GobiMin Inc.
TSX VENTURE : GMN

GobiMin Inc.

August 18, 2006 16:30 ET

GobiMin Reports Results of Second Quarter of 2006

Expressed in United States dollars except where otherwise indicated

TORONTO, CANADA--(CCNMatthews - Aug. 18, 2006) - GobiMin Inc. (TSX VENTURE:GMN) (the "Company" or "GobiMin") is pleased to report its financial and operating results for the second quarter of fiscal year 2006. The unaudited interim consolidated financial statements along with management's discussion and analysis have been filed with SEDAR (www.sedar.com).

Highlights and subsequent events

1. Successful separation of copper concentrate from mixed nickel-copper concentrate. Copper now accounts for 17% of revenues considerably higher than the 6% in last year. Average cash cost per tonne of ore (net of by-products credit) dropped from $18.30 in 2005 to $13.50 in the current quarter.

2. 15,000 meters diamond drilling program was started at flagship nickel-copper deposit of Yellow Mountain (also known as "Huangshan") and 6 holes were already completed. Data were collected to support calculation of resources in compliance with National Instrument 43-101 by the end of the year.

3. Acquisition of 30% interest in Malonglang high grade copper-zinc project located in Dazi County in Tibet.

4. Expansion at Yellow Mountain East mine (Huangshan Dong Mine) is well on schedule to deliver substantial production increase in 2007 and 2008:



- Construction of a new 250,000 tonnes annual capacity (1,000 tonne
per day) concentration plant is on schedule for completion by late
2006. Total capacity should jump from 150,000 tonnes to 400,000
tonnes annually.
- Underground production shaft construction is also on schedule to
deliver increased ore to feed increased capacity from the new
concentration plant
- Construction affects 2nd quarter results but impact should be
offset by 3rd and 4th quarter results, assuming stable metal
prices. The overall production in 2006 should still be higher than
2005.


5. Subsequent to the quarter end, GobiMin successfully closed a private placement with an aggregate of 4,120,000 common shares issued to US and Canadian institutional investors at a price of CAD$1.70 per share, for aggregate proceeds of CAD$7,004,000.

Results of Operations

Revenues from the Company's nickel-copper mining operations for the second quarter of 2006 totaled $3,549,385 compared to $3,947,100 for the second quarter of 2005. The net earnings were $878,687 compared to $1,781,864 for the second quarter of 2005.The decrease of revenues and net earnings were mainly due to lower grade ore processed and sold in the first six months of 2006. This was expected in the Company's 2006 production plan and according to the plan, the grade of ore should ramp up in the second half year and the overall 2006 production and revenue should exceed those of 2005. A substantial part of the decrease of net earnings in the quarter compared to a year earlier is also due to costs associated to operating a public company.

During the second quarter of 2006, the Company sold 580,000 pounds of nickel and 220,000 pounds of copper, compared to 813,000 pounds of nickel and 496,000 pounds of copper content in nickel-copper concentrates in the corresponding period in 2005. The plant processed 50,687 tonnes (second quarter of 2005: 55,680 tonnes) of ore with a nickel head grade of 0.65% (second quarter of 2005: 0.85%) and recoveries amounting to 84.6% (second quarter of 2005: 89.7%). The lower recoveries in this quarter were due to the separation of copper from the mixed concentrates.

Net of smelting and refining costs, average nickel price realized in the second quarter of 2006 was $5.06 per pound sold and average copper price realized was $2.74 per pound sold compared to average nickel price realized of $4.56 per pound sold and average copper price realized of $0.48 per pound sold in the same corresponding period in 2005. The higher realized price for the current period was mainly due to the increasing market price of nickel and copper and the higher price factor for copper from the launch of the copper separation program mentioned above.

Cost of sales amounted to $1,181,506 in the second quarter of 2006 compared to $1,071,343 for the second quarter of 2005. Cash operating cost per tonne of ore, net of those by-product credits, averaged $13.5 for the second quarter of 2006 compared to $20.9 for the second quarter of 2005. The significant decrease in cash cost per tonne of ore in 2006 was mainly due to the increasing by-product credits, driven by higher copper market price and copper price factor from the copper separation. This illustrates the importance of the copper separation initiative in enhancing the company's future financial performance. However, the cash costs per pound of nickel sold were comparable in these two periods because the nickel grade of ore in the second quarter of 2006 was much lower than that in the corresponding period in 2005, which basically offset the impact of increasing by-product credits. As mentioned above, the grade level is expected to ramp up in the third and fourth quarter of this year. Therefore the cash cost per pound of nickel should decrease from current level.

Outlook

The Company expects higher production of nickel and copper concentrates for the second half of 2006 due to the return to higher ore grade resulting in overall production in 2006 to exceed 2005. Construction works in 2006 and 2007 should deliver substantial production increase in 2007 and 2008. Increased production and lower cash cost per tonne from higher copper revenues through copper separation should be the catalysts for substantial earnings growth in the coming years.

"We continue to see positive fundamentals in each of our product segments." said Felipe Tan, CEO of GobiMin. "The nickel and copper markets in China have been continuously robust in 2006 and our team has done an outstanding job in implementing the copper separation program, meeting the production and exploration plans and seeking for opportunities of acquiring new quality mining 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.

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

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