TORONTO,
Ontario - August 16th, 2007 -- GlobeStar Mining Corporation
("GlobeStar" or the "Company") (TSX: GMI) announced today that it
has received and will file shortly an independent National Instrument 43-101
compliant technical report ("Technical Report") updating the mineral resource
and reserve estimates for its wholly owned Cerro de Maim?n Project currently
under construction. The Project, which is slated to commence operation in the
summer of 2008, will initially produce copper concentrates from the sulphide
flotation circuit and gold and silver as dor? from the oxide cyanidation
circuit. The Technical Report also
details the Project's updated capital and operating cost estimates, as well as
incorporating scope changes from the last Technical Report filed by the Company
on September 19th, 2006.
"Recent drilling results, plus
exceptional work by GlobeStar's development team and their consultants, has
resulted in an increase in size, profitability and longevity of the Company's
flagship project," commented Bill Fisher, GlobeStar's CEO, "The Company's value
is underpinned by Cerro de Maim?n's independently prepared Technical Report,
coupled with considerable upside potential from its aggressive nickel and
copper/gold exploration programs."
The
Technical Report was prepared for the Company by Micon International Limited
("Micon") in Toronto. All currency
amounts are in US dollars ("$") unless otherwise stated.
Highlights
of the Technical Report
Highlights
of this Technical Report are set out below. Data from the Project's earlier
Technical Report dated September 19th, 2006 are in brackets for
comparison:
?
Proven
and probable reserves have increased by 82% to 6 million tonnes (3.3
million)
?
Mine
life increased by 34%
to 9 years, spanning 10 calendar years at a higher annual throughput (6.7
years);
?
Pre-tax
net present value at an 8% discount rate is projected at $172
million
($36 million) and after-tax net present value at the same discount rate is
projected at $131 million ($23 million);
?
Internal
rate of return (IRR), after-tax, is estimated at 58%
(26%);
?
15
month capital pay-back
(29 months);
?
Life-of-mine
production is anticipated to total 229 million pounds of copper (169 million
pounds) a 36% increase, 130,000 ounces of gold (83,000 ounces) a 57% increase
and 4.1 million ounces of silver (2.8 million ounces), a 46% increase;
?
Operating
costs, including site costs, freight, and maintenance are expected to increase
to an average of approximately $15 million per year ($11 million) due to higher
production levels. The total life-of-mine average cost of
production for copper from the sulphide plant is expected to decrease by 14% to
$0.42 per lb ($0.48 per pound), net of
by-product credits;
?
Total
project capital expenditure over the life-of-mine is estimated to be $68.6
million ($47 million);and
?
Metal
price assumptions used in the Technical Report were $2.45 per pound of copper
($1.15), $543 per ounce of gold ($392), and $10.00 per ounce of silver
($5.98). On August 9, 2007, the
Company announced that as part of its mandatory hedging program, it hedged
57,900 ounces of gold at $650 per ounce, and 1,440,000 ounces of silver at
$11.50 per ounce. The gold price achieved is $107 per ounce higher and the
silver price is $1.50 per ounce higher than the assumptions in the Technical
Report's reserve and revenue calculations, a positive difference of US$ 8.36
million.
Project
Summary
GlobeStar
is currently developing its 100% owned Cerro de Maim?n project through its
wholly-owned subsidiary, Corporaci?n Minera Dominicana ("CMD"). The project
falls entirely within the Maim?n Mining Block ("Mining Block C1"), which was
part of the Quisqueya No. 1 exploitation concession originally held by
Falconbridge Dominicana C. por A. GlobeStar has acquired, through CMD, exclusive
rights to explore and develop Mining Block C1 from Falconbridge Dominicana on
March 1, 2002. The project is
located in the Dominican Republic approximately 75 kilometers northwest of the
capital city of Santo Domingo. It is near the town of Maim?n in Monse?or Nouel
Province.
All
of the permits for construction and operation of the mine are in place, and the
Company is fully financed through construction, having raised C$61.8 million
equity and debt of US$45 million over the last 12 months (see recent release of
August 9, 2007). Construction of the processing plants began in April 2007. GlobeStar's current construction
schedule received from the Company's engineers Met-Chem Canada Inc. ("MetChem")
and construction manager, RSW International, Inc., (both companies located in
Montreal) targets commissioning and start-up of the Project in the summer of
2008.
