TVI Pacific Inc. (TSE:TVI)

[ChuckD-MSB]

Note from Rhonda:

Below is a link to an updated valuation by our friends at Goldminerpulse based on TVI’s in situ gold and silver. This valuation does not include copper. Also a correction should be noted that the updated Balabag 43-101 is expected mid-late August, not October/November as noted. An update on the Balabag internal feasibility study and mine development decision will be out in the shorter term.

Fair Market Valuation Summary - 2011-May-24
Projected fair market stock price for TVI Pacific Inc. at the close of trading on 2011-May-24 was C$0.21. The actual closing stock price was C$0.07.

Note: An updated NI43-101 report for Balabag is expected in the October/November timeframe. Based on the September news Positive Results From Balabag Gold Project Drill Program, which detailed gold grades from 1.49 g/t to 14.01 g/t and silver grades of 49.18 g/t to 315.07 g/t, over excellent true widths ranging from 3.64m to 7.32m, the expected NI43-101 report (October/November) has a high probability of yielding a very significant increase in the company's total in situ gold and silver with a resultant significant increase in fair market valuations presented in this report.

Read Full Report Here...



Estimating TVI Pacific Fair Market Valuation

By Dennis Boyko
Created on: February 4, 2010
Current version 0.50: September 14, 2010 -- added a note for the expected Balabag NI43-101 update and anticipated impact.
Metrics have been updated with closing prices available on 2011-May-24.
Fair Market Valuation Summary - 2011-May-24

Projected fair market stock price for TVI Pacific Inc. at the close of trading on 2011-May-24 was C$0.21. The actual closing stock price was C$0.07.

Note: An updated NI43-101 report for Balabag is expected in the October/November timeframe. Based on the September news Positive Results From Balabag Gold Project Drill Program, which detailed gold grades from 1.49 g/t to 14.01 g/t and silver grades of 49.18 g/t to 315.07 g/t, over excellent true widths ranging from 3.64m to 7.32m, the expected NI43-101 report (October/November) has a high probability of yielding a very significant increase in the company's total in situ gold and silver with a resultant significant increase in fair market valuations presented in this report.

At the close of trading, the current and projected Market Capitalization per ounce of Gold Equivalent for TVI Pacific Inc., were:

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current market valuation: US$55.57 per ounce of Au Eq.
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projected fair market valuation as a gold producer: US$227.04 per ounce of Au Eq.
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TVI Pacific Inc. in situ metal value is approximately 40.3% from gold and 28.5% from silver with the rest from copper and zinc.
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The projected fair market capitalization per ounce of gold equivalent has been set at 70% of valuation on the Gold Producer Valuation line to discount copper and zinc metal values.

The expected valuation change is outlined in the chart below. The market capitaliztaion per ounce of gold equivalent for TVI Pacific is expected to increase from the February 3, 2010 valuation to the projected valuation (projected valuation is 70% of what the valuation would have been on the Gold Producer Valuation Line. That is, the Gold Producer Valuation line is defined by the market fundamentals of Agnico-Eagle (86.5% gold and 9.6% silver) and Kinross (92% gold and 2.9% silver) both of which have around 90% of the in situ metal value from gold and silver.

TVI Pacific Valuation Change Estimate

Projected fair market stock price for TVI Pacific Inc. is derived using the projected fair market valuation at start of production of US$227.04 per ounce of Au Eq (as derived above) and the following assumptions:

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Risk Premium: 20% applied to the capital expenditure to bring the Balabag property into production. This blog assumes Base Case 1, as detailed on p. 6 of 212 in SCOPING STUDY OF THE BALABAG PROJECT
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Discount Factor: 5% -- set to cover account for the time gap of Balabag coming on line. This figure is set at just 5% since the Canatuan mine, which is larger, is already in production.

The discounting of the future gold metal prices after the start of production are already fully accounted for in the Gold Producer Valuation Line which is derived from current day market prices and company fundamentals.

Discussion

The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.

The discounting applied to TVI Pacific Inc. is consistent with the discounting the current market applies to Yamana Gold (YRI on the valuation chart). Yamana's in situ metal value is approximately 33% from gold and the rest from copper and other base metals. As a result, Yamana (YRI) falls well to the left of the Gold Producer Valuation Line in the current market.

http://www.goldminerpulse.com/blogs/tvi-pacific-valuation.php