TORONTO, ONTARIO--(CCNMatthews - May 22, 2007) -
(Expressed in United States dollars except where otherwise indicated)
GobiMin Inc. (the "Company" or "GobiMin")(TSX VENTURE:GMN) is pleased to report its financial and operating results for the first quarter of 2007. 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 Quarter ended Quarter ended
March 31, 2007 March 31, 2006
$(2) $(2)
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Revenue 10,276,582 2,344,135
Net earnings 4,605,030 278,183
Net cash from operating activities 5,980,516 176,011
Basic earnings per share 7.0 cents 0.6 cents
Diluted earnings per share 6.9 cents 0.5 cents
Operating cash flow per share(1) 9.1 cents 0.3 cents
Cash and cash equivalents per share(1) 32.0 cents 19.6 cents
EBITDA(1) 5,950,956 784,956
(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.
(2) In Dollars unless otherwise indicated.Financial Highlights
Results in this quarter reflect surging ore production from ongoing expansion, higher nickel prices and the production of the new mill. The financial highlights in the first quarter of 2007 are:
- Record quarterly revenue of $10.3 million, an increase of 338% over the $2.3 million in Q1 2006 as ore mined rose 185% to reach 62,610 tonnes.
- Gross margin was 71.8%, compared to 47.8% in 2006.
- Record quarterly $4.6 million net income, compared to $0.3 million in Q1 2006, an increase of over 15 times. Basic earnings per share in this quarter increased to 7 cents from 0.6 cents in Q1 2006.
- Cash cost per tonne of ore, after by-product credits, fell to $14.53 compared to $22.40 in Q1 2006, as a result of increasing production economy scale, higher by-product credits and effective cost control system.
- Cash cost per pound of nickel payable, after by-product credits, remained stable at $1.41 compared to $1.37 in Q1 2006, as favorable nickel price allows the Company to mine lower grade ore. The average realized nickel price in this quarter, net of smelting and refining cost, was $9.84 compared to $3.79 in Q1 2006. Therefore the cash margin increased to $8.43 per pound of nickel, compared to $2.42 in Q1 2006, an increase of 230%.
- Cash flow from operating activities rose to $6.0 million from $0.2 million in Q1 2006.
- Cash position reached a record $22 million.
- Subsequent to this quarter, on May 16, 2007, GobiMin closed a private placement with an aggregate of 3,450,000 common shares at a price of $3.25 (CAD$3.75) for aggregate gross proceeds of approximately $11.2 million (CAD$12,937,500).
Business Summary
Production Growth
Ore mined increased in this quarter to 62,610 tonnes from 21,988 tonnes in the same period of last year, reflecting the Company's recent ability to produce all year round and the new mill starting operation last fall. The production is expected to continue to grow with additional production shafts coming to stream as planned for 2007 and 2008.
Exploration progress at Yellow Mountain property (also known as "Huangshan")
After completing an 18,000-meter Diamond drilling program that aims to support the historical resource estimate, a National Instrument 43-101compliant resource calculation will be released in the second quarter of 2007. The Company is starting another 20,000-meter drilling program which mainly focuses on promising new targets identified at shallow depth.
Strong Cash Position
In the first quarter of 2007, GobiMin's cash balance rose to a record $22 million, mainly due to $6.0 million cash generated from operations and $2.8 million cash from warrant and option exercised. The management expects that the cash balance remains strong in 2007, considering the ongoing operation profits and $11.2 million gross proceeds raised in the private placement in May 2007. This strong cash position allows great financial flexibility to fund its growth.
Outlook
The NI43-101 compliant calculation of resources for the Yellow Mountain property is expected to be completed in the first half of 2007. The Company is in discussion with a large Chinese company to form a potential joint venture for the feasibility study and development of the Yellow Mountain nickel/copper property. No assurance can be given to the success of such discussion.
The Company will be injecting approximately $1.3 million (RMB10 million) into two new joint ventures as announced before and will start exploration work at the zinc and copper projects as soon as exploration licenses are obtained.
The Company is embarking into an aggressive plan to optimize the current mining process at Yellow Mountain East mine. Part of the proceeds from the private placement in May 2007 will be used to purchase mining equipment, to improve efficiency of the underground development work and to increase the production at the mine site.
As a well-established player in the local mining industry, the Company continues to seek opportunities of acquiring quality projects.
Certain statements contained in this press release constitute forward-looking information. Such statements are based on the current expectations of management of GobiMin. You 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 reader 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 were 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 the 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.
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