(Expressed in United States dollars except where otherwise indicated)
TSX-V: GMN
TORONTO, Aug. 23, 2012 /CNW/ - (TSXV:GMN) GobiMin Inc. ("GobiMin" or the "Company") reports its financial and operating results for the second quarter of 2012. The unaudited interim consolidated financial statements along with management's discussion and analysis have been filed with SEDAR (www.sedar.com) and are also available at the website of the Company (www.gobimin.com).
Financial Highlights
| Three months ended | Twelve months ended | Three months ended | |
| June 30, 2012 | December 31, 2011 | June 30, 2011 | |
| $ | $ | $ | |
| Revenue | - | - | - |
| Other revenue and gains | 0.4 million | 0.9 million | 0.2 million |
| Share of results of associates and a jointly-controlled entity | (0.08 million) | 0.5 million | 0.02 million |
| Gain on disposal of an associate | - | 8.8 million | - |
| (Loss)/profit for the period/year | (0.9 million) | 2.5 million | (0.9 million) |
| LBITDA (1) | (1.0 million) | (3.8 million) | (0.9 million) |
| Basic and diluted (losses)/earnings per share |
(0.013) | 0.05 | (0.013) |
| LBITDA per share(1) | (0.017) | (0.06) | (0.015) |
| Cash and cash equivalents | 58.8 million | 62.3 million | 39.8 million |
| Cash and cash equivalents per share | 0.96 | 1.00 | 0.63 |
| Working capital | 50.6 million | 53.2 million | 46.4 million |
| Total non-current financial liabilities | 56,000 | 83,000 | - |
| Total assets | 116.8 million | 120.6 million | 113.7 million |
| Equity attributable to shareholders | 82.4 million | 84.8 million | 78.3 million |
| Equity attributable to shareholders per share |
1.35 | 1.36 | 1.25 |
Note:
(1) As non-IFRS measurements, LBITDA (losses before interest income and expense, income taxes, depreciation and amortisation), LBITDA per share and cash and cash equivalents per share do not comply with IFRS and, therefore, the amounts presented in the above table may not be comparable to similar data presented by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Business Summary and Development
1. Gold Project in Xinjiang
The Group owns a 70% equity interest in Xinjiang Tongyuan Minerals Ltd. ("Tongyuan") which is developing and operating the Sawayaerdun Gold Project in Xinjiang, China.
According to the agreement entered into in September 2009, Tongyuan, committed to acquire the exploration and mining licences of the Sawayaerdun Gold Project at a total consideration of $7,226,126 (RMB45,500,000). Deposits of $6,352,638 (RMB40,000,000) have been paid as at June 30, 2012 and the remaining commitment of $873,488 (RMB5,500,000) are payable upon the completion of the transfer of the exploration and mining licences of the Sawayaerdun Gold Project to Tongyuan. In August 2012, the remaining commitment of $873,488 was paid after Tongyuan has obtained the exploration and mining licences. All the total consideration paid was then classified as exploration and evaluation assets.
Up to the end of June 2012, exploration drillings of about 8,800 meters, including 10 diamond drill holes of 3,000 meters, have been completed. The scheduled exploration drilling program of another 23 drill holes with approximately 21,000 meters is in progress. GobiMin aims to complete approximately 30,000 meters under the drilling programs in 2012.
Along with the above planned exploration programs, GobiMin will continue to pursue the infrastructure construction programs for the mine site.
2. Silver Operation
The Group holds an equity interest of 48.02% in China Precision Material Limited ("China Precision") which engages in metal trading and processing, predominantly in silver.
The Group has made advances to China Precision from time to time to finance its silver inventory. As at June 30, 2012, amounts due from China Precision to the Group amounted to $4.4 million while China Precision had a silver inventory of 5.2 tonnes with a market value of about $4.6 million. The Group recorded interest income of $122,732 on these advances for the six months ended June 30, 2012.
For the six months ended June 30, 2012, China Precision had a net profit of about $360,000, with GobiMin's share amounting to $170,000 compared with $250,000 for the six months ended June 30, 2011.
