GobiMin Inc.

GobiMin Inc.

April 11, 2007 18:43 ET

GobiMin Announces Outstanding 2006 Financial Results and Raises Dividend by 20% to CAD$0.012

TORONTO, ONTARIO--(CCNMatthews - April 11, 2007) -

(Expressed in United States dollars except where otherwise indicated)

GobiMin Inc. (the "Company" or "GobiMin") (TSX VENTURE:GMN) is pleased to report its financial and operating results for the fourth quarter and the fiscal year of 2006. The audited 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.

Following the outstanding 2006 financial and operating results, GobiMin is pleased to declare a 2006 annual dividend of CAD$0.012 per share, a 20% increase as compared to the 2005 annual dividend of CAD$0.010 per share. Shareholders of record at the close of business on May 15, 2007 will be entitled to receive the dividend which will be payable on June 5, 2007.

Financial Summary Quarter Quarter Year Year
ended ended ended ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
$ $ $ $
Revenue 7,519,732 1,144,131 19,587,808 11,038,464
Net earnings (loss) 2,399,860 (248,258) 6,351,180 3,462,255
Basic earnings per
share 0.038 (0.006) 0.11 0.09
Diluted earnings per
share 0.035 (0.006) 0.10 0.08
Net cash from operating
activities 2,633,381 (85,921) 8,137,741 6,375,311
EBITDA(1) 3,928,463 299,693 9,976,778 5,665,050

(1) As a non-GAAP measurement, EBITDA does 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.

Financial Highlights

- Record revenue of $19.6 million in 2006, an increase of 77% over $11.0 million in 2005 as ore production rose 50% to reach 222,167 tonnes.

- Record revenue of $7.5 million in Q4 2006, an increase of 557% over the $1.1 million in Q4 2005.

- Gross margin was 66.3%, compared to 60.2% in 2005.

- Record $6.4 million net income in 2006, compared to $3.5 million in 2005, an increase of 83%.

- Record $2.4 million net income in Q4 2006, compared to $0.2 million net loss in Q4 2005.

- Cash cost, after by-product credits, fell to $13.07 per tonne of ore or $1.04 per pound of nickel payable, compared to $18.29 or $1.09 respectively in 2005.

- Cash flow from operating activities rose to $8.1 million from $6.4 million in 2005.

- Cash position rose to a record $15 million.

Business Summary

Production Growth

In 2005, the Company set a strategy to increase nickel and copper production from Yellow Mountain East (also known as Huangshan Dong) Mine while taking full advantage of the benefits of operating in one of the lowest cost countries in the world. GobiMin enjoys the following benefits:

- One of the lowest production cash cost per tonne of ore in the nickel industry

- Low capital expenditures for shaft construction and mill construction

- Fast implementation and construction time

The combination of such factors enables the Company to consider increasing ore production by also mining profitably lower grade ore to increase nickel/copper output while maximising overall mine life. Three new shafts were built in Yellow Mountain East Mine. the Company designed and built, in just six months, a second mill with capacity of 1,000 tonnes per day at a cost of $2.3 million. Production testing started in October and the new mill reached full capacity by the end of 2006. In the past, production had to cease operations during winter but the Company is now able to continue producing all year round even during winter.

Ore mined increased from 147,977 tonnes in 2005 to 222,167 tonnes in 2006. Full benefit of the new shafts along with another shaft planned for 2008 will fuel growth with ore production planned for 330,000 tonnes in 2007.

Production of Affiliates

Dazi PuXiong Copper Company Limited ("PuXiong"), in which the Company acquired a 30% equity interest in May 2006, has commenced test operation of its mill with 500 tonnes per day capacity in October 2006. With the copper, lead and zinc ores from PuXiong's own mine site and custom tolling from other miners, the mill is reaching full capacity at the year-end of 2006. PuXiong is planning to increase the mill capacity to 1,000 tonnes per day in 2007, considering that the ores feed is increasing fast and will exceed the current capacity soon.

Production Process Improvement

In the second quarter of 2006, the Company successfully implemented separation of copper concentrate from mixed nickel-copper concentrate which enabled the Company to sell copper concentrate and nickel concentrate separately and consequently earn higher revenues. The Company is able to realize a higher sale price than selling the copper by-product contained in the nickel concentrate. Higher copper prices also contributed to the increase in revenue. With approximately $0.40 incremental cash cost per tonne of ore relating to the new separation process in the mill, the incremental credits are $7.48 per tonne of ore, greatly improving the cost structure by reducing about 29% the average cash cost per tonne of ore from $18.29 in 2005 to $13.07 in 2006.

