TVI Pacific Inc.
TSX : TVI

TVI Pacific Inc.

August 04, 2005 09:42 ET

Philippines Grants Significant Tax Incentives For TVI's Canatuan Gossan Project

CALGARY, ALBERTA--(CCNMatthews - Aug. 4, 2005) -

- Income tax holiday of 4 years granted, extendable to 7 years under certain conditions

- Tax credit for 10 years granted on raw materials and semi-manufactured supplies

- Tax incentives apply to Gossan Project only; Sulphide Project to be subject of separate application

- Variety of additional incentives offered

- Incentives designed to promote economic development for the region and social benefits for indigenous people

TVI Pacific Inc. (TSX:TVI) is pleased to announce that the Board of Investments ("BOI") of the Republic of the Philippines has granted its Canatuan Project operating affiliate, TVI Resource Development (Phils) Inc. ("TVIRD"), the status of New Export Producer of Dore Bullion (Gold and Silver) on a Non-Pioneer basis.

This status accords the company a range of significant tax and other incentives that are expected to enhance the robust of the Canatuan Project.

Under the provisions of the fiscal regime that will apply to TVIRD as a New Export Producer, TVIRD will benefit from the following major tax incentives:

- An income tax holiday (ITH) for four years from the date of registration with the Board of Investments.

- Bonus years added to the income tax holiday bringing to seven years the length of holiday, provided TVIRD meets certain conditions for it to qualify for the bonus years. The conditions are: 1) maintaining a certain ratio of capital invested relative to the number of workers employed; 2) annual net foreign exchange savings or earnings of not less than US$ 500,000 during the first three years of operation and; 3) use of indigenous raw materials. Management of the Company expects that these conditions will be met and therefore TVIRD will qualify for the bonus years.

- Tax credit for ten years equivalent to the national internal revenue taxes and duties paid on raw materials and supplies and semi-manufactured products used.

In addition, the BOI has granted certain operational and customs-related incentives, including:

- Employment of foreign nationals.

- Simplification of customs procedures for imported equipment and supplies.

- Exemption of import duties, taxes and fees, on spare parts and supplies for a period of ten years, provided exports exceed 70% of production, which we expect will be the case.

- Exemption from wharfage dues, any export tax, duties, imposts and fees for a period of ten years.

Combined, these incentives are intended to reward TVIRD for the risks undertaken in promoting the Canatuan Project and in providing a substantial economic development stimulus for an underdeveloped and underprivileged region of the Philippines.

These incentives apply only to the current Gossan phase of the overall Canatuan Project. TVIRD anticipates that it will apply for similar incentive treatment for the development of the Sulphide phase of the Project, in which copper and zinc are expected to be produced. TVIRD is in the process of finalising the final feasibility study for this separate, expansion project, and will announce the results of the study shortly.

"These incentives will have a significant impact on the bottom line for Canatuan," said TVI Pacific Inc. CEO Clifford M. James, "contributing to the robust economics we see for this project. The Government of the Philippines has recognised the need to provide incentives for companies to invest in new developments, particularly in areas of the country most deprived. The result will be continued economic benefits for the Zamboanga region, as well as dramatic social and economic development for the indigenous people of the area."

The statements herein that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "expect", "may", "anticipate", or "will" and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from those anticipated or implied by forward looking statements. TVI Pacific Inc. does not assume responsibility for the accuracy and completeness of the forward looking statements and, subject to applicable law, does not undertake any obligation to publicly revise such forward looking statements to reflect subsequent events or circumstances. The forward looking statements of TVI Pacific Inc. contained in this News Release are expressly qualified, in their entirety, by this cautionary statement. The various risks associated with the Canatuan Project are more fully described in the Canatuan 43-101 Report and the Gossan Feasibility Report which are both filed by the Corporation on SEDAR and which are available at www.SEDAR.com.

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

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