Two Japanese companies have taken an interest in the Canatuan polymetallic project of
Situated on the Philippine island of Mindanao, the property hosts oxide resources of 935,500 tonnes grading 4.12 grams gold and 133.44 grams silver per tonne, as well as sulphide resources of 1.3 million tonnes grading 1.45 grams gold, 73.02 grams silver, 3.36% copper and 2.45% zinc. Mineralization occurs in a lens of fresh and gossanous massive sulphides in northeasterly trending schistose volcanics, with the deposit itself stretching 825 metres in strike length and 150-300 metres in width.
The agreement, which is subject to the outcome of further metallurgical tests and a feasibility study, would see TVI relinquish a 40% interest in return for cash and financing arrangements for 75% of project costs. The resulting joint-venture company would cover the remaining capital costs, in the form of equity, and all dor and concentrates produced would be sold to the unnamed Japanese partners.
Plans call for the expansion of an existing Merill-Crowe pilot plant to 300 tonnes per day and the addition of an 850-tonne-per-day flotation circuit. Both reserve-types would be mined similtaneously, by open-pit methods at stripping ratios of 2.41-to-1 and 2.5-to-1, but processed separately.
Capital costs are projected at US$18.5 million; the internatal rate of return rings in at 36%; and the net present value, using a discount rate of 10%, is pegged at US$11.6 million. Both figures include taxes and are based on current metal prices. (Gold and copper prices used in the resource estimates were US$295 per oz. and US75 cents per lb., or US$30 and US10 cents higher than those used in the economic analysis.)
Gold and silver production is expected to start in late 2000, with concentrate production following several months later. In its first full year of production, the mine will crank out an estimated 46,044 tonnes copper concentrate, 11,697 tonnes zinc concentrate, 40,000 oz. gold and just over 2 million oz. silver at an average cash cost of US$147 per oz. gold-equivalent.
TVI will remain operator and reportedly has all construction permits in hand. The company’s current interest is subject to a 1% net smelter return royalty to the underlying property owner and a 12.5% back-in right held by Benguet, a Philippine-based mining and real estate company.
In 1998, TVI lost $2.8 million on revenue of $3.7 million, compared with losses of $34.5 million on $99,979 in 1997. The latter period mainly suffered from writeoffs.
Cash flow for the periods dropped to $216,197 from $621,000.
In the first three months of 1999, the junior lost $531,294 on revenue of $430,810, compared with losses of $45,379 on $926,145 in the same period of 1998. Cash flow for the periods was negative $180,121 and positive $227,454, respectively.
At the end of the first quarter, TVI had working capital of $1.41 million.
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