TVX Gold Inc. - Cash Cost of $168 Per Ounce and Production Cost of $262 Per Ounce Highlight Year to Date Performance At TVX

Business Wire, August 12, 1999

TORONTO--(BUSINESS WIRE)-August 12, 1999-- TVX Gold Inc. reported net earnings of $6.0 million for the second quarter of 1999, compared to net earnings of $2.4 million in the same quarter a year ago.

The $6.0 million realized in the quarter includes a one-time net gain of $4.2 million from the completion of the TVX-Normandy transaction. TVX's share of production from its five joint ventures was 132,300 gold equivalent ounces for the period and 275,200 for the six months ended June 30, comparing favourably with the 114,400 gold equivalent ounces produced for the same quarter in 1998 and the 221,300 ounces produced for the first six months of 1998. Cash cost for the period was $176 per ounce and $168 for the first half of the year against $188 and $198 achieved in the corresponding 1998 periods. Production cost per ounce was $274 for the second quarter and $262 year to date, compared to $289 and $300 realized for the respective periods in 1998.

Revenue and operating cash flow were $46.5 million and $25.0 million, respectively, in this quarter, versus $40.0 million and $14.3 million in the corresponding quarter last year. Year-to- date June 30, revenue stood at $87.6 million while operating cash flow was $28.5 million.

Metals prices realized in the second quarter were $397 per ounce of gold and $4.20 per ounce of silver, after accounting for the impact of deferred revenue of $106 per gold ounce and loss of $0.90 per silver ounce, compared to $372 and $4.70, respectively, in the corresponding 1998 period. For the six months ended June 30, realized metals prices were $405 per ounce of gold and $4.30 per ounce of silver after accounting for the impact of deferred revenue.

Eike Batista, Chairman, President and Chief Executive Officer said: "TVX has achieved strong 1999 year-to-date results in a difficult gold market environment. These results reflect the quality of our underlying assets. We have implemented broad-based cost reduction and cash preservation programs given the changed business conditions. The programs have substantially reduced monthly costs in Greece and the 1999 general corporate administration and overhead costs should be significantly less than in 1998. We also plan to capitalize on the technical strengths of our new partner in the Americas, Normandy Mining Limited, with a continued view to minimizing cash costs per ounce. We are well positioned to move forward with a revitalized balance sheet that benefits today from having $162 million in cash of which $125 million is available at the corporate level."

TVX-Normandy Mining Transaction -------------------------------

Prior to the end of the quarter, TVX formed a business partnership with Normandy Mining Limited creating a dynamic gold player in the Americas. The transaction became effective July 1.

The TVX-Normandy business partnership will actively pursue new opportunities in the Americas. Its assets will include, directly or indirectly, interests in TVX's five existing producing gold mines: La Coipa in Chile (50%); Crixas (50%) and Brasilia (49%) in Brazil; New Britannia (50%) and Musselwhite (32%) in Canada; along with TVX and Normandy's exploration projects in the region. Accordingly, after June 30, TVX's interest in each of the operations was reduced by approximately 50%. Prior to the completion of this transaction, the mines were forecast to produce approximately 509,000 gold equivalent ounces at an average cash cost of $175 per ounce sold in 1999. Post transaction, TVX Gold revised its 1999 forecast production to approximately 375,000 gold equivalent ounces.

As a result of the transaction, TVX's proven and probable reserves will contain approximately 9.5 million ounces of gold equivalent while total resources are estimated to contain 15.7 million gold equivalent ounces. At year-end 1998, TVX Gold's proven and probable reserves were estimated to be 12.4 million gold equivalent ounces and total resources were estimated to be 20.0 million gold equivalent ounces.

The TVX-Normandy business partnership provided TVX with cash proceeds of $211 million of which $187 million was derived from Normandy's ownership in the assets contributed by TVX and $24 million from Normandy's purchase of 17.8 million TVX treasury shares at Cdn$2.00 per share. The transaction resulted in a net accounting gain of $4.2 million which includes gains and losses based on the individual mines respective book values, a portion of deferred revenue and restructuring charges.

By purchasing the TVX treasury shares, Normandy became the second largest shareholder of TVX behind Chairman, President and CEO, Eike Batista. With this purchase, the aggregate number of issued and outstanding TVX shares increased to 179.6 million shares. Mr. Robert Champion de Crespigny, Executive Chairman of Normandy Mining, was elected to the TVX Board of Directors at the company's June 16 Annual Meeting.

The transaction also furnishes TVX with mechanisms for financing any acquisition by the new entity for up to three years. Normandy has also provided TVX with a $150 million line of credit, of which $100 million is available for general corporate purposes and $50 million for funding requirements in the Americas, or such other purposes as may be agreed. TVX agreed to indemnify Normandy for up to $15 million for any potential unidentified environmental liabilities at the five operations that become known within the next six years.