TVI Pacific announcement/update (Full text of press release from Canadian Corporate News)
(NOTE: Sorry about the poor formatting for the numbers - couldn't do a printout to get them set up properly.)
NOVEMBER 23, 1998
TVI Plans Staged Expansion of Existing Facilities to 300 TPD (Gossan) at its Canatuan Project, Southern Philippines
CALGARY, ALBERTA--In recent months, TVI Pacific Inc. [TSE:TVI] has expended considerable effort in refining the overall project plan for its Canatuan polymetallic (gold, silver, copper, zinc) massive sulphide project on the island of Mindanao, Philippines, in light of current market conditions. The Company is now considering a low cost scenario under which the project's existing pilot plant (which operated during 1997 with a throughput of 50, then 80 tpd) would be expanded to 300 tpd to mine and process the deposit's gold and silver bearing gossan reserves by a combination of CIL and Merrill Crowe methods. Two scenarios are being considered, namely (i) a direct expansion to 300 tpd; and (ii) a staged expansion, first to 120 tpd, and then 300 tpd. After approximately 6 years of production at this level, or earlier if metal prices warrant, a separate sulphide processing unit (gold, silver, copper and zinc) would be constructed using additional capital to operate at a throughput of 850 tpd.
The initial capital outlay required to upgrade the pilot plant to 300 tpd and begin processing gossan ore, is US$4.0 million. Under existing market conditions, the project would have a payback period under one year and would provide over US$5 million of positive cash flow for the Company in the first full year of production.
TVI also has the option of expanding the 80 tpd plant to 120 tpd immediately and then further expanding to 300 tpd using cash flow generated from the operation. Although this case requires lower initial capital outlay of US$1.5 million (US$1.0 initial cash, US$0.5 cash from operations) it provides only limited cash flow in the first year as it is being re-invested directly into the plant expansion.
Using the assumptions made in the bankable feasibility study and taking into account the reduction of both operating and capital costs as a result of the lowered processing throughput and the devaluation of the Philippine peso, these alternatives have the following financial profiles based on different levels of metal prices:
Expected Financial Results at Metal Prices of $295/oz Au, $5.00/oz Ag, $0.75/lb Cu and $0.45/lb Zn.
-------------------------------------------------------------
Cost/
Percent Percent Equiv.
Description NPV Dis. 0 NPV Dis. 10 Payback oz. Au
-------------------------------------------------------------
$(000)'s $(000)'s Years' $
-------------------------------------------------------------
Expand directly to 300 tpd and add sulphide plant at 850 tpd. $29,700 $14,500 0.8 $159
-------------------------------------------------------------
Expand to 300 tpd
after 12 months
operation at
120 tpd and add
sulphide plant
at 850 tpd. $28,900 $13,700 0.6 $160 -------------------------------------------------------------
Expected Financial Results at Metal Prices of $325/oz Au, $6.00/oz Ag, $1.00/lb Cu and $0.55/lb Zn.
-------------------------------------------------------------
Cost/
Percent Percent Equiv.
Description NPV Dis. 0 NPV Dis. 10 Payback oz. Au
-------------------------------------------------------------
$(000)'s $(000)'s Years' $
-------------------------------------------------------------
Expand directly to 300 tpd and add sulphide plant at 850 tpd. $56,700 $26,700 0.7 $137
------------------------------------------------------------
Expand to 300 tpd
after 12 months
operation at 120
tpd and add sulphide
plant at 850 tpd. $56,000 $26,600 0.5 $138 -------------------------------------------------------------
All of the alternatives considered are expected to yield internal rates of return in excess of 200 percent. The financial results are most sensitive to grade and metal price changes, less sensitive to operating cost variances and least sensitive to capital cost changes.
''We are very excited with the benefits that these scenarios could potentially afford TVI.'' said Clifford M. James, President, Chief Executive Officer and Chairman of the Board. ''The interest we have received from potential lenders, partners and others regarding these alternatives, together with an ongoing investigation of the original [1850tpd gossan, 850 tpd sulphide] project plan for Canatuan, is very encouraging....Cash flow generated from this project will allow the Company to expedite exploration on other prospective areas at Canatuan and other properties in our portfolio, and provide funds to further our acquisition and growth strategy.''
|
