CALGARY, ALBERTA--(Marketwire -08/10/12)- TVI Pacific Inc. (TVI.TO) (TVIPF) (TVI or the Company) today announced its unaudited, consolidated financial and operational results for the quarter ended June 30, 2012.
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 June 30, 2012 and June 30, 2011 and the audited consolidated financial statements for the years ended December 31, 2011 and 2010. These documents were filed with certain securities regulators in Canada, and are available on our web site (www.tvipacific.com) or under our profile on SEDAR (www.sedar.com).
Q2 2012 Highlights
- Net revenue of $22.6 million realized from the sale of concentrate
- Net income of $2.1 million
- Earnings before interest, depreciation and accretion of $4.4 million
- Cash balance of $17.5 million at quarter end
- Short term debt facilities of $12.9 million (average interest rate of 2.04%)
- A working capital surplus of $13.3 million
Quarter ended Quarter ended Quarter ended June 30, 2012 June 30, 2011 March 31, 2012 ---------------------------------------------------------------------------- - Gross revenue ($ million) $26.5 $24.1 $16.9 - Net revenue ($ million) $22.6 $21.2 $14.4 - Total cost per Copper Pound Equivalent (1) (US$) $2.62 $3.13 $3.04 - Production cash cost per Copper Pound Equivalent (2) (US$) $1.29 $1.65 $1.70 - Total cash cost per Copper Pound Equivalent net of by- products (3) (US$) $0.65 $1.70 $1.17 - Net income (loss) ($ million) $2.1 ($2.1) ($2.3) - Basic net income (loss) per share $0.003 ($0.003) ($0.004) - Average copper price received (US$/lb) $3.57 $4.19 $3.85 - Cash balance at quarter end ($ millions) $17.5 $15.3 $20.4 - Letters of credit and loan facilities ($ millions) (4) $12.9 $26.5 $13.9 - Working capital surplus (deficit) ($ millions) $13.3 ($3.1) $12.4 (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: 2.04% for Q2 2012, 6.77% for Q2 2011 and 1.85% for Q1 2012
The Canatuan mine generated net revenues of $22.6 million in Q2 2012 from the sale of concentrates, net of treatment, refining and penalties. The revenue comprised two shipments of copper concentrate and one shipment of zinc concentrate, and is 7% higher than the $21.2 million net revenue realized during the same period in 2011.
Although copper prices declined during Q2 2012 to US$3.57/lb from US$3.85/lb during Q1 2012 and zinc prices declined to US$0.85/lb from US$0.94/lb in Q1 2012, TVI had net income of $2.1 compared to net loss of $2.3 million for Q1 2012 and a net loss of $2.1 million for Q2 2011. Net income was higher because TVI completed two copper concentrate shipments and one zinc concentrate shipment during Q2 2012, compared to one copper concentrate shipment and one zinc concentrate shipment in Q1 2012 and two copper concentrate shipments in Q2 2011.
The average copper mill feed grade during Q2 2012 was 0.92% Cu compared to 0.85% Cu during Q1 2012. The increased feed grade offset the effect of slightly reduced mill tonnage resulting from scheduled mill maintenance work and is within expected operational variability. The continuing operations optimization resulted in higher plant efficiency performance during the quarter than forecast. The production team achieved an improved ore feed quality and an appropriate feed blending and reagent regime. Cyanide use during the second quarter was greatly reduced and was removed from the process for most of May and all of June. As a result Canatuan realized significantly higher than planned metal recoveries and lower than budget operating costs. TVI expects to complete a minimum of three copper shipments during the remainder of 2012.
TVIRD completed embankment construction for the Stage 4 expansion of the Sulphide Tailings Storage Facility in June 2012. This has increased the available storage volume within the impoundment area to 4.6 million cubic meters.
Operational Highlights Quarter ended Quarter ended Quarter ended June 30, 2012 June 30, 2011 March 31, 2012 ---------------------------------------------------------------------------- Average tonnes processed per day 2,520 2,450 2,744 Ore copper grade (%) 0.92 1.24 0.85 Copper concentrate copper grade (%) 18.46 22.92 18.19 Copper concentrate gold grade (g/t) 9.48 4.92 7.70 Copper concentrate silver grade (g/t) 370.51 323.99 377.91 Zinc concentrate zinc grade (g/t) 49.64 - 48.88 Copper pound equivalent produced 6,997,256 6,270,759 6,527,072 Copper produced (lbs) 3,750,947 4,397,136 3,356,555 Gold produced (oz) 2,745 1,378 2,061 Silver produced (oz) 127,685 90,653 123,917 Zinc produced (lbs) 4,197,683 1,552,986 4,841,896
In Q2 2012 average mill throughput decreased to 2,520 from 2,744 dry metric tonnes (dmt) per day in Q1 2012; however copper ore, gold and zinc feed grades were slightly higher compared to the previous quarter. The higher grades of copper, gold and zinc resulted in an increase of 7% in copper pound equivalent produced quarter over quarter.
During the second quarter of 2012, the mill processed 229,281 tonnes; however, only a portion of original ore reserves was consumed due to the additional material found and mined during the year. 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.
Based on average daily throughput going forward of 2,600 tonnes per day, mine life is approximately 1.2 years (subject to change in throughput to meet shipping commitments).
