TVI Pacific comments on implementing a Normal Course Issuer Bid (NCIB) to buy back its shares.

There are two primary reasons why TVI will not be buying back any shares under a Normal Course Issuer Bid.

First, TVI currently does not meet the financial performance measurement tests that allow such a bid to take place. Under the Alberta Business Corporations Act, TVI cannot legally perform a NCIB. Our situation may change with continued positive financial results.

Second, TVI believes that cash flow is better spent reducing our interest expense and expediting our exploration and development projects, and pursuing accretive joint venture or acquisition opportunities within a long-term growth strategy in mind. TVI’s interests are aligned with those of our shareholders and we will continue our efforts towards realizing long-term, fair, sustainable value for our securities.


What are the benefits of the DMC partnership?

Tabingan, Matigdao and Palalian are scheduled for priority follow up exploration including airborne geophysical surveys. Tabingan in particular is interesting in that it has approximately 400 metres of surface exposure and is up to 20 metres thick.

We recently announced we have established a strategic alliance with DACON Corporation’s affiliate DMC-CERI Inc.  DACON a substantial Philippine conglomerate reputed for its extensive holdings in general construction, coal mining, power generation, infrastructure, real estate development and manufacturing (www.dmciholdings.com).

As partner of choice by DMC, we have added substantial operational strength to our capability by involving a major player in the region and country. DMC already has long standing forestry and agribusiness operations in the area and are currently maintaining the roads. With established camps, they are also providing security services in the permit area. By partnering with DMC, the costs on the EXPA 61 exploration project going forward will be significantly reduced.

In addition, they have considerable expertise in moving materials that we believe will be cost effective for us in any new mining operation which could occur if a mineable discovery is made. By partnering with DMC, we also gain the opportunity to participate in a number of very attractive mineral properties around the country, owned by DMC, for which our combined talents could prove mutually beneficial over the longer term. As an example, DMC would like us to consider partnering with them on a very attractive key tenement in the middle of the monster Tampakan project.


How Does the Company Stock Option Plan Work?

The purpose of The Plan is to advance the interests of TVI by encouraging the directors, officers, employees and consultants to acquire Shares.  There are 4 main reasons for this:

1)    Increase the ownership of TVI by the workforce;  

2)    Align the interests of the workforce with the interests of the shareholders;

3)    Encourage retention of valuable employees who directly contribute to the success of the Company; and

4)    Provide additional incentive for employees efforts on behalf of TVI.

One third of the options granted become exercisable one full year after the grant date, and then another third on each anniversary date for the following two years.  This schedule is designed to promote retention and ensures that employee interests are aligned with the shareholders.

Options may be exercised at a price which shall be fixed by the Board at the time that the Option is granted.  No Option shall be granted with an Exercise Price at a discount to the Market Price. The Market Price shall be the closing price of the Shares on The Toronto Stock Exchange on the first day preceding


What is the status of exploration (Tamarok, Balabag, Canatuan near mine, North Zamboanga, etc.)?

Near-term Development

Canatuan Near-Mine Tenements

Exploration to date has identified several mineral occurrences on the surrounding tenements, including the Tabingan, Matigdao, and Palalian prospects, which we believe are compelling exploration prospects. We plan to advance exploration and conduct airborne geophysical surveys over the tenement area as soon as we can.

Through exploration, we hope to find new commercial mineral deposits in the vicinity to further increase the mineral resource and extend the life of the Canatuan Mine by providing new feedstock for the existing facilities. We are focusing exploration efforts on previously-discovered mineralized zones within a fifteen kilometre radius of the main deposit, surrounding and along strike of the mine. These present immediate growth opportunities which will help extend the current mine life.

Balabag

The Balabag gold project is a high priority for us. Based on preliminary exploration results, we believe that the Balabag property has the potential to become a second production centre. We have begun to evaluate development scenarios designed to bring the Balabag project into production, with advanced development work scheduled to begin later this year.

