UPDATE TVI Q3

TVI report another great quarter.


As expected TVI did a 0,006 per share net profit and this is very good when you have to remember that they are drilling and exploration everywhere possible in the vicinity of Canatuan in a way to increase mine life and keep expenses at the minimum for the short term.

Sure revenues are down compared to last year because of 2 shipments instead of 3.5 (part of one shipment was included in Q3 last year plus 3 regular shipments)

But there are some very interesting points in Q3 reports.

1) Administrative and general cost have decreased by almost 1/3

2) Interest have been reduced by close to 80% due to repayment of shark loan

3) Exploration cost have increased by 800% proving that TVI is working 24/7 to increase mine life

4) They have managed to get operational credit margin at very good interest %. They are building a great credit history with lenders.

5) Their accumulated deficit is now only 2,9M$ and going down every quarter and only about 7,9M in SHORT term debt. That is excellent

6) Still have over 4,4M$ in cash at the end of Q3 BUT TVI is not going to act like a bank. They definitely need the money to drill, explore and then explore and drill. It would not be worthy to accumulate cash to the expense of future growth. It is safe for them to have some (4M$ is largely enough) but more than that could be avoiding them to explore and expand company size. For the same reason do not expect dividend or share buyback at this time.

7) Their Debt to equity is in great shape as is their debt to assets ratio.

But what is interesting investors right now is not what they actually are able to produce at Canatuan but mainly what the next projects are going to be.

They are still working on Balabag. I do not think they are still drilling to find the minimum 50,000 ounces core area but to confirm a lot more interesting area where more than 50,000 ounces exist. They do not need more than the original 50K to start up their bootstrap operations but how about 25% or 50% more…in the same core area. That would be very nice. Oh and by the way do they need a 43-11 to drill and start a bootstrap operation? I do not think so. The 43-101 is needed to allow TVI to mention their confirmed resources not to drill them. Naturally they will provide one sometimes in 2011 to allow them the use of the ‘proven resources’ wording. It they had to go on the market to obtain financing it would be a complete story but that is one the beauty of TVI as they will not need any outside financing to do a bootstrap mine. Initial confirmed resources in 2008 were over 200K ounces and feasibility study was for a full scale gold mine. So the only variable that has changed is the scale of the start-up mine. If they were to go on a full scale, they would probably have to either issue more shares or get some large financing none of which we are interested in at this time.

How about Siennalynn? This area being 4 times larger than actual Canatuan, it could be easily thought that for same quality of ore all around the area it would mean 20 years mine life. Also remember that this new area is almost ready and drilling is already happening there. So what will get out of there? I think it will be great news near the end of Q2 2011 or early Q2 2011.

Zinc could add on some extra cash whenever the correct recipe is found and acceptable results achieve. TVI is not a zinc mining company but why loose it if you can increase copper % and get $$$ for the sub product!

Another surprise could be some interesting results from Dacon jv deal that occurred in January 2010. It has been really quiet on this partnership and whenever it is very quiet it generally means something is coming.

But I think the biggest and more interesting project on a long term scale is Tamarok and drilling will begin in early 2011 as airborne surveys have already begins.

When you look at all these different projects on the table it would be totally unfair to pretend that none of them will be successful.

Remember also that 7 more drills are coming back from the original buyer that desisted himself. So wherever those drills will go they will accelerate their projects.

They will get the zinc separation process right, (this would add up another 10M$ on their yearly revenues and probably another 4-5M$ in net profit)

They will get Balabag up and running (adding another 10-15M$ in revenues and 3-4M$ in net profit)

They will enhance mine life by at least another 10 years with the new Siennalynn project and they have mentioned often it will be stage by stage as the cost of a 43-101 to prove a mine life extension of 10 years at once could be very high But this one could add another 15-20M$ in yearly revenues and 10M$ in net profit one step at the time.

They will explore and drill Tamarok and do not forget that any type of good news on this one alone could mean significant increase in company value and share price. This is the unknown territory and most probably where great share increase could come from. (as a matter of fact share price could come from any great results from any projects they have right now)

Based upon those estimations even if only 1 project was to be successful in 2011, there is no doubt that TVI would increase substantially their gross revenues and net earnings and if Siennalynn, Balabag and Zinc were all to start producing revenues in 2011, the total 2012 expected revenues could be a lot higher than the actual 2010 revenues. Naturally there is always the mines commissioning that could hit some bumps along the road and this is normal but when you look at the possibilities, this is a fast growing company.

They have also definitely shown their ability to deliver and stay on course, control their costs and achieve sustainable profitability.

They have become a very transparent company (I suspect that they are now keeping some surprises instead of being too transparent) and even great companies do not indicate all of what is happening or everything that is negotiated at the time.

They have turned 180 degrees from an almost dead company to a very profitable one (they were able to spend on new projects only since early July 2010 when previous loan was totally paid for and look at what has been already achieved.

They have attract many new investors from OTCQX (remember those 600K to 1M shares transacted in 1 deal at the time) and imagine what would happen if only 1 of them was an analyst from a hedge fund…that being the case they would probably be looking at 7-10 million shares. I do not believe that any of those transactions were done by investors who do not know what they are doing. They know exactly what they are buying and they will take the time to get those shares at the right price and right before TVI starts its next leg up. Now imagine a listing in Honk Kong…

Talking about edge fund accumulating, it is very important to note that we the retail investors that are accumulating shares are doing it when share price is right meaning that we are not rich enough to buy 500K shares at once at the ask price. We will wait and buy them 5 or 10 or 25 thousands at the time then wait for it to come back a little before putting another order. This is the same when we sell. Nobody would do the mistake of putting on sale 1M shares at market bids. So DO YOU THINK edge funds manager are different? NO they will wait and see scooping the good deals on the market. The only way to have them buy the shares at high prices is stop selling them at the actual price that most investors think are too low. But one thing is sure, if those edge funds start accumulating shares of TVI the ask prices will eventually goes higher and the quantity available at cheaper prices will be eliminated. This is a cat and mouse game and patience is most of the time rewarded when you find a great quality company like TVI with a bright future.

Yes there will be some instability in the market but we must not forget that even 5M shares traded in any given day only represents 1% of the total float leaving room for volatility.

May it goes back to 0,10??? Maybe and yes it represents about 25% less than where TVI was 3 weeks ago but it must be clearly understood that investing into TVI (not day trading) is a long term investment that will be lucrative on the long way. Naturally, nobody should resist cashing in some profit when you achieve your profit target. (nobody makes profit by buying stocks, we all make profit when we sell stocks…) but we have to establish goals whenever we buy in stocks and get ready to have some waiting moments and after all that is one of the reason nobody should invest all their eggs in the same basket and keep their portfolio diversified.

But, TVI is a great play in the mining sector and in a very very active area of the globe: Asia.

So this is where we are now: a waiting game where the believers will keep their stock waiting for the next major NR and there are many to coming within the next 2-3 quarters.

For those who believed in TVI some months ago when the share slipped to 0,075: congratulations you have already made a huge profit.

Where will TVI shares be in 1 year from now: your guess is as good as mine but with all those projects in the bank my answer will be :HIGHER…