Technical
Report
Micon
was retained to review, audit and take responsibility for an "in-house" mineral
resource and updated mineral reserve estimate prepared for the Cerro de Maim?n
Project. Messrs. Paul Roos, PGeo.,
Harry Burgess, PEng., and Ian Ward, PEng. of Micon are the "Qualified Persons"
responsible for the Technical Report prepared in accordance with National
Instrument 43-101. Mr. Roos was
responsible for the resource estimation. Mr. Ward for the metallurgy, mill
operating costs and capital costs sections, and Mr. Burgess was responsible for
the mineral reserve estimates, mine operating costs, project capital costs, and
financial sections of the Technical Report.
Production
Plan
The
sulphide mineral reserves have been increased to 4.8 million tonnes (previously
2.8 million tonnes), an increase of 71%. In addition, the oxide reserve has been
increased to approximately 1.2 million tonnes (previously 0.6 million tonnes),
an increase of 100%. These changes
result in an increase in mine life to 9 years, with the plant expansions detailed below. The annual throughput of the oxide circuit has been increased by
200 tonnes per day to 700 tonnes per day or 252,000 tonnes per year, a result of
the oxide reserve increase. The oxide circuit is to be converted around year
five to a second sulphide circuit once the oxide reserve is completely
processed, increasing the annual sulphide milling rate by 44% from 1,300 tonnes
per day or 468,000 tonnes per year to 1,875 tonnes per day or 675,000 tonnes per
year.
Estimated
Mineral Reserves and Resources
The
estimated mineral reserves and resources have been prepared in accordance with
National Instrument 43-101 Standards and CIM definitions.
The
mineral resource estimate was prepared using an electronic block model and
MineSight? software. The deposit
consists of two parts, a Cu-Zn-Au-Ag bearing massive sulphide and an overlying
Au-Ag bearing oxide deposit that formed by weathering of the massive sulphide.
Data in sufficient quantities to model variograms were found in both domains;
hence grade interpolation was performed by ordinary kriging as well as inverse
distance weighting methods. A
summary of the mineral resource prepared by GlobeStar, and verified by Micon, is
set out in Table 1 below. The estimate is as of June 30th,
2007:
Table 1
Cerro de Maim?n Deposit
Mineral Resource
Mineral
Resource - Oxide |
Class |
Tonnes |
Au(g/t) |
Ag(g/t) |
AuEquiv |
Ounces
Au |
Ounces
Ag |
Measured
(M) |
985,172
|
1.86 |
33.2 |
2.40 |
58,828 |
1,051,146
|
Indicated
(I) |
261,407
|
1.39 |
23.4 |
1.78 |
11,713 |
196,929
|
M
+ I |
1,246,579
|
1.76 |
31.1 |
2.27 |
70,541 |
1,248,075
|
Oxide
Resource is summarized at a 0.50 g/t equivalent gold cut-off grade (AuEquiv), where |
AuEquiv
= Au + Ag * AgFactor
[AgFactor =
0.01630] |
Mineral
Resource - Sulphide |
Class |
Tonnes |
Cu(%) |
Au(g/t) |
Ag(g/t) |
Zn(%) |
Pounds
Cu |
Ounces
Au |
Ounces
Ag |
Pounds
Zn |
Measured
(M) |
5,628,632
|
2.30
|
0.91
|
33.3
|
1.46
|
285,868,560
|
164,955
|
6,030,179
|
181,517,189
|
Indicated
(I) |
1,739,214
|
1.25
|
0.73
|
28.7
|
1.31
|
47,862,876
|
40,634
|
1,603,996
|
50,063,877
|
M
+ I |
7,367,846
|
2.05
|
0.87
|
32.2
|
1.43
|
333,731,436
|
205,589
|
7,634,175
|
231,581,065
|
Inferred |
142,283
|
1.20
|
0.71
|
34.6
|
1.12
|
3,758,520
|
3,249
|
158,491
|
3,522,333
|
Sulphide
Resource is summarized at a 0.30% Cu cut-off
grade |
Estimated
mineral resources that are not mineral reserves do not have demonstrated economic viability.
