CALGARY, ALBERTA--(Marketwire - July 6, 2012) - TVI Pacific Inc. ("TVI" or the "Corporation") (TSX:TVI)(OTCQX:TVIPF) announced today that it has entered into a heads of agreement (the "HOA"), dated July 6, 2012, which sets out the terms of various proposed transactions with Mindoro Resources Ltd. ("Mindoro"), a TSX Venture Exchange ("TSXV") listed issuer (TSX VENTURE:MIO), also listed on the ASX (ASX:MDO). The proposed transactions consist of a loan to, investment in, and joint ventures with, Mindoro (or affiliates of Mindoro). The joint ventures are expected to involve TVI's Philippine affiliate, TVI Resources Development Phils., Inc. ("TVIRD"). All references to currency in this news release are in Canadian dollars unless otherwise stated.
Under the HOA and subject to the satisfaction of certain conditions, TVI has agreed to loan Mindoro $938,968 (the "Loan") pursuant to a secured promissory note. The Loan is to be secured by Mindoro's interests, whether direct or indirect, in the Agata South nickel laterite mineral project in the Philippines (the "Agata South Security"). Interest will accrue and be payable on the principal amount of the Loan at the rate of 8% per annum (calculated semi-annually and not in advance); however, if the full principal amount is repaid from the proceeds of the Tranche 1 Closing (as defined below), no interest will be payable on the Loan. Subject to acceleration as contemplated by the HOA, the Loan will mature and be repayable on October 1, 2012. The HOA provides that the Loan will be repaid by Mindoro promptly following the Tranche 1 Closing, using proceeds from the sale of Units (as defined below). Upon the occurrence of certain events of default, as set out in the HOA, Mindoro may, at its election, cause the Loan to be repaid with: (i) cash; (ii) the interests of Mindoro (whether direct or indirect) in the Agata South mineral project; or (iii) the interests of Mindoro (whether direct or indirect) in another Philippines mineral project. As a condition of the HOA, TVI must advance the Loan to Mindoro prior to July 18, 2012.
The HOA provides that, subject to the receipt of all regulatory approvals, the execution and delivery of a definitive subscription agreement and definitive joint venture agreements relating to various mining projects in the Philippines, TVI will purchase 63,115,559 units of Mindoro (the "Units") at a price of $0.05 per Unit, with each Unit consisting of: (i) one common share of Mindoro (a "Mindoro Share"); and (ii) one Mindoro Share purchase warrant (a "Mindoro Warrant"), exercisable into a Mindoro Share at a price of $0.10 per Mindoro Share (together, the "Private Placement"). Each Mindoro Warrant will have a term of five years.
TVI anticipates that the Private Placement will be completed in two tranches. The first tranche is to consist of 18,779,353 Units ($938,968) and is expected to close on August 15, 2012 or a later date agreed to by TVI and Mindoro (the "Tranche 1 Closing"). The second tranche is to consist of 44,336,206 Units ($2,216,810) and is expected to close following receipt by Mindoro of shareholder approval (not later than September 28, 2012) (the "Tranche 2 Closing"). The closing of the Private Placement is subject to completion of satisfactory due diligence by TVI.
The HOA provides that following the Tranche 2 Closing, TVI will be entitled to nominate one director to the board of directors of Mindoro out of a maximum of six directors and should TVI exercise the Warrants in full, it will have the right to nominate at least two directors to the board of directors of Mindoro.
The HOA also contemplates that TVI will have a pre-emptive right to participate in any future offerings of Mindoro Shares in order to enable TVI to maintain its percentage ownership interest in Mindoro.
Under the HOA, TVI, through its affiliate TVIRD, has the exclusive right or option to enter into joint venture arrangements with Mindoro (and its affiliates) with respect to the Agata Nickel Project and the Pan de Azucar Project (summarized below). The HOA provides that all joint ventures entered into between TVIRD and Mindoro will be operated by TVIRD and will be overseen by a management committee that includes representatives of TVI and Mindoro in proportion to their joint venture interests (provided that during the earning period of the joint ventures, TVIRD will control each management committee). TVI's participation in the joint ventures is conditional upon the Loan being extended to Mindoro prior to July 18, 2012.
