GRAND JUNCTION, COLORADO -
- Net loss of $1.8 million in third quarter compared to $1.75
million in second quarter
- $83.3 million of consolidated cash and cash equivalents at end
of quarter compared to $86.2 million at end of second quarter
- Geovic Cameroon feasibility study underway, significant
increase in anticipated costs, supplemental report may be
undertaken
Geovic Mining Corp. ("Geovic" or "Company"), a company engaged
in exploring for nickel, cobalt and manganese through its 60%-owned
subsidiary, Geovic Cameroon PLC ("GeoCam") and for other minerals
in the United States and other areas of the world, reported its
interim unaudited financial results for the third quarter and nine
months ended September 30, 2007. GeoCam is planning to develop its
Nkamouna cobalt-nickel-manganese project in Cameroon. The Company's
financial information reported in Canada is available on SEDAR
(www.sedar.com), and the financial information reported in the
United States to the Securities and Exchange Commission is
available on EDGAR (www.sec.gov).
The Company's interim unaudited financial information is as
follows:
Geovic Mining Corp.
(an exploration stage company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2007 2006
$ $
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ASSETS
Current
Cash and cash equivalents 83,300,044 9,373,870
Accounts receivable 296,705 7,654
Prepaid expenses 69,651 83,271
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Total Current Assets 83,666,400 9,464,795
Property, plant and equipment, net 285,325 201,869
Mineral property costs 1,590,707 -
Deposits 61,190 65,163
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Total Assets 85,603,622 9,731,827
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accrued liabilities and other payables 1,537,303 913,138
Income tax payable 845,397 859,697
Advances from minority shareholders 3,478,131 -
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Total Current Liabilities 5,860,831 1,772,835
Contingent liability 240,863 240,863
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Total Liabilities 6,101,694 2,013,698
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Commitments and contingencies
Stockholders' Equity
Preferred stock, par value of $.0001, 50,000,000
shares authorized and 0 (December 31,
2006 - 6,000,000) shares issued and outstanding - 600
Common stock, par value of $.0001, 200,000,000
shares authorized and 101,113,488 (December 31,
2006 - 62,142,943) shares issued and outstanding 10,111 6,214
Stock purchase warrants 15,747,657 3,074,845
Additional paid in capital 102,278,867 37,281,909
Deficit accumulated during the exploration stage (38,534,707) (32,645,439)
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Total Stockholders' Equity 79,501,928 7,718,129
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Total Liabilities and Stockholders' Equity 85,603,622 9,731,827
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------------
September September September September Since
30, 2007 30, 2006 30, 2007 30, 2006 Inception
$ $ $ $ $
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Revenue - - - - -
Expenses
Exploration costs 2,171,833 1,565,479 5,601,434 2,510,167 19,842,941
Head office and
management 791,037 294,025 2,709,979 997,608 8,309,934
Stock based
compensation 161,627 925,842 507,253 925,842 12,030,507
Interest and bank
charges 7,864 593 8,760 1,313 36,815
Depreciation 14,573 7,918 41,211 30,295 745,631
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3,146,934 2,793,857 8,868,637 4,465,225 40,965,828
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Advances from
minority
shareholders 714,314 - 1,615,074 - 1,615,074
Interest and other
income 899,999 42,669 1,978,295 55,603 2,289,744
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Net loss before
income taxes (1,532,621)(2,751,188)(5,275,268)(4,409,622)(37,061,010)
Income tax expense 242,000 395,372 614,000 633,704 1,473,697
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Net loss for the
period (1,774,621)(3,146,560)(5,889,268)(5,043,326)(38,534,707)
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Basic loss per
share (0.02) (0.14) (0.07) (0.24)
Basic weighted
average number
of common shares 88,967,270 22,221,441 88,967,270 20,870,332
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------------
September September September September Since
30, 2007 30, 2006 30, 2007 30, 2006 Inception
$ $ $ $ $
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OPERATING
ACTIVITIES
Net loss for the
period (1,774,621)(3,146,560)(5,889,268)(5,043,326)(38,534,707)
