TVI Pacific Provides Second Quarter 2014 Financial and Operational Results
TSX: TVI OTCQX: TVIPF
CALGARY, Aug. 12, 2014 /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 June 30, 2014.
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, 2014 and June 30, 2013 and the audited consolidated financial statements for the years ended December 31, 2013 and 2012. 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 2014 Highlights
- Cash balance of $1.8 million at June 30, 2014.
- No debt owing.
- Net loss before interest, tax, depreciation and share of loss of associates and joint ventures of $1.19 million.
- Net loss of $1.9 million.
- A working capital surplus of $7.4 million.
June 30, 2014
June 30, 2013
March 31, 2014
|Gross revenue ($ million)||-||$20.1||-|
|Net revenue ($ million)||-||$17.0||-|
|Net loss ($ million)||($1.9)||($4.3)||($1.6)|
|Basic net loss per share||($0.003)||($0.007)||(0.002)|
|Cash balance at quarter end ($ millions)||$1.8||$9.1||$1.9|
|Letters of credit and loan facilities ($ millions) (1)||-||$9.2||-|
|Working capital surplus ($ millions)||$7.4||$6.3||$8.6|
Average interest rate of: 2.00% for Q2 2013 and for year-end 2013. All
Letters of Credit
and loan facilities have been fully repaid at December 31, 2013.
On December 27, 2013, the Philippine Securities Exchange Commission approved an increase in the authorized capital stock of TVI's Philippine operating affiliate, TVI Resource Development Phils., Inc. ("TVIRD"), which resulted in the subscribed ordinary shares being issued to Prime Resource Holdings, Inc. ("PRHI") and a reduction in TVI's indirect interest in TVIRD and other Philippine subsidiaries. This has further resulted in the deconsolidation of TVIRD, Exploration Drilling Corporation ("EDCO") and interests in the Agata and Pan de Azucar joint venture entities. TVI's continuing interest of approximately 30.66% in TVIRD is now recorded as an investment in joint venture within the mining segment, and accounted for using the equity method in the consolidated financial statements. As such, revenues earned and related expenses incurred at the level of TVIRD and its subsidiaries now result in an adjustment to the investment account and therefore do not make financial results directly comparable year-over-year.
In addition to retaining a 30.66% indirect interest in TVIRD and other Philippine subsidiaries, TVI continues to directly hold (i) 23.01% equity interest in Foyson Resources Limited ("Foyson") (ii) a 14.4% equity interest in Mindoro Resources Ltd. ("Mindoro" or "MRL"); (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. ("TG World").
Net income breakdown
3 months ended
June 30, 2014
3 months ended
June 30, 2013
|Reported net loss||(1.86)||(4.31)|
|Interest expense and income taxes||-||0.04|
|Depreciation, depletion and accretion||0.01||2.28|
|Share of loss of associates and joint venture||0.66||1.24|
Net loss before interest, taxes, depreciation and accretion, and
share of loss of associates and joint venture
Adjusting for non-cash items, the net loss before interest, taxes, depreciation and share of loss of associates and joint ventures is reduced to $1.19 million for the three months ended June 30, 2014. The share of loss of associates and joint venture represents TVI's proportionate share of losses recognized through the quarter by Foyson and Mindoro, as well as TVI's 30.66% indirect interest in TVIRD and the other Philippine subsidiaries.
TVI fully repaid all debt facilities as at December 31, 2013 and has not incurred anything further as at June 30, 2014.
Cash reported at June 30, 2014 now includes only cash held at the level of TVI and not within its affiliates, and includes also only the proceeds received from PRHI through the First and Second Close. After giving effect to the various investment and financing transactions involving PRHI (the "Transactions"), following satisfaction of certain conditions outlined in the definitive agreements executed by TVI, PRHI and others on December 11th, 2013, PRHI holds approximately 5% of the total number of issued and outstanding common shares of TVI and 68.42% of the total number of outstanding voting shares of TVIRD.
Further to the news release disseminated by TVI on July 8, 2014, TVI has now completed the Final Close with PRHI which has resulted in the release of all proceeds remaining in escrow, including:
|a)||US $4.3 million for the purchase of 3.97% of the common shares of TVI Minerals Processing, Inc.; and,|
|b)||US $1.23 million related to the sale and restructuring of subsidiaries and Class A shareholders of TVIRD.|
US $5.3 million of the above transactions have come through directly to TVI in July 2014 as the repayment of intercompany advances, resulting in an aggregate US $10.65 million to TVI as a result of the Transactions and US $11.85 million to TVIRD and various subsidiaries, each before tax and related fees.
Cash was augmented in the quarter by the receipt of remaining production petroleum tax credits ("PPTC") in June of US $573,268 from the State of Alaska (the "State"). The areas previously explored by TG World for hydrocarbons in Alaska qualified TG World to apply for PPTC, which are cash credits funded by the State for previous exploration and seismic expenditures.
