TVI Pacific Inc.
TSX : TVI

TVI Pacific Inc.

November 06, 2006 13:05 ET

TVI Pacific Announces Record Financial Results for Nine Month Period

CALGARY, ALBERTA--(CCNMatthews - Nov. 6, 2006) - TVI Pacific Inc. (TSX:TVI) (TSX: "TVI" or the "Company") is pleased to announce solid financial results for the third quarter and first nine months of 2006. (All dollar amounts set out in this news release are expressed in Canadian currency unless otherwise noted.)

Financial Review

Highlights for the three-month period ended September 30, 2006 include:

- Total operating revenue of $11,291,796 compared to $4,692,652 for the three-month period ended September 30, 2005

- Cash flow from operations of $2,023,059 compared to cash outflow from operations of $(19,089) for the same period in 2005

- Canatuan mine cash flow from operations of $5,105,387 on revenues of $10,360,822 in the third quarter, compared to mine cash flow from operations of $1,263,089 on revenues of $4,002,934 for the same period last year

- Canatuan mine net income of $3,879,791 for the third quarter, compared to net income for the mine of $723,861 in the same period last year

- The Canatuan mine produced 12,730 oz of Au and 157,550 oz of Ag for the third quarter, compared to 4,512 oz of Au and 177,455 oz of Ag during the same period last year. On a gold equivalent basis, the Canatuan mine produced 15,698 AuEqOz in the third quarter, an increase of 113% compared to 7,361 AuEqOz for the same period last year

- Net loss of $(169,112), compared to net loss of $(191,387) in the same period last year as exploration expenditures were increased to $1,549,769 in the quarter relative to $291,286 for the same period in 2005. Net loss per share was $(0.000) on a diluted basis, compared to $(0.001) in the same period last year

Highlights for the nine-month period ended September 30, 2006 include:

- Total operating revenue of $33,561,261 compared to $11,051,915 for the nine-month period ended September 30, 2005

- Cash flow from operations of $9,160,697 compared to cash flow from operations of $247,144 for the same period in 2005

- Canatuan mine cash flow from operations of $14,273,398 on revenues of $29,124,844 in the first nine months of 2006, compared to mine cash flow from operations of $2,800,503 on revenues of $9,119,092 for the first nine months of 2005

- Canatuan mine net income of $8,664,528 for the first nine months in 2006, compared to net income for the mine of $956,625 in the same period last year

- The Canatuan mine produced 34,490 oz of Au and 453,115 oz of Ag for the nine-month period, compared to 12,105 oz of Au and 302,648 oz of Ag during the same period last year. On a gold equivalent basis, the Canatuan mine produced 42,976 AuEqOz in the first nine months of 2006, an increase of 152% compared to 17,029 AuEqOz for the same period last year

- Net income of $2,006,912, compared to net loss of $(2,403,054) in the same period last year. Net income per share was $0.005 on a diluted basis, compared to net loss of $(0.007) in the same period last year

Significant additional financial information includes:

- Cash balance of $2,061,931 as at the end of September, 2006, compared to a cash balance of $476,097 as at December 31, 2005

- Working capital was $1,670,462 at September 30, 2006 compared to a working capital deficiency of $(2,580,471) at December 31, 2005

- Total assets increased to $21,598,453 at September 30, 2006 compared to $18,698,253 at December 31, 2005

- Exploration expenses of $1,549,769 were incurred for the third quarter, compared to $291,286 for the same period in 2005. For the nine-month period ended September 30, 2006, exploration expenses of $3,157,366 were incurred, compared to $929,370 for the same period in 2005

- Administrative and general expenses decreased by 41% in the third quarter to $910,754, from $1,553,160 for the same period in 2005. Administrative and general expenses decreased by 13% in the first nine months of 2006 to $2,709,532, from $3,131,344 for the same nine months in 2005

- The Company's Drilling Division (unconsolidated) produced cash flow, net income and revenues of $1,485,350, $1,438,533 and $3,820,572, respectively, for the three months ended September 30, 2006, compared to $347,494, $310,682 and $689,718 for the corresponding period last year. On a consolidated basis, which eliminates inter-company revenues and profits (ie. revenues generated from TVI's own work), the Drilling Division produced cash flow, net income and revenues of $153,126, $(36,139) and $931,253, respectively, for the three months ended September 30, 2006. There were no inter-company revenues generated in the same three-month period in 2005

- The Company's Drilling Division (unconsolidated) produced cash flow, net income and revenues of $1,850,797, $1,654,840 and $6,423,893, respectively, for the nine months ended September 30, 2006, compared to $212,213, $93,415 and $1,932,823 for the same nine months in 2005. On a consolidated basis, the Drilling Division's cash flow, net income and revenues were $1,069,226, $726,510 and $4,305,580, respectively. There were no inter-company revenues generated in the same nine-month period in 2005

- The Drilling Division completed 12,275 meters of drilling for TVI during 2006 (nil in 2005), out of a total 40,290 for the year

