TVI Pacific Inc.
TSX : TVI
OTCQX : TVIPF

TVI Pacific Inc.

November 15, 2010 07:30 ET

TVI Pacific Provides Third Quarter Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2010) - TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF) ("TVI" or "the Company") today announced unaudited, consolidated financial and operational results for the three and nine months ended September 30, 2010.

For a thorough explanation of the points noted in this press release, shareholders are encouraged to read the interim consolidated financial statements and management's discussion and analysis for the quarter ended September 30, 2010, filed with certain securities regulators in Canada on November 15, 2010, and available on our web site (www.tvipacific.com) and SEDAR (www.sedar.com).

Financial Snapshot Quarter ended Sept 30, 2010   Quarter ended June 30, 2010
Net Revenue $15.7 mm   $16.5 mm
Free cash flow (1) $4.4 mm   ($0.6) mm
Net Income (loss) (2) $2.9 mm   ($1.1) mm
Basic Earnings (loss) per share $0.006   ($0.002)
Production cash cost (US$/Cu lb eq) $1.02   $1.13
Cash Balance (3) $4.4 mm   $6.2 mm
Average copper price received (US$/lb) (4) $3.30   $3.22
  1. Free cash flow is a non-GAAP measure that represents cash generated from the operating activities before changes in working capital, less cash expenditures on property and equipment
  2. Net income in Q2 was reduced as a result of one-time penalties and related charges incurred in the early termination of the Term Facility
  3. Cash Balance as of November 12, 2010 was $8.2 million
  4. Average copper price received for shipment 18 on November 6th was $3.77 (US$/lb)

Net revenue for the periods ending June 30 and September 30, 2010 were lower than previous quarters for two reasons:

- A change in the shipment schedule, from every 4 weeks to approximately every 6 weeks, was implemented to allow for the planned interruptions in production that were a result of the commissioning process of the zinc circuit; and

- In order not to exceed the maximum zinc content limits in copper concentrates, as specified by the offtaker requirements, ore with lower grades of zinc and copper had been processed at Canatuan starting in May. These lower ore grades resulted in lower revenues for the past six months. It is expected that with the successful commissioning of the zinc circuit, higher grade ores will again be processed.

Net income of $2.9 million was realized in Q3 compared to a net loss of $1.1 million in Q2, 2010, an increase of $4.0 million quarter over quarter. The decline in Q2 was primarily the result of payment of one-time charges relating to the early repayment of the Term Facility. The increase in Q3 was partially offset by modestly lower revenue due to slightly reduced quantities of copper, gold and silver shipped during the quarter.

Net Income Breakdown   Quarter ended Sept 30, 2010 (thousands)   Quarter ended June 30, 2010 (thousands)
         
Reported net income (loss)   $2,911   ($1,141)
One-time finance charges   -   $5,151
Exploration costs   $1,090   $775
Amortization and accretion   $3,095   $2,746
         
Earnings before one-time finance charges, exploration costs and amortization and accretion   $7,096   $7,531

Shipments

- Two shipments of copper concentrates were completed in Q3, 2010, for a total of 10,528 dry metric tonnes. The average copper price received was US$3.30 per lb for total gross revenue of US$16.13 million, which is comparable with the previous quarter.

- Subsequent to the end of the quarter, on November 6, 2010, an eighteenth shipment of copper concentrate was completed at an average copper price received of US$3.77 per lb for gross revenue of US$8.9 million, bringing total gross revenue year to date to US$68.3 million.

Short-Term Debt Facilities, Letter of Credit Facilities and Current Cash Position

- The Company has short-term loans from a major Philippine bank. As at September 30, 2010, the total outstanding was US$7.6 million (CDN$7.8 million):

  - The Company has a US$3.3 million revolving loan that is payable in 180 days, bearing interest at 4.3% per annum. This facility was subsequently paid on October 15, 2010. On the same day, the same facility was renewed and was immediately utilized by the Company at a lower interest rate of 3.3% per annum subject to quarterly re-pricing. The renewed facility is payable in 180 days.

  - In addition, TVI has two short-term loan facilities. The first amounts to US$3.0 million and is payable over four equal quarterly payments, bearing interest at 4.33% per annum. The scheduled quarterly payments in the amount of US$750,000 each were made in July and October 2010, respectively. The second amounts to US$2.0 million and is payable in 360 days, bearing interest of 4.54% per annum.