In addition to the $1.8 million held directly by TVI at June 30, 2014, TVI's Philippine affiliates have a cash balance of $11.5 million. Cash held directly by TVI's Philippine affiliates has been reclassified to Investment in Joint Venture in the consolidated financial statements, in proportion to the interest retained by TVI, as a result of the transaction with PRHI through which PRHI has assumed joint control of TVIRD with TVI.
June 30, 2014
June 30, 2013
March 31, 2014
|Average tonnes processed per day||-||2,593||3,068|
|Ore copper grade (%)||-||0.73||0.33|
|Concentrate copper grade (%)||-||18.23||18.30|
|Concentrate gold grade (g/t)||-||10.41||12.41|
|Concentrate silver grade (g/t)||-||349.26||423.00|
|Concentrate zinc grade (g/t)||-||44.60||-|
During the six months ended June 30, 2014, TVIRD completed its last shipments of copper concentrate and zinc concentrate from the current mining operations at Canatuan as ore reserves from the open pit have been exhausted. The total gross revenue of TVIRD for the six months ended June 30, 2014 was US $10.95 million (CAD $12.06 million), of which only the 30.66% proportionate share of TVIRD's net loss has been recognized in TVI's investment in joint ventures. The total net loss of the mining segment in Q2 2014 and for the six months ended June 30, 2014, that has been deconsolidated is $2.1 million and $4.1 million, respectively.
Following the end of mining and processing operations in January, decommissioning and rehabilitation activities within the disturbed areas commenced. The second quarter activities have continued to focus on the decommissioning of plant and equipment within the mill and processing plant area and continuation of the progressive rehabilitation activities within the overburden waste areas and the surface mine area. The rehabilitation tasks include earthwork stabilization, drainage controls and re-vegetation. Water quality monitoring as well as meteorological data collection, hydrologic data collection and instrumentation data collection for the Sulphide Tailings Storage Facility Dam continued through the second quarter. These activities will continue through the remainder of 2014.
Canatuan is owned 100% by TVIRD. TVI has a 30.66% indirect ownership interest in Canatuan through TVIRD.
A key focus of TVIRD through the quarter, as operator of the Agata Mining Joint Venture ("AMVI"), has been the commencement of site development and construction of the port facility in June for the proposed direct shipping ore ("DSO") operation of the high-iron laterite resources at the Agata Project. On April 28, 2014, AMVI announced it has received the Declaration of Mining Project Feasibility ("DMPF") and clearance to develop a port facility for the proposed DSO operation, receipt of which provides authorization to proceed to development, including the extraction and sale of iron, nickel and other associated minerals in the contract area, and builds on the existing Environmental Compliance Certificate ("ECC") already held by the project. Shipping of the high-iron laterite is expected to commence through the third quarter of 2014, subject to receipt of remaining port approvals and financing.
As operator also of the Agata Processing Joint Venture ("APJV"), TVIRD is continuing to develop the definitive feasibility study on nickel processing at Agata, which is expected to be complete through the second half of 2014. Pilot plant testing by the Beijing General Research Institute of Mining & Metallurgy ("BGRIMM") facility in China and at the TVIRD pilot plant in the Philippines has proven successful.
Both the DSO and the nickel processing projects have been supported by the updated National Instrument 43-01 ("NI 43-101") technical report filed by TVI on April 10, 2013, and entitled "Independent Report on the Nickel Laterite Resource - Agata North, Philippines", which reflects an updated and reclassified resource estimate for the Agata North nickel laterite resource. The new resource provides a robust foundation for moving forward, initially with a DSO operation of high-iron limonite (upper laterite horizon), followed by atmospheric leach processing of the underlying saprolite horizon.
Highlights of the updated NI 43-101 include:
- An increase in Measured and Indicated resources to 33.9 million dry metric tonnes at 1.1% nickel as compared to the previous 31.8 million dry metric tonnes at 1.05% nickel;
- Inferred resources are 2.0 million dry metric tonnes at 1.04% nickel;
- Estimated contained nickel is 391 thousand tonnes.
At a cut-off grade of 44% iron, there are an estimated 7.0 million dry metric tonnes, or approximately 10 million wet metric tonnes, at 48.5% iron and 0.94% nickel - a DSO product grade much in demand in China.
TVI has a 30.66% indirect ownership interest through TVIRD in the interest to be earned in the Agata Mining Option and Joint Venture and the Agata Processing Joint Venture. TVIRD has the option to earn up to a 60% interest in each of these projects by expending a minimum $2 million on each within 12 months of the date of each joint venture agreement and by bringing the DSO operation into production and completing a definitive feasibility study for a nickel processing facility. As at June 30, 2014, TVIRD has earned 59% of shares in the Agata Mining Joint Venture and 45% of shares in the Agata Processing Joint Venture, which remain in escrow until satisfaction of the remaining requirements.
