RE: News.Strong 2009/Stronger 2010/Nickel Wildcard2009 was a very strong year for GMI which commenced commercial production at its wholly-owned Cerro de Maimon copper-gold-silver mine and related facilities (collectively, the "Cerro de Maimon Mine") on January 1, 2009.
Highlights
- Gross revenues for the fourth quarter of 2009 were approximately $26.5 million, operating earnings were $13.3 million and cash flows from operating activities were $7.1 million.
- For the year ended December 31, 2009, gross revenues were approximately $78.5 million, operating earnings were $31.7 million and cash flows from operating activities were $23.9 million.
- Cash, restricted cash and accounts receivable totalled approximately $24.4 million as at December 31, 2009, as compared to $5.9 million as at December 31, 2008.
- Cash costs per payable pound of copper sold1 during 2009 were approximately $1.58 before byproduct credits and approximately .81 after byproduct credits.
- GlobeStar made its quarterly scheduled repayment of long-term debt on December 31, 2009 in the amount of approximately $2.7 million, and was in compliance with all covenants under the debt facility as of that date.
- The 2010 exploration program is underway, with a focus on advancing the Moblan West lithium project in Northern Quebec, continuing the drilling in the immediate vicinity of the Cerro de Maimon Mine and following up on targets previously identified in the Bayaguana district in the Dominican Republic.
........Operating earnings for the Company's first year of commercial production totalled $31.7 million, after deducting operating expenses of $26.2 million and amortization and depletion of $10.1 million.
..........The unaudited cash and restricted cash totalled approximately $16.3 million at December 31, 2009, an increase of $3.6 million during the fourth quarter of 2009. The amount outstanding on GlobeStar's senior debt facility with Nedbank totalled an unaudited $37.5 million at the end of the fourth quarter, after making the scheduled quarterly repayment of $2.7 million, including accrued interest, on December 31, 2009.
The Guidance for 2010 is as follows............
.... Total production from the Cerro de Maimon Mine in 2010 is forecast at approximately 24 million pounds of copper, 15,000 ounces of gold and 480,000 ounces of silver.
......The sulphide plant is forecast to produce approximately 24 million pounds of copper, 6,000 ounces of gold and 380,000 ounces of silver in concentrate during 2010. The oxide plant is expected to produce approximately 9,000 ounces of gold and 100,000 ounces of silver in precipitate which will be smelted and refined into dore bars.
.......Production costs, including treatment, refining and shipment charges to market are forecast to be approximately
.95 per pound of payable copper after byproduct credits. Treatment and refining charges are expected to be in line with the 2010
Taken together, GMI will have gross sales in 2010 of about $105 million , which will generate operating earnings of about $60 million or about
.59 per share.
This , at peer trading multiples , is eqiuivalent to a fair valuation of about $3.50 per share on expected 2010 copper production.
There are other pluses as well...........the lithium project continues to advance......but perhaps the big wild card on the upside is the possibility that recently high nickel prices will start development and production of its laterite nickel deposit which is just 10 km from Xstrata's nickel smelter in the DR.
That event would double the above fair value target..