GlobeStar Reports Second
Quarter 2009 Results
(All
dollar amounts are expressed in United
States currency unless otherwise stated.)
Toronto, Ontario August 12, 2009. GlobeStar Mining Corporation (GlobeStar)
(TSX:GMI) today announced key highlights of its financial and operational
results for the three months (the Second Quarter 2009) and six months ended
June 30, 2009 (the First Half 2009). Copies of GlobeStar�s
Second Quarter 2009 financial statements and management�s discussion and analysis
are available on GlobeStar�s website at
www.globestarmining.com and at www.sedar.com.
GlobeStar will hold a conference call at 9:00 a.m. (EDT) on
Thursday August 13, 2009 to discuss these results; call-in details are included
at the end of this release. A short presentation will be made during the
conference call, for which presentation slides will be available on the investor
relations tab of GlobeStar�s website.
Highlights
- GlobeStar completed
another successful quarter of operations and exploration.
- Second Quarter 2009
gross revenues were approximately $17.1 million, operating earnings were
$4.8 million and cash flows from operating activities were $4.6 million.
- First Half 2009 gross
revenues were approximately $31.3 million, operating earnings were $9.6
million and cash flows from operating activities were $9.4 million.
- Cash, including
restricted cash, and accounts receivable totalled approximately $13.4
million as at June 30, 2009 as compared to $10.3 million as at March 31,
2009.
- GlobeStar made its
first scheduled repayment of long-term debt on June 30, 2009 in the amount of
approximately $2.9 million. At the end of the Second Quarter 2009, GlobeStar was in compliance with all covenants,
including completion tests at the Cerro de Maimón Mine, under the senior
debt facility.
- Cash costs during the
Second Quarter 2009 were approximately $1.09 per payable pound of copper
sold after byproduct credits and approximately
$0.92 per payable pound of copper sold after byproduct
credits during the First Half 2009.
- Second Quarter 2009 sales
were approximately 6.2 million pounds of copper, 1,700 ounces of
gold and 139,000
ounces of silver. First Half 2009 sales were
approximately 12.6 million pounds of copper, 3,200 ounces of
gold and 305,000
ounces of silver.
- An initial phase of
exploration drilling northwest of the Cerro de Maimón open pit has
intersected sufficient sulphide and oxide mineralization to require a
follow up drill program to define possible additions to the current ore
reserve.
- Ongoing drilling in the Bayaguana gold-copper district has intersected narrow
(less than 2 metres
wide) sulphide horizons that have assayed up to 4% copper and minor
precious metals. Drilling will continue in this prospective area until at
least the end of 2009.
Second
Quarter 2009 Financial Statements
GlobeStar�s Second Quarter 2009 results reflect the commencement
of commercial production at the Cerro de Maimón copper-gold-silver mine and
related facilities (the Cerro de Maimón Mine) on January 1, 2009. Consequently,
there are no comparable operating results for the second quarter of 2008.
Results
of Operations: During the Second Quarter 2009, GlobeStar
sold approximately 10,300 tonnes of copper concentrate plus dor��
bars containing gold and silver. Gross revenues from the sale of concentrate
during the Second Quarter 2009 totalled approximately $16.4 million while the
sale of gold-silver dor�� produced gross revenues of
approximately $0.7 million.
Refining,
treatment, freight and other marketing-related charges totalled approximately
$2.7 million and operating expenses were approximately $7.0 million during the
Second Quarter 2009.
Cash
costs per payable pound of copper sold were approximately $1.63 before byproduct credits and $1.09 after byproduct
credits. These cash costs include mine site operating costs as well as
smelting, refining, freight and royalty charges related to marketing the copper
concentrate.
Operating
earnings were approximately $4.8 million after amortization and depletion of
$2.5 million. A net loss of approximately $4.2 million resulted from the $7.1
million unrealized loss on the fair value of GlobeStar�s
copper, gold and silver hedges during the Second Quarter 2009. The value of the
hedges declined primarily due to the increase in the price of copper during the
quarter.
The
following condensed Statements of Loss outline the financial results of
operations during the Second Quarter 2009 and the First Half 2009.
|
Statements
of Loss (in U.S.