Agata DSO Joint Venture
The Agata Nickel Project is located in the Suriago mining region. The HOA contemplates that stage one of the proposed TVIRD joint venture will involve a direct shipping operation ("DSO").
Under the HOA, TVIRD has the exclusive right to form joint ventures with Mindoro with respect to the Agata Nickel Project. TVIRD will be required to fund 100% of the required expenditures to enable the project to operate a DSO, upon the completion of which TVIRD is to earn a 60% interest in the DSO operation (subject to a minimum expenditure of $2 million within 12 months of the joint venture agreement and DSO operations having commenced within three years of the date of that agreement).
Agata Processing Joint Venture
The HOA provides that TVIRD will fund 100% of the required expenditures to complete a definitive feasibility study on nickel processing for the Agata Nickel Project. Upon delivery of the definitive feasibility study, TVIRD will earn a 60% interest in the Agata Nickel Project and tenements and properties (subject to a minimum expenditure of $2 million within 12 months of the date of that agreement and completing the definitive feasibility study within four years of the date of that agreement).
Pan de Azucar Joint Venture
The Pan de Azucar prospect is located near Panay Island, central Philippines. Under the HOA, TVIRD has the exclusive option to form a joint venture with Mindoro (and its affiliates) on the Pan de Azucar mineral project in the Philippines on the following terms and conditions: (i) TVIRD is to contribute US$2 million over a 24 month period to earn a 51% interest in the project (subject to TVIRD having spent a minimum of $1 million within 12 months of the date of the joint venture agreement); and (ii) TVIRD will have the option (exercisable at any time until July 4, 2013, and extendible at the election of TVI for an additional 12 month period upon payment of $200,000) to contribute an additional US$3 million over the 24 month period immediately following the initial 24 month earning period in exchange for an additional 9% interest in the Pan de Azucar Project.
Mindoro may undertake exploration activities on the Pan de Azucar property at any time prior to TVIRD exercising the option.
Tapian San Francisco Project
Tapian San Francisco lies within the towns of Mainit and Malimono, Surigao del Norte, approximately 32 km south of Surigao City, Northeast Mindanao, Philippines. TVI understands that this project is currently subject to a proposed sale to a third party.
In the event a proposed sale of Mindoro's Tapian San Francisco Project in the Philippines to a third party does not proceed, the HOA provides that TVIRD will have an exclusive option (expiring March 31, 2013) to form a joint venture with Mindoro on terms and conditions suitable for an early stage exploration prospect.
Exclusivity and Due Diligence
Mindoro has agreed to a 90 day exclusivity period with respect to the transactions set out in the HOA. During the exclusivity period, TVI and TVIRD are entitled to conduct such legal, financial and technical due diligence as they consider appropriate, and it is a condition of TVI and TVIRD that the results of such due diligence inquiries be satisfactory to TVI and TVIRD, in their sole discretion.
Mr. Clifford M. James, TVI's President and Chief Executive Officer noted: "based on our initial review (and subject to further confirmatory due diligence) the proposed joint ventures appear to represent compelling opportunities for the Corporation. We believe that the Agata and Pan de Azucar projects lend themselves to the type of strategy we have successfully deployed elsewhere in the Philippines to undertake mine development at low cost and on time. The work we have done to date indicates that the Agata and Pan de Azucar projects fit with our acquisition strategy of seeking long-life mining projects that have the potential to generate short term cash flow."
Mindoro is a Canadian company engaged in mining exploration in the Philippines. The common shares of Mindoro are listed on the TSX-V and on the Australian Stock Exchange. Mindoro trades under the symbol MIO on the TSX-V and under the symbol MDO on the ASX. A copy of Mindoro's announcement can be accessed on www.sedar.com or on Mindoro's website, www.mindoro.com.
TVI is a publicly-traded Canadian company focused on the production, development, exploration and acquisition of resource projects in the Philippines. TVI produces copper and zinc concentrates from its Canatuan mine and is pre-developing its Balabag gold and silver project. TVI also has an interest in an offshore Philippine oil property.
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Forward Looking Statements
This news release contains certain forward-looking information (referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "intend", "estimate", "scheduled", "expect", "may", "will", "should", or similar words suggesting future activities or outcomes.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. 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 contained in this news release are made as of the date hereof and TVI does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable Canadian securities law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.