Pit
shells have been determined using the Lerchs-Grossmann algorithm, based on
mining blocks, which include all mining and haulage costs for waste and all
mining, processing, transport, off-site treatment and administration costs for
ore. Typical pit rim costing is applied to determine the ore/waste split.
Allowance for mining recovery and waste dilution is included in the resource
estimation procedure. The combined oxide and sulphide mineral reserve tonnage,
determined by the current mining planning, is 6 million tonnes, at a grade of
2.08% Cu, 34.56 g/t Ag and 1.13 g/t Au. The total waste to be removed is estimated at 46 million tonnes, rendering a strip ratio of approximately 7.7:1.
The individual oxide and sulphide mineral reserves estimates are presented below
in Table 2. The estimate is current as of June 30th,
2007.
Table
2
Cerro
de Maim?n Deposit Estimated Mineral Reserves
Mineral
Reserves - Oxide |
|
Tonnes |
Ag(g/t) |
Au(g/t) |
Proven |
927,274
|
37.1 |
1.95 |
Probable |
230,093
|
23.9 |
1.48 |
Total |
1,157,367
|
34.5 |
1.86 |
Mineral
Reserves - Sulphide |
|
Tonnes |
Cu(%) |
Ag(g/t) |
Au(g/t) |
Proven |
4,285,800
|
2.66 |
35.7 |
0.98 |
Probable |
538,760
|
1.52 |
28.7 |
0.78 |
Total |
4,824,560
|
2.54 |
34.9 |
0.96 |
The
mineral reserve estimates presented in Table 2 are included in the mineral
resource estimates described above and presented in Table
1.
Metallurgical
Recoveries
There
have been no changes to the metallurgical recoveries previously determined for
the Project. Recoveries used in the
Technical Report are summarized in the table below:
Table
3
Cerro
de Maim?n Recoveries
Sulphide
Flotation Recoveries |
Cu
Met Recovery |
85.0% |
Ag
Met Recovery |
55.0% |
Au
Met Recovery |
45.0% |
Oxide
Mill Recoveries |
Recovery
Au |
90.8% |
Recovery
Ag |
87.1% |
The
Project currently has no credit for zinc, which is treated as a penalty in the
copper concentrates. The Company is
currently conducting a metallurgical test program at SGS Lakefield under the
supervision of Micon to optimize revenues. The Proven and Probable reserves
contain
160
million pounds of zinc in the sulphide portion.
Capital
Costs Estimate
As
part of the detailed engineering, the capital costs have been estimated by
GlobeStar and Met-Chem, the Company's engineers, and were verified by
Micon. The capital costs are
considered to be within an accuracy range of +/- 10%. To date, all of the major
equipment has been ordered and the delivery incorporated into the Project
schedule. The estimated capital
costs are summarized in Table 4 below.
The
current capital costs estimate are higher than the September 19th,
2006 Technical Report, but represent several significant scope changes as well
as increased prices due to general cost escalation since the previous Technical
Report. Significant scope changes include:
?
Installation
of a 6.8 MW generating plant onsite to ensure a stable source of electricity
from which to run the processing plants and related
infrastructure;
?
A
conventional and fixed crushing system as opposed to the previously scoped
portable crushing system. The
conventional crushing system is intended to ensure increased operating time and
lower overall operating costs due to lower maintenance
costs;
?
Increase
of oxide circuit throughput from 500 tonnes per day to 700 tonnes per day and
subsequent conversion of the oxide circuit for sulphide processing, resulting in
an increase of sulphide ore
throughput from 1,300 tonnes per day to 1,875 tonnes per
day;
?
An
increase in pre-production stripping of waste and overburden reflecting an
increase in estimated mineral reserves;
?
Additional
land purchases to accommodate a larger footprint of the
operations;
?
Surface
water collection pond sufficient to handle a 24 hour, 25 year storm event;
and
?
Additional
geotechnical and environmental studies to ensure an environmentally and
technically sound project.
The
following table summarizes the pre-production capital costs estimate. Costs include direct and in-direct
costs, owner's costs, as well as capitalized pre-stripping mining costs, taxes
and duties, and a 10% contingency.
