TVI Pacific
Question and Answer with Cliff James
May 27, 2010

Are there any joint ventures that are in the making?

We are in discussions with a number of companies. We recognize that we are an entry platform for companies who want to come into the Philippines. It works two ways. They get access to our operational team and current projects and we get some of their resources so that we can expand by taking on new projects.


Now that the election is over, will that speed up any new projects?

I think that the reality is that its going to take some time with the election, as with any election. There are going to be new ministers, they call them secretaries over there as per the US system, and we need to wait and see who those ministers, or secretaries, are going to be. There is going to be a period of time when the old ministers go out. June 30th is their last day and then the new team comes in. There will be a transition period, then these new guys and gals get to work and then we’ll have to see how they work. There isn’t anything that we’re doing right now that is being held up with respect to regulatory approval. I would say that the system will be up and running realistically in about the next six months.


Why don’t you apply for the authority to buy back your stock?

What we’re talking about here is buying back shares under a normal course issuer bid (NCIB). First, TVI currently does not meet the financial performance measurement test that allows for such a bid to take place. Under the Alberta Business Corporations Act, we can’t legally perform an NCIB. With the profits that we’re making, that’s going to change or may change with the continued positive financial results. Secondly, and quite importantly, we’re looking at a growth path here. We’ve got lots of things going on and what we want to do is to grow the company. We believe that the cash is better spent at this time on growing the company than buying shares in the market.


Are you planning a reverse stock split?

The answer is no, we’re not planning a reverse stock split. We believe we’ve got enough growth potential with what we’re doing that we can grow into the number of shares that we have and that is what we’re going to do. Something that everybody should know is that when you do a reverse stock split as a separate event, 96% of the time, the company realizes a loss in value of its security over a period of time. What you would do, when you consider this, would be to time it with another major event, a major financing, or some major discovery. The directors look at this issue from time to time and they are not interested in doing it. I’m not saying that in the future, with some major event, that we wouldn’t consider it but for now, it is not a priority for us.


Do you have plans on rewarding shareholders with a dividend?

No, we don’t. We need that money for growth. We would rather take the $10 million that could be used to pay a dividend and put that into Balbag, for instance, to get that project up and running. And I could name a number of other things that we could do with the money. We are a capital appreciation investment vehicle – there are other investment vehicles to choose from if you are looking for an income stream.


What are you doing to bring TVI to the attention of the investing community?

Well I can tell you that we have been extremely busy in this regard. TVI has presented at multiple investor conferences, met with a significant number of investment houses, brokerage houses, analysts and the like - both in North America and over in Asia. We’re going to continue this effort and get our story out to the public.


When attending these conferences in various cities and countries, what is the primary question or concern TVI is specifically asked at each conference?

I think the biggest one, certainly in North America, is the concern about our mine life. I think we’ve addressed that in our presentation. It’s a priority for us; we are well aware of what our mine life is. We are partly responsible for this issue. The original design for Canatuan was a mine that processed 1,350 tonnes a day. Well if we had been processing at 1,350 tonnes a day, we would have a longer mine life. We chose to shorten our mine life, increase the throughput and go through the deposit faster to generate more income and cash flow. And we think that was a smart thing to do. That was not a decision taken lightly. It was a decision taken with the view that we could find other feed to put through the mill, other ore bodies that will result in more ore being put through the mill to extend the mine life. We have even contemplated the possibility of expansion with the additional material that we may be putting through the mill.

Balabag, for whatever reason seems to be discounted, considered to be a small project. As I kept saying during the presentation, we believe that Balbag can be a significant project for the company. If we have the resource potential that we seem to have at depth, we could easily be looking at something in the million ounce deposit range, and that is a significant project. That’s a billion dollar project quite frankly. And I think it’s very much undervalued in the minds of the investors.


Concern around doing business in the Philippines?