One option under consideration involves the establishment of a “bootstrap” mining operation at Balabag. This alternative involves the construction of a small plant, with limited capital expenditures and relatively low initial throughput that can be ramped up over time into a full scale mining operation using the cash flows generated from operations. The option to construct a Balabag plant in stages would allow us to advance activities with minimum initial capital and to begin production at an earlier date.

High-Impact Exploration

Tamarok and Tapisa

In North Zamboanga, our applications cover almost all the targets identified by a prior exploration program, conducted by a major international company, numbering at least 20 epithermal gold, massive sulphide and porphyry copper-gold prospects. The Tamarok copper-gold project and the Tapisa exploration project are located 60 kilometres north-northeast of the Balabag project. Reconnaissance work carried out to date supports historical findings and has discovered new prospects. Notably, a great deal of the mineralization in these areas occurs right on the surface and is easily accessible to our exploration teams.

The Tamarok Mineral Production Sharing Agreement was signed by the Government of the Republic of the Philippines in Q4 2009.  We plan to conduct geophysical surveys, carry out systematic detailed geological investigations, further delineate drill targets on surface and schedule a diamond drilling program.


What amount of funds will TVI need for its development plan at Balabag?

One option under consideration involves the establishment of a “bootstrap” mining operation at Balabag. This alternative involves the construction of a small pilot plant, with limited capital expenditures and relatively low initial throughput that can be ramped up over time into a full scale mining operation using the cash flows generated from operations. The option to construct a Balabag plant in stages would allow the Company to advance activities with minimum initial capital and to begin production at an earlier date.


What is the security situation like in the vicinity of the Canatuan Mine and the Company’s properties?

The security and safety of our employees and our communities is a high priority for us. We have experienced no incidents at the mine site since we started production in 2004. We are comfortable with the level of security in place and will continue to be very diligent in this regard.


Will TVI continue to generate the same level of cash flows over the life of mine?

As we mine through the copper rich portion of the ore body and start getting into the copper-zinc zone as expected, the ability to separate and monetize the zinc will result in additional revenue – from the zinc. We have initiated construction on an additional flotation circuit to separate and monetize the zinc. Our overall revenues are dependent on volatile metal prices. In addition, as the orebody is mined, overall grades will decrease, thereby decreasing the amount of concentrate produced from the same volume of rock. Our plan to offset this is to increase daily throughput which will increase the amount of concentrate produced. Our goal is to keep the cash flow as steady as possible.

Three months ahead of schedule, construction of the Zinc Circuit began on October 28, 2009, and is expected to be fully operational by late April 2010. Copper concentrate production will continue at a rate of approximately 5,000 tonnes per month while the zinc circuit is designed to produce approximately 1,000 tonnes per month of zinc concentrate


What does TVI plan to do about its debt?

We have engaged a Manila-based private investment and advisory firm to assist in efforts to refinance the Term Facility, which was negotiated and implemented in late 2008 and early 2009 when access to capital was severely limited. Tight credit markets resulted in elevated financing costs. There can be no assurance that our efforts to refinance the Term Facility will be successful or that additional financing will be available on terms acceptable to us.

Although our free cash flow is more than sufficient to service the current interest, advisory fees and principal payment schedule, we believe that securing lower-cost alternatives to the current facility would better enable us to accelerate growth plans.


How does TVI plan to address its capital structure (consolidation/buy-back)?

There is no current plan to address our capital structure. While we realize that the optics of so many shares outstanding is not ideal, cash flow per share is the same whether there are 500 million or 100 million shares outstanding. We will consider a restructuring as opportunities present themselves but will likely not consider it as a stand-alone activity. History has proven that share rollbacks, by themselves, often result in a drop in value for the security.


How does the Company intend to improve its share price?

If you are reading this, then you will be on our new and improved web site. We have initiated a new investor communication strategy and expect to see fair valuation for our share price through continuous marketing, timely information flow and proactive broker and analyst relationships. We are working diligently in this regard.