$millions)
|
Three Months Ended
June 30, 2009
|
Six
Months Ended
June 30, 2009
|
|
Gross revenues
|
17.1
|
31.3
|
|
Refining,
treatment and other charges
|
(2.7)
|
(5.0)
|
|
Net revenues
|
14.4
|
26.3
|
|
Operating expenses
|
(7.0)
|
(12.3)
|
|
Amortization & depletion mineral properties
|
(2.6)
|
(4.4)
|
|
Operating earnings
|
4.8
|
9.6
|
|
General & administrative expenses
|
(1.5)
|
(2.7)
|
|
Amortization
and exploration property write downs
|
(0.1)
|
(0.3)
|
|
Interest
|
(0.6)
|
(1.1)
|
|
Derivative & exchange losses: realized
|
(0.6)
|
(0.3)
|
|
Derivative loss: unrealized
|
(7.1)
|
(13.3)
|
|
Income tax recovery
|
0.9
|
0.7
|
|
Net loss
|
(4.2)
|
(7.4)
|
The
realized prices for copper, gold and silver sales during the Second Quarter
2009 were $2.33 per pound, $975 per ounce and $14.73 per ounce, respectively. These
realized prices compare with the average London Metal Exchange copper price and
the average gold and silver prices as published in Metal Bulletin during the
Second Quarter 2009 of $2.12 per pound for copper, $922 per ounce for gold and
$13.72 per ounce for silver. The realized prices incorporate the expected
forward prices for the month of settlement. As at June 30, 2009 GlobeStar had approximately 2.9 million pounds of copper
sales priced for July settlement.
Statements
of Cash Flows: Cash flows from operating activities were approximately
$4.6 million during the Second Quarter 2009 and the first scheduled repayment
of long-term debt of approximately $2.9 million was made on June 30, 2009. Pursuant
to the requirements of GlobeStar�s senior debt
facility with Nedbank, the debt reserve account was
fully funded during the Second Quarter 2009 in the amount of $5.6 million and GlobeStar was in compliance with all covenants under such
facility at the end of the Second Quarter 2009.
Exploration
expenditures were approximately $0.6 million during the Second Quarter 2009
with activities focused on diamond drilling in the Bayaguana
gold-copper district and IP geophysical surveys in the vicinity of the Cerro de
Maimón Mine. Geological mapping was ongoing in both of these areas throughout
the quarter. During the Second Quarter 2009, 10 diamond drill holes totalling 1,750 metres were
drilled at the Cerro de Maimón Mine at a cost of approximately $0.2 million.
Expenditures
on sustaining capital projects and construction related to completing the water
ponds at the Cerro de Maimón Mine were approximately $1.4 million during the
Second Quarter 2009.
The
following condensed Statements of Cash Flows outline GlobeStar�s
cash flows during the Second Quarter 2009 and the First Half 2009.
|
Statements
of Cash Flows (in U.S.
$millions)
|
Three Months Ended
June 30, 2009
|
Six
Months Ended
June 30, 2009
|
|
Cash
flows from operating activities
|
4.6
|
9.4
|
|
Repayment
of long-term debt
|
(2.9)
|
(2.9)
|
|
Funding
of debt reserve account
|
(5.6)
|
(5.6)
|
|
Exploration expenditures
|
(0.6)
|
(1.0)
|
|
Drilling
at Cerro de Maimón Mine
|
(0.2)
|
(0.2)
|
|
Sustaining capital expenditures
|
(1.4)
|
(2.2)
|
|
Other
cash flow items including proceeds from pre-commercial production sales
|
1.8
|
3.2
|
|
Increase (decrease) in cash
|
(4.3)
|
0.7
|
Balance
Sheet Data: Cash, including restricted cash, and accounts receivable
were approximately $13.4 million at June 30, 2009, an increase of $3.1 million
during the Second Quarter 2009. Saleable metal inventories were approximately
$1.5 million at June 30, 2009 versus $1.0 million at March 31, 2009. The amount
outstanding on GlobeStar�s senior debt facility with Nedbank totalled $42.2 million at the end of the Second
Quarter 2009 after making the first scheduled repayment of $2.9 million on June
30, 2009.
|
Balance
Sheets (in U.S.
$millions)
|
As
at 30Jun09
|
As
at 31Mar09
|
|
Assets
|
|
|
|
Cash including restricted cash
|
9.4
|
8.1
|
|
Accounts receivable
|
4.1
|
2.2
|
|
Product inventory
(at cost)
|
1.5
|
1.0
|
|
All other assets
|
104.2
|
107.5
|
|
|
119.2
|
118.8
|
|
Liabilities & Equity
|
|
|
|
Accounts
payable and accrued liabilities
|
8.2
|
6.2
|
|
Long-term debt
|
42.2
|
44.6
|
|
All other liabilities
|
6.8
|
2.0
|
|
Equity
|
62.0
|
66.0
|
|
|
119.2
|
118.8
|
Operating Results
A summary
of the operating results for the three months ended March 31, 2009 (the First
Quarter 2009) and the Second Quarter 2009 are outlined in the following tables.
