TVI Pacific Inc. and Mindoro Resources Ltd. Announce Robust
Economics for the Agata High-Iron DSO Project
TSX: TVI OTCQX: TVIPF
TSXV: MIO ASX: MDO FFT:
OLN
CALGARY, Sept. 10, 2013 /CNW/ - TVI Pacific Inc.
(TSX:TVI) (OTCQX:TVIPF) (TVI) and Mindoro Resources Ltd.
(TSXV:MIO) (ASX: MDO) (FFT:OLM) (Mindoro) announced today a
National Instrument 43-101 compliant
Feasibility Study indicating robust economics for a direct shipping
ore
operation ("DSO") of the high iron laterite resources at the
Agata
Project, located in Agusan del Norte, Mindanao, the Philippines.
Highlights:
Low initial start-up capital of US$10.1
million, high Internal Rate of
Return (IRR) of 187% and payback within first year of
operation;
Post-tax Net Present Value (10% discount) of US$37.9 million;
DSO product to grade 48% Fe and 0.9% Ni. - a consistently
in demand
product;
Remaining infrastructure development planned for Q4,
2013;
DSO to China planned to
commence in Q1, 2014.
Shipping rates to accelerate to 2.5M wet metric tonnes per annum
in
2015.
"Completion of the Feasibility Study is a major milestone in
developing
new cash-flow opportunities beyond TVI's producing Canatuan
copper-zinc
mine," said Cliff James, Chairman
and President of TVI Pacific. "The
study demonstrates robust economics that provide a path towards
further
development at Agata and advancing our goal of eventually building
a
nickel processing plant."
"We are extremely pleased with the robust results of the Agata
DSO
Feasibility Study and the progress achieved by the operator, TVI,
to
date. The Agata DSO project provides a unique opportunity to
generate
revenue in early 2014 and to start rebuilding value in our company.
We
also look forward with keen anticipation to the results of the
Agata
Processing Feasibility Study expected in early 2014", said
Tony Climie,
CEO of Mindoro.
TVI and Mindoro Joint Ventures
TVI and Mindoro have signed four joint venture agreements,
previously
announced on October 1, 2012,
relating to the Agata and Pan de Azucar
mining projects located in the
Philippines. The joint ventures present
TVI and Mindoro with multiple growth opportunities for near and
medium-term cash flow. Mindoro has 75% interest in the projects and
an
option to acquire the remaining 25% interest from a private
Philippine
company. TVI may earn up to a 60% interest from Mindoro and
is
operator of the projects.
Mining opportunities at Agata include:
near-term high-iron laterite direct shipping ore operation
(DSO);
near-term limestone DSO;
medium-term lime production facility;
medium-term nickel-processing plant.
Economic Assessment
Below is a summary of the Agata DSO feasibility study economic
assessment:
Table 1: Summary of Economic Results
High Iron Limonite DSO sale price (FOB)
|
USD/wmt
|
$22
|
NPV (10% discount rate) post-tax
|
USD (M)
|
$37.9
|
Payback Period
|
Years
|
1.0
|
IRR post-tax
|
%
|
187%
|
The High Iron limonite DSO sale price of US$22 per wet metric tonne (wmt
FOB) is 10% lower than the average sale price realized by
off-takers
shipping similar ore over the past 18 months.
Capital and operating cost estimates have been developed to
±15%
precision. The inputs to the Feasibility Study were developed by
Dallas
Cox, MAusIMM (CP), of Crystal Sun Consulting Limited, based
on
estimates from local Philippine contractors, TVI's current
suppliers
and service providers.
Installed capital cost estimates include the Port Loading
Facility,
general infrastructure, mining-related capital costs, duties and
taxes
for equipment, sustaining capital and an estimate of working
capital. A
10% contingency has been allowed within the capital cost
estimate.
Operating cost estimates include mining, infrastructure,
government
charges, royalties, administration, security, community relations
and
environmental costs. Cash flows are calculated on an
after-tax basis
applying the current Philippine taxation regime.
