TVX completes feasibility at Olympias

With gold production up at all its mines and a drop in cash costs, TVX Gold (TVX-T) has managed to turn in a quarterly profit for the second consecutive time.

For the second quarter ended June 30, TVX earned US$2.4 million (or nil per share) on revenue of US$40 million, compared with a net loss of US$3.4 million (4 cents per share) on US$42 million for the corresponding period last year.

From its five joint-ventured mines, TVX’s share of production during the recent quarter was 95,000 oz. gold and 1 million oz. silver, compared with 82,200 oz. gold and 1.4 million oz. silver a year ago.

Mine by mine, TVX’s share of production for the second quarter was: 27,300 oz. gold and 1 million oz. silver at La Coipa in Chile; 20,100 oz. gold at Brasilia in Brazil; 18,400 oz. gold at Crixas in Brazil; 16,900 oz. gold at Musselwhite in Ontario; and 12,300 oz. gold at New Britannia in Manitoba.

Total cash costs in the 3-month period were US$188 per oz. gold-equivalent versus US$217 in the second quarter of 1997. Realized metal prices were US$372 per oz. gold and US$4.70 per oz. silver, compared with US$410 and US$5.60, respectively, in the year-ago period.

At the La Coipa gold-silver mine, which is owned equally by TVX and operator Placer Dome (PDG-T), damage to a ring gear in the primary grinding mill reduced tonnage throughput by 20%. However, better grades and improved recoveries offset this lower tonnage, and gold-equivalent production was slightly above plan. The mill will continue to operate at a lower throughput rate until a temporary replacement ring gear is received in October. Processing of the nearby Chimberos deposit’s silver ore began on schedule in July. Placer believes production will continue to meet the 1998 forecast.

Startup difficulties continued at TVX’s 49%-owned Brasilia mine, with the processing of sulphide ore proving more difficult than expected, resulting in reduced mill tonnage and recoveries. Operator Rio Tinto (RTP-N) has reduced by 50,000 oz. its forecast for 1998’s total gold production, and TVX is following suit by revising its 1998 forecast to 505,000 from 530,000 oz. Strong cost performances at TVX’s other joint ventures are expected to offset Brasilia’s increased cash costs, and the original cash operating cost forecast of less than US$200 per oz. gold-equivalent remains unchanged.

At TVX’s half-owned Crixas mine, a 10% tonnage increase achieved in 1998 has resulted in a similar improvement in both gold production and costs.

At Musselwhite, production and cash costs in the second quarter of 1998 showed substantial improvement over the corresponding period last year, partly as a result of better grades. TVX holds a 32% interest in the mine, with the remainder held by operator Placer Dome.

At the TVX-operated New Britannia mine, production continued at the same level as in last year’s second quarter, though cash costs were nearly 15% lower, at US$238 per oz. Underground exploration continues to confirm the extension of the ore zones to depth. Ownership of the mine is divided equally between TVX and High River Gold Mines (HRG-T).

In Greece, Kvaerner Metals has completed a final feasibility study on the Olympias polymetallic project. The study estimates construction costs of US$225 million before confirmed European Union grants of up to US$70 million. Based on measured and indicated resources of 11.8 million tonnes containing 3 million oz. gold and 42 million oz. silver, the mine life is projected to exceed 15 years. Production levels for the first five years, when existing tailings and stockpiled concentrates are being retreated, are expected to reach 210,000 oz. gold and 2 million oz. silver per year, with cash operating costs pegged at less than US$125 per oz. gold (net of byproduct credits for silver, zinc and lead).

At the nearby Skouries gold-copper project, Kvaerner expects to complete a final feasibility study in September. Mining would likely be carried out selectively by means of sub-level caving, as this would enhance grades. The mill is now being designed to process about 18,000 tonnes per day in a single-line plant.

Construction costs are expected to be reduced by up to US$50 million, to about US$250 million, before anticipated European Union grants of more than US$70 million.

TVX is still awaiting a ruling on the Ontario court case relating to the claim made against TVX concerning its Greek properties. The three individuals suing the company claim breach of fiduciary responsibility and misuse of confidential information, allegations which TVX denies.