q2 2013 and 2.01% for Q3 2012
The mining segment generated net revenues of $11.7 million in Q3 2013
from the sale of concentrates, net of treatment, refining and
penalties, and a further $0.3 million from drilling and other services
to third party customers. During Q3 2013, there was one shipment of
copper concentrate and one shipment of zinc concentrate for a total of
5,498 dry metric tonnes and 5,169 dry metric tonnes, respectively,
wherein the Company realized average prices of US$3.23 for copper and
US$0.84 for zinc.
The Company realized a consolidated net income of $0.3 million during Q3
2013, which included a decrease in total mining, milling and other
expenses through the quarter on a Cu lb equivalent unit basis as metal
production increased through a combination of higher throughput and
improved metal recoveries. Net income also includes a further $0.6
million in Net Smelter Returns (NSR) earned through Rapu Rapu
Processing, Inc. (“Rapu Rapu”) during the quarter. Total NSR now
received from Rapu Rapu equates to US $2.3 million cash in the current
year and US $5.4 million total to date, all net of withholding tax,
since the signing of a Memorandum of Agreement with Rapu Rapu on
December 12(th), 2012.
A 7% decline in copper price, 16% decline in gold price and 24% decline
in silver price realized by the Company as compared to the same nine
month period ended September 30, 2012 has contributed to lower revenues
year-over-year, as has a continuing decline in copper feed grade, as
may be expected over the life of the Canatuan mine. This is the result
of the declining natural grade distribution of the mineral deposit as
the Company mines deeper into the pit and follows its mining plan. As
such, production cash cost has increased year-over-year as a result of
processing lower feed grades (0.72% average year-to-date) through the
blending of ore to reduce penalty elements in the concentrate, though
the increase has been offset in part by reduced mining cost and the
continuing non-use of cyanide.
Net income breakdown
3 months ended Nine months ended September 30, 2013 September 30, 2013 ($ million) ($ million) Reported net income (loss) 0.34 (4.55) Interest expense and income taxes 0.29 0.36 Depreciation, depletion and 2.03 6.72 accretion Share of loss of associates 0.25 1.56 Net income before interest, 2.81 4.09 taxes, depreciation and accretion, and extraordinary items
Adjusting for extraordinary and non-cash items, net income before
interest, taxes, depreciation and extraordinary items is $2.81 million
for Q3 and $4.09 million for the nine months ended September 30(th), 2013. The share of loss of associates represents the Company’s proportionate share of losses recognized
through the year by Foyson Resources Limited and Mindoro Resources Ltd
(“Mindoro”), in which the Company currently holds a 10.61% and 14.4%
interest, respectively. The share of loss relates primarily to the
impairment of investments held directly by Mindoro.
Quarter ended Quarter ended Quarter ended September 30, September 30, June 30, 2013 2012 2013 Average tonnes processed per 2,617 2,580 2,593 day Ore copper grade (%) 0.61 0.92 0.73 Copper concentrate copper 17.00 18.33 18.23 grade (%) Copper concentrate gold grade 12.31 9.41 10.41 (g/t) Copper concentrate silver 376.92 333.39 349.26 grade (g/t) Zinc concentrate zinc grade 42.56 48.40 44.60 (%) Copper pound equivalent 5,309,633 7,034,311 4,938,238 produced Copper produced (lbs) 2,645,950 3,924,034 2,761,964 Gold produced (oz) 2,872 3,085 2,541 Silver produced (oz) 88,045 109,055 92,579 Zinc produced (lbs) 3,319,771 1,789,459 2,312,284
During Q3 2013, mill throughput averaged 2,617 dry metric tonnes per
day, for a total of 240,799 tonnes through the quarter. This mill feed
consisted of ore mined from within the ore reserve block model as well
as additional materials found and mined during the period. This
material, consisting of banded sulphides with low-grade chlorite
schists, 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. Further detailed near-pit exploration
will be continued to test the extent of the mineralized sulphide
horizon. Additional metallurgical studies are underway to address the
increase in penalty elements expected to be encountered in the lower
horizon of the ore body.
The average copper feed grade during Q3 2013 was 0.61% copper, lower
than 0.73% copper for the previous quarter. In addition to the
predicted decline in metal grades deeper in the deposit, ore blending
to reduce penalty element levels in the concentrate also contributed to
a lower feed grades. The average copper recovery was 81%, higher than
the 72% of the previous quarter.
Based on average daily mill throughput going forward of 3,000 tonnes per
day, open pit mining is estimated to be completed by the fourth quarter
of this year while mill processing and concentrate shipments are
expected to continue into the first quarter of 2014 (subject to change
in throughput to meet shipping commitments). The Company expects to
complete one further copper concentrate shipment and one zinc
concentrate shipment through 2013. With mining expected to be
completed by year end, preparations for closure of the operations have
To date, 37 copper concentrate shipments of approximately 5,000 dry
metric tonnes each, and six zinc concentrate shipments totaling 25,456
dry metric tonnes, have been completed. The 37th copper concentrate
shipment completed loading on September 16, 2013 and the sixth shipment
of zinc concentrate was completed July 27, 2013.
