has also
put out its Q1 earnings, the first full quarter
of production from Cerro de Maimón. The
headline number was a loss of US $3.2
million, but here again that was after
unrealized losses of $6.2 MM in the hedge
book. The operating earnings were $4.7
million and the quarter closed with cash and
receivables of $10.3 million, which is
comfortably ahead of the $9.4 current portion
of the debt load given the cash cost was
$1.23 per pound of copper in Q1, or $0.75
per pound after byproduct credits. The
slower start for the gold circuit could mean
further reduction in the net copper cost base,
though it should be noted gold is hedged at
$800 per oz per the loan requirements.
In a nutshell, we continue to view GMI as
very comfortably priced. The 4 cent per
share operating net during its first quarter of
production, in a weak quarter for copper’s
price, marks it as a lower cost copper
producer. Globestar continues its
exploration near the mine site, and we
continue to view this as important to its
potential revaluation. A significant gain to
the project’s reserve base could be enough
to see the valuation jump, and there is room
for a take-over bid already on table.