Well, I find this fascinating. I guess it’s a case of not being invested there, not knowing what the Philippines is all about. TVI has operated in the Philippines since 1993. We’ve been there almost seventeen years. In fact, we have been there seventeen plus years now, because I went to the Philippines in May of 1993. We have been on the Canatuan project since 1994. There is concern about the Philippines in the sense that it is a very tough place to do business – I strongly, vehemently disagree. I love doing business in the Philippines. Philippinos are wonderful people.

The Philippines are what I call a hyper democracy. Everybody has got to have at least three kicks at the can before anything is decided. It is the oldest democracy; it is the strongest democracy in Asia in my opinion. I think that it is a great place to do business. We told you in one of the earlier slides that there are all kinds of opportunities there. We are very, very happy to be there.

Is it an unsafe place to do business? I don’t believe that for ten minutes. Sure, we’re in an area where there are rebel groups. We manage that in the sense that we know that security is an inherent function of our business. I believe 110% that this is purely a function of having good relationships with the local community. We haven’t had a security incident since 2002. We did have some security issues, but the mine was in care and maintenance and we weren’t even operating. We shipped gold for four years. We shipped it in helicopters and by truck in the early days – never had an incident. We are shipping copper concentrate now. We’re shipping copper concentrate by 15 tonne trucks. It goes down to port all the time. There’s never been an incident. I want to stress again that the crime rate down there is very low. We’ve got tremendous community support and when you think about it, we employ a lot of people down there and there is tremendous spin-off. The last thing that the local people want is something to happen to the company who is paying their salaries and looking after the community. They don’t want anything to happen to us.

I remember I gave a presentation in New York a number of years ago on TVI and I took the local NY paper a local paper from the Philippines and compared the numbers of crimes that had occurred (that were listed in the paper in New York in the last night). Compared to crimes in Manila, was a tiny fraction of what occurred in New York. People need to get over there and really see it to understand it. Philippines is a great place to be, we’re happy to be there. There’s huge opportunity and I guess that’s enough said on that.


Why does the share price not reflect the true value of the company?

Well, we have a number of reasons we think that we’re not getting recognition. I think one of the primary reasons is the fact that we have not raised any money from the public since 2003. And why didn’t we raise any money? Well, we didn’t raise any money because we didn’t need to. We were generating cash. We were able to borrow money, but part of the problem is, when you don’t go out and raise money and don’t bring in new investors, you don’t get the kind of interest that you would otherwise get if you are doing an IPO or doing some kind of fundraising.

I think that the fact that we are in the Philippines – we get a discount for that. People don’t understand the Philippines as I just said. I think that is a reflection on our share price. Its one of our primary reasons for considering a regional listing, either Hong Kong or Singapore. The feedback we’re getting from the companies and the brokerage firms that operate under Hong Kong and Singapore is amazing. We go down to Toronto and talk to people down there and there’s a big yawn about us. We go to Singapore and Hong Kong and there’s no yawn; these guys are jumping over themselves to get involved with us. And as they say, they have no idea how analysts in Canada and the US value companies. They say they just don’t understand it. In other words, exploration companies that have high market caps are generally companies who have got a whole lot of blue sky and get a whole lot of hot air. Nine times out of ten and maybe it should be nine times out of a hundred, these companies have all this pizzazz and all that, but when you go put a dril hole into it, typically you find out there is nothing there, there is nothing to develop.

In Asia, they have a very different view of the world. They say they like TVI. Why? “Because you have strong cash flow and a good revenue history. If you come here you’re going to be trading on a multiple of earnings.” Our exploration potential is important in the sense that we have a future, but they like the fact that we are a producer.


What is the ultimate goal for TVI Pacific? Is it to grow and prosper as a mining company? Or is it to get the company profitable as a buyout candidate?

And the answer is that as a management team and as a board, our plan is to grow the company as best we can, as fast as we can. We have an aggressive growth plan and we plan to execute that. If, along the road, somebody comes along and offers us a price for our stock we can’t refuse and we think the shareholders should learn about it, we are going to be presenting that to our shareholder base. We must. We have a responsibility to do that.