"We are pleased with TVI's strong financial performance in the latest period," said Cliff James, TVI's President and CEO. All financial parameters have increased dramatically compared to those of the same period a year ago. While metal production from the Canatuan Mine was slightly higher in Q3 compared to Q2 (15,698 AuEqOz (Q3) vs 15,636 AuEqOz (Q2)), revenue from the mine decreased from $11,473,604 to $10,360,822, directly attributable to lower shipments (due to local holiday at the refinery) and realized metal prices; cash flow decreased from $5,942,931 to $5,105,387; but income increased from $3,341,953 to $3,879,791, mainly due to decreased operating expenses and depreciation. The Drilling Division continues to perform well year over year, producing third quarter cash flow, net income and revenues of $1,485,350, $1,438,533 and $3,820,572, respectively, compared to $347,494, $310,682 and $689,718 for the corresponding period last year. Overall consolidated cash flow and income decreased over Q2 mainly because of lower realized metal prices and substantially increased exploration costs. A decision was made to accelerate exploration at Balabag, which continues to show encouraging results. This has resulted in higher exploration costs for the period which in turn has lowered both cash flow and income for the period. Compared to Q2, cash balances have increased from $1,842,797 to $2,061,931 in the latest quarter; working capital has increased from $742,046 to $1,670,462; total assets increased from $20,836,809 to $21,598,453; and, G&A costs declined substantially from $1,353,390 to $910,754."

Outlook

The Company's financial position has improved significantly during the year. Record cash flows, net income and revenues for the last three quarters have resulted in the elimination of the Company's working capital deficiency. The Canatuan mine has achieved increased throughput and improved recoveries, which, when combined with overall enhanced metal prices, has produced higher cash flows. Metal and mineral prices have recently been subject to a degree of volatility, but remain near record highs. The financial results and operations of the Drilling Division improved dramatically following the complete reorganization starting in early 2005. Based on the positive results of the first three quarters, as well as continued progress in operations and exploration, management expects that 2006 will continue to be a record year for TVI.

About TVI Pacific Inc. (TSX: TVI)

TVI Pacific Inc. is a publicly-listed Canadian mining company focused on exploring for and producing precious and base metals within district scale systems in Asia.

In the Philippines, TVI's most advanced project, the Canatuan Mine, (the first foreign-invested, new, mining project in the Philippines in nearly four decades) began mining and milling operations in mid-2004, producing gold and silver dore. Mill throughput is currently over 1,800 dmtpd, generating approximately 160 AuEqOz per day from a gossan/oxide zone. TVI has received a completed NI 43-101 feasibility study on the Canatuan Sulphide project prepared by Norwest Corporation (which has been filed with certain securities regulatory authorities in Canada and is available at the SEDAR website.) The Norwest study addresses the copper-zinc bearing massive sulphide zone, or lower portion of the Canatuan Deposit. Planning for construction of the Sulphide Project at Canatuan is nearly complete and a positive plant production decision is anticipated in the near future, after further project optimization work has been completed. In addition, TVI holds a 2.5% NSR on the Philippine-based Rapu Rapu project (operated by Lafayette Mining Ltd.). Exploration in the Philippines is being conducted at Canatuan, in an effort to expand TVI's resource base and to find new deposits, and at Balabag, Tamarok and Tapisa, which management of TVI view as compelling exploration properties.

In China, TVI's wholly-owned Chinese subsidiary, Hunan Pacific Geological Exploration Inc., is the first and only foreign mining company to be granted both WOFE status and a Qualified Explorer License. The exploration program in China is focused primarily within the Golden Triangle area, a highly prospective metallogenic region in China's south-western provinces of Yunnan, Guizhou and Guangxi Autonomous Region and prospective areas in the Tibet Autonomous Region. HPGEI has 2,394 sq kms of land under application in China in the Golden Triangle and in the Tibet A.R.

TVI also has a Drilling Division consisting of Exploration Drilling Corporation ("EDCO"), a wholly-owned subsidiary of TVI Pacific Inc. based in the Philippines, and Hunan Pacific Drilling ("HPD"), a division of HPGEI based in China, which generates revenue from contract drilling.

The financial information set out in this release should be read in conjunction with the consolidated, unaudited interim financial statements of the Company as at and for the periods ended September 30, 2006 and related Management Discussion and Analysis which have been filed with certain securities regulatory authorities in Canada and are available on the SEDAR web site at www.sedar.com and on the Company's website at www.tvipacific.com. Wherever used in this News Release, Gold equivalent values were calculated based on actual Ag and Au prices received in the respective periods.

The statements set out in this News Release 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. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and, in certain cases, information received from or disseminated by third parties, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include such things as the volatility of prices for precious metals and base metals, commodity supply and demand, fluctuations in currency and interest rates, inherent risks associated with the exploration and development of mining properties, ultimate recoverability of 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 and changes in exploration plans or budgets. 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. The forward-looking statements of TVI Pacific Inc. contained in this News Release are expressly qualified, in their entirety, by this cautionary statement. Various risks associated with the Company's exploration activities are described in detail in TVI's Annual Information Form, filed by TVI on SEDAR on March 30, 2006, which is available at www.SEDAR.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.
    Paul Moon
    Director, Corporate Communications
    (403) 265-4356
    (403) 264-7028 (FAX)
    Email: tvi-info@tvipacific.com
    Website: www.tvipacific.com