GOLD AND PRECIOUS METALS — TVX Gold forges ahead with gold projects in Greece

— Updated and final feasibility studies expected in third quarter

In many European countries, mining is perceived in terms that might best be described as dated, and this perception is posing challenges for Canadian companies seeking to develop operations there. TVX Gold (TVX-T) found this out when it attempted to develop the Olympias and Skouries gold projects in northeastern Greece.

The Toronto-based gold producer faced considerable opposition to the project on environmental grounds, even though the dormant mine was once an important employer in the historic mining region.

Efforts to alleviate public concerns are paying off, the company reports, and support is now coming from all levels of government and from local groups. Local relations have improved since the company hired a Greek mining executive born in the region, though opposition to the Olympias project is still being encountered in the nearby village of Olympiada.

While those public consultations continue, TVX is forging ahead with feasibility studies for Skouries and Olympias. A bankable feasibility study for Skouries is expected in the third quarter, along with an amended final feasibility study for Olympias. The reports are expected to upgrade about 7 million contained ounces of resources into reserves, and confirm the economic viability of the project.

TVX believes Olympias can be constructed for US$250 million, before European Union grants of up to US$70 million. Initial annual production is expected to average 225,000 oz. gold, based on daily throughput of 2,750 tonnes. The total cost per ounce is anticipated to be less than US$125, after byproduct credits. The mine life is estimated at 14 years, or longer if more ore is found at depth.

Capital costs for Skouries are estimated at less than US$300 million (also before EU grants of US$70 million or more). Initial production would be about 275,000 oz. gold annually, with total cash costs of less than US$100 per oz. after copper byproduct credits. The mine would operate for 20 years based on current resources — possibly longer if extensions to the deposits are confirmed at depth and to the southeast.

TVX still faces a legal challenge in Ontario concerning its Greek property.

Three individuals have sued the company, claiming breach of fiduciary responsibility and misuse of confidential information. TVX denies the allegation.

On the financial front, TVX earned US$568,000 in the first quarter, compared with a loss of US$342,000 in the same period in the previous year.

The company’s share of gold-equivalent production was 106,900 oz. (87,000 oz. gold and 909,000 oz. silver) in the first quarter, compared with 86,200 gold-equivalent ounces a year earlier. The cash cost per gold-equivalent ounce was US$210 this year, and US$237 a year ago.

TVX expects to produce 330,000 oz. gold and 11 million oz. silver this year at a total cash cost of less than US$200 per oz. The company hedges both gold and silver production from its mines in North and South America.