In Q2 2012, TVI completed two copper concentrate shipments (28th and 29th) for a total of 10,638 dmt and its fourth zinc concentrate shipment of approximately 5,062 dmt. Approximately 5,000 dry metric tonne copper concentrate shipments are expected to occur approximately every 6 to 8 weeks, while zinc concentrate shipments are expected to occur approximately every 4 to 6 months. To date, 29 copper concentrate shipments of approximately 5,000 dry metric tonnes each, have been completed. Additionally, 4 zinc concentrate shipments have been completed to date, totaling 15,828 dry metric tonnes. The 30th copper shipment is set to occur in the first half of August 2012 and the 5th zinc shipment is scheduled in the last quarter of 2012.
As of June 30, 2012, TVI had short term debt facilities totaling $12.9 million at an interest rate averaging 2.04%. Cash on hand was $17.5 million at the same date.
Presidential Executive Order #79
On July 9, 2012, The Philippine Government introduced a new mining policy in the form of a Presidential Executive Order ("Executive Order #79"), which provided direction to agencies of the Administration to carry out certain directives and signalled the Government's intention to seek legislation "rationalizing existing revenue sharing schemes and mechanisms". Management of TVI is of the view that there are certain positive elements to the new policy; however Management continues to be uncertain with respect to various matters, including the following:
- No specifics have been announced by the Government regarding the amended fiscal regime, other than statements from Government officials that there will be an unspecified increase in the Government's share of revenues generated from mining operations.
- As at this time, there is no certainty regarding the timing or content of the legislation that the Government plans to introduce to implement amendments to the fiscal regime.
- The Executive Order states that until the new legislation takes effect the Government will enter into no new mineral agreements, but companies may apply for Exploration Permits, giving them a "right of first option to develop and utilize the minerals in their respective exploration area upon the approval of the declaration of mining project feasibility and the effectivity of the said legislation".
- The Government has reassured investors that the new fiscal terms will be applied "prospectively"; but it has also advised that existing contract holders may be asked to voluntarily renegotiate their contract terms. The Executive Order states that the outcome of any such renegotiation "will in all cases be mutually acceptable to the government and the mining contractor".
- The Government has indicated that new mineral reservations with known strategic mineral reserves and resources will be created, but has not provided particulars with respect to timing or location.
- The policy states that the Government will act to ensure that the exercise of the powers of Local Government Units is consistent with national laws and that "reasonable" limitations only would be applied to mining activities, while recognizing "the need for social acceptance" of proposed mining projects and activities. However, recent statements made by Government officials indicate that where an existing local ordinance is not withdrawn by the Local Government Unit, companies may have to seek resolution in the courts (as TVI is doing in relation to the Province of Zamboanga del Norte, where Canatuan is located).
- The Government has indicated that additional areas of the country - related to prime agricultural lands, tourism development areas and island ecosystems - will be considered off limits to mining exploration and development (in addition to those already defined in the National Integrated Protected Areas System).
- Other aspects of the new policy will not be known until the final promulgation of the Implementing Rules and Regulations.
The elements of the Executive Order that are considered positive by the Management of TVI include the following:
- As noted above, the Government has indicated that any changes in fiscal regime will be applied prospectively, with existing contracts to be respected on existing terms.
- The Government has indicated that it proposes to establish a "one-stop shop" for all mining-related regulatory management.
- The Government has indicated that it proposes to register with, and implement, the Extractive Industries Transparency Initiative.
- The Government has noted that there will be greater regulation of small-scale mining, and that small-scale miners will be required to adhere to environmental and other laws. The Government has announced that it proposes to establish a task force on illegal mining at a high level within the Administration.
The foregoing information regarding selected aspects of Executive Order #79 has been included in this news release to provide an update for readers who would otherwise be unaware of this recent development. That information is based upon the text of Executive Order #79 and statements made by various Government officials in the Philippines in relation to that order. Readers are cautioned not to place undue reliance upon the information respecting Executive Order #79 set out above, as there can be no assurances, at this time, with respect to the timing of implementation of new legislation and regulations or the ultimate effect that such legislation and regulations may have upon companies, such as TVIRD, operating in the Philippines mining sector.
TVI Pacific Inc. is a publicly-traded Canadian company that is focused on the production, development, exploration and acquisition of resource projects in the Philippines. TVI produces copper and zinc concentrates from its Canatuan mine, is in pre-development stage at its Balabag gold and silver project. TVI also has an interest in an offshore Philippine oil property.
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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 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). Forward-looking statements regarding the nature and timing of exploration at the Greater Canatuan Tenement Area (including EXPA 61, Malusok and SE Malusok), Tamarok and the Company's other tenements in the Philippines are based upon current and previous exploration activities, management's experience with other exploration programs undertaken in the Philippines 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 is dependent upon the receipt of free prior informed consent from indigenous communities and regulatory approvals from the government of the Philippines. 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) 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 timing of an updated NI 43-101 report and optimized feasibility study for Balabag are based upon current and previous exploration activities, advice received from third-parties, and the Company's overall plans, budget and strategy for Balabag (which are all subject to change). Forward-looking statements regarding the resumption of drilling activities at Tamarok are based on the exploration carried out to date and the Company's overall plans, budget and strategy for Tamarok (which is subject to change). Forward-looking statements regarding the arrival date of additional drilling rigs in the Philippines are based on discussions with third parties.
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, 2011, which was filed on SEDAR on March 30, 2012, 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.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.