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August 24, 2007
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GobiMin Earns Record $5.4 Million in Second Quarter
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TORONTO, ONTARIO--(Marketwire - Aug. 24, 2007) -
(Expressed in United States dollars except where otherwise indicated)
GobiMin Inc. (the "Company" or "GobiMin") (TSX VENTURE:GMN) is pleased to announce net earnings of $5,356,978 or $0.075 basic earnings per share for the second quarter of 2007, compared to net earnings of $878,687 or $0.016 basic earnings per share for the second quarter of 2006. The unaudited interim consolidated financial statements along with management's discussion and analysis have been filed with SEDAR (www.sedar.com) and are also available at the website of the Company (www.gobimin.com).
Financial Summary Increase
Quarter ended Quarter ended on
June 30, June 30, quarterly
2007 2006 basis
$ $ %
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Revenue 9,752,563 3,549,385 175%
Net earnings (loss) 5,356,978 878,687 510%
EBITDA(1) 6,582,676 1,488,685 342%
Basic earnings per share 0.075 0.016 369%
Diluted earnings per share 0.073 0.014 421%
EBITDA per share(1) 0.096 0.026 269%
Cash and cash equivalents
per share(1) 0.501 0.157 219%
YTD ended YTD ended Increase
June 30, June 30, on
2007 2006 YTD basis
$ $ %
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Revenue 20,029,145 5,893,519 240%
Net earnings (loss) 9,962,008 1,156,870 761%
EBITDA(1) 12,585,629 2,273,641 454%
Basic earnings per share 0.146 0.021 595%
Diluted earnings per share 0.142 0.019 647%
EBITDA per share(1) 0.184 0.041 349%
Cash and cash equivalents
per share(1) 0.501 0.157 219%(1) As non-GAAP measurements, Operating cash flow per share, Cash and cash equivalents per share and EBITDA do not comply with GAAP and, therefore, the amounts presented in the above table may not be comparable to similar data presented by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Financial Highlights
During this quarter, the Company increased its production, maintained its low cost position and continued the development of its nickel/copper property Yellow Mountain while generating record profits and cash balance.
Financial highlights in the second quarter of 2007 are:
- Record quarterly revenue of $9.8 million, an increase of 175% over the $3.5 million in Q2 2006.
- Revenue of the first six months of 2007 reached $20 million, exceeding the total revenue of the year of 2006.
- Gross margin was 72.8%, compared to 56.2% in Q2 2006.
- Record quarterly $5.4 million net income, compared to $0.9 million in Q2 2006, an increase of 510%.
- EBITDA for the quarter jumped 342% quarter over quarter to $6.6 million.
- Basic earnings per share in this quarter increased to $0.075 from $0.016 in Q2 2006, despite a 26% increase in number of shares over the comparative period in last year.
- Cash profit margin increased to $11.60 per pound of nickel compared to $8.43 in Q1 2007 and $3.91 in Q2 2006. Average realized price of nickel concentrate in this quarter was $13.01 per pound.
- Cash position reached a record $36.6 million or $0.501 per share (a non-GAAP measure) while the Company remains debt free.
- Completion of a private placement of 3.45 million shares at C$3.75 per share.
- Application for production development permits filed for its Yellow Mountain nickel / copper property.
Business Summary
Production Growth
Ore mined increased in this quarter to 73,623 tonnes from 50,687 tonnes in the same period of last year, reflecting the Company's annual production plan announced at the beginning of this year. The underground mining production is expected to continue to grow with 2 additional production shafts coming on stream at Yellow Mountain East Mine as planned for 2007 and 2008.
In 2006, the Company increased its milling capacity to accommodate anticipated growth in mining production output from 220,000 tonnes of ore in 2006 to over 400,000 tonnes for 2008.
The Company has started optimizing the current mining shafts at Yellow Mountain East Mine and Xiangshan Mine, by improving the underground operation efficiency and safety standards. The plan includes changing mining equipments, prolonging vertical shafts, upgrading the whole mining system and improving the ventilation system. Aiming to improve GobiMin's mining operation to a higher level, this plan will cover all the seven shafts at Yellow Mountain East Mine and Xiangshan Mine and expects to cost about $3 million. Since the optimization process will have impact on current mining operations, the Company will gradually implement the plan through 2007 and 2008 so as to minimize the impact on ore production.
NI 43-101 Resource Estimate
During this quarter, GobiMin received a National Instrument 43-101 compliant resource estimate from Met-Chem Canada Inc. of Montreal ("Met-Chem") for its Yellow Mountain deposit. At 0.2% cut-off, Indicated Mineral Resources are estimated at 12 million tonnes averaging 0.44% nickel, 0.29% copper and 0.026% cobalt while Inferred Resources total 48 million tonnes averaging 0.42% nickel, 0.27% copper and 0.026% cobalt. The technical report of the resource estimate is filed with SEDAR and can also be found in the Company's website (http://www.gobimin.com/i/pdf/YellowMtn-43-101Report-Jul2407.pdf).
In addition, last year's drilling program showed some high grade intersections within the diorite rock formation at near-surface. This is an indication that the diorite rock is not a barren rock and may represent a potential drilling target. The new discovery of a second structural high grade contact in the diorite rock presents a new interpretation of the geology and provides potential to increase both the size and the grade of the deposit at near-surface.
As a result, GobiMin has recently started a 20,000 meters drilling campaign to:
- Focus on upper 500 meters depth mineralization for an earlier development at near-surface.
- Increase the Inferred Mineral Resource tonnage.
Outlook
Based on the Company's 2007 YTD operation costs, the Company's break even for its cash cost of nickel in concentrate (a non-GAAP measure) is estimated to be approximately $2.60. Therefore although the current nickel market price has widely fluctuated, the management is of the view that the Company should continue to generate strong operation cash flow and net earnings.
The Company has completed a feasibility study prepared by the Xinjiang Non-ferrous Design Institute for the Yellow Mountain nickel / copper property. The Company has filed the feasibility study and applied for the production development permits from government and expects receiving them in the coming months.
Implementation of the optimization process at Yellow Mountain East Mine is under progress and will gradually affect works at the various mining shafts. Full year production is now projected to reach between 280,000 and 300,000 tonnes of ore, as compared to 220,000 tonnes produced in 2006. The ultimate objective of the optimization of the mining plan is to provide continuous production growth until 2010.
GobiMin is actively engaged in discussion with potential partners in the development of Yellow Mountain (aiming production in 2010) as well as forming joint ventures on exploring other quality base metal projects.
Certain statements contained in this press release constitute forward-looking information. Such statements are based on the current expectations of management of GobiMin. The readers are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances or events to differ materially from those projected in the forward-looking information. These risks include, but are not limited to, risks associated with fluctuations in metal prices, risks associated with mining operations including environmental hazards, GobiMin's reliance on key suppliers and on key personnel, the potential for changes in the legislative and regulatory environment in China and other risks and uncertainties detailed from time to time in GobiMin's annual report and other filings with the Canadian securities commissions. The readers should not place undue reliance on the forward-looking information included in this press release given that (i) actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information could prove to be inaccurate. These statements speak only as of the date they are made, and GobiMin assumes no obligation to revise such statements as a result of any event, circumstance or otherwise, except in accordance with law. Additional information about (i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and (ii) the material factors or assumptions, that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information is contained in GobiMin's annual report and other documents filed from time to time with the Canadian securities commissions, all of which are available at www.sedar.com and the Company's website www.gobimin.com.
To receive GobiMin press releases by email, please send a message to info@gobimin.com and specify "GobiMin press releases" on the subject line.
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.
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