TVI Pacific Inc.
TSX : TVI

TVI Pacific Inc.

November 14, 2005 13:59 ET

TVI Pacific Announces Consolidated Interim Third Quarter Financial and Operating Results for 2005

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2005) - TVI Pacific (TSX:TVI) announced today its financial and operating results for the three and nine months ended September 30, 2005. (All amounts are expressed in Canadian dollars, unless otherwise indicated). The highlights noted in this News Release should be read in conjunction with the Company's consolidated, unaudited interim financial statements and Management Discussion and Analysis for the third quarter, 2005 which have been filed on Sedar at www.sedar.com and are also available on the Company's website at www.tvipacific.com.

Financial Review

Third Quarter Highlights:

- 408% increase in total revenue from $2,186,730 for the first nine months of 2004 to $11,123,005 for the corresponding period in 2005.

- Positive cash flow of $2,800,503 on revenues of $9,119,092 from Canatuan mine operations in the first nine months of 2005.

- During the third quarter, the Company produced 4,512 ounces of gold and 177,455 ounces of silver at Canatuan. This brings total production for the nine months ended September 30, 2005 to 12,105 ounces of gold and 302,648 ounces of silver. The average price received per ounce of gold and silver sold during the third quarter were $522.11 and $8.37 respectively.

- Production costs at the Canatuan mine continued to decrease during the quarter ended September 30, 2005. Total cost per equivalent gold ounce decreased from $521.73 in the second quarter to $463.03 in the third quarter. Cash cost per equivalent gold ounce also decreased to $348.28 in the third quarter from $404.46 in the second quarter.

- Average mill throughput increased to 529 dry metre tonnes (DMT) per day for the third quarter compared to 360 DMT per day for the second quarter.

- New capital investments totaling $2,993,801 were made during the nine-month period ended September 30, 2005 to further expand Canatuan mine facilities.

- Exploration expenses of $929,370 were incurred for the nine months ended September 30, 2005 compared to $932,956 for the same period in 2004.

- Drilling Division operating revenues for the nine months increased 11% from $1,746,117 in 2004 to $1,932,823 in 2005. Net income of $93,415 was recorded for the first nine months of 2005 compared to a net loss of $306,685 for the corresponding period in 2004. Cash flow from operations increased to $212,213 for the nine months ended September 30, 2005 compared to a cash outflow of $198,805 for the same period in 2004. The improved results are attributed to improved management and better utilization of equipment.

- First NSR royalty payment on account of Rapu Rapu production ($17,880 US) was received in the fourth quarter of 2005, as a result of first gold being poured at the Rapu Rapu project in July 2005. TVI Resource Development (Phils.) Inc., an affiliate of TVI Pacific Inc., holds a 2.5% NSR royalty interest in the Rapu Rapu project.

- On a consolidated basis, the Company has cash of $662,156 as at September 30, 2005.

- Cash outflow from operations (before working capital adjustments) decreased from $2,036,586 for the nine months ended September 30, 2004 to cash flow of $328,206 for the corresponding period in 2005.

- Total assets increased to $18,036,209 at September 30, 2005 compared to $15,929,233 at December 31, 2004.

- Consolidated net loss for the three months ended September 30, 2005 of $191,387 ($0.001 per share) compared to a net loss of $896,091 ($0.003 per share) in the corresponding period in 2004. The net loss for the nine-month period ended September 30, 2005 was $2,403,054 ($0.007 per share) compared to a net loss of $2,615,874 ($0.008) for the corresponding period in 2004. The net loss for the nine months ended September 30, 2005 included exploration expenses (including both Philippines and China) of $929,370 ($932,956 in 2004), depreciation and accretion of $1,969,712 ($143,664 in 2004), stock-based compensation expense of $447,173 ($465,938 in 2004) and interest and incremental interest on convertible debentures of $328,385 (nil in 2004).

- Administrative and general expenses increased from $1,945,951 for the nine months ended September 30, 2004 to $3,131,344 for the nine months ended September 30, 2005, reflecting additional costs incurred at the Canatuan mine in respect of commercial operations, increased legal and auditing fees and administrative costs for China. These expenses are expected to remain around this level.

Review of Operations

Canatuan Mine

Operating revenues from the Canatuan Mine increased from $2,307,826 for the second quarter of 2005 to $4,002,934 in the third quarter. Cash flow increased to $1,263,089 for the third quarter from $513,514 for the second quarter. These increases are a result of increased daily throughput and improved recoveries.



Selected Canatuan Mine operating results for the first nine months are
as follows:

Three months ended Nine months ended
September 30, 2005 September 30, 2005
------------------------------------------------------------------------
Dry metric tonnes (DMT) processed 46,593 117,766
Average mill throughput
(DMT per day) 529 439
Feed grade (grams per tonne)
Gold 3.51 3.72
Silver 211.41 180.48
Gold (Au) ozs produced 4,512 12,105
Silver (Ag) ozs produced 177,455 302,648
Gold (Au) Equivalent oz produced 7,361 17,029
Average price received per oz
Gold $522.11($441.09 US) $532.22($432.76 US)
Silver $ 8.37 ($7.07 US) $ 8.57 ($7.08 US)
Total cost per equivalent
gold oz $463.03($390.44 US) $466.97($385.10 US)
Cash cost per equivalent
gold oz $348.28($293.42 US) $356.03($293.38 US)
Cash flow from operations $ 1,263,089 $ 2,800,503


Operations for the fourth quarter of 2005 are expected to be better than those of the third quarter and are expected to show higher throughput and higher metal recoveries with resultant higher revenues and cash flow being generated.

