TVI Pacific Provides Third Quarter 2014 Financial and Operational Results
TSX: TVI OTCQX: TVIPF
CALGARY, Nov. 13, 2014 /CNW/ - TVI Pacific Inc. (TSX: TVI) (OTCQX: TVIPF) ("TVI" or "the Company") has released its unaudited, consolidated financial and operational results for the quarter ended September 30, 2014. The full version of the financial statements and the management discussion and analysis can be viewed on the Company's web site at www.tvipacific.com or on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Third Quarter 2014 Financial Highlights
- Robust cash and short term deposits balance of $6.2 million.
- Net income before interest, tax, depreciation, share of loss of associates and joint ventures, and impairment of associates of $0.10 million.
- Net loss of $1.5 million.
- Working capital surplus of $6.8 million.
- No debt owing.
Clifford James, President and Chief Executive Officer of TVI, stated: "We are very pleased to be in such a position of financial strength, particularly given the current resource climate, which will allow the Company to advance its various investment interests and to pursue opportunities in the Asia Pacific region."
Financial Highlights
| Quarter ended September 30, 2014 |
Quarter ended September 30, 2013 |
Quarter ended June 30, 2014 |
||
| Cash and short-term deposits balance at quarter end ($ millions) |
$6.2 |
$4.9 |
$1.8 |
|
| Working capital surplus ($ millions) |
$6.8 |
$6.4 |
$7.4 |
|
| Letters of credit and loan facilities ($ millions) (1) |
- |
$3.9 |
- |
|
| Gross revenue ($ million) |
- |
$14.6 |
- |
|
| Net revenue ($ million) |
- |
$12.1 |
- |
|
| Net income (loss) ($ million) |
(1.5) |
$0.34 |
($1.9) |
|
| Basic net income (loss) per share |
$(0.002) |
$0.000 |
($0.003) |
| (1) |
Average interest rate of: 2.00% for Q3 2013 and for year-end 2013. All letters of credit and loan facilities have been fully repaid at December 31, 2013. |
On December 27, 2013, the Philippine Securities Exchange Commission approved an increase in the authorized capital stock of TVI's Philippine operating affiliate, TVI Resource Development Phils., Inc. ("TVIRD"), which resulted in the subscribed ordinary shares being issued to Prime Resource Holdings, Inc. ("PRHI") and a reduction in TVI's indirect interest in TVIRD and other Philippine subsidiaries. This has further resulted in the deconsolidation of TVIRD, Exploration Drilling Corporation and interests in the Agata and Pan de Azucar joint venture entities. TVI's continuing interest of approximately 30.66% in TVIRD is now recorded as an investment in joint venture within the mining segment, and accounted for using the equity method in the consolidated financial statements. As such, revenues earned and related expenses incurred at the level of TVIRD and its subsidiaries now result in an adjustment to the investment account and therefore do not make financial results directly comparable year-over-year.In addition to retaining a 30.66% indirect interest in TVIRD and other Philippine subsidiaries, TVI continues to directly hold (i) a 20.04% equity interest in Foyson Resources Limited ("Foyson") (ii) a 14.4% equity interest in Mindoro Resources Ltd. ("Mindoro" or "MRL"); (iii) a 10% interest in the Amazon Bay Iron Sands project (for which the exploration license is held by Titan Mines Limited, a company in which Foyson holds 50% shareholding and has an option to acquire the remaining 50%); and (iv) a 100% investment in shares of TG World Energy Corp. ("TG World").
Net income breakdown
| 3 months ended September 30, 2014 ($ million) |
3 months ended September 30, 2013 ($ million) |
|
| Reported net income (loss) |
(1.47) |
0.34 |
| Interest expense and income taxes |
0.17 |
0.29 |
| Depreciation, depletion and accretion |
0.01 |
2.03 |
| Share of loss of associates and joint ventures |
1.05 |
0.25 |
| Impairment of Associate |
0.34 |
|
| Net income before interest, taxes, depreciation and accretion, share of loss of associates and joint ventures, and impairment of associate |
0.10 |
2.81 |
During the period ended September 30, 2014, an impairment loss of $343,763 was recorded to write down TVI's investment in Foyson at its fair value. As at September 30, 2014, the fair value of the investment in Foyson was $405,141, and was calculated based on the number of shares held by TVI multiplied by the September 30, 2014 share price of Foyson.
Adjusting for non-cash items, the net income before interest, taxes, depreciation, share of loss of associates and joint ventures, and the impairment of associate was $0.10 million for the three months ended September 30, 2014. The share of loss of associates and joint ventures 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 joint venture entities.
Cash Position
TVI fully repaid all debt facilities as at December 31, 2013 and has not incurred anything further as at September 30, 2014.
Cash and short term deposits reported at September 30, 2014 includes only cash held at the level of TVI and its consolidated subsidiaries, but not within its associates and joint venture entities, and includes also the proceeds received from PRHI through the First to Final 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 as announced in news on December 11, 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.
As announced in news reported on July 8, 2014, TVI 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. |
A total of US$5.3 million of the above transactions has 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.
Aside from the $6.2 million held directly by TVI and its subsidiaries at September 30, 2014, TVI's Philippine affiliates have a cash balance of $7.1 million. Cash held directly by TVI's Philippine affiliates has been presented as part of 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.
