New gold mine in Chile will boost TVX output

Not only is Consolidated TVX Mining (TSE) determined to be a low-cost producer, but the Toronto- based firm has designs on becoming the largest gold-mining company in South America.

TVX, whose share of gold output from mining projects in Brazil in 1987 equalled about 22,000 oz, is hoping to increase that total to almost 300,000 oz by 1991 in large part through a 49% interest in the La Coipa gold-silver project in Chile, which is expected to be in production early in 1989. (Annual production at La Coipa is expected to total 140,000 oz gold.)

The company forecasts its share of gold output from all projects will be 56,000 oz this year, 145,000 oz in 1989 and 167,000 oz in 1990.

President Ian Telfer told shareholders at the recent annual meeting that while the company’s gold production cost is expected to be $200(US) per oz this year, that figure will drop to $150 once La Coipa is in operation.

Chairman Eike Batista announced at the meeting proven reserves at La Coipa have jumped to a gold equivalent of about 5.7 million oz, with the deposit open in all directions. Large mill planned

A mill capable of processing 1,100 tons per day is being built at La Coipa, which was formerly explored by Consolidated Gold Fields. By 1991, plans call for a 16,500-ton-per-day mill to be in operation at the site.

(TVX obtained its 49% interest in La Coipa through its acquisition of a 49% interest in Selsted Investments, which is incorporated in Great Britain. TVX shareholders gave formal approval to the acquisition at the annual meeting.)

During the first quarter of 1988, TVX recorded earnings of $2.85 million (10 cents per share) compared to a net loss of $1.2 million (7 cents per share) for the same period in 1987. The company’s share of gold production during the quarter from its various projects totalled 11,200 oz.

For 1987, the company reported a net loss of $25.9 million ($1.25 per share). The loss was attributed to a write-down of $26 million, which included $6 million for the company’s almost 20% interest in Golden Shield Resources (TSE), an equity investment Telfer said TVX has up for sale.

To finance La Coipa, a $60 million(US) loan was arranged. At the annual meeting, shareholders approved creation of Class A special shares to be issued in conjunction with the La Coipa acquisition. The non-voting A shares are convertible, on a one-for-one basis, into common shares of TVX.

In addition to the four producing mines in which TVX has an interest, the company lists interests in five exploration projects in Brazil. Telfer said exploration has been suspended on a platinum-palladium property in northern Brazil.

As of May 11, TVX had about 29.7 million shares outstanding. The two major shareholders are Batista, with a 10.9% interest, and an organization known as the Canadian Depository for Securities, with a 37.5% interest.