Mineral Reserve Estimate and DSO Production Targets
The National Instrument 43-101 Compliant Mineral Resource estimate
for
the Agata Nickel Project, released on April
10, 2013 (available on www.sedar.com; www.tvipacific.com;
and www.mindoro.com), forms the basis of the Mineral Reserve
estimate for the Feasibility
Study and the following DSO production targets:
Table 2: DSO Production Targets
YEAR
|
wmt
|
Ni%
|
Fe%
|
2013
|
-
|
-
|
-
|
2014
|
2,000,000
|
0.9
|
48.0
|
2015
|
2,500,000
|
0.9
|
48.0
|
2016
|
1,800,000
|
0.9
|
48.0
|
2017+
|
500,000
|
0.9
|
48.0
|
The resource estimation method applied to the Mineral Resources
was
ordinary kriging. Cut-off grades applied were 0.5% nickel
within the
Limonite zone and 0.8% nickel within the Saprolite zone.
The Mineral Reserve estimate in the table below, based on
open-pit
optimization and designs by Dallas
Cox, reflects the economic
parameters in the Feasibility Study and is expressed in both dry
metric
tonnes (dmt) and wet metric tonnes (wmt).
Table 3: Agata North Mineral Reserve Estimate - as at
August 30th, 2013
Classification
|
Horizon
|
M (dmt)
|
M (wmt)
|
Ni%
|
Co%
|
Fe%
|
Al%
|
Mg%
|
SiO2%
|
Proven
|
Limonite
|
0.18
|
0.26
|
1.00
|
0.11
|
47.1
|
3.0
|
1.6
|
5.6
|
Probable
|
Limonite
|
6.61
|
9.44
|
0.93
|
0.11
|
48.3
|
3.4
|
0.5
|
3.0
|
Proven + Probable
|
TOTAL
|
6.79
|
9.70
|
0.93
|
0.11
|
48.0
|
3.4
|
0.5
|
3.0
|
Capital and Operating Costs
The project capital and operating costs are presented in Tables 4
and 5:
Table 4: Capital Cost Estimate for Agata Nickel DSO
Project
Description
|
Capital Costs
(Million USD)
|
Mobilisation
|
0.15
|
Site Preparation
|
0.04
|
Road Construction/Upgrading/Widening
|
1.14
|
Causeway Construction
|
2.62
|
Building Construction
|
1.89
|
General Services and Transportation
|
0.21
|
Mechanical/Electrical Equipment
|
0.07
|
Laboratory and Equipment/Apparatus
|
0.24
|
Office Equipment
|
0.06
|
Miscellaneous Services
|
0.20
|
Subtotal
|
6.62
|
|
|
Working Capital
|
2.64
|
Sustaining Capital
|
0.95
|
Subtotal
|
3.59
|
|
|
Contingency
|
0.93
|
VAT Payable (@ 12%)
|
1.31
|
|
|
Total
|
12.45
|
Table 5: Operating Cost Estimate
|
LOM Cost
(Million USD)
|
USD /wmt
shipped
|
Mining & Haulage Cost
|
33.5
|
3.45
|
Ore Drying
|
6.5
|
0.67
|
Stockpile Load & Haulage Cost
|
16.8
|
1.73
|
Barging
|
21.7
|
2.24
|
Roads, Drainage and Rehabilitation
|
9.7
|
1.00
|
G&A
|
17.9
|
1.84
|
Fees & Royalties
|
7.5
|
0.78
|
MPSA Compensation & Rates
|
3.0
|
0.31
|
VAT Payable (@ 12%)
|
10.9
|
1.12
|
TOTAL OPERATING COSTS
|
127.4
|
13.14
|
Port Loading Facility and Infrastructure
The close proximity of the planned Port Loading Facility to the
ore
stockpile (3.5km) will provide a significant economic advantage
through
low transportation costs. The Port will consist of a
causeway
extending approximately 160m offshore and will allow two barges to
be
moored and loaded simultaneously.
DSO Market
The region in which the Agata DSO Project is situated, in
north-eastern
Mindanao, hosts approximately fifteen DSO operations at present
that
cumulatively exported 17.3 million wmt and 19.2 million wmt in 2011
and
2012, respectively.
Over the past 18 months the High Iron DSO sale price has
fluctuated
between USD $15/wmt and USD
$34/wmt. The recent and historical
price of
High Iron Limonite DSO has been a function of supply and demand,
but
influenced by seasonal weather patterns in South East Asia. DSO
projects on the sheltered west cost of the Mindanao peninsula,
where
Agata is situated, can ship ore 12 months a year and take advantage
of
peak season prices.
Technical Report and Independent Qualified Persons
A National Instrument 43-101 Technical Report is available on SEDAR
at www.sedar.com and on TVI and Mindoro's websites at
www.tvipacific.com and www.mindoro.com.