Adjustments to
reconcile net
loss to net cash
used in operating
activities:
Depreciation
expense 14,573 7,918 41,211 30,295 745,630
Stock based
compensation
expense 161,627 925,842 507,253 925,842 12,030,507
Changes in non-
cash operating
working capital:
Decrease (increase)
in accounts
receivable 16,885 (2,874) (289,051) 24,001 (296,705)
Decrease (increase)
in prepaid expenses 24,109 10,000 13,620 10,000 (69,651)
Decrease (increase)
in deposits 595 - 3,973 - (61,190)
Decrease (increase)
in other current
assets - 4,976 - (8,303) -
(Decrease) increase in
accrued liabilities
and other payables (43,955) 1,391,769 624,164 1,418,057 1,537,302
Increase in contingent
liability - - - - 240,863
Increase (decrease)
in income tax
payable 242,000 395,372 (14,300) 633,704 845,397
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Cash used in
operating
activities (1,358,787) (413,557)(5,002,398)(2,009,730)(23,562,554)
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INVESTING
ACTIVITIES
Purchases of
property, plant
and equipment (35,773) (16,728) (124,667) (17,234) (1,030,956)
Acquisition of
mineral leases (807,179) - (1,590,707) - (1,590,707)
Net (purchases)
sales of short-
term investments - 997,495 - (993,600) -
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Cash provided by
(used in) investing
activities (842,952) 980,767 (1,715,374)(1,010,834) (2,621,663)
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FINANCING ACTIVITIES
Increase (decrease)
in minority
interest (714,314) - 3,478,131 - 3,478,131
Cash paid to
rescind exercise
of stock options - (15,000) - (15,000) -
Proceeds from
issuance of
common and
preferred Stock - - 67,158,300 4,714,097 95,589,796
Proceeds from
issuance of stock
purchase
warrants - - 13,093,286 - 16,168,131
Proceeds from
exercise of stock
options and stock
purchase warrants 20,503 - 1,954,276 18,130 2,031,846
Share issue costs (39,353)(1,230,275)(5,040,047)(1,230,275) (7,783,643)
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Cash provided by
(used in) financing
activities (733,160)(1,245,275)80,643,946 3,486,952 109,484,261
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Net increase
(decrease) in
cash and cash
equivalents (2,934,899) (678,065)73,926,174 466,388 83,300,044
Cash and cash
equivalents,
beginning of
period 86,234,943 2,079,791 9,373,870 935,338 -
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Cash and cash
equivalents, end
of period 83,300,044 1,401,726 83,300,044 1,401,726 83,300,044
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Net loss for three months ended September 30, 2007 compared to
three months ended September 30, 2006:
Geovic Mining had a $1,774,621 net loss in the three months
ended September 30, 2007, in comparison with a $3,146,560 net loss
in the same period of 2006. For both periods, the Company had no
material revenues from operations and incurred losses, as it has
since its inception. The reduction in the net loss in the third
quarter of 2007 was due to an increase in interest income of
$857,330 which was the result of investing the additional funds the
Company raised during the year from two public offerings. However,
the Company's operating expenses for the quarter ended September
30, 2007 were $3,146,934 compared to $2,793,857 for the quarter
ended September 30, 2006. This increase was primarily a result of
the increase in exploration costs of $606,354, head office expenses
of $497,012 offset by a decrease in stock based compensation of
$764,215. The increase in exploration costs and head office
expenses were attributable to the additional funds available to the
Company which were used to further the progress of the Company's
business. The decrease in stock based compensation was the result
of fewer stock options vesting during the quarter ended September
30, 2007 compared to September 30, 2006. In addition, the Company
had $242,000 of income tax expense in the third quarter of 2007
compared with $395,372 in the third quarter of 2006, and it
recorded $714,314 as minority interest during the three months
ended September 30, 2007 in relation to $0 in the third quarter of
2006 The increase in exploration costs in the quarter ended
September 30, 2007 compared with the same period in 2006 was due to
increases of approximately $433,618 in property evaluation expenses
related to the Cameroon project, $728,618 in expenses for other
projects in the United States and other areas. These increases were
partially offset by decreases of $342,392 in property surface area
tax and $228,658 in metallurgical studies.
