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Issue 20, May 30, 2008 Customer Service 1-800-528-0559

Geovic Mining (GMC, TSX) A World Class Cobalt-Nickel Play

Geovic has been one of my top picks since it started trading because of its stellar economics and the fact that it is perhaps the only primary cobalt resource in the world.

Since my coverage of Geovic began, the price of Cobalt has skyrocketed from under $30 and is now hovering around its all time high of $50. Nickel is currently trading in the $12 per pound range.

Once production starts Geovic is forecasting an impressive internal rate of return (IRR) of 56% with a 2 year pay back based on 40% equity and 60% debt financing, giving after tax cash flow (discounted at 8%) of $704 million. Average operating costs during the first 19 years of production are estimated at $3.12 per pound of saleable cobalt, net of nickel byproduct credits.

These statistics are based on $20 cobalt and $12 nickel.

Cobalt Prices are Forecasted to Stay Strong Short Term

By the time Geovic starts production in late 2010, the price of cobalt and nickel will have a dramatic influence of the company?s ultimate success. The market at large had been forecasting a dramatic drop in cobalt?s price over the next two years based on significant new supply coming on-stream from three major projects emanating from the Democratic Republic of the Congo (DRC).

Though the assumed cobalt price used in the Geovic?s final feasibility study may be conservative, there is good reason to believe that cobalt prices may stay a lot higher then previously forecasted. Over the next two years, $30 may be the support price, well above the recent historical 3 year price of $21.17.

Credit Suisse stated in a recent report that these new projects in the DRC are being delayed due to a lack of electricity needed to get these new plants fully operational. The report points out that ?unless a radical investment in the countries vast hydro potential is fast tracked? the necessary power requirements do not appear to be in place.

This is a major issue in the DRC.

One of the biggest developing mines in the world right now is Freeport-McMoran?s Tenke Fungurume project in the DRC. This mine has 10% of the global copper reserves and more than half the cobalt. Over the first ten years of production this mine is forecasted to produce 18 million pounds of cobalt and 250 million pounds of copper.

Freeport owns 57.75% of the mine while Lundin Mining owns 24.75% and Gecamines, Congo?s state-owned copper producer owns the remainder. However the DRC have now decided they want a bigger piece of Tenke, raising their stake to 45% from 17.5%.

So even if the power issues can be resolved, another bigger concern is if Freeport will decide to slow or even halt the Tenke project because of their smaller vested interest. A similar situation arose last year when Camec had ownership problems with the DRC government. Their Luita project was halted for a year.

Delays from all three of the DRC?s cobalt projects have already reduced a projected 22,000 tonnes of cobalt from the market over 2008 and a projected 24,000 tonnes in 2009.

Unless the power supply issues and the Tenke ownership situation are resolved in a timely fashion in the DRC, higher cobalt prices may continue to be the norm when Geovic starts production. This would be an added windfall for investors.

Meanwhile, almost next door in politically stable Cameroon, Geovic Cameroon (GeoCam), 60% owned by Geovic Mining Corp. (GMC,TSX), is quietly developing the world?s largest primary cobalt deposit without fanfare or fuss?

Cameroon

Cameroon is one of those countries most people couldn?t identify on the map and that?s because nothing bad ever happens there to warrant our attention. Located in West Africa, the country is politically and economically stable. They are also receptive to foreign investment. Aside from this cobalt deal, Exxon Mobil is building a billion-dollar pipeline in Cameroon which is a testament to the confidence in the government and the stability of the country.

The Properties

Despite raising almost $100 million in the last two years, Geovic and its Nkamouna deposit (pronounced ka-moon-ah) have not yet hit industry radar screens. Moreover, the Cameroonian government and local investors own 39.5% of GeoCam - so the risk of dramatic changes in government demands appears relatively low.

The Nkamouna deposit is the first of seven deposits to be developed. It has proven and probable compliant reserves of 54 million tonnes. Production is slated to start in Q3 of 2010. Immediately north of the Nkamouna deposit is the Mada deposit which has a 43-101 resource of 145 million tons. Both these deposits are undergoing more drilling and we can expect updated resource estimates by December of 2008.

In addition there are five other deposits, so this project will be around for a long time ? beyond anyone?s lifetime!

The unique characteristics of the cobalt make this project a world class deposit:

The cobalt mineralization in Cameroon is higher grade then any other laterite cobalt deposit in the world. The cobalt itself has large grains which are unusual. Given the unique structure of the cobalt and the ease of mining it, the ore is increased by a factor of 3 by using low cost mining methods which triples the rate of return for the company and the net present value.

After processing the course concentrate on site, the end product would be pure enough to send directly to a battery manufacturer or other industrial user.

13 Years in the Making

The management group is a low-key, roll-up-your-sleeves team of geologists and mining engineers based in the small city of Grand Junction, Colorado ? about 300 kilometers west of Denver. Founder Bill Buckovic is a geologist who spent years trekking through the world?s jungles searching for a world-class mineral deposit. In Cameroon he found what was known to be a mediocre nickel occurrence, but one which contained five times the cobalt grade of other laterites. Given his firm belief in cobalt?s outlook, he acquired exploration rights to these properties in the mid 1990s, and financed the original private company for $15 million through friends and family for 10 years before going public in late 2006. Bill didn?t take a salary for several years.

And now, with the mine permit in place, and construction ready to begin, Geovic continues to quietly move towards creating value for shareholders and project stakeholders. Geovic will be an overnight success at one point ? one that was at least 13 years in the making.

Conclusion

There is no research coverage on Geovic by any securities firm in North America or Europe, where its capital has been raised. It is not even mentioned as a comparable in cobalt statistics issued by brokerage firms and mining companies. Geovic seldom appears in mining trade publications. And even though Nkamouna is scheduled to produce approximately 7% of the world?s cobalt supply starting in late 2010, the company is almost invisible.

Geovic?s low profile is certainly not due to project economics. The internal rate of return (IRR) is the standard measure of profitability for a mine. Most mines go into production with a 20% IRR, so given Geovic?s projection of an IRR of 56% with a two-year payback period, this investment looks extremely impressive.

Geovic is the type of stock you can buy now while it?s cheap and ride up in the years ahead as the cash flow and production start to build.