Table
4
CMD Capital
Expenditures
($000s,
Q1 2007 Value)
Total
Project Capital Costs Estimate in
$000s |
Mining |
5,878
|
Site
Earthworks |
4,352
|
Crushing |
2,971
|
Sulphide
Plant |
8,280
|
Oxide
Plant |
6,087
|
Generating
Plant |
5,477
|
Tailings
Disposal |
1,125
|
Reagents |
248
|
Surface
Water |
4,156
|
Plant
Air |
206
|
Mobile
Equipment |
250
|
Inventory
& Spares |
1,122
|
Owner's
Overhead & Indirect |
14,631
|
Subtotal
Before Contingency & Taxes |
54,783
|
Contingency |
5,477
|
Taxes |
8,374
|
Total
Project Capital Costs Estimate |
68,634
|
The
sustaining estimated capital requirements, as estimated by GlobeStar are summarized in Table 5 below.
Table
5
Project Life-of-Mine Estimated Sustaining
Capital
Costs
(in $000s, Q1 2007
Value)
Project
Life-Of-Mine Estimated
Sustaining Capital Costs |
|
2007P |
2008P |
2008/09 |
2009/10 |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2014/15 |
2015/16 |
2016/17 |
Total |
Mill |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Sulphide
Mill Exp |
|
|
|
|
- |
- |
200 |
50
|
- |
- |
- |
250 |
Mine
Dewatering |
- |
|
50
|
- |
- |
50
|
- |
- |
50
|
- |
- |
150 |
Pit
Drain Holes |
- |
|
25
|
25
|
25
|
25
|
25
|
25
|
25
|
25
|
- |
200 |
Mobile
Equipment |
- |
|
25
|
- |
25
|
- |
- |
- |
- |
- |
- |
50
|
Vehicles |
- |
- |
50
|
|
50
|
- |
50
|
|
50
|
|
- |
200 |
Tailing
Cell # 2 |
- |
|
225 |
- |
- |
- |
- |
- |
- |
- |
- |
225 |
Tailing
Cell # 3 |
- |
|
|
225 |
- |
- |
- |
- |
- |
- |
- |
225 |
Total |
- |
- |
375
|
250
|
100
|
75
|
275
|
75
|
125
|
25
|
- |
1,300
|
Operating
Cost Estimates
Life-of-mine
estimated operating costs were developed by GlobeStar, and verified by Micon,
based on previously defined reagent consumptions modified to reflect current
unit costs, onsite power generation costs, fuel costs, labor and burden costs,
and contractor mining costs. GlobeStar received firm bids on all major costs and
incorporated these figures in the engineering estimates.
The
life-of-mine estimated operating costs are summarized in Table 6
below:
Table
6
Summary
of Life-Of-Mine Estimated Unit Operating Costs
Unit
Estimated Operating Costs, in $/tonne
Milled |
Area |
Pre
Exp* |
Post
Exp** |
LOM |
Mining
Cost*** |
13.63 |
13.63 |
13.63 |
Oxide
Milling |
7.69 |
7.69 |
7.69 |
Sulphide
Milling |
12.72 |
12.35 |
12.51 |
Admin |
1.89 |
2.09 |
2.04 |
Con
F,S & R**** |
18.05 |
16.68 |
17.28 |
Dore
F,S & R |
0.86 |
-
|
0.86 |
Notes:
*"Pre
Exp" is when both the oxide and sulphide plants are operating at their designed
tonnages.
**"Post
Exp" is when the oxide plant is shut down and the sulphide plant is increased to
1,875 tonnes/day.
***Based
on a stripping ratio of 7.7 to 1.0.
****F,S
& R means Freight, Smelting & Refining costs.
Financial
Analysis
The
overall economic potential of the Project has been evaluated using conventional
discounted cash flow techniques on a 100% equity basis. This procedure has been
used for the purpose of estimating the financial returns expected to accrue to
CMD as the owner of 100% of the mining, processing and concentrate
transportation operations. Metal price assumptions used in the Technical Report
were $2.45 per pound of copper, $543 per ounce of gold, and $10.00 per ounce of
silver.