- The Company also has letter of credit facilities that accrue interest at a combined interest rate of 8.25% per annum and are payable over four equal monthly instalments starting 90 days from the withdrawal dates. The funds are used in the normal course of business operations. The total amount payable to the bank at September 30, 2010, was US$821,735 (CDN$846,223).

- As of September 30, 2010, the Company held $4.4 million in cash. As of November 12, 2010, the Company held $8.2 million in cash.

Production and Costs 

- The average mill throughput at the Canatuan operations in Q3, 2010 increased to 2,375 dry metric tonnes per day from the daily average throughput of 2,064 dry metric tonnes per day in Q2, 2010. This was made possible due to the higher plant availability achieved in Q3, 2010. Plant availability in Q2, 2010 was lower since scheduled shutdowns relating to the zinc circuit commissioning were implemented. Recoveries for all the metals also increased with copper recovery posting a quarter over quarter increase of 7.02% (from 81.41% in Q2 to 88.43% in Q3). Consequently, production cash cost per Cu lb eq decreased from US$1.13 in Q2 to US$1.02 in Q3.

Outlook

- In the early stages of the zinc circuit commissioning in Q2 of this year, it was found that acceptable copper/zinc separation was not being achieved. Since that time, extensive metallurgical testing of the Canatuan ores has been conducted by reputable third parties and an optimum 'recipe' involving combinations of reagents and plant configurations for the process flow sheet has been decided. As of the date of this news release, the Company has resumed on-site testing, however, it is expected that commissioning of the revised process flow sheet could continue for some time.

- A Phase 2 drilling program of 55 new holes began at the Balabag gold project on July 26, 2010. The program includes further infill drilling in the core area of the Tinago vein and step out drilling in the downdip mineralized zones identified in Phase 1. Phase 2 also includes infill drilling at the Miswi vein and infill and extension drilling at the Lalab vein. An internal scoping study has been launched and TVI expects to come to a decision regarding a "Bootstrap" mine development plan in Q1, 2011. Social and environmental baseline studies are currently underway along with additional metallurgical testing.

- TVI has begun drilling at the recently acquired, highly prospective Siennalynn property. It is anticipated that Stage 1 drilling will be completed by mid-Q1, 2011 with assays and evaluations completed by the end of the same quarter. Preparation is ongoing for the Stage 2 drill program. The extent of this additional drilling will be determined as progress is evaluated during Stage 1.

- Helicopter-supported geophysical surveys have been initiated covering all TVI's tenements in the Zamboanga peninsula. As of October 31, 2010, the airborne surveys have flown over 5,093 line-kilometres (3,165 miles) acquiring magnetics/radiometric data covering 84,000 hectares (207,568 acres). Part 1 and Part 2 of the airborne surveys are expected to be completed by early 2011.

- Drilling is expected to begin on identified targets on the Tamarok copper-gold prospect in early 2011.

- The current fleet of seven drill rigs will be augmented by the addition of seven of the Company's rigs that will be returned from Kyrgyzstan during Q1, 2011. These rigs will be used on the Siennalynn, Balabag and Tamarok exploration projects.

Key Financial Figures Quarter Over Quarter

(in thousands of CDN dollars except per share information)   Quarter Ended Sept 30, 2010   Quarter Ended June 30, 2010   Quarter Ended March 31, 2010   Year to date Sept 30, 2010
Net revenue   15,666   16,453   26,184   58,303
Operating cash flow   378   1,724   14,811   16,913
Free cash flow(1)   4,378   (555)   12,208   16,031
Net income (loss)   2,911(2)   (1,141)   8,390   10,160
Earnings (loss) per share (basic)   0.006   (0.002)   0.018   0.021
Free cash flow per share(1)   0.009   (0.001)   0.025   0.033
  1. See financial statements for the reconciliation from operating cash flow to free cash flow. Free cash flow is a non-GAAP measure. See MD&A for definition of this non-GAAP measure.
  2. Net of $22,042 share of the non-controlling interests. Please see the "Non-controlling interests" section in the MD&A.

