TORONTO, Oct. 20 /CNW/ - GobiMin Inc. ("GobiMin" or the 'Company")
announced today that it will start a strategic review on the development of
Yellow Mountain nickel/ copper project (the "YM project") due to the recent
dramatic decline of nickel and copper price. At this time, it is uncertain how
long metal price will remain depressed therefore the Company believes that it
is a prudent course of action to preserve cash and temporarily suspend
construction work at the YM Project pending the results and recommendations of
The Company will undertake an extensive and thorough evaluation of the YM
Project to determine if it can reduce capital expenditures by modifying the
mining plan or to reduce risk by attracting a strategic partner.
GobiMin has spent approximately US$26 million in preparation of ground
work, sinking of shafts, water pipeline and power line connections at Yellow
Mountain deposit. The construction work done so far remains essential whenever
construction restarts. The Yellow Mountain deposit remains one of the largest
undeveloped nickel deposits in China.
Strong Cash Position and Debt Free
As of September 30, 2008, the Company had approximately US$35 million in
cash and US$11.7 million of bank loan, which was paid off in October 2008. Net
cash therefore amounted to approximately US$23 million or US$0.32 per basic
share (CDN $0.38). The Company has no long term debt. The suspension of work
at YM Project will allow the Company to preserve its cash while assessing all
All figures are only estimates and are not audited. Net Cash is different
from working capital and is a non GAAP measure.
Continuing Mining operations
The mining operations at Yellow Mountain East Mine and Xiangshan Mine
will not be affected by the suspension of the Yellow Mountain Project. The
Company continues to increase its production by improving the mining and
processing capacity and efficiency. GobiMin remains one of the lowest cost
nickel producer in the industry.
Challenges and Opportunities
In these trying times, challenges and opportunities arise. Management
will also perform an overall review of the prioritization and best allocation
of the Company's financial resources to the YM Project and its other projects,
a) The potential future development of the newly discovered Yanxi
Project using typical low-cost Chinese mining methods. The metal
content, established under NI 43-101 rules, of this shallow deposit
is estimated to be approximately 254 million pounds of copper in
Indicated Mineral Resources with a further 160 million pounds in
Inferred Mineral resources;
b) The potential acquisition of high grade base metals projects which
are currently under geological assessment and negotiation.
GobiMin is a junior mining company with nickel/copper sulphide operations
and development properties in northwestern China. Through its subsidiaries,
Xinjiang Yakesi Resources Co. Ltd. and Hami Jubao Resources Co. Ltd., GobiMin
controls three concessions, within a 10-kilometre radius, totaling 455
hectares. In operation since 1999, GobiMin currently operates two underground
mines (Yellow Mountain East and Xiangshan) and is also currently developing
its Yellow Mountain nickel/copper deposit.
GobiMin also has 40% interest in the newly discovered Yanxi Copper
Deposit in Hami region.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
The release contains certain forward-looking statements. These
forward-looking statements are subject to a variety of risks and uncertainties
beyond the Company's ability to control or predict which could cause actual
events or results to differ materially from those anticipated in such
forward-looking statements. These risks include, but are not limited to, those
associated with our capacity to finance our activities, the price of minerals
and other commodities, reliance on subcontractors and key personnel, and other
risks and uncertainties detailed from time-to-time in our filings with the
Canadian securities commissions.
Readers should not place undue reliance on forward-looking statements,
given that (i) our actual results could differ materially from a conclusion,
forecast or projection in the forward-looking information, and (ii) certain
material factors or assumptions which were applied in drawing a conclusion or
making a forecast or projection as reflected in the forward-looking
information, could prove to be inaccurate. Additional information about (i)
the material factors that could cause actual results to differ materially from
the conclusion, forecast or projection in the forward-looking information, and
(ii) the material factors or assumptions that were applied in drawing a
conclusion or making a forecast or projection as reflected in the
forward-looking information, is contained in the Company's annual report and
other documents filed from time to time with the Canadian securities
commissions and which are available at www.sedar.com.
The TSX Venture Exchange has neither approved nor disapproved the
contents of this press release.
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For further information:
For further information: James Xiang, Chief Financial Officer, GobiMin
Inc., Tel: (416) 915-0133, email@example.com, www.gobimin.com