Project ‘On plan’
The report below is an independent review of the construction activities taking place at the Canatuan Sulphide Project, prepared by Robert C. Armstrong,, B.A.Sc., M.Sc., Ph.D., an independent and lead director of Canadian affiliated company TVI Pacific Inc.Dr. Armstrong has served as an independent director of TVI Pacific since June 1998. His skills and leadership include 40 years of experience as a professional in the mining industry. Prior to joining the board, he worked in senior and executive positions for several mining companies including Cominco Ltd. and Echo Bay Mines Ltd. In these positions he had responsibility for mineral exploration and mining activities, both foreign and domestic. He currently serves as the President of Armstrong and Associates International LLC. (Denver, Colorado), a private company involved in the mineral exploration industry, and as a director of Pitchstone Exploration Ltd, a public mining company, the shares of which are listed on the TSX Venture Exchange.
Certain statements in this report constitute forward-looking statements, including statements respecting the timing of start-up operations for the Sulphide Project at Canatuan. Readers should refer to the cautionary statement that appears at the end of this report.
Canatuan Project
PROGRESS REPORT
June, 2008
R.C.Armstrong
SUMMARY
The Canatuan Sulphide Project is the most important project currently underway at TVIRD. Of the two weeks in the Philippines this trip, I spent the period from June 6 to June 11 at site reviewing the preparations and progress of the project. There I met with senior management and reviewed the aspects of the project through various detailed presentations and visual inspection of the key areas. Overall, I was impressed with the enthusiasm and teamwork of the senior managers. They are excited about resuming work and getting the plant up and running on schedule.
Sulphide Plant
Construction work underway at the mill facility involves the deconstruction of portions of the gossan plant and the addition of equipment for the sulphide phase. Currently the foundations of the primary, SAG mill and feed conveyor have been excavated and formwork is in place for an anticipated concrete pour. The two secondary ball mills have been reconditioned with new liners and bearings and are ready for production. Critical path equipment has been ordered, some obtained substantially ahead of schedule, in keeping with a fourth quarter start-up date. The hiring of personnel is underway with the selection of key area supervisors progressing well. The new mill manager has been hired and is scheduled to report soon to the project. He will work with the metallurgical consultant now on site to begin detailed testwork in the Canatuan lab to refine the flowsheet and ore feed requirements. I was impressed with the experienced personnel I met in this area. This knowledge and early testwork will facilitate a more effective plant startup.
Construction proceeding on the foundation of the ball mill for the sulphide plant
Deconstruction of existing gossan infrastructure in preparation for sulphide operations
Existing gossan plant (note the adjacent construction activities)
Personnel
Most management positions have been hired for the project, but some key positions still remain in the areas of the mine and general management. The manpower market remains tight for good, experienced managers and supervisors as jobs are being offered for local and overseas employment. Even our current employees are receiving competing offers and the Company must remain diligent on keeping the employees they have hired so far.
Mine and Geology
Senior geological and mining personnel are currently being interviewed to augment the Canatuan team. Two young mining engineers are currently on site and are preparing the mine plans under the direction of the General Manager.
Sulphide Tailings Dam
Work has commenced on the construction of the first lift of the dam at the sulphide tailings impoundment area. Materials for the core and random fill have been sourced and tested. A plus is the close proximity of these materials to the damsite, requiring only a limited haulage distance. The filter sand is of high quality and much has been stockpiled near the damsite ready for use. Adequate allowance for rain delays appears to have been scheduled. An international consultant is being sourced for the quality control monitoring of the dam construction, consistent with previous practice.
Panoramic view of the sulphide tailings dam
Construction activities proceeding on top of the sulphide tailings dam
Construction activities proceeding on top of the sulphide tailings dam
Road to Port and Port Area
The road from Canatuan to the Santa Maria port is being upgraded and is currently passable with transport trucks. For the portion from Canatuan to Siocon, the work program contemplates improving side drainage and the installation of culverts in key areas. 3500 cu. meters of gravel have been used to resurface the road so far and more is needed in softer areas. Topping and crowning of the road will begin as equipment becomes freed up from the dam construction. Management estimates that about 500 tonnes per day (“TPD”) are transported on days that they haul sand from the riverbed. As well, about 50 TPD of supplies and bus traffic to Siocon pass along the road. Anticipated usage following startup of concentrate production at Canatuan is well within the current usage rate of the road. For the portion from Siocon to Santa Maria port, a concrete surfaced road is being constructed by the national government and is expected to be ready for use by October 2008. At the port, TVIRD has plans to construct a covered, secure warehouse area for dry concentrate storage. It is anticipated that the concentrates will be transported in 1T bags to facilitate handling and reduce spillage (protect the environment). The two metre tides are not anticipated to cause a loading problem.
