BASE METALS — TVI aims to finance Canatuan project in the Philippines

Low prices for gold and base metals have resulted in a moderate first-quarter loss for TVI Pacific (TVI-T), hampering the company’s efforts to advance the Canatuan project on the southern Philippine island of Mindanao.

For the 3-month period ended March 31, TVI reported a loss of $45,379 (or less than 1 cents per share), compared with a loss of $5.4 million (8 cents per share) in the corresponding period of 1997.

In addition to the decreased loss, TVI reports that cash flow during the recent quarter amounted to $227,454 and that working capital at the end of the period was $2.5 million.

The Calgary-based company’s main priority is to raise sufficient financing to proceed with construction at Canatuan. All the necessary permits to do so are reportedly in hand.

As of December 1997, Canatuan was estimated to contain proven and probable oxide reserves of 1.4 million tonnes grading 3.77 grams gold per tonne and 105.66 grams silver, plus unoxidized reserves of 1.5 million tonnes grading 2.79% copper, 2.03% zinc, 1.31 grams gold and 62.14 grams silver.

Canatuan is a volcanic-hosted sulphide deposit that forms part of a northeasterly trending belt of Cretaceous to Tertiary basement schists containing massive sulphide lenses. The deposit is arcuate in shape with a shallow dip, a strike length of about 825 metres and a width varying from 150 to 300 metres.

The near-surface portions of the deposit have been oxidized to a gold-silver-rich gossan. The sulphide portion of the deposit consists of several lenses of massive, semi-massive and banded sulphide contained in a 40-metre-thick interval of pyrite-rich quartz-sericite schist. The bulk of the sulphide reserves are in the lower massive sulphide horizon, which is continuous over the entire length of the deposit and has an average thickness of 5.75 metres. The gossan varies from massive to banded, and generally reflects the internal stratigraphy of the downdip sulphide interval. The main gossan horizon has an average thickness of 4.3 metres.

The project’s net present value, after tax, is US$17.1 million at a discount rate of 10% and US$11.1 million at a rate of 15%. The internal rate of return is 32.6%, on an all-equity basis.

TVI based its calculations on metal prices of $300 per oz. for gold, US$5 per oz. for silver, US85 cents per lb. for copper and US55 cents per lb. for zinc. The estimates also take into account assumptions made in the original bankable feasibility study, as well as the devaluation of the Philippine peso in late 1997.

Scoping studies, undertaken during the first quarter, considered daily production rates of 250 and 400 tonnes on the gold and silver ore in the gossan only. Production rates of 1,850 and 850 tonnes per day from both the gossan and massive sulphide ores were also considered.

Rothschild Australia recently reconfirmed its interest in providing debt financing.

Production at the small-scale pilot plant at Canatuan was halted during the first quarter, mainly because of the low price of gold. A study is examining the feasibility of further expanding plant production capacity and adding a Merrill-Crowe processing unit to increase both gold and silver recoveries.

Meanwhile, TVI continues to explore other projects in the Philippines, including Rapu Rapu and Buenavista, both of which are on the island of Luzon.