GlobeStar's Hedge Exposure Lower in 2010
Date : 01/11/2010 @ 4:28PM
Source : MarketWire Canada
TORONTO, ONTARIO--(Marketwire - Jan. 11, 2010) -
(All dollar amounts are expressed in United States currency unless otherwise stated.)
In response to questions it has received from the investment community and other interested parties, GlobeStar Mining Corporation ("GlobeStar") (TSX:GMI) today confirmed that GlobeStar's copper, gold and silver hedge exposure for 2010 is much lower than in 2009.
GlobeStar's hedging program, which commenced in 2009 and covers a period of three years, was mandatory as part of the requirements of the project debt facility used to finance GlobeStar's Cerro de Maimon Mine in the Dominican Republic.
Copper Hedges
The quantity of copper production hedged for 2010 is approximately 2.1 million pounds at an average price of $2.32 per pound, as compared to approximately 6.3 million pounds at an average price of $2.67 per pound hedged in 2009.
GlobeStar also holds call options, during 2010, on approximately 2.1 million pounds of copper at a strike price of $4.10 per pound.
Gold Hedges
The quantity of gold production hedged for 2010 is 20,400 ounces at a price of $650 per ounce, offset by call options held by GlobeStar during 2010 on an equivalent 20,400 ounces at a price of $800 per ounce. Consequently, GlobeStar fully participates in all gold price movements when the gold price exceeds $800 per ounce, less the $150 per ounce loss on the spread between the hedges and the call options.
The hedging contracts do not contain any physical delivery obligations and the hedges are cash settled at the end of each month.
Silver Hedges
The quantity of silver production hedged for 2010 is 480,000 ounces at a price of $11.50 per ounce, offset by call options held by GlobeStar during 2010 on an equivalent 480,000 ounces at a price of $17.25 per ounce. Consequently, GlobeStar fully participates in all silver price movements when the silver price exceeds $17.25 per ounce, less the $5.75 per ounce loss on the spread between the hedges and the call options.
As with the gold hedges, the silver hedging contracts do not contain any physical delivery obligations and the hedges are cash settled at the end of each month.
2011 Hedges
During 2011, GlobeStar's hedge position is further reduced as compared to 2010.
Copper production hedged will be reduced to approximately 1.1 million pounds at an average price of $2.04 per pound while copper call options are held on the equivalent number of pounds at a price of $4.10 per pound.
Gold production hedged is a much reduced 5,100 ounces at a price of $650 per ounce and call options are held on 5,100 ounces at $800 per ounce.
Silver production hedged remains at 480,000 ounces at a price of $11.50 per ounce and call options are held on 480,000 ounces at $17.25 per ounce.
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 exploring for copper and gold on its extensive mineral concessions in the Dominican Republic, and also 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).
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," "forecasts," "projects," "intends," "anticipates," or "believes," 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 sulphide and oxide plants at the Cerro de Maimon Mine to operate at their design capacities; (b) certain assumptions relating to the market price for copper, gold and silver and the expected levels of supply and demand for copper, gold and silver and quantities hedged; (c) there being no significant disruptions affecting operations at the Cerro de Maimon Mine, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment, naturally occurring events or otherwise; (d) production at the Cerro de Maimon Mine for 2010 being consistent with GlobeStar's plans; (e) the continued operation of the Cerro de Maimon Mine and (f) counterparties to all hedges and call options meet their contractual obligations. 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.