During the Second Quarter 2009, the mine and sulphide plant operated
satisfactorily, however, the tonnes of ore processed are lower than budget due
to higher than expected moisture content in the ore and bottlenecks in the
flotation section of the sulphide plant. Plans are being implemented to
increase the sulphide ore throughput during the remainder of the year.
The
following table outlines the sulphide plant�s operating statistics during the
First and Second Quarters of 2009.
|
Sulphide Plant
Operating Statistics
|
Three Months Ended
June 30, 2009
|
Three Months Ended
March 31, 2009
|
|
Sulphide ore processed (tonnes)
|
98,000
|
103,000
|
|
Copper grade
|
3.2%
|
3.9%
|
|
Gold grade g/t, Silver
grade g/t
|
1.0,
59
|
1.0,
87
|
|
Copper, gold & silver
recoveries
|
84%,
31%, 50%
|
86%,
45%, 67%
|
|
Copper concentrate
produced (tonnes)
|
10,500
|
12,500
|
|
Copper in concentrate
(pounds)
|
5.9
million
|
7.6
million
|
|
Gold
& silver in concentrate (ounces)
|
1,000,
93,000
|
1,600,
192,000
|
During
the Second Quarter 2009 the oxide plant�s performance improved while processing
approximately 50,000 tonnes of oxide ore versus 34,000 tonnes during the First
Quarter 2009. Gold production, however, was lower than budget due to lower than
budgeted head grades and lower than design tonnages due to high clay content in
the ore which caused material handling difficulties. Steps are being taken to
elevate gold production levels during the remainder of the year by increasing
the cut-off grade of the gold ore processed in the mill and increasing
throughput.
The
following table outlines the oxide plant�s operating statistics during the
First Quarter 2009 and Second Quarter 2009.
|
Oxide Plant
Operating Statistics
|
Three Months Ended
June 30, 2009
|
Three Months Ended
March 31, 2009
|
|
Oxide ore processed (tonnes)
|
50,000
|
34,000
|
|
Gold grade g/t, Silver
grade g/t
|
1.1,
17
|
1.3,
65
|
|
Gold & silver
recoveries
|
80%,
54%
|
84%,
35%
|
|
Gold produced (ounces)
|
1,460
|
1,200
|
|
Silver produced (ounces)
|
14,400
|
25,000
|
Cerro de Maimón Exploration
At the
Cerro de Maimón Mine the initial phase of exploration drilling northwest of
the open pit was completed in July 2009 after drilling approximately 2,133 metres in 13
diamond drill holes. This drill program intersected sufficient sulphide and
oxide mineralization to require a follow up drill program, currently scheduled
to commence in September 2009, to define possible additions to the current ore
reserve.
Bayaguana Exploration
GlobeStar�s Bayaguana district consists
of 72 square kilometres of mineral concessions located approximately 60 kilometres east of
the Cerro de Maimón Mine and hosts three geologically important copper and
gold deposits. The largest mineral deposit is Doña
Amanda which has a NI-43-101 compliant inferred mineral resource estimated at
128 million tonnes grading 0.31% copper, 0.19 grams of gold per
tonne and 1.43 grams
of silver per tonne at a cut-off grade of 0.15% copper.
GlobeStar�s 2009 exploration program has completed geological,
geophysical and geochemical surveys in the eastern portion of the Bayaguana district and has drilled approximately 2,170 metres in 9
holes in La Palma East
area. Partial assays have been received from three drill holes where sulphide
mineralization has been encountered in narrow (less than 2 metres wide) horizons
which have assayed up to 4% copper and minor amounts of gold and silver.
These
geologically encouraging results have resulted in a continuation of the drill
program in the Mariposa area located northwest of La Palma East near the Doña Loretta mineral deposit which has a NI-43-101
compliant inferred resource of 8.2 million tonnes grading 0.5% copper at a
cut-off grade of 0.25% copper. The drill program is expected to continue until
the end of 2009 and will include exploration at Mariposa, Doña
Loretta, Doña Amanda and then further west to the
Cerro Kiosko deposit.
The Cerro
Kiosko deposit has a NI-43-101 compliant indicated
and inferred resource of 4.9 million tonnes grading 0.98% copper, 2.0 grams of gold per
tonne and 5.1 grams
of silver per tonne at a cut-off grade of 0.35 grams of gold per
tonne. The Kiosko mineral system remains open to the
south and drilling later in 2009 will be directed towards increasing this
resource.
