Reports First Quarter 2009 Results

Cerro De Maimón mine

Emerging Copper and Gold producer in the Dominican Republic

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Reports First Quarter 2009 Results

posted on May 13, 2009 03:13PM

May 13, 2009

GlobeStar Reports First Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - May 13, 2009) -

(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 ended March 31, 2009 (the "First Quarter 2009"). Copies of GlobeStar's First Quarter 2009 financial statements and management's discussion and analysis 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 Thursday May 14, 2009 to discuss these 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.

First Quarter 2009 Highlights

- Gross revenues were approximately $14.2 million, operating earnings were $4.7 million and cash flows from operating activities were $4.8 million.

- Cash and accounts receivable totalled approximately $10.3 million as at March 31, 2009.

- Cash costs were approximately $0.75 per payable pound of copper sold after byproduct credits.

- Sales were approximately 6.4 million pounds of copper, 1,500 ounces of gold and 166,000 ounces of silver.

First Quarter 2009 Financial Statements

GlobeStar's First Quarter 2009 financial statements reflect the commencement of commercial production at the Cerro de Maimon copper-gold-silver mine and related facilities (the "Cerro de Maimon Mine") on January 1, 2009. Consequently, there are no comparable operating results for the first quarter of 2008.

Results of Operations: During the First Quarter 2009, GlobeStar sold approximately 12,650 tonnes of copper concentrate, of which 1,900 tonnes consisted of concentrate produced during the pre-production period. The proceeds from the sale of the pre-production concentrate were netted against pre-production operating costs, while the revenues from the remaining 10,750 tonnes were recognized as revenues for the quarter. Gross revenues from the sale of concentrate during the First Quarter 2009 totalled approximately $14.1 million while the sale of gold-silver dore produced gross revenues of approximately $0.1 million.

Refining, treatment, freight and other marketing related charges were less than what was forecast in the GlobeStar press release dated January 13, 2009 and totalled approximately $2.3 million during the First Quarter 2009. Operating expenses of approximately $5.3 million were also less than in the forecast provided early in 2009.

Cash costs per payable pound of copper sold were approximately $1.23 before byproduct credits and $0.75 after byproduct credits. These cash costs include all mine site operating costs as well as treatment, refining and freight charges related to marketing the copper concentrate.

Operating earnings were approximately $4.7 million after amortization and depletion of $1.9 million. A net loss of approximately $3.2 million resulted from the $6.2 million unrealized loss on the fair value of GlobeStar's copper, gold and silver hedges during the First Quarter 2009. The value of the hedges declined primarily due to the increase in the price of copper during the quarter.

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Statements of Loss (in $millions)                        Three Months Ended
                                                                   March 31
----------------------------------------------------------------------------
                                                        2009           2008
----------------------------------------------------------------------------
Gross revenues                                          14.2              -
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Refining, treatment and other charges                   (2.3)             -
----------------------------------------------------------------------------
Net revenues                                            11.9              -
----------------------------------------------------------------------------
Operating expenses                                      (5.3)             -
----------------------------------------------------------------------------
Amortization & depletion - operating assets             (1.9)
----------------------------------------------------------------------------
Operating earnings                                       4.7              -
----------------------------------------------------------------------------
Amortization and exploration property write downs       (0.2)          (0.1)
----------------------------------------------------------------------------
General & administrative expenses                       (1.2)          (1.9)
----------------------------------------------------------------------------
Interest                                                (0.6)           0.2
----------------------------------------------------------------------------
Derivative & exchange gains (loss): realized             0.4           (0.7)
----------------------------------------------------------------------------
Derivative loss: unrealized                             (6.2)          (5.4)
----------------------------------------------------------------------------
Income tax (expense)                                    (0.1)             -
----------------------------------------------------------------------------
Net loss                                                (3.2)          (7.9)
----------------------------------------------------------------------------

The realized prices for copper, gold and silver sales during the First Quarter 2009 were $1.81 per pound, $918 per ounce and $12.76 per ounce, respectively. These realized prices compare with the average London Metal Exchange copper price and the average gold and silver prices as published in Metal Bulletin during the First Quarter 2009 of $1.55 per pound of copper, $908 per ounce of gold and $12.61 per ounce of silver. The realized prices incorporate the expected forward prices for the month of settlement. As at March 31, 2009 GlobeStar had approximately 6.0 million pounds and 1.7 million pounds of copper sales priced for April and May settlement, respectively.

Statements of Cash Flows: Cash flows from operating activities were approximately $4.8 million during the First Quarter 2009. No financing activities were undertaken in the First Quarter 2009.

Exploration expenditures were approximately $0.4 million during the First Quarter 2009 with activities focused on a 33 kilometre IP geophysical survey in the Bayaguana gold-copper district and the commencement of a similar 25 kilometre survey in the vicinity of the Cerro de Maimon Mine. Geological mapping was ongoing in both of these areas throughout the quarter.

