Mr. Cliff James reports

TVI'S PHILIPPINE AFFILIATE JOINT VENTURE NEARS COMPLETION OF DEFINITIVE FEASIBILITY STUDY ON AGATA NICKEL PROCESSING PROJECT

Agata Processing Inc., a joint venture of TVI Pacific Inc.'s Philippine affiliate, TVI Resource Development (Phils.) Inc., expects to complete by the end of 2014 a definitive feasibility study for a nickel processing plant at the Agata project located in northern Mindanao, the Philippines. API is a joint venture company in which TVIRD has the right to earn a 60-per-cent interest upon the delivery of the DFS. The proposed nickel processing plant will use a proprietary and innovative combination of two proven technologies that aim to achieve maximum nickel recovery at low operating and initial capital cost.

"Completion of the DFS is a critical milestone for TVIRD as the proposed nickel processing plant would produce nickel at low costs and receive feed from the same mining site as the current high-iron/low-nickel direct shipping ore operation, creating notable cost savings and operational synergies," stated Cliff James, chairman, president and chief executive officer of TVI Pacific and chairman of TVIRD. "Additionally, the completion of this study will support TVIRD's efforts to secure a listing on the Philippine Stock Exchange, the achievement of which could substantially enhance its investment value for TVI shareholders."

Current direct shipping ore operations are focused on the upper zone of the Agata laterite orebody, which consists of an upper high-iron/low nickel zone (ferruginous limonite zone), an intermediate high-iron/medium-nickel zone (limonite zone), and a lower low-iron/medium-high-nickel zone (saprolite zone). The proposed nickel processing facility would process ore from the lower limonite and saprolite zones and produce a mixed hydroxide product with approximately 40 per cent nickel content, which would be sold to the stainless steel market under offtake agreements.

Process innovation

The process technology that TVIRD has been developing will revolutionize the way nickel laterites are processed in the industry. Currently, the most common technology used is high-pressure acid leach, a process which generally requires intense upfront capital expenditures of over $1-billion. To avoid such high capex, TVIRD has engineered a two-stage process involving an initial atmospheric tank leach process and a secondary low-pressure acid leach process. Combined, the capex for this two-stage process in a modular plant that is capable of producing 7,000 tonnes of nickel equivalent product per year is expected to range between $150-million to $200-million, a substantially lower cost, while having the same anticipated low operating costs as HPAL. More precise figures will be announced upon the completion of the DFS.

While both the ATL and LPAL processes on their own are well understood and proven technologies -- ATL is used as a stand-alone process for nickel laterite and copper oxide operations and LPAL is commonly used in zinc processing -- this would be the first time the two processes are combined in this order for the processing of nickel limonite and saprolite ore.

It is expected that the DFS will be completed by the end of the year.

DFS methodology and progress

The DFS scope of work was separated into two components: (1) a Philippine in-country component for items such as port, infrastructure, mining, residue storage and water supply; and (2) a process plant and acid plant component.

The in-country component was conducted by Philippine-based engineering companies as well as the TVIRD project team to ensure that this part of the scope is integrated optimally with the DSO project to increase operational and cost-efficiency. Work completed to date includes the design of: (i) a management plan that aims to integrate a staged backfill plan with proposed mining stages while enabling progressive rehabilitation of mining areas to take place; (ii) a leached ore storage facility for the containment of residue generated from the ATL processing facility; (iii) a brine management system which would treat brine solution from the processing plant for safe discharge into the ocean through a subsea diffuser according to the release requirements of the Department of Energy and Natural Resources; and (iv) a water conveyance system to provide a dedicated water supply to the operation.

The process plant and acid plant component was designed by the Beijing General Research Institute of Mining & Metallurgy and a prominent Chinese acid plant supplier, respectively. TVIRD selected BGRIMM to complete the process plant design due to its reputation as an international Chinese engineering company well experienced and recognized as a leader in nickel processing research with access to premium quality, cost-effective Chinese process equipment. The impact of this selection will be significant as approximately 80 per cent of the project capital cost is related to the process and acid plants. The relationship with BGRIMM is further supported by its previous work on the project, as announced in news on March 19, 2014, which involved extensive bench- and pilot-scale testing. As such, testwork seamlessly flowed into flow sheet development, process design and engineering, and cost estimation with the same technology partner.

To date, process and acid plant engineering has been completed. This design culminated in a 3-D model of the plant, with select static 3-D images available for viewing on TVI Pacific's website. Vendor quotations for all equipment have been received and integrated into the overall plant capital calculations. All raw materials and reagent requirements have been determined and vendor quotations obtained. This, together with other items such as labour costs, has been compiled to provide the process and acid plant operating cost. Both capital and operating costs are in line with previous indicative expectations.

Future plans

Once the DFS has been completed, TVIRD will move into detailed plant design and construction. The financing of plant construction, engineering, site development and procurement are planned for 2015 with plant construction and commissioning expected to proceed the following year.

An indicative MHP offtake agreement has been received from BGRIMM. The MHP pricing from this proposed agreement has been used as the basis for the nickel product pricing in the economic model of the project.

Qualified person

Mike Bue, BScEng, MEng, PEng, technical adviser and project advisory group member of TVI and a member of the Professional Engineers of Ontario and Canadian Institute of Mining and Metallurgy, is the qualified person under National Instrument 43-101 who has approved the scientific and technical information in this news release.

Mr. Bue is supported in his role by Vincent Smith, MSc, chemical engineer, project metallurgist, who has over 20 years of experience in metallurgical process development, operations and design across 50 mine sites encompassing 15 countries and was previously the group technology manager for ENK PLC, a nickel laterite development and production company in the Philippines.

About the Agata nickel processing project

The Agata nickel processing project is held by API, a joint venture company in which TVIRD has the right to earn a 60-per-cent interest upon the delivery of a definitive feasibility study, subject to TVIRD having expended a minimum of $2-million within 12 months of the date of the Agata processing option and joint venture agreement signed on Sept. 24, 2012, and completing the definitive feasibility study within four years of the date of the API agreement. As of Sept. 30, 2014, TVIRD has completed its requirement to spend a minimum of $2-million and has earned 45 per cent of shares in API, which remain in escrow until satisfaction of other requirements.

The project is located in Agusan del Norte province, within the Surigao mining region on the island of Mindanao, Philippines. The Surigao region is a major nickel producing region providing ore to processing plants in Australia, China, Korea and Japan.

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