Cumpi�� Hill Nickel Laterite
Deposit
Coincident
with the recent resurgence in the price of nickel, GlobeStar
is evaluating the options available to reinitiate the development of the Cumpi�� Hill nickel laterite
deposit located 4
kilometres from the Cerro de Maimón Mine. Cumpi�� Hill has a NI-43-101 compliant indicated and
inferred resource of 6.2 million tonnes grading 1.5% nickel at a cut-off grade
of 1% nickel containing an estimated 200 million pounds of nickel.
Moblan Lithium Deposit
The Moblan West lithium deposit located 112 kilometres north
of Chibougamau,
Quebec is 60% owned by GlobeStar and hosts a NI-43-101 compliant inferred resource
of 5.3 million tonnes grading 1.5% Li2O at a cut-off grade of 0.43%
Li2O. GlobeStar is currently determining
the most advantageous approach for continuing the development of this important
lithium resource.
2009
Outlook
GlobeStar has used a copper price of $2.50 per pound, a gold
price of $900 per ounce and a silver price of $13.00 per ounce for the second
half of 2009 in
developing this outlook.
Based
upon the actual production and sales history to date GlobeStar
has revised its previously disclosed guidance for 2009 as described in press
releases dated January 13, 2009 and April 8, 2009.
Forecast
of Operating Results: Copper production during 2009 from the
Cerro de Maimón mine is expected to total approximately 25 million pounds from
the processing of 400,000 tonnes of sulphide ore grading on average 3.4%
copper. Gold and silver contained in the copper concentrate is forecast to
total approximately 5,000
ounces and 440,000 ounces,
respectively.
The oxide
plant is forecast to process approximately 200,000 tonnes of oxide ore
producing approximately 7,000
ounces of gold and 113,000 ounces of
silver in dor��.
The
forecast production from the sulphide and oxide plants reflects current
operating practices but GlobeStar is implementing
plans to increase production in both plants as described in the Operating
Results section of this press release.
Forecast
of Financial Results: The following forecast incorporates the
actual realized metal prices for the First Half 2009 and the prices indicated
at the beginning of this section for the second half of 2009. These metal
prices are higher than was incorporated in the previously disclosed guidance
for 2009 as described in press releases dated January 13, 2009 and April 8,
2009.
Gross
revenue from the sale of approximately 24 million payable pounds of copper, 9,000 ounces of
payable gold and 490,000
ounces of payable silver is projected to be
approximately $69 million.
Operating
earnings before depreciation, after $24 million of mine operating costs and $10
million of treatment, refining and freight charges, are forecast at
approximately $35 million. Depreciation is projected to be approximately $9
million.
Net
income, after $5 million of general and administrative costs, $17 million of
derivative losses, $2 million of interest costs and $2 million of taxes, is
forecast at approximately $nil for 2009.
Cash flow
from operating activities is projected to be approximately $30 million. Exploration
and sustaining capital expenditures are forecast to be approximately $3 million
each. Debt and tax payments are projected to be $12 million and $3 million
respectively. Working capital adjustments, proceeds from pre-production sales
and other cash flow items are forecast at approximately $1 million. The net
increase in cash for the year is projected to be approximately $8 million with
year-end cash balances, including restricted cash, totalling approximately $11
million.
Conference
Call Details
GlobeStar will host a conference call on Thursday August 13,
2009 at 9:00 a.m. (EDT) to discuss these results. The conference call may be
accessed by dialing 1-888-789-9572 in North
America or 1-416-695-7806 internationally. Please dial in the
participant pass code 3375201. The archived conference call can be accessed by
following the instructions in the investor relations tab on GlobeStar�s
website.
A short
presentation will be made during the conference call and the presentation
slides will be available in the investor relations tab of GlobeStar�s
website at www.globestarmining.com.
About GlobeStar
GlobeStar Mining Corporation is a Canadian based mining and
exploration company producing copper, gold and silver at its Cerro de Maimón
Mine in the Dominican
Republic. GlobeStar
maintains a listing on the Toronto Stock Exchange (symbol: GMI).
A.E.
Olson, M AusIMM, GlobeStar�s
Senior Vice President and COO and a Qualified Person as defined under Canadian
National Instrument 43-101, supervised the preparation of and verified the
technical information contained in this release.
Contact:
GlobeStar Mining Corporation
|
David
Brace
Chief Executive Officer
Email: dbrace@globestarmining.com
Tel: (416) 640-4915 (direct)
|
Dave Massola
Chief
Financial Officer
Email: dmassola@globestarmining.com
Tel: (416) 868-6678 Ext: 4034
|
Tel: 416-868-6678 �Fax: 416-868-6467 www.globestarmining.com
18 King Street East, Suite 900,
Toronto, Ontario,
M5C 1C4
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