For the three months ended 30 June 2012, China Precision incurred a net loss of $190,000, with GobiMin's share being $90,000. The loss in this quarter was mainly caused by the net open positions of silver held by China Precision. Most of the positions of China Precision are hedged. However, its products are silver granules and are not deliverable to London Bullion Market Association, which accepts only delivery of silver ingots. These net open positions are normal market practice due to imperfect hedges. The management of China Precision is comfortable with the market fluctuation for its open positions which are limited within 10% of its total hedged positions. Despite the quarterly fluctuations, China Precision has gained back the account loss subsequent to the reporting date hereof.
3. Base Metal Exploration Projects in Xinjiang
(a) Four Exploration Companies
Since 2007 to the end of June 2012, the Group has invested a total of $3,652,767 (RMB23,000,000) as capital in five exploration companies in Xinjiang, including the Yanxi Copper Property, which was disposed of in 2010 at a significant gain, and four exploration companies in Xinjiang, China for nickel, copper, and gold.
The total cost of investment in the four remaining exploration companies amounted to $2,382,239 (RMB15,000,000). In May 2012, the Group received dividend income of $259,540 (RMB1,634,221) from the four exploration companies, thus reducing the cost of investment to $2,122,699. The equity investments as at June 30, 2012 are recorded as $2,093,286 (RMB13,180,580), slightly less than the cost of investment.
GobiMin continues the exploration programs of the projects of its four exploration companies and also actively searches for high quality mining and exploration projects.
(b) Yanxi Copper Property
GobiMin formerly owned a 40% indirect equity interest in Xinjiang Tongxing Minerals Limited ("Tongxing"), which is engaged in exploration and development of the Yanxi Copper Property in Xinjiang, China. The Group entered into a Share Transfer Agreement with China Daye Non-Ferrous Metals Mining Limited ("China Daye") on July 14, 2010 regarding the disposal of 80% of its equity interest in Tongxing. The transaction was completed on July 22, 2010 and GobiMin received all the cash consideration of $7,722,007 (HKD60,000,000) and a first lot of convertible bonds ("CB") of $14,157,014 (HKD110,000,000). After the disposal, GobiMin retains an 8% indirect unlisted equity interest in the Yanxi Copper Property.
Subsequently in August 2012, the Yanxi Mining Licence has been obtained and the final payment of the consideration of $11,454,311 (HKD89,000,000) in the form of the CB has been received from China Daye on August 8, 2012. Accordingly, the deferred gain on disposal will be recognized as gain on disposal of an associate which will be reflected in the interim results for the quarter ending September 30, 2012.
4. Normal Course Issuer Bid
On January 20, 2012, GobiMin renewed its normal course issuer bid to repurchase up to an additional 3,129,814 common shares over a maximum period of 12 months ending January 31, 2013. For the six months ended June 30, 2012, a total of 1,409,000 common shares were repurchased at an aggregate cost of $1,005,979 (CAD1,023,097). For the period from July 1, 2012 to August 23, 2012, a total of 401,500 common shares were repurchased at an aggregate cost of $246,216 (CAD250,406). All shares repurchased were returned to treasury for cancellation.
Management believes that the repurchase by the Company of its own shares can maximise shareholder value and is in the best interest of the Company and its shareholders. A copy of the related Notice of Intention to Make a Normal Course Issuer Bid for 2012 shall be provided to shareholders upon receipt of written request to the Company at its registered office.
5. Working Capital
As at June 30, 2012, the Group has a working capital of about $50.6 million (December 31, 2011: $53.2 million), after netting off its current liabilities of $32.7 million (December 31, 2011: $33.9 million). The working capital is sufficient to support the development of the existing projects and operations, including the Sawayaerdun Gold Project, in the foreseeable future.
Certain statements contained in this press release constitute forward-looking information. Such statements are based on the current expectations of management of GobiMin. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances or events to differ materially from those projected in the forward-looking information. Forward looking information includes without limitation, statements regarding the size and quality of the Company's mineral resources, progress in development of mineral properties, the prospective mineralization of the properties, and planned exploration programs. The reader should not place undue reliance on the forward-looking information included in this press release given that (i) actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information could prove to be inaccurate. These statements speak only as of the date they are made, and GobiMin assumes no obligation to revise such statements as a result of any event, circumstance or otherwise, except in accordance with law.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
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SOURCE: GobiMin Inc.
Felipe Tan, Chief Executive Officer
Tel: (852) 3586-6500
Email: [email protected]
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