Who is the Advisor and why are their fees so high?

As we have previously indicated, are not able to confirm the identity of the advisor, as it is subject to confidentiality restrictions covering various elements of the Advisory Agreement. We have confirmed the applicability of those confidentiality restrictions in discussions with our outside legal counsel. Although we are subject to legal restrictions on our ability to identify the advisor in communications with shareholders and others, we can confirm that the advisor is not (i) a member of the TVI Pacific management team or its Board of Directors or (ii) affiliated with any member of the TVI Pacific management team or its Board of Directors.


Why did TVI choose to enter the loan agreement with LIM rather than seeking a more advantageous deal?

On January 20, 2009, when universal credit and capital markets were frozen, we signed a US$30.1 million five-year term loan facility agreement and converted the previous bridge financing facility into a term loan on February 6, 2009. In connection with the execution of the Term Facility, we issued, to the Lenders, share purchase warrants in the capital of TVI and paid a fixed arrangement fee in the amount of US$195,000. There was no other financing option available at the time. The alternative was to face insolvency. We were very pleased to get the financing.


Will TVI be able to meet its financial obligations in the coming periods?

We fully expect that we will be able to meet our future obligations. Although our free cash flow is more than sufficient to service the current interest, advisory fee and principal payment schedule, we believe that securing lower-cost alternatives to the current facility would better enable us to accelerate growth.

We continue to produce copper concentrates for shipment every four weeks. Over the past three quarters, we have been able to increase efficiencies and throughput at the Canatuan Sulphide Project, resulting in declining unit production cash costs. For the three months ended September 30, 2009 alone, the Company realized free cash flows of $11.6 million. We define free cash flows as operating cash flow before changes in non-cash working capital less capital expenditures on property and equipment.


Is TVI planning to raise further funds and, if so, how?

We plan to evaluate additional value enhancing joint venture or acquisition opportunities as well as consider raising additional capital in the future to finance the exploration and development of our diverse portfolio of mining properties and land positions. We have no current plans to do equity financing.


Will the Company pay a dividend now that you’re in production?

There are no plans to offer a dividend. We believe that returning cash flow to the current operation, development and exploration programs will result in a higher rate of return for our shareholders in the long run.


What is TVI’s future growth plan?

• We began construction of the Zinc Circuit in October 2009, three months ahead of schedule. We anticipate the Zinc Circuit to be fully operational by late April 2010 which will monetize the zinc component of the deposit for added revenue streams.
• We plan to advance development on the Balabag gold and silver project. We will be completing an optimization plan to use a “bootstrap” development strategy. Social and environmental baseline studies are currently underway along with additional metallurgical testing.
• Exploration activities will ramp up in the Canatuan Near-Mine Tenements. There are various tenements owned by us which are within a 15 km trucking distance to the Canatuan plant. These present immediate growth opportunities which will help extend the current mine life.
• We expect the Mineral Production Sharing Agreement to be signed by the Government of the Republic of the Philippines in Q4 2009. Following the signing, exploration activities will resume on the Tamarok-Tapisa porphyry copper-gold prospect.
• We are currently reviewing new opportunities, especially those that have low initial capital requirements, have long lives, and can be put into production quickly, resulting in near term cash generation.

Will the Company seek out joint venture / amalgamation opportunities?

We are considering strategic alliances or joint ventures with other mining companies to benefit from economies of scale. There can be no assurance that any of the current discussions will result in further investments in the Company or that the consideration of strategic alliances and joint ventures will lead to the establishment of relationships with third-party mining organizations. We have an open door policy in this regard and will consider all opportunities presented to us.


Will TVI seek opportunities outside of the Philippines?

One of our competitive advantages is that we have operated successfully in the Philippines since 1994. Our team has a history of delivering projects on time and under budget. The risks inherent with attempting to operate in a country where we have limited or no experience presents a risk factor that may be too high. All opportunities presented will be given a fair evaluation, however, it is unlikely we will pursue projects outside the Philippines at this time.