The Agata North DSO Feasibility Study has been prepared under
the
direction of Dallas Cox, an
independent qualified person, with
contributions from Mark Gifford and
Michael Conan-Davies;
independent
qualified persons as defined by National Instrument 43-101
(Canada).
Messrs Cox, Gifford and Conan-Davies have authorized the
technical
information detailed in this release.
Dallas Cox, MAusIMM(CP), a qualified
person as defined by National
Instrument 43-101, has reviewed and verified the disclosure of
the
Mineral Reserve Estimate in this news release. Mr. Cox has
over thirty
years of experience which is relevant to the activity he has
undertaken
and he has consented to the release of the pertinent information in
the
form and context in which it appears.
Mark Gifford, FAusIMM, a qualified
person as defined by National
Instrument 43-101 has reviewed and verified the disclosure of
the
Mineral Resource Estimate in this news release. Mr. Gifford
has over
twenty- six years of experience which is relevant to the activity
he
has undertaken and he has consented to the release of the
pertinent
information in the form and context in which it appears.
Michael Conan-Davies, MAusIMM(CP), a
qualified person as defined by
National Instrument 43-101 has reviewed and verified the disclosure
of
the Economic Assessment in this news release. Mr.
Conan-Davies has
over fifteen years of experience which is relevant to the activity
he
has undertaken and he has consented to the release of the
pertinent
information in the form and context in which it appears.
About TVI Pacific Inc.
TVI Pacific Inc. is a Canadian resource company focused on the
production, development, exploration and acquisition of
resource
projects in the Philippines and
Southeast Asia. The Company
produces
copper and zinc concentrates from its Canatuan mine and is
advancing
its Balabag Gold-Silver project. TVI is a
participant/operator in
several joint venture projects in the
Philippines and Papua New
Guinea
and also has an interest in an offshore Philippine oil
property.
About Mindoro Resources Ltd.
Mindoro is a Tier 1 Issuer trading on the TSX Venture Exchange
(MIO),
Australian Securities Exchange (MDO) and Frankfurt Stock Exchange
(WKN
906167). Mindoro has a 75% interest, and an option to acquire
the
remaining 25%, in the Agata Nickel Project, Mindanao, and the Pan
de
Azucar Sulphur-Copper-Gold Project, Iloilo. TVI Pacific Inc. has
the
option to earn up to a 60% interest in these projects by meeting
the
earn-in requirements outlined in the September 27, 2012 release.
Mindoro also holds a 53.3% stake in ASX listed Red Mountain
Mining
(ASX: RMX), which has a 100% direct and indirect interest in
the
Batangas gold and copper-gold projects.
The Toronto Stock Exchange has neither approved nor disapproved
of the
information contained herein.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as
that term is defined in the policies of the TSX Venture
Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements in this news release constitute
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 include, but are not limited to,
commencing
development of the infrastructure for the Agata North DSO Project
plans
to commence direct shipping of high iron limonite ore to
China in the
first quarter of 2014, and other statements that are not
historical
facts. Forward-looking statements are based upon the opinions
and
expectations of TVI and Mindoro as at the effective date of
such
statements and, in certain cases, information received from or
disseminated by third parties. Although TVI and Mindoro believe
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. These
factors
include, but are not limited to, such things as general
economic
conditions in Canada, the United States, the Philippines and elsewhere;
volatility of prices for precious metals, base metals, oil and
gas;
commodity supply and demand; fluctuations in currency and
interest
rates; inherent risks associated with the exploration and
development
of mining properties; inherent risks associated with the
exploration of
oil and gas properties; ultimate recoverability of reserves;
production, timing, results and costs of exploration and
development
activities; political or civil unrest; 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 personnel and equipment (including
mechanical problems). 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 of TVI and Mindoro contained in
this news
release are expressly qualified, in their entirety, by this
cautionary
statement. Various risks to which TVI, Mindoro and their affiliates
are
exposed in the conduct of their business are described in detail
in
TVI's and Mindoro's Annual Information Forms for the year ended
December 31, 2012, which were filed
on SEDAR on March 19, 2013, and
April 1, 2013, respectively, and are
available at www.SEDAR.com. Subject to applicable securities laws,
TVI and Mindoro do 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.
SOURCE TVI Pacific Inc.