Globestar Mining Corporation
TSX : GMI

Globestar Mining Corporation

March 31, 2010 18:24 ET

GlobeStar Reports Strong 2009 Financial Results and Low Cost Mining Operations

TORONTO, ONTARIO--(Marketwire - March 31, 2010) -

(All dollar amounts are expressed in United States currency unless otherwise stated.)

GlobeStar Mining Corporation ("GlobeStar") (TSX:GMI) today announced key highlights of its financial and operational results for the three months and year ended December 31, 2009. Copies of GlobeStar's 2009 audited consolidated financial statements and management's discussion and analysis ("MD&A"), as well as the February 23, 2010 press release containing the operating results for 2009, are available on GlobeStar's website at www.globestarmining.com and at www.sedar.com.

GlobeStar will hold a conference call at 9:00 a.m. (EDT) on Wednesday, April 7, 2010 to discuss the 2009 results. Call-in details are included at the end of this release. A short presentation will be made during the conference call, for which presentation slides will be available on the investor relations tab of GlobeStar's website in advance of the call.

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 $0.81 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.

Fourth Quarter and Full Year 2009 Financial Results

GlobeStar 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. Consequently, there are no comparable operating results for 2008.

Results of Operations: Gross revenues from the sale of concentrate and dore and related products during the fourth quarter of 2009 totalled approximately $26.5 million, an increase of $5.8 million over the third quarter 2009 gross revenues. For the year ended December 31, 2009, gross revenues totalled $78.5 million. Refining, treatment, freight and other marketing-related charges totalled approximately $2.9 million for the fourth quarter and $10.5 million for the year.

Cash costs per payable pound of copper sold2 in 2009 were approximately $1.58 before byproduct credits and $0.81 after byproduct credits. These cash costs include mine site operating costs as well as smelting, refining, freight and royalty charges related to marketing the copper concentrate.

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. GlobeStar recorded an unrealized loss of $17.6 million during 2009 on the change in fair value of the outstanding copper, gold and silver hedges entered into under the terms of its debt facility. The fair value of the hedges declined primarily due to increases in the prices of copper and silver during the year. During 2010, the amount of copper and gold covered by hedging contracts will decrease from 2009 levels by approximately 67% and 37%, respectively.

Net income, after general and administrative expenses, interest and taxes, for three months and year ended December 31, 2009 totalled $8.0 million and $2.0 million, respectively.

The following condensed Statements of Income outline the results of operations during the three months and year ended December 31, 2009:



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Three Months Year
Ended Ended
December 31, December 31,
2009 2009
Statements of Income (in U.S. $millions) (unaudited) (audited)
----------------------------------------------------------------------------
Gross revenues 26.5 78.5
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Refining, treatment and other charges (2.9) (10.5)
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Net revenues 23.6 68.0
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Operating expenses (7.1) (26.2)
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Amortization & depletion of mineral properties (3.3) (10.1)
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Operating earnings 13.2 31.7
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General & administrative expenses (1.0) (5.4)
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Amortization and exploration property write
downs (0.3) (0.6)
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Interest (0.2) (1.8)
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Foreign exchange losses & realized derivative
losses (2.4) (4.4)
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Unrealized derivative losses (1.1) (17.6)
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Income tax (expense) recovery (0.2) 0.1
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Net income 8.0 2.0
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Statements of Cash Flows: Cash flows from operating activities were approximately $7.1 million during the fourth quarter of 2009, with a total increase in cash for the period of approximately $3.6 million.

GlobeStar made its scheduled long-term debt repayment of approximately $2.7 million, including accrued interest, on December 31, 2009. Pursuant to the requirements of GlobeStar's senior debt facility with Nedbank, the debt reserve account remained fully funded during the fourth quarter of 2009 in the amount of $5.3 million and GlobeStar was in compliance with all covenants under such facility at the end of the year.

Exploration expenditures were approximately $0.2 million during the fourth quarter of 2009, with activities focused on the analysis of drilling results from earlier in the year. In addition, exploration at the Cerro de Maimon Mine continued during the fourth quarter, with a total of 26 holes (3,097 metres) completed by year-end, at a total cost of $1.1 million for the year.

Expenditures on sustaining capital projects related primarily to the completion of the water and tailings ponds at the Cerro de Maimon Mine and totalled approximately $3.3 million for 2009.

The following condensed Statements of Cash Flows outline GlobeStar's cash flows during the three months and year ended December 31, 2009:



----------------------------------------------------------------------------
Three Months Year
Ended Ended
December 31, December 31,
2009 2009
Statements of Cash Flows (in U.S. $millions) (unaudited) (audited)
----------------------------------------------------------------------------
Cash flows from operating activities 7.1 23.9
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Repayment of long-term debt (principal) (2.2) (6.6)
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Funding of debt reserve account - (5.3)
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Exploration expenditures (0.2) (2.2)
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Drilling at Cerro de Maimón Mine (0.6) (1.1)
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Sustaining capital expenditures - (3.3)
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Other cash flow items, including net proceeds
from pre-commercial production sales (0.5) 2.5
----------------------------------------------------------------------------
Increase in cash 3.6 7.9
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Balance Sheet Data: Cash, restricted cash and accounts receivable were approximately $24.4 million at December 31, 2009, an increase of $6.1 million during the fourth quarter of 2009. Saleable metal inventories were approximately $1.4 million at year-end versus $2.1 million at September 30, 2009. The amount outstanding on GlobeStar's senior debt facility with Nedbank totalled $37.5 million at the end of 2009, after making the scheduled quarterly repayment of $2.7 million, including accrued interest, on December 31, 2009.

