GobiMin Announces Third Quarter 2010 Results

TSX-V: GMN

(Expressed in United States dollars except where otherwise indicated)

TORONTO, Nov. 18 /CNW/ - GobiMin Inc. (the "Company" or "GobiMin") reports its financial and operating results for the third quarter of 2010.  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

	3 months ended September 30, 2010			3 months ended September 30, 2009			Changes
Cash and cash equivalents	$47 million			$76 million			-38.45%
Cash and cash equivalents per share^(1)	$0.69			$1.11			-37.52%
Revenue	$-			$-			-
Net earnings/(losses)	$1.1million			($0.8 million)			>-100%
LBITDA ^(1)	($0.7 million)			($0.6 million)			16.93%
Basic earnings/(losses) per share	$0.016			($0.012)			>-100%
Diluted earnings/(losses) per share	$0.016			($0.011)			>-100%
LBITDA per share^(1)	($0.011)			($0.009)			19.48%

(1)

As non-GAAP measurements, LBITDA, LBITDA per share and Cash and cash equivalents per share do not comply with GAAP 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 GAAP.

Business Summary and Development

(a)     Gold Project in Xinjiang

The Company, through a wholly owned subsidiary, entered into an agreement with Xinjiang Baodi Mining Company ("Baodi") and a subsidiary of Brigade No. 2 of Xinjiang Bureau of Geology and Mineral Resources ("Brigade No. 2") to form a joint venture company, Xinjiang Tongyuan Minerals Ltd. ("Tongyuan"), in China to develop and operate the Sawayaerdun Gold Project in Xinjiang, China. GobiMin owns a 70% equity interest in Tongyuan while Baodi and Brigade No. 2 each own a 15% interest. Tongyuan has obtained the related mining license and has also applied for an exploration license for the surrounding area of 20.27 km² for further exploration and development. The Gold Project is located 200 km northwest of the city of Kashi, western Xinjiang, China and lies within the Tian Shan Gold Belt, which is one of the most promising gold belts in China.

Of the 22 known areas of identified mineralization based on the exploration works carried out before GobiMin's acquisition of the Gold Project, Zones I, II, IV and XI have been recognized as relatively large scale mineralization and Zone IV has been intensively explored and recognized as the most substantial mineralization. Based on the previous findings, GobiMin extended the detailed exploration works in the northern part of Zone IV above the elevations of 3,200 m and conducted general exploration on the deep part of the Zone IV gold vein, Zones I, II and XI, so as to determine the extension of banded vein, comprising numerical vertical/inclined drilled holes, trenches, and horizontal shaft/tunneling.

The main exploration works carried out this year include 35 drill holes with a total length of about 6,800 m and 33 trenches of approximately 1,350 m.  The NI 43-101 technical report is expected to be available early next year and results of the drilling and sampling programs will be announced in due course. Currently, all exploration work on the Sawayaerdun Gold Project is being suspended in preparation for winter, and will resume next year.

(b)     Coal Project in Xinjiang

On February 9, 2010, GobiMin acquired an indirect equity interest of 24.49% in the Balikun Coal Project in Xinjiang, China and participates in its management and operations.  GobiMin and its partner jointly have a controlling interest in the project through Xinjiang Ruide Mining Limited. According to a NI 43-101 Mineral Resource estimate prepared by Scott Wilson Ltd. in February 2010, the Balikun Coal Project hosts 38 million tonnes of coal in Measured Resources and 50 million tonnes in Indicated Resources. The power and water supply facilities and boiler for heating supply have been installed and are in operation. 

(c)     Silver Operations

In 2009, GobiMin acquired a 49% equity interest in China Precision Material Limited ("China Precision") which engages predominantly in silver trading. China Precision buys physical silver ingots from producers and sells them directly to end consumers. All its positions are hedged and it is not exposed to market price movements. In order to increase the vertical spectrum of the silver business, China Precision has developed an upstream silver business by establishing a small processing workshop in Hong Kong for transforming the silver into more variety of product forms. To increase product variety and profit contribution, GobiMin will continue to source and explore new business opportunities with potential partners in this sector.

(d)     Base Metals Exploration Projects in Xinjiang

GobiMin currently owns equity interests in 4 base metals exploration projects in Xinjiang, China including nickel, copper, lead and zinc projects. 

GobiMin owned a 40% indirect equity interest in another joint venture which is engaged in exploration and development of the Yanxi Copper Property. On April 13, 2010, GobiMin entered into a framework agreement to dispose of a 32% interest in the Yanxi Copper Property located about 115 km south of the city of Hami in Xinjiang, China.  The Company has completed the reorganization to form a new holding company ("Holdco") to hold 80% equity interest in Xinjiang Tongxing Minerals Limited ("Tongxing") and entered into a Share Transfer Agreement on July 14, 2010 to dispose of the 100% equity interest in Holdco. The transaction was completed on July 22, 2010 and GobiMin has received all the cash consideration and the first lot of convertible notes. After the mining license of the Yanxi Copper Property is granted, the Company shall receive the final lot of convertible notes and the net proceeds receivable by GobiMin is about HKD60.48 million (CAD8.16 million). Pursuant to the Share Transfer Agreement on July 14, 2010, should the mining license not be granted by December 31, 2010, GobiMin guarantees to refund to the buyer all the consideration received and in return, the buyer shall transfer the interest in the Holdco back to GobiMin.  The Company and the buyer are in the course of negotiation of a supplemental agreement to allow for more time to obtain the mining license. A press release shall be published once the terms of the supplemental agreement are finalised. The related gain on the disposal shall be recognised by the Company upon obtaining the mining license.  GobiMin currently retains an 8% indirect equity interest in the Yanxi Copper Property. 

For the remaining exploration projects, the Company will continue to conduct pre-survey and exploration to identify potential mineralization.

(e)     Investment Opportunities

The Company ceased to have its substantial mining operations in Hami, Xinjiang of China following the disposal of two operating subsidiaries in February 2009.  With a cash balance of $47 million, the Company will keep on searching for potential investment opportunities.

(f)     Normal Course Issuer Bid

On January 26, 2010, GobiMin has renewed its normal course issuer bid to repurchase up to an additional 3,412,865 common shares for a further one year period.  The normal course issuer bid will expire on January 31, 2011.  Up to September 30, 2010, a total of 1,860,500 common shares were repurchased for an aggregate cost of CAD1,522,455 ($1,473,664).  For the period from October 1, 2010 to November 18, 2010, a total of 716,500 common shares were repurchased at an aggregate cost of CAD603,609 ($582,543).  All shares repurchased were returned to treasury for cancellation.

Outlook

The NI 43-101 technical report of Sawayaerdun Gold Project is expected to be available early next year and further drilling program will be carried out during 2011. Upon receipt of the NI 43-101 report, the Company plans to initiate the feasibility study and mine construction.

For the Balikun Coal Project in Xinjiang, both infrastructure and mining construction are progressing on schedule.  Mine construction is expected to be completed in 3 years.

Under the 2010 buyback programe, a total of 2,577,000 common shares were repurchased at an average price of CAD0.8175 up to November 18, 2010.  The management believes that the extension of the normal course issuer bid this year have helped to enhance our shareholder value.  The share buyback program makes desirable use of our cash reserves and will continue to positively impact the earnings per share.

GobiMin continues to assess new growth opportunities in China and overseas with the objectives of bringing significant value to its shareholders in the years ahead and becoming a highly profitable and diversified mining company.

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.  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 the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release."

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