As of September 30, 2013, the Company had short term debt facilities of
$3.9 million at an interest rate averaging 2.0%, while cash on hand was
Cash balances fluctuate between reporting periods as cash is used for
operating and capital requirements. In recent months also commodity
markets have experienced substantial volatility and have affected cash
balances of the Company as prices for copper, gold and silver have
fallen. And while the Company remains confident that required permits
for projects will be issued, the Company cannot estimate with any
certainty the date of their issue and such delays have further affected
cash balances. The Company had scheduled for the introduction of new
projects as the Canatuan mine approached its end of mine life to
replace cash flow and ensure cash is available to address potential
technical issues that may be expected to be experienced at Canatuan,
given the age of the mine.
On November 8, 2013, the Company repaid in full all short-term loans
currently outstanding with a major Philippine bank that had been
secured by the metal off-take agreement related to the sale of copper
concentrates. As at the current date, the Company has no further
short-term loans outstanding.
Financing Opportunity and Proposed Investment by Prime Asset Ventures,
On October 18, 2013, the Company entered into a nonbinding letter of
interest (the “Proposal“) which sets out certain terms of proposed transactions involving Prime
Asset Ventures, Inc., an arm’s-length Philippines corporation (“PAVI“). The current transaction proposes that PAVI will acquire 68.42%
interest in all Philippine assets currently held by the Company, which
includes TVIRD, EDCO and various other smaller Philippine
subsidiaries. TVIRD is the Company’s affiliate who owns and operates
the Canatuan mine, the Balabag silver-gold development project, and
various exploration projects. The Company would continue to hold 100%
of its investments in Mindoro Resources Ltd. and Foyson Resources
Limited, as well as 100% of TG World Energy Corp. All of the Company’s
Philippine assets are currently held through TVI International
Marketing (“TVI Marketing”), through which PAVI would acquire its 68.42% interest. TVI Marketing
is a wholly-owned subsidiary of TVI Limited, which in turn is a
wholly-owned subsidiary of the Company.
It is also proposed that PAVI would acquire through a private placement
approximately 5% of the current issued and outstanding common shares of
the Company (based upon 622,137,038 common shares currently outstanding
and assuming there are no further issuances of shares from the treasury
of the Company prior to closing of the private placement).
The Proposal contemplates a number of transactions that are expected to
provide USD $11 million cash to the Company, including USD $1 million
through the proposed private placement and USD $10 million through a
secondary sale by TVI Limited of outstanding TVI Marketing shares to
PAVI. The Proposal further contemplates that USD $11.5 million is to
be invested directly into TVI Marketing through the issuance of TVI
Marketing Shares to PAVI resulting in PAVI acquiring a 68.42% interest
in all of the Company’s Philippine assets.
A Special Committee has been established by the Company board of
directors to consider the Proposal and negotiate the terms of the
related definitive agreements and work is proceeding in this regard.
Completion of the proposed transactions are further subject to
satisfaction or waiver of various conditions, including committee or
board approval, as applicable, of both the Company and PAVI, receipt of
all necessary regulatory and third party approvals, the negotiation,
execution and delivery of definitive transaction documentation by the
Company and PAVI, the completion of due diligence investigations and
there being no material adverse changes affecting the Company or TVI
Marketing. The Proposal provides for a 30 day exclusivity period
(through to November 17, 2013), during which the Company has agreed to
deal exclusively, with limited exception, with PAVI with a view to
negotiating the related definitive agreements. Subject to the terms of
the Proposal, the Company may still consider alternative investment
With the exception of certain provisions (exclusivity, confidentiality
and costs), the Proposal is nonbinding and there can be no assurance
that the Transactions will be completed on the terms set out in the
Proposal or at all.
Typhoon Haiyan and Company Operations
The Company is saddened by the loss of life and damage to infrastructure
as a result of typhoon Haiyan. Company operations and projects
continue to be ongoing and relatively unaffected other than damage to
some roads. The Company wishes for the Philippines and its people to
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. The Company produces
copper and zinc concentrates from its Canatuan mine and is advancing
its Balabag Gold-Silver project. TVI is a participant/operator in
several joint venture projects in the Philippines and Papua New Guinea
and also has an interest in an offshore Philippine oil property.
The Toronto Stock Exchange has neither approved nor disapproved of the
information contained herein.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this news 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 United States, 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 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). 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 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 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 schedules 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).
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 TVI and its affiliates are exposed in
the conduct of their business are described in detail in the Company’s
Annual Information Form for the year ended December 31, 2012, which was
filed on SEDAR on March 19, 2013, and is available 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, except as required by law.
SOURCE TVI Pacific Inc.