CALGARY, Nov. 26, 2014 /CNW/ - TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF) ("TVI" or "the Company") and TVI's Philippine affiliate, TVI Resource Development (Phils.), Inc. ("TVIRD"), have announced that Agata Mining Ventures Inc. ("AMVI") is modifying its high-iron/low nickel direct shipping ore ("DSO") operations to include shipments of ore containing higher nickel content to maximize revenues at the Agata nickel laterite project located in northern Mindanao, the Philippines. AMVI, a joint venture company in which TVIRD holds a 60% interest and is the operator, has also commenced a detailed exploration program aimed at upgrading the previously defined nickel laterite resource and to identify additional resources at the project.
"We are pleased to see AMVI adjust its DSO operations in light of current depressed nickel laterite prices to maximize revenues and achieve healthier operating margins," stated Mr. Cliff James, Chairman and CEO of TVI and Chairman of TVIRD. "Additionally, while carrying out its DSO operations, AMVI has found more nickel laterite ore than was previously identified at the Agata project. As such, a thorough drilling campaign on the Agata nickel laterite orebody has commenced to better understand the project's resource potential."
Modified DSO Operations
AMVI's original DSO operational plan at the Agata nickel laterite project was to ship approximately 55,000 wet metric tonnes (wmt) of high-iron/low nickel DSO grading a minimum of 48% iron and 0.6% nickel approximately every three to four weeks upon commencement of operations. To date, two shipments have been completed and a third shipment is nearing completion. However, current market prices for nickel laterite ore containing 0.6% to 0.9% nickel and 49% iron have fallen to US$13 to US$15 per tonne from an average price of US$21 to US$23 per wmt in the earlier part of 2014 and all of 2013, which has impacted operating margins.
To offset the price drop, AMVI now plans to mine higher grade saprolite ore (containing greater than 1.5% nickel) found in the deeper part of the nickel laterite orebody and make two 55,000 wmt shipments of the ore in the near term, as current market prices for nickel laterite ore containing 1.5% nickel is between US$38 and US$40 per wmt. Following the shipment of the higher nickel grade saprolite ore, AMVI 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.
AMVI management is also implementing operation-wide cost-saving measures and is planning to ramp up production to further enhance operating margins.
While it has been AMVI's intention to process higher grade saprolite ore at a proposed nickel processing facility on-site (as announced in news on November 24, 2014), AMVI believes that there will be sufficient saprolite ore remaining when the process plant is commissioned and that additional saprolite ore may be identified through the aggressive drilling program currently underway at the project.
Exploration Program Underway
In October 2014, AMVI commenced a detailed exploration program 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 previously disclosed in a National Instrument (NI) 43-101 compliant mineral resource estimate released on April 10, 2013.
The in-fill drill program consists of a total of 494 diamond drill holes, ranging in depth from 15 to 20 metres, totalling an estimated 7,904 metres. To date, 93 holes have been completed and results have yielded significant intercepts of up to 2.3% nickel and 52.5% iron (a full table of drill results is available on TVI's website as a PDF link to this news release). Results of the in-fill drill program will be used to upgrade the mineral resource estimation at the project.
Concurrent with in-fill drilling, a 143 twin hole drill program consisting of coring and auger drilling is underway for data validation of the holes previously drilled by Mindoro Resources in 2010. A total of 52 auger drill holes have been completed to date and initial assay results on samples show higher nickel and iron grades as compared with previous drill data. In addition, thicker saprolite horizons have been intercepted during the drill campaign, indicating a potential increase in volume and grades of the current resource. Due to the variability of the deposit, full results of the twin hole drill program will be announced upon completion of the program.
While both in-fill and data verification drill programs are being carried out at the west and south pit of the Agata North portion of the orebody, AMVI is also planning to carry out a step-out drill program aimed at defining ore extensions outside the pit design and to assess the potential of satellite laterite deposits mapped at the southern areas of the project.
Reconnaissance mapping will be carried out to locate areas of possible drill targets for the step out program, which will be finalized once ground assessment and drill target definition are complete. Further details and results of the exploration programs underway will be reported in the upcoming months.
AMVI intends to produce a NI43-101 compliant resource update on the Agata nickel laterite project upon completion of the drill program which is expected by mid-2015 or sooner.
Production Ramp Up
AMVI is currently planning to ramp up its nickel DSO operations from the previously stated goal of 2.5 million wet metric tonnes per year to 5 million wet metric tonnes 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.
About the Agata Project
The Agata nickel DSO 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.
As announced in news on November 20, 2014, AMVI has secured a total of US$11 million in financing for the Agata DSO project to date. This includes the offer of a US$8 million term loan facility from China Banking Corporation as well as $3 million from Tewoo Hoperay (Singapore) Pte. Ltd, a subsidiary of Tianjjn Hoperay Mineral Limited Company, a major Chinese State Owned Enterprise, as part of offtake agreements signed in June and August 2014 to sell a total of 1.5 million wet metric tonnes of high iron/low nickel DSO. AMVI will use the funds to ramp up operations at the Agata DSO project, to fund the current exploration programs and resource updates at the Agata nickel laterite and limestone projects, and for general working purposes.
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 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.
Qualified Person and Quality Assurance/Quality Control
Mike Bue, Bsc. Eng, M.Eng, P.Eng, Technical Advisor and Project Advisory Group member of TVI and a member of the Professional Engineers of Ontario and Canadian Institute of Mining and Metallurgy, is the qualified person under NI43-101 who has approved the scientific and technical information in this news release.
Core samples are analyzed in the Agata Mine Laboratory using XRF and 4 Acid Digestion technique. Standard Quality Assurance/Quality Control (QA/QC) procedures are implemented in core handling and sampling at Agata. QA/QC materials inserted into sample dispatch include third party purchased certified reference materials for iron and nickel, coarse duplicates, and blanks. Assay results of QA/QC materials are strictly monitored and re-analysis of the complete batch of samples are carried out when anomalous assay results are noted.
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 with its Agata DSO project. TVIRD also continues to advance its 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.
For further information: Shirley Anthony, Investor Relations, TVI Pacific Inc., Phone: 778.999.2771, E-mail: [email protected]