Cash flow for three months ended September 30, 2007 compared to
three months ended September 30, 2006:
During the three months ended September 30, 2007, the Company
used $1,358,787 in operating activities in comparison with $413,557
in the third quarter of 2006, an increase of approximately
$945,230. The Company used $842,952 in investing activities in the
three months ended September 30, 2007 compared to a source of
$980,767 in the same period of 2006, an increase of approximately
$1,823,719 due to the proceeds from the sale of short-term
investment of $997,495 in the third quarter of 2006 and the net
increase in the purchase of mineral property and fixed assets of
$826,224 in the third quarter of 2007. The financing activities of
the Company used $733,160 during the third quarter of 2007, a
decrease of approximately $512,115 compared to the $1,245,275 used
by financing activities in the third quarter of 2006. This decrease
compared to the third quarter of 2006 was due primarily to a
reduction of the share issue costs in the third quarter of 2007 of
$1,190,922 offset by an increase in the minority interest of
$714,314 in the third quarter of 2007. As a result, the cash
balances of the Company decreased by $2,934,899 in the third
quarter of 2007 compared to a $678,065 decrease in the comparable
period of 2006.
Financings:
During the first nine months of 2007 the Company completed the
following financings:
--On March 6, 2007, the Company raised gross proceeds of Cdn$54
million (including the over-allotment option) through the public
sale through agents of 21.6 million units at Cdn$2.50 per unit.
Each unit consisted of one common share and one-half of one common
share purchase warrant; each whole warrant entitles the holder to
purchase one common share at Cdn$3.00 for five years following the
closing. The net proceeds received after payment of the 6% cash
commission to the agents were Cdn$50.76 million before payment of
approximately $500,000 of other expenses related to the
offering.
--On April 27, 2007, the Company issued 8,750,000 units at a
price of Cdn$4.00 per Unit for gross proceeds of Cdn$35 million.
Each unit consisted of one common share and one-half of one common
share purchase warrant. Each whole warrant entitles the holder to
purchase one common share at Cdn$5.00 for five years following the
closing. The Company paid a 5% cash commission to the underwriters
and other expenses estimated at Cdn$171,000. The Company also
granted the underwriters an over-allotment option which they
partially exercised and, as a result, on May 30, 2007, the Company
issued 834,200 units for additional gross proceeds of Cdn$3,336,800
representing additional net proceeds of Cdn$3,160,950 after payment
of the 5% cash commission.
Cash and Working Capital:
At September 30, 2007, the Company had cash and equivalents of
$83,300,044 (including cash held by GeoCam) compared to $9,373,870
at December 31, 2006, and working capital of $77,805,569 in
comparison with $7,691,960 at December 31, 2006.
Geovic Cameroon Initiatives:
On April 9, 2007 GeoCam's stockholders entered into a
Stockholders' Agreement setting out the terms, conditions and
fiscal arrangement for continued participation in the Cameroonian
project by Geovic and the minority shareholders. The agreement
includes provisions consistent with Cameroon business laws for all
shareholders to contribute financing as required to advance the
project in 2007 and forward. The Company believes that the
shareholders agreement is consistent with international mining
industry standards and is compliant with Western Africa (OHADA)
business law.
From the inception of the Cameroon project through December 31,
2006, Geovic advanced all operating expenditures on behalf of
GeoCam and all such expenditures were consolidated on the accounts
of the Company. On April 12, 2007, GeoCam shareholders approved a
GeoCam capital increase through the issuance of 650,000 new shares
at 10,000 CFA francs per share, or a total of 6.5 billion CFA
francs (equivalent to approximately $13.5 million). All of the new
shares approved for issuance were purchased by or for the accounts
of the shareholders of GeoCam, including Geovic, in their
respective ownership interests prior to the capital increase. The
share purchases were completed by May 12, 2007. As a result, GeoCam
received funds that are, pending expenditure, being held by GeoCam
in US$ and CFA francs accounts in the Cameroon branch of a large
international bank. This increase in capital is being used to fund
a portion of GeoCam's future operating costs.
The minority interest balance of $3,478,131 at September 30,
2007 represents the remaining funds on hand from the capital
increase contributed by the minority shareholders described above.
The difference between the original amount contributed and the
balance at September 30, 2007 represents the minority shareholders'
share of the actual expenditures from January 1, 2007 through
September 30, 2007. Prior to 2007, no amounts were recognized for
minority interest because there was no obligation for the minority
shareholders to share these costs.
During the three months ended September 30, 2007, Geovic and
GeoCam entered into a one-year services contract that became
effective January 1, 2007. The contract covers the professional and
technical services that Geovic and outside contractors expect to
provide to GeoCam during the contract term to facilitate the
Cameroon project. The terms and conditions of the technical
services contract are consistent with arm's length provisions of
third party service providers and the Company believes