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Statements of Cash Flows (in $millions)                  Three Months Ended
                                                                   March 31
----------------------------------------------------------------------------
                                                        2009           2008
----------------------------------------------------------------------------
Cash flows from operating activities                     4.8            0.3
----------------------------------------------------------------------------
Cash flows from financing activities                       -           14.2
----------------------------------------------------------------------------
Exploration expenditures                                (0.4)          (0.4)
----------------------------------------------------------------------------
Capital expenditures                                    (1.0)         (17.8)
----------------------------------------------------------------------------
Other investing activities                               1.6           (0.1)
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Increase (decrease) in cash                              5.0           (3.8)
----------------------------------------------------------------------------

Expenditures on sustaining capital projects and construction related to completing the water ponds at the Cerro de Maimon Mine were approximately $1.0 million during the First Quarter 2009.

Balance Sheets: Cash and accounts receivable were approximately $10.3 million at March 31, 2009, an increase of $4.3 million during the First Quarter 2009. Saleable metal inventories were approximately $1.0 million at March 31, 2009 versus $nil at the end of 2008. The amount outstanding on GlobeStar's senior debt facility with Nedbank totalled $44.6 million at the end of the First Quarter 2009.

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Balance Sheets (in $millions)                  As at 31Mar09  As at 31Dec08
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Assets
----------------------------------------------------------------------------
Cash                                                     8.1            3.2
----------------------------------------------------------------------------
Accounts receivable                                      2.2            2.8
----------------------------------------------------------------------------
Concentrate inventory (at cost)                          1.0              -
----------------------------------------------------------------------------
All other assets                                       107.5          116.8
----------------------------------------------------------------------------
                                                       118.8          122.8
----------------------------------------------------------------------------
Liabilities & Equity
----------------------------------------------------------------------------
Accounts payable and accrued liabilities                 6.2            6.3
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Long term debt                                          44.6           44.0
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All other liabilities                                    2.0            3.5
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Equity                                                  66.0           69.0
----------------------------------------------------------------------------
                                                       118.8          122.8
----------------------------------------------------------------------------

First Quarter 2009 Operating Results

A summary of the operating results for the First Quarter 2009 is outlined in the following tables. During the First Quarter 2009 the mine and sulphide plant operated satisfactorily and currently continue to do so.

----------------------------------------------------------------------------
Sulphide Plant                                           Three Months Ended
----------------------------------------------------------------------------
                                                  March 31,     December 31,
Operating Statistics                                  2009             2008
----------------------------------------------------------------------------
Sulphide ore processed (tonnes)                    103,000           90,000
----------------------------------------------------------------------------
Copper grade                                        3.9%(1)             3.5%
----------------------------------------------------------------------------
Gold grade g/t, Silver grade g/t                   1.0, 87          1.0, 77
----------------------------------------------------------------------------
Copper, gold & silver recoveries              86%, 45%, 67%    75%, 49%, 54%
----------------------------------------------------------------------------
Copper concentrate produced (tonnes)                12,500            7,700
----------------------------------------------------------------------------
Copper in concentrate (pounds)               7.6 million(1)     5.1 million
----------------------------------------------------------------------------
Gold & silver in concentrate (ounces)  1,600(1), 192,000(1)  1,500, 120,000
----------------------------------------------------------------------------
(1) revised after reconciliation to shipments
----------------------------------------------------------------------------

The oxide plant has been operating on a continuous basis during the First Quarter 2009, however, production was still ramping up at the end of the quarter. During April 2009, the oxide plant processed approximately 600 tonnes of oxide ore per day, producing approximately 720 ounces of gold and 18,000 ounces of silver during the month.

----------------------------------------------------------------------------
Oxide Plant                                              Three Months Ended
Operating Statistics                                         March 31, 2009
----------------------------------------------------------------------------
Oxide ore processed (tonnes)                                         34,000
----------------------------------------------------------------------------
Gold grade g/t, Silver grade g/t                                    1.3, 65
----------------------------------------------------------------------------
Gold & silver recoveries                                            84%, 35%
----------------------------------------------------------------------------
Gold produced (ounces)                                                1,200
----------------------------------------------------------------------------
Silver produced (ounces)                                             25,000
----------------------------------------------------------------------------

Exploration Update

At the Cerro de Maimon Mine exploration drilling continues approximately 600 metres northwest of the open pit. To date, the one drill rig has completed approximately 540 metres of drilling in four holes and assay results are pending. The current program envisions drilling at least another ten holes in this prospective area.

In the Bayaguana gold-copper district, located about 40 kilometres east of the Cerro de Maimon Mine, diamond drilling is scheduled to start next week on targets focused on gold mineralization such as is found in the Pueblo Viejo district of the Dominican Republic.

Conference Call Details

GlobeStar will host a conference call on Thursday May 14, 2009 at 9:00 a.m. (EDT) to discuss these 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 5518103. The archived conference call can be accessed until Friday May 22, 2009 by following the instructions in the investor relations tab on GlobeStar's website.

A short presentation will be made during the conference call and the presentation slides will be available in the investor relations tab of GlobeStar's website at www.globestarmining.com.

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 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 Canadian National Instrument 43-101, supervised the preparation of and verified the technical information contained in this release.

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