Flamboyant Brazilian millionaire Eike Batista is resigning as chairman, chief executive officer and director of
Directors Nigel Lees and Ian Rugeroni are also resigning, following the lead of Paul Soros, who resigned as director in February. Soros was replaced by Sean Harvey.
Batista will remain on selected boards of TVX’s South American joint-venture operations.
The changes follow the creation of a special committee designed so that TVX directors and NM Rothschild & Sons can review “strategic alternatives” for the company.
Harvey stepped in as TVX’s chairman and CEO after being involved with TVX as a financial advisor and consultant for more than five years.
The board will be reduced to five from nine people: Harvey, John Craig, Greg Martyr, Mark Young and an as-yet-unnamed independent director.
“The management and directors of TVX will continue to explore strategic alternatives while pursuing a program of cost reduction,” says Harvey. “With the support of management, the board and TVX’s shareholders, I hope to shepherd TVX through these difficult times until a solution can be found that is acceptable to all stakeholders of TVX.”
In 2000, TVX turned a profit of US$12.4 million (or nil per share after an adjustment for its gold-linked convertible notes) on revenue of US$170 million, compared with a net loss of US$47.6 million (US$1.73 per share) on revenue of US$1.63 million in 1999.
The improvement reflects lower writedowns, lower depreciation charges, and reduced corporate and interest expenses. Results from the previous year included a US$64-million writedown on the Stratoni operations in Greece and a US$4.2-million gain on the creation of the TVX Normandy Americas partnership with Australia’s
TVX’s share of production in 2000 from its five mines in the Americas was 257,100 oz. gold-equivalent (208,000 oz. gold and 2.8 million oz. silver), which is 35% lower than the 397,800 gold-equivalent oz. (234,400 oz. gold and 8.7 million oz. silver) achieved in 1999.
The decline stems from two factors: the sale of half of TVX’s interests in the Americas operations to Normandy in mid-1999, and lower production from the La Coipa mine in Chile.
Total cash costs were US$178 per oz. gold-equivalent sold during 2000 — a 5% increase, principally due to increased cash costs at La Coipa.
Thanks to hedging, TVX realized an average of US$351 per oz. for gold and US$3.85 per oz. for silver during 2000, compared with average spot prices of US$279 and US$4.95 per oz., respectively. In 1999, realized prices were US$393 and US$4.17 per oz. for gold and silver, respectively.
Cash flow from operations was US$32.6 million in 2000, down from US$46.6 million in 1999.
TVX’s share of capital spending declined in 2000 to US$41.8 million, with US$10.1 million spent on existing mines and US$31.7 million earmarked for development projects in Greece.
On July 31, 2000, TVX’s common shares were consolidated on a 5-to-1 basis in order to meet listing requirements on the New York Stock Exchange and thereby remain in compliance with the terms of its 5% gold-linked convertible notes.
In 2001, TVX expects to produce 253,800 attributable gold-equivalent ounces from the Americas operations (the La Coipa, Crixas and Brasilia mines in Brazil and the Musselwhite and New Britannia mines in Canada) and 30,600 tonnes zinc, 28,700 tonnes lead and 1.8 million oz. silver from its Stratoni operation in Greece. Cash costs in 2001 are expected to be US$180 per oz.
In December 2000, SNC Lavalin estimated that the initial capital cost of bringing the stalled Olympias gold project in Greece into production would be US$258 million, up US$10 million from a feasibility-study estimate.
TVX says various petitions brought by opponents of the project were presented to Greece’s highest court in January and that the judge recommended the petitions be dismissed. The court’s final decision is expected soon.
Previous commitments for development of Olympias remain in place, including US$130 million of limited-recourse debt financing and US$40 million of grant bridge financing.
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