The following condensed Balance Sheets outline GlobeStar's financial position at December 31, 2009 and 2008:



----------------------------------------------------------------------------
As at As at
Balance Sheets (in U.S. $millions) December 31, December 31,
(audited) 2009 2008
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Cash, including restricted cash 16.3 3.1
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Accounts receivable 8.1 2.8
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Product inventory (at cost) 1.4 -
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All other assets 104.0 116.9
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Total Assets 129.8 122.8
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Liabilities & Equity
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Accounts payable and accrued liabilities 7.2 6.3
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Long-term debt 37.5 44.0
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All other liabilities 13.3 3.5
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Equity 71.8 69.0
----------------------------------------------------------------------------
Total Liabilities & Equity 129.8 122.8
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Cerro de Maimon Mine Exploration

New geological mapping and a 30-kilometre induced polarization survey were completed in the Cerro de Maimon Mine open pit area during the first half of 2009. The information gathered was used to define a number of anomalies outside the range of the known mineralized body.

During the remainder of the year, the Company conducted a drilling program to test the targets identified. A total of 26 holes (3,097 metres) were completed by year-end, with the program continuing in the first quarter of 2010. Assays received to date have indicated a potential 200-metre extension of the Cerro de Maimon Mine sulphide ore zone to the northwest.

Once the drilling is completed and the remaining assays are received, the results will be used to fully delineate the grade, continuity and extent of this potential sulphide mineralization and subsequently update the Cerro de Maimon Mine estimated mineral resources.

Maimon and C1 Concessions

The Company's Maimon and C1 Concessions cover approximately 85% of the Maimon massive sulphide belt surrounding the Cerro de Maimon Mine. Three drilling targets were selected by the end of the third quarter of 2009 based on geophysics, geochemistry and mapping results. These targets are named Las Yagrumas, Barbuito West and Barbuito South and a total of 16 holes were drilled on these targets during the fourth quarter of 2009, approximating 2,500 metres.

Of note were the holes drilled in Barbuito West. Two holes, BW-01 and BW-02, showed continuity along the dip of semi-massive to disseminated sulphides. Drilling results included 32 metres averaging 0.35 grams of gold per tonne and 2.27% zinc in hole BW-01. Further exploration in this area is planned in 2010.

Bayaguana District Exploration

GlobeStar's Bayaguana district consists of 72 square kilometres of mineral concessions, located approximately 60 kilometres east of the Cerro de Maimon Mine, and hosts several geologically important copper and gold deposits.

The largest mineral deposit is the Dona Amanda deposit, which has a National Instrument ("NI") 43-101 compliant inferred mineral resource estimated at 128 million tonnes grading 0.31% copper, 0.19 grams of gold per tonne and 1.43 grams of silver per tonne at a cut-off grade of 0.15% copper.

During the third and fourth quarters of 2009, the Company conducted a 24-hole drilling program, totalling 4,518 metres, along a 1.3 kilometre zone between the Mariposa Hill and the Dona Loretta south area. The best interceptions included 10 metres grading 0.92% copper and 0.12 grams of gold per tonne (hole CC-27) and 21.62 metres grading 0.80% copper and 0.04 grams of gold per tonne. During 2010, it is expected that the 2009 drilling data will be integrated into the Dona Loretta geological model and its resource inventory will be subsequently updated.

The Cerro Kiosko deposit has a NI 43-101-compliant estimated indicated and inferred mineral resource of 4.9 million tonnes, grading 0.98% copper, 2.0 grams of gold per tonne and 5.1 grams of silver per tonne at a cut-off grade of 0.35 grams of gold per tonne. The 2009 trenching program identified a mineralized gold zone running parallel and approximately 160 metres to the west of the main Cerro Kiosko structure. The surface channel samples in the new zone have assayed up to 1.04 grams of gold per tonne over eight metres. The zone has been identified over a strike length of approximately 300 metres and remains open along strike in both directions. Additionally, trenches over the surface projection of the main gold-copper Cerro Kiosko vein have assayed up to 1.80 grams of gold per tonne over ten metres. The 2010 activities at Cerro Kiosko will focus on a trenching and drilling program over areas identified by the late 2009 transverse program and the previously known mineralized structures. Results will be used to evaluate the potential of an increased gold-copper resource in the area.