Key Production Figures Quarter Over Quarter

    Quarter ended Sept 30, 2010   Quarter ended June 30, 2010   Quarter ended March 31, 2010   Year to date Sept 30, 2010
Copper pound equivalent produced (thousand lbs)   6,249   5,036   8,841   20,127
Copper produced (thousand lbs)   5,140   4,111   6,930   16,182
Gold produced (oz)   1,379   1,184   2,321   4,884
Silver produced (oz)   97,676   76,571   220,400   394,647

Key Operation Figures Quarter Over Quarter

The following table details some key operating statistics for the Canatuan Sulphide Mine for the three month periods ended September 30, June 30 and March 31, 2010.

    Quarter ended Sept 30, 2010   Quarter ended June 30, 2010   Quarter ended March 31, 2010   Year to date Sept 30, 2010
Total tonnes processed   218,525   187,845   203,480   609,850
Average tonnes processed per day   2,375   2,064   2,261   2,234
Ore copper grade (%)   1.21   1.22   1.75   1.39
Copper recovery (%)   88.43   81.41   88.14   86.42
Concentrates produced (dry weight - t)   12,680   10,110   15,826   38,616
Average daily concentrates produced (dry weight - t)   138   111   176   141
Concentrate copper grade (%)   18.39   18.45   19.86   19.01
Concentrate gold grade (g/t)   3.38   3.64   4.56   3.93
Concentrate silver grade (g/t)   239.60   235.57   433.15   317.87
Production cash cost per Cu lb eq (US$)(1) (2)   1.02   1.13   0.56   0.84
Total cash cost per Cu lb eq (US$)(2)   1.36   1.58   0.94   1.23
Total cash cost per Cu lb eq, net of by-products (US$)(2)   0.91   0.95   0.32   0.66
                 
Offtake                
Copper concentrates shipped (dry weight - t)   10,528   10,533   15,514   36,575
Cu lb eq shipped   5,180,122   5,458,367   8,546,480   19,184,969
Average copper price received (US$/lb)   3.30   3.22   3.28   3.27
  1. Excludes selling expenses.
  2. Production cash cost per Cu lb eq, Total cash cost per Cu lb eq and Total cash cost per Cu lb eq, net of by-products, are non-GAAP measures. Please see definitions in the "Non-GAAP Measures" section of the MD&A.

About TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF)

TVI Pacific Inc. is a publicly-traded copper producer focused on the production, development, exploration and acquisition of precious and base metal mining deposits in the Philippines. The Company's interest in the Canatuan Mine and its other Philippine assets are held through its affiliate, TVI Resource Development (Phils.), Inc.

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IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Certain information set out in this news release constitutes 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 management of the Company as at the effective date of such statements and, in certain cases, information received from or disseminated by third parties. Although the Company 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 by such forward-looking statements. These factors include, but are not limited to, 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 mineral 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; changes in exploration plans or budgets; and availability of equipment and personnel. 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. 

Forward-looking information respecting future operating information concerning the sulphide operation at Canatuan (including the processing of copper and zinc concentrates and projected production, cash costs, cash flows and income) is based upon current mining and processing activities at Canatuan, the current throughput of the sulphide plant and anticipated expansions in throughput capacity, prior experiences of management with mining and processing at Canatuan, the estimated copper and zinc mineralization of the sulphide zone at Canatuan, the current development and operating plan for Canatuan, and the Company's current budget and overall strategy for Canatuan, which are all subject to change. Forward-looking information relating to the nature and timing of exploration activities (including drilling) on the near-mine tenements, EXPA 61, Siennalynn, Balabag, Tamarok, Tapisa, Bonbon and the Company's other tenements in the Philippines are based upon the results of prior exploration activities, current mining and exploration activities, discussions with third parties and the Company's current budget and overall strategy, which are all subject to change. In certain cases, the anticipated timing of exploration activities in the Philippines is dependent upon the receipt of FPIC from local communities and regulatory approvals from government authorities in the Philippines. Forward-looking statements regarding the nature and timing of airborne geophysical surveys over Canatuan and the North Zamboanga Tenements are based on discussions held to date with the international service provider, the timing of mobilization of equipment, the timing of regulatory approvals from government authorities in the Philippines, the results of prior and current exploration activities, and the Company's overall plans, budget and strategy, which are all subject to change.

The forward-looking statements of the Company contained in this news release are expressly qualified, in their entirety, by this cautionary statement. Subject to applicable securities laws, the Company does not undertake any obligation to publicly revise the forward-looking statements included in this news release to reflect subsequent events or circumstances, except as required by law.

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

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