The
life-of-mine Project financial metrics based on the metal prices used in calculating the estimated mineral reserves are summarized in Table
7:
Table
7
Project
Estimated Financial Metrics
Estimated
Financial Metrics (US$ millions) |
Gross
Revenue |
623.8
|
Net
Revenue |
523.4
|
Operating
Income Before Depreciation |
364.8
|
Operating
Income Before Income Tax |
315.1
|
Net
Income |
248.2
|
Pretax
Project Cash Flow |
294.9
|
Post
tax Project Cash Flow |
228.0
|
IRR
- Pre Tax % |
68.7 |
IRR
- Post Tax % |
58.3 |
Project
Payback Period |
15
Months |
Pretax
NPV @ 8% |
172.3
|
Post
Tax NPV @ 8% |
130.6
|
Sensitivity
Analysis
A
sensitivity analysis was completed on key variables, including copper price,
revenue, capital cost, and operating costs. The results of this analysis are
summarized in Table 8 and Figure 1 below:
Table 8
Before-Tax
Sensitivity Analysis
NPV(8%)
(US$ millions) |
|
Revenue
$ |
Capex
$ |
OpCost
$ |
Cu
Price
$ |
-20% |
94.1
|
183.3 |
192.1
|
107.9
|
-10% |
133.2 |
177.8 |
182.2
|
140.1
|
Base |
172.3 |
172.3 |
172.3
|
172.3
|
10% |
211.5 |
166.8 |
162.5
|
204.5
|
20% |
250.6 |
161.3 |
152.6
|
236.7
|
Figure 1
Before-Tax
Sensitivity Analysis
The
Project's before-tax NPVs for various copper prices are summarized in Figure 2
below:
Figure 2
Before-Tax NPVs
at Various Copper Prices
Project
Risks
The
Cerro de Maim?n Project has been drilled to such an extent that Micon considers
the risk associated with any resource estimates to be low to moderately-low.
Many programs to update and revise grade and tonnage estimates have been performed on the Project.
The
development of the Cerro de Maim?n Project is subject to a number of risks that
could affect the successful completion and/or the financial performance relative
to the results set out in the Technical Report and summarized in this
release. Some of these risks are
common to all mining projects, including: changes in commodity prices, adverse
changes in exchange rates and concentrate treatment costs, shortages of critical
supplies, equipment, and qualified professionals, delays in construction due to
weather or equipment deliveries and unforeseen mining or metallurgical
difficulties. With respect to the
Project's development, GlobeStar has attempted to mitigate these risks to the
extent possible by purchasing long lead-time equipment and second hand crushers
and ball mills in advance, and having the project reviewed by outside engineers
and consultants.
Technical
Report
As
required by National Instrument 43-101, GlobeStar will file the Technical Report
on SEDAR shortly and it will be available at www.sedar.com and the Company's website at www.globestarmining.com .
Ian
Ward, PEng., a Qualified Person as defined by NI 43-101, supervised the
preparation and verified the technical information contained in this
release. This
news release was prepared by GlobeStar under the supervision of Bill Fisher,
PGeo. and A Eric Olson, MAusIMM, both Qualified Persons as defined by NI 43-101.
About
GlobeStar
GlobeStar
Mining Corp. is a well funded mine development company, developing the permitted
Cerro de Maim?n copper/gold project, with commissioning and start-up currently
expected in the summer of 2008. The Company is also aggressively exploring an
extensive base and precious metals exploration portfolio in the Dominican
Republic with a $4 million exploration budget for nickel and copper/gold exploration, including a 207-hole nickel drilling program.
Contact:
GlobeStar
Mining Corporation
William
Fisher
or
JP Chauvin
CEO
President and COO
Email:
wfisher@globestarmining.com
Email: jp.chauvin@globestarmining.com
Tel.:
(416) 868-6678
Tel.: (416) 868-6678
Bay
Street Connect
Coal
Harbor Communications
Gus
Garisto
Dale Paruk
Email:
gus@baystreetconnect.com
Email: dale@coal-harbor.com
Tel.: (416) 607 6023
Tel.:
(604) 662-4505
Fax: (604) 662-4547
Reader
Advisory
The
information in this news release may include certain information and statements
about management's view of future events, expectations, plans and prospects that
constitute forward-looking statements. Assumptions that are subject to
significant risks and uncertainties are the basis for these statements. 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 and indicated by these forward looking statements.
Although GlobeStar believes that the expectations reflected in forward looking
statements are reasonable, we can give no assurances that the expectations of
any forward-looking statements will prove to be correct. 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, except as required pursuant to
applicable securities laws.