Sample preparation was undertaken at ACME Analytical Laboratories ("ACME") in Maimon, Dominican Republic. Pulps were shipped to ACME's laboratories in Chile and Canada and were analyzed by four acid digestion inductively coupled plasma emission spectrometry ("ICP-ES") analysis. Gold in every sample was analyzed by fire assay. Copper, zinc and silver above the detection upper limit were reanalyzed by atomic absorption. Full QA/QC procedures were implemented, including the insertion of standards, duplicates and blanks.

Cumpie Hill Nickel Laterite Deposit

Coincident with the recent resurgence in the price of nickel, GlobeStar is evaluating the options available to reinitiate the development of the Cumpie Hill nickel laterite deposit located four kilometres from the Cerro de Maimon Mine. Cumpie Hill has a NI 43-101-compliant estimated indicated and inferred mineral resource of 6.2 million tonnes grading 1.5% nickel at a cut-off grade of 1% nickel, containing an estimated 200 million pounds of nickel.

Moblan West Lithium Project

The Moblan West lithium deposit, located in northern Quebec, is 60% owned by GlobeStar and hosts a NI 43-101-compliant estimated inferred mineral resource of 5.3 million tonnes grading 1.5% lithium oxide ("Li2O") at a cut-off grade of 0.43% Li2O.

During the fourth quarter of 2009, external consultants prepared a new 3D model of the Moblan West pegmatite, based on 2007 drilling data and the new data from the summer 2009 trenching program. According to this model, an extensive drilling program has been designed for 2010, which is expected to drill approximately 15,000 metres in an estimated 100 holes.

The deposit is suitable to open pit mining with an indicated low stripping ratio. Preliminary metallurgical testing indicates that a high-quality lithium concentrate, containing approximately 91% spodumene and 7.2% Li2O, may be produced from the Moblan West lithium deposit and such a concentrate could be marketed to end users in the glass and ceramic sectors or further upgraded to battery-quality lithium carbonate.

Conference Call Details

GlobeStar will host a conference call on Wednesday, April 7, 2010 at 9:00 a.m. (EDT) to discuss the 2009 results. The conference call may be accessed by dialing 1-888-789-9572 in North America or 1-416-695-7806 internationally. Please dial in the participant pass code 4608775. The archived conference call can be accessed by following the instructions in the investor relations tab on GlobeStar's website.

About GlobeStar

GlobeStar Mining Corporation is a Canadian-based mining and exploration company producing copper, gold and silver at its Cerro de Maimon Mine in the Dominican Republic. GlobeStar is also exploring for copper and gold on its extensive mineral concessions in the Dominican Republic, and holds significant interests in the Moblan lithium project in Quebec, Canada, and the Cumpie Hill lateritic nickel deposit in the Dominican Republic. GlobeStar maintains a listing on the Toronto Stock Exchange (symbol: GMI).

A.E. Olson, M AusIMM, GlobeStar's Senior Vice President and COO and a Qualified Person as defined under NI 43-101, supervised the preparation of and verified the technical information contained in this release, other than that related to the Moblan Lithium Project, which was verified by Gary H. K. Pearse, P.Eng., of Equapolar Resource Consultants, who is also a Qualified Person under NI 43-101.

Cautionary Statements Concerning Forward-Looking Statements

This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to as ''forward-looking statements''). Forward-looking statements include, but are not limited to, possible events and statements with respect to possible events. The words "plans," "expects," "is expected," "scheduled," "estimates," or "believes," or similar words or variations of such words and phrases or statements that certain actions, events or results "may," "could," "would," "might," or "will be taken," "occur," and similar expressions identify forward-looking statements.

Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable to GlobeStar as of the date of such statements, are inherently subject to significant risks and uncertainties and may not be appropriate for use other than as used herein. These estimates and assumptions include, but are not limited to: (a) the ability of the Cerro de Maimon Mine's sulphide and oxide plants to operate at their design capacities; (b) certain assumptions relating to the market price for its products; (c) there being no significant disruptions affecting operations at the Cerro de Maimon Mine; (d) production at the Cerro de Maimon Mine being consistent with GlobeStar's current expectations; (e) the continued operation of the Cerro de Maimon Mine; and (f) the ability of GlobeStar to successfully continue its exploration and other activities. Because of these risks and uncertainties and, as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated, implied or indicated by these forward-looking statements. Although GlobeStar believes that the expectations reflected in its forward-looking statements are reasonable, we can give no assurances that the expectations of any forward-looking statements will prove to be correct. All of the forward-looking statements made in this news release are qualified by these cautionary statements and those made in the "Risk Factors" section of GlobeStar's most recently filed Annual Information Form and GlobeStar's other filings with the securities regulators of Canada. These factors are not intended to represent a complete list of the factors that could affect GlobeStar. GlobeStar disclaims any intention, and assumes no obligation, to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise, or to explain any material difference between actual events and such forward-looking statements, except as required pursuant to applicable securities laws.

1 Cash costs per payable pound of copper sold is a non-GAAP measure. See MD&A for a discussion of non-GAAP measures.

2 Cash costs per payable pound of copper sold is a non-GAAP measure. See MD&A for a discussion of non-GAAP measures.

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