Exploration progress

The Company completed an 18,000-meter diamond drilling program at the Yellow Mountain property (also known as "Huangshan") that aims to support the historical resource estimate to comply with National Instrument 43-101 ("NI43-101"). The final resource calculation will be released in the first half of 2007 and then the Company will move to scoping and feasibility study in the second half of 2007. The discovery at Yellow Mountain property was first reported in early 1990s with historical resources of 67 million tonnes at 0.48% nickel and 0.31% copper under category C and D of the China Geological and Mineral Resources Classification System. These historical resources do not comply with NI43-101 and therefore should not be relied upon.

Continuous acquisitions

In addition to the investment in PuXiong mentioned above, GobiMin entered into a joint venture agreement with Xinjiang Huaxing Minerals Ltd., which is a subsidiary of Xinjiang Bureau of Geology and Mineral Resources ("Xinjiang Bureau"). By combining GobiMin's project development expertise and Xinjiang Bureau's resource strength, the new joint venture aims to acquire quality projects in Xinjiang. The joint venture has resulted in the exploration license of one zinc project and is applying for exploring another copper project in Xinjiang region.

In February 2007, GobiMin entered into agreements to form two joint ventures with subsidiaries of Xinjiang Bureau to participate in resource exploration on Xinjiang's Xinyuan Yuximolegai Copper Deposit and Xinjiang's Nileke Alesitan Copper Deposit. Upon formation, both joint ventures will apply for mining permits on the respective deposit. This is expected to take four to six months. GobiMin will operate and manage the joint ventures.

Strong Cash Position

In 2006, GobiMin raised gross proceeds of approximately $7.4 million (CAD$ 8.3 million) in two private placements totalling 5,280,000 common shares. The Company also received $4.7 million (CAD$ 5.4 million) from the exercise of 6,950,460 warrants and 265,000 options.

By the end of 2006, the Company has approximately $15 million in cash and no debt. In the first quarter of 2007, the Company received subscription money of approximately $2.9 million (CAD$ 3.4 million) from warrant and option exercise. The management is of the view that the cash balance, coupled with the ongoing operating cash flow, should be sufficient to support the Company's current exploration, investment and acquisition activities according to the plan.


With the increase in working days in the winter season and the two shafts coming on board in the fourth quarter of 2006, the Company expects total ore processed to increase to 330,000 tonnes in 2007, compared to 222,167 tonnes in 2006. GobiMin is also examining the process of optimizing the mining development in Yellow Mountain East Mine.

The NI43-101 compliant calculation of resources for the Yellow Mountain property is expected to be completed in the first half of 2007. The Company is in discussions with large Chinese mining companies to form potential partnerships for the feasibility study and development plan of Yellow Mountain. No assurance can be given to the success of such discussions.

The Company will start exploration work in the newly-acquired zinc and copper projects with the view of bringing them into production as soon as possible.

During 2007, the Company is planning to refurbish the first mill in order to improve efficiency and increase overall capacity to sustain articulated growth for the coming years.

GobiMin incurred substantial capital expenditures in 2006. This included a new head office, a new mill and a substantially advanced shaft construction program. Other than the development of Yellow Mountain, sustaining capital expenditures should be lower in 2007. Based on the current market situation and growing production, the Company expects increasing cash flow as well as higher free cash flow in 2007.

As a well-established player in the local mining industry, the Company continues to seek opportunities of acquiring quality projects.

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. These risks include, but are not limited to, risks associated with fluctuations in metal prices, risks associated with mining operations including environmental hazards, GobiMin's reliance on key suppliers and on key personnel, the potential for changes in the legislative and regulatory environment in China and other risks and uncertainties detailed from time to time in GobiMin's annual report and other filings with the Canadian securities commissions. 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. 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 GobiMin's annual report and other documents filed from time to time with the Canadian securities commissions, all of which are available at www.sedar.com and the Company's website www.gobimin.com.

To receive GobiMin press releases by email, send a message to info@gobimin.com and specify "GobiMin press releases" on the subject line.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

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