As mentioned, TVI's continuing interest of approximately 30.66% in TVIRD, as well as the indirect ownership interest to be earned through TVIRD in the Agata Mining Option and Joint Venture and the Agata Processing Joint Venture, is now recorded as an investment in joint venture within the mining segment, and accounted for using the equity method in the consolidated financial statements. As such, revenues earned and related expenses incurred at the level of TVIRD and its subsidiaries now result in an adjustment to the investment account. Cash generated also at the level of TVIRD, its subsidiaries and joint ventures, will be accounted for directly at that level, and be used to fund activities at that level, and will therefore not flow through directly to TVI but may be expected to fund current and future operations and expansion activities at the level of TVIRD, its subsidiaries and joint ventures to further enhance the value of the investment.
Other Direct Investments: Foyson Resources Limited and Amazon Bay
Following the quarter, TVI was advised that on July 25, 2014, its 10% earned interest in Amazon Bay was formally registered with the Papua New Guinea Mineral Resources Authority ("PNG MRA") after having been earlier approved by the Minister for Mining on June 5, 2014. Foyson Resources Limited ("Foyson"), with whom TVI has the Amazon Bay Iron Sands Joint Venture Project, also announced on July 3, 2014, that the PNG MRA has renewed exploration license EL1396, the key tenement covering the Amazon Bay iron sands project on the southeast cost of PNG. Together with the other approved Amazon Bay tenements, Foyson now has a land holding of approximately 1,627 sq. km. In addition to the 10% earned interest in Amazon Bay, TVI continues to hold a direct 23.01% equity interest in Foyson. Through the quarter, a sampling program at Amazon Bay has been completed, resulting in 600kg of samples being provided to a major Chinese group in Beijing for metallurgical testing.
Subsequent to the quarter on July 25, 2014, TVI provided notice to Foyson of its intent not to proceed with the Stage 2 farm-in of Amazon Bay but renewed its commitment to assist Foyson in finding a cashflow positive project, with synergies for its PNG operations. Foyson announced July 4, 2014, that it has commenced exclusive negotiations for a strategic relationship with Integrated Green Energy Pty Ltd ("IGE") to acquire and fund the commercialization of its plastics-to-diesel technology, where the agreed strategy is to build four commercial-scale waste plastic-to-diesel plants in eastern Australia over the next two years. IGE is an Australian company located near Newcastle, New South Wales, with a focus on the development of its waste conversion technology to produce sustainable energy resources. The technology is applicable to both processing non-recyclable and waste plastics-to-fuels and for power generation in remote locations by processing a hybrid biomass, and IGE is currently operating a successful pilot plant, producing industry standard diesel suitable for use in conventional diesel engines. IGE is seeking the necessary funding to complete the first commercial facility at its Berkeley Vale pilot plant site, which has full environmental approvals and can be operational within six months of funding. Foyson has entered into a 120 day exclusivity period to complete due diligence, on the basis of acquiring licenses to operate the technology on a global basis, with exclusivity in some jurisdictions, including Australia.
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 from its Canatuan mine and is advancing its Agata Nickel DSO operation and its Balabag Gold-Silver project. TVI is a direct or indirect 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 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 TVI 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).
The forward-looking statements set out in this news release include information relating to interests that may be earned by TVIRD in the Agata joint ventures; opportunities for exploration, development and commercialization of the Agata Mining Project. Related risks and uncertainties include, but are not limited to: (A) results of further work in pursuing the conceptual planning not supporting current expectations as to the opportunities anticipated; (B) TVIRD not funding the necessary expenditures at Agata to advance the project or earn an interest under the joint venture agreement due to, among other things (i) changes in TVIRD's strategic priorities, due diligence findings, changes in laws or regulations affecting mining operations in the Philippines (including the profitability of such operations), and other factors, (ii) changes in TVIRD budgets and (iii) limited availability of funds; (C) a determination on the part of TVIRD not to pursue projects contemplated by one or more of the joint venture agreements for technical, economic, legal or other reasons (including, without limitation, a failure to obtain required permits or other governmental or regulatory approvals); and (D) certain other risks identified elsewhere in TVI's public filings, including, without limitation, those risk factors set forth at pp. 66-74 of TVI's Annual Information Form dated March 19, 2014.
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 of TVI contained in this News Release are expressly qualified, in their entirety, by this cautionary statement. Various risks to which TVI is exposed in the conduct of its business are described in detail in the TVI's Annual Information Form for the year ended December 31, 2013 which was filed on SEDAR on March 19, 2014 and is available under TVI's profile at www.sedar.com. Subject to applicable securities laws, TVI does not undertake any obligation to publicly revise the forward-looking statements included in this news release to reflect subsequent events or circumstances.
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TVI Pacific Inc.