Road upgrading and rehabilitation operations
Security
Industrial and personal security has been maintained at site. Plans have been announced for continuing civilianization of the security force that protects the site and the community. The personnel currently provided by the military will be converted to standard industrial security and the coverage of the national and municipal police will be extended into the area consistent with regional development elsewhere in the country. The local situation remains peaceful and supportive, but diligence is required.
Health and Safety
The presence of a full time doctor augments the medical staff and protective programs of regular testing and treatment of people have reduced the incidents of infectious diseases to a very low level. As construction begins, further medical staff and facilities are required to maintain compliance with national regulations. With the resumption of construction strict attention to safe work practices is to be maintained in an effort to keep the incident rate at a low level as it was during the gossan operation. The current plant managers are trained and versed in the safety requirements. Of note, however, is the news that the doctor at the Siocon hospital has left and that Siocon residents outside the mine area are planning to travel to seek medical assistance at Canatuan. This could strain the capacity of our medical facilities. Plans are in place to assist Siocon to attract a suitable doctor for their hospital.
The Canatuan medical clinic
Environment
Canatuan operations and the construction project are reported to be “In Compliance” with the dam construction permit in place and the Company has applied for the permits to operate the sulphide plant. The gossan dam water and that of the upper and lower tailings dams are regularly tested and contain “zero cyanide” measured as free cyanide and available for discharge to the environment. Water behind the sulphide tailings dam is collected and periodically discharged as construction proceeds. It also contains zero free cyanide and permittable levels of base metals with a pH of 6.8, within the range for discharge. Siltation and slumping of the waste dumps and road slopes require attention and there is a plan to address these issues as equipment returns to the site. With no operations, no spills have been reported at the plant site. Potable water at the plant site and Malusok is provided by reverse osmosis and chlorination systems. Both systems are working satisfactorily. Water qualities of the impact communities are being monitored.
Panoramic view of the gossan tailings dam
Gossan tailings dam
Community Relations/ Social Development
One of the biggest changes I noticed at Canatuan was the progress of the relationship between the Company and the local and regional communities. In the meetings I attended, I was aware of a more mature and trusting relationship that has developed; some of it because of the plant shutdown and tightening of expenditures. Now that the Sulphide Project construction is underway there is a spirit of optimism and cooperation.
I was impressed by the growth of the education facilities and the number of teachers, initially hired by TVIRD, and now accepted and managed by the Department of Education through a mutual sharing and development process. It was also gratifying to see the pride in the eyes of the recipients of the TVIRD’s scholarships for higher education. Sanitation and water facilities continue to improve in the communities with the help of TVIRD’s social programs. Roads to the impact communities are being upgraded by TVIRD to provide them with access to the markets with their produce.
The Council of Elders is the group of Indigenous Peoples who are effectively managing and planning for the future of their communities. The group has developed in capacity and cohesiveness and works together with the Company in an open and cooperative manner. During the meeting with them there was open support expressed for TVIRD’s development of the Sulphide Project.
TVIRD through its social development programs has created an envelope of support around its Canatuan project. I heard from a visiting government official that TVIRD, throughout the Philippines, is held as an example of how mining companies should work with communities.
TVIRD constructed spillway across the Pisawak River
View of the existing open pit
Certain information set out in this report constitutes forward-looking information. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Forward-looking statements are based upon the opinions of the preparer of this report as at the effective date of such statements. Although the preparer of this report believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the preparer can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties (known and unknown) that could cause actual outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as the volatility of prices for precious metals and base metals, commodity supply and demand, fluctuations in currency and interest rates, inherent risks associated with the exploration and development of mining properties, ultimate recoverability of mineral reserves, timing, results and costs of exploration and development activities, availability of financial resources or third-party financing, new laws (domestic or foreign), changes in administrative practices and changes in exploration plans or budgets. Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this report and such forward-looking statements should not be interpreted or regarded as guarantees of future outcomes. Forward-looking information respecting the timing of Sulphide Project start-up operations at Canatuan, is based upon progress made to date on the construction activities at Canatuan, advice received from third-party contractors with respect to the timing of various components of the construction project, prior experiences of management with construction activities at Canatuan, the current development plan for Canatuan and the Company’s current budget and overall strategy for Canatuan, which plans, budget and strategy are all subject to change. Forward-looking information respecting the timeframe for ongoing rehabilitation activities at Canatuan are based upon rehabilitation activities carried out to date at Canatuan, the current rehabilitation plan for Canatuan and the Company’s current budget and overall strategy for environmental rehabilitation at Canatuan, which plans, budgets and strategy are all subject to change. The forward-looking statements of the preparer of this report contained in this report are expressly qualified, in their entirety, by this cautionary statement. Various risks to which the Company is exposed in the conduct of its business (including exploration activities) are described in detail in the Company’s Annual Information Form for the year ended December 31, 2007, which was filed on SEDAR on March 27, 2008 and is available under the Company’s profile at www.SEDAR.com.