Cerro De Maimón mine
Emerging Copper and Gold producer in the Dominican Republic
Message: Commercial Production and Provides 2009 Guidance
| January 14, 2009 |
| RETRANSMISSION: GlobeStar Mining Declares Commercial Production and Provides 2009 Guidance |
| TORONTO, ONTARIO--(Marketwire - Jan. 14, 2009) - (All dollar amounts are expressed in United States currency unless otherwise stated.) GlobeStar Mining Corporation ("GlobeStar") (TSX:GMI) today announced the declaration of commercial production as of January 1, 2009 at its 100% owned Cerro de Maimon copper-gold-silver mine located in the Dominican Republic. The sulphide mill has been producing copper, gold and silver in concentrate at its design capacity since mid-November 2008 and the oxide plant has been in continuous production of gold-silver precipitate since mid-December 2008. Concentrate shipments commenced in early November and have continued on a regular basis through year end. This sustained level of mining, processing and sales activity has resulted in the declaration of commercial production. Fourth Quarter Highlights - Production of approximately 5.1 million pounds of copper; 1,500 ounces of gold and 120,000 ounces of silver in 7,700 tonnes of concentrate. - Shipment of 7,290 tonnes of copper concentrate to smelters in China. - Proceeds received in December 2008 from fourth quarter concentrate shipments totalled $4.8 million, with a further $3.7 million in expected proceeds from fourth quarter shipments to be received in early 2009. - One-half of the 2% net smelter return royalty on the Cerro de Maimon mine was purchased for $1 million. - Copper concentrate inventories in excess of 1,900 tonnes at year end. - Construction of the production facilities was complete at year end except for work associated with the expanded surface water retention pond. Fourth Quarter Production and Shipments During the fourth quarter of 2008, the sulphide plant milled 89,800 tonnes of ore grading 3.5% copper. Copper recoveries in the sulphide mill were 75% during the quarter but averaged over 80% in December 2008 as operations were optimized. Production in the fourth quarter of 2008 totalled approximately 7,700 tonnes of copper concentrate containing approximately 5.1 million pounds of copper; 1,500 ounces of gold and 120,000 ounces of silver. Concentrate grades averaged approximately 30% copper, 5.9 grams of gold per tonne and 465 grams of silver per tonne during the fourth quarter of 2008. Six copper concentrate shipments were made to smelters in China during the period November 6, 2008 to December 23, 2008 totalling 7,290 dry metric tonnes. The oxide plant began operating in mid-December and is currently running at 75% of design capacity due to the higher than expected clay content in the oxide ore. Additional flocculent treatment capacity is being added to the oxide mill circuit to control the higher clay content of the ore and full production from the oxide plant is anticipated by the end of the first quarter of 2009. 2009 Outlook GlobeStar has used a copper price of $1.50 per pound, a gold price of $700 per ounce and a silver price of $9.50 per ounce in developing this 2009 outlook. (See accompanying Cautionary Statements Concerning Forward-Looking Statements.) Copper production during 2009 from the Cerro de Maimon mine is expected to total approximately 29 million pounds from the processing of 475,000 tonnes of sulphide ore grading on average 3.3% copper. Gold and silver contained in the copper concentrate is forecast to total approximately 7,300 ounces and 368,000 ounces, respectively. During 2009, GlobeStar expects to sell a majority of its copper concentrates under sales contracts to overseas smelters. Discussions are underway to finalize the marketing contracts relating to the anticipated production in 2009. The oxide plant is scheduled to process 245,000 tonnes of oxide ore producing approximately 14,000 ounces of gold and 280,000 ounces of silver in dore. Gross revenue from the sale of approximately 27 million payable pounds of copper, 21,000 ounces of payable gold and 614,000 ounces of payable silver is projected to be $60 million. Operating earnings before depreciation, after $24 million of mine operation costs and $11 million of treatment, refining and freight charges, are forecast at approximately $25 million. Depreciation is projected to be approximately $10 million. GlobeStar has hedged a portion of its 2009 production with synthetic put options on 6,322,850 pounds of copper, 32,400 ounces of gold and 480,000 ounces of silver at $2.67 per pound, $650 per ounce and $11.50 per ounce, respectively. Net income, after $5 million in general and administrative costs, $11 million in derivative gains, $2 million of interest costs and $6 million in taxes, is forecast at approximately $13 million. Cash flow from operating activities is projected to be approximately $26 million. Exploration and sustaining capital expenditures are scheduled to be approximately $4 million and $3 million, respectively. Cash out-flows for financing activities are forecast to be $14 million. Exploration expenditures during 2009 will be focused on expanding the ore reserves of the Cerro de Maimon copper-gold-silver mine, drilling in the Bayaguana gold-copper district located approximately 40 kilometres east of the mine, pursuing new exploration and acquisition opportunities in Mexico and Central America, and to a limited extent advancing GlobeStar's nickel properties in the Dominican Republic. Cash balances at the end of 2009 are projected to be $10 million. GlobeStar's net income and operating cash flow are materially impacted by changes in the price of copper. At a copper price of $2.00 per pound, net income and operating cash flow are forecast at approximately $20 million (an increase of 54%) and $32 million (an increase of 23%), respectively. At a price of $1.00 per pound of copper, net income and operating cash flow are estimated at approximately $6 million (a decrease of 54%) and $19 million (a decrease of 27%), respectively. About GlobeStar GlobeStar Mining Corporation is a Canadian based mining and exploration company producing copper, gold and silver at its Cerro de Maimon mine in the Dominican Republic. GlobeStar maintains a listing on the Toronto Stock Exchange (symbol: GMI). A.E. Olson, M AusIMM, GlobeStar's Vice President Projects 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. |
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