Operational Highlights
Canatuan Operations
| Quarter ended 2014 |
Quarter ended 2013 |
Quarter ended |
|
| Average tonnes processed per day |
- |
2,617 |
3,068 |
| Ore copper grade (%) |
- |
0.61 |
0.33 |
| Concentrate copper grade (%) |
- |
17.00 |
18.30 |
| Concentrate gold grade (g/t) |
- |
12.31 |
12.41 |
| Concentrate silver grade (g/t) |
- |
376.92 |
423.00 |
| Concentrate zinc grade (g/t) |
- |
42.56 |
- |
During January 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. These final shipments from Canatuan have generated total gross revenue for TVIRD for the nine months ended September 30, 2014, of 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 Q3 2014 and for the nine months ended September 30, 2014, that has been deconsolidated, is $1.1 million and $5.2 million, respectively.
Following the end of mining and processing operations in January 2014, decommissioning and rehabilitation activities within the disturbed areas commenced. Third quarter activities have continued to focus on the decommissioning of plant and equipment within the mill and processing plant area as well as continuation of the progressive rehabilitation activities within the overburden waste areas and the surface mine area. 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 third 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.
Mindoro Joint Venture Projects
In October 2014, TVIRD announced that its joint venture company, Agata Mining Ventures Inc. ("AMVI") launched operations and commenced loading its first shipment of high-iron/low nickel direct shipping ore ("DSO") produced from the Agata project in the Philippines, which was completed on October 23, 2014. As at the reporting date, loading of a second shipment of high-iron/low nickel DSO has also been completed.
As operator of another joint venture, Agata Processing Inc. ("API"), TVIRD is working to complete a definitive feasibility study on a nickel processing plant 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 facility in China and at the TVIRD pilot plant in the Philippines has proven successful.
Both the DSO and 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, 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.
Highlights of the April 2013 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 of 2.0 million dry metric tonnes at 1.04% nickel;
- Estimated contained nickel is 391,000 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.
TVI has a 30.66% indirect ownership interest through TVIRD in the interest earned in AMVI and interest to be earned in API. 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 September 30, 2014, TVIRD has earned 60% of shares in AMVI and 45% of shares in API, the latter of 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 AMVI and API, 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.
For further information on TVI's operations please refer to the Management's Discussion and Analysis available on TVI's website www.tvipacific.com or under our profile on SEDAR (www.sedar.com).
Other Direct Investments: Foyson Resources Limited and Amazon Bay
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, 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. A sampling program at Amazon Bay was completed in Q2 2014, resulting in 600kg of samples being provided to a major Chinese group in Beijing for metallurgical testing.
On July 25, 2014, TVI provided notice to Foyson of its intent not to proceed with a Stage 2 farm-in of Amazon Bay but renewed its commitment to assist Foyson in finding a cash flow positive project, with synergies for its PNG operations.
Foyson announced July 4, 2014, that it had 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. On October 23, 2014, Foyson announced completion of a private placement by IGE in the amount of AUD$337,500, through which IGE was granted 135 million ordinary shares, representing 14.73% of Foyson's share capital. This has resulted in the dilution of TVI's interest in Foyson from 23.01% as at September 30, 2014, to a current 20.04%, and follows the announcement by Foyson on September 30, 2014, of its intention to enter into a strategic relationship with IGE whereby Foyson will acquire exclusive licenses to use IGE's waste conversion technology in Australia, New Zealand, China, North America, India, Southeast Asia, Papua New Guinea and Fiji, and also fund the construction of up to four plants in eastern Australia.
Petroleum and Natural Gas Properties: TG World
Most recently, on August 18, 2014, the Department of Energy confirmed its approval of a 3 year moratorium period that includes Service Contract 54A ("SC 54A"). SC 54A is located in the Philippines and is situated offshore, west of the Palawan Islands. TG World continues to hold a 12.5% working interest in SC 54A while the project operator is Nido Petroleum Limited of Perth, Australia ("Nido"), who owns a 42.4% working interest in the project.
The moratorium period extends from August 5, 2014 to August 5, 2017 and provides the joint venture sufficient time to study the development of the discovered marginal resources in the block. At the end of this period, the joint venture has the option to enter sub-phase 7 with a commitment to drill one well.
Nido has advised the partnership it intends to continue to seek divestment of its interest in SC 54A following an earlier announcement in 2013 that in light of a strategic review, SC 54A became a non-core asset within its portfolio as it refocused its intentions in other blocks and other countries. Since that time too, another partner, Trafigura, has advised the Joint Venture it has agreed a provisional sale of its 15% interest to another party, subject to the fulfilment of certain completion provisions, while the one other partner, Kairiki Energy (through which its interest in the partnership is held by Yilgarn Petroleum Philippines Pty Ltd.), announced on October 20, 2014, that it has entered into a binding term sheet to sell its 30.1% interest in SC 54A to Focus Oil and Gas.
TVI management continues to believe in the development potential of the three discovered fields, including Tindalo, and that the Block has important remaining exploration upside. Accordingly TVI intends to pursue development options with its partners and/or could entertain offers for the divestment of its interest in the event of an approach by a potential buyer.
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, in which TVI holds a 30.66% indirect interest, has to date produced copper and zinc concentrates as well as gold and silver from its Canatuan mine. TVIRD has now commenced production of high-iron/low nickel ore at its Agata nickel DSO project and is working towards completion of a Definitive Feasibility Study for an innovative nickel processing plant at the Agata mine site. In addition, TVIRD continues to advance its Balabag Gold-Silver project towards development.
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 (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.
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.
SOURCE: TVI Pacific Inc.
TVI Pacific Inc.,Shirley Anthony, Investor Relations, 778.999.2771, [email protected]
Share this article