The Canatuan mine is presently undergoing progressive expansion to increase daily throughput capacity to approximately 1,000 DMT and at the same time increase metal recoveries. The last major component of the expansion, the installation of a second ball mill, was delayed as the Company awaited completion of the first stage of the new tailings dam, which was completed in August 2005. The new ball mill was installed and began operating in October 2005 with a targeted daily plant throughput of 1,000 DMT by year-end.

Exploration

Exploration work continues in both Philippines and China. In the Philippines, tenement applications were filed by TVI's affiliate, TVI Resource Development (Phils.) Inc. on 1,257 sq kms of prospective lands located on the Zamboanga peninsula and an option agreement was signed on the Balabag gold exploration property. Discussions are currently underway with a major company which is primarily interested in large scale porphyry copper-gold deposits on a possible joint venture on the Zamboanga tenement application lands. Near mine exploration has commenced on lands at Canatuan and on the Balabag property. A drilling program on the Balabag property is expected to commence prior to year-end. In China Hunan Pacific Geological Exploration Inc. ("HPGEI"), TVI's wholly owned Chinese subsidiary, filed seven exploration license applications for lands located within the Golden Triangle area, totaling 90.76 sq kms, which have been accepted by the Ministry of Land and Resources. Exploration activities continue in the Golden Triangle area and Tibet. Discussions are ongoing with several major companies on one or more potential joint ventures on HPGEI properties in China.

Drilling Division

Management continues to focus on improving overall performance of the Drilling Division operations, including securing new contracts to improve fleet utilization, hiring new key supervisory staff, upgrading the overall mechanical condition of the fleet, and reducing costs. Fleet utilization continued to grow in the third quarter and with new contracts signed is expected to grow throughout the balance of the year. During the quarter, the Drilling Division saw increased revenues with eight drills operating in September 2005. An additional drill is expected to commence operations in December 2005, under a contract signed with a third-party earlier in the year. Prospects for the future look promising.

Rapu Rapu

TVIRD holds a 2.5% NSR royalty on the Rapu Rapu property. First gold was poured by the operator, Lafayette Mining Limited in July 2005. Lafayette management has publicly indicated that Lafayette expects production of copper and zinc in the fourth quarter, 2005. TVI Pacific's management understands that a major exploration program at Rapu Rapu has extended the mine life. The first royalty payment of $17,880 US was received in November 2005.

Outlook

TVI's current focus is to complete the expansion of the Canatuan mine. The final planned expansion of the mine, in the Gossan Mining Phase, is expected to be completed in December 2005, at which time increased throughput and recoveries are anticipated. The exploration program in the Philippines has been re-established with near mine exploration at Canatuan, the application for new tenements on the Zamboanga peninsula, the signing of an agreement and the commencement of exploration on the advanced stage Balabag property and the evaluation of several other properties. A drilling program on the Balabag property is expected to commence prior to year-end. The exploration program in China continues to focus on the Golden Triangle region and Tibet. Exploration licences are expected to be filed on lands in Tibet by year-end. Discussions are ongoing in respect of a potential joint venture on HPGEI properties in China. In the fourth quarter of 2005, management of the drilling division is expecting to see increased revenues, with at least nine drills operating by the end of December 2005. The Company is focusing on improving overall performance of the drilling division operations through mechanical upgrades to the fleet, reduced overhead costs and better fleet utilization.

The Company's consolidated cash position is expected to remain tight in the short term with the further expansion of the Canatuan mine. Expenditures incurred in connection with the expansion effort are currently being financed from cash flow generated from mine operations. Management believes however, that its current cash position, together with the anticipated cash flow from operations, cash from anticipated option and warrant exercises and short term funding, as required, should be sufficient to fund current operations and meet obligations as they become due.

Additional information is provided in the Company's audited financial statements for the years ended December 31, 2004 and 2003 and the Company's Annual Information Form and Information Circular. These documents are available on SEDAR at www.sedar.com.

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 forward-looking statements are subject to certain risks and uncertainties that could cause actual results or outcomes to differ materially from those anticipated or implied by such 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. Additional risks relating to the Corporation's operations at Canatuan are contained in TVI's Annual Information Form, which has been filed with securities regulatory authorities in Canada and is available at www.sedar.com and on the Corporation's web site at www.tvipacific.com.

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

Contact Information

  • TVI Pacific Inc.
    Clifford M. James
    President and CEO
    (403) 265-4356
    or
    TVI Pacific Inc.
    E. John W. Adkins
    Vice-President Finance
    (403) 265-4356
    (403) 264-7028 (FAX)
    Email: tvi-info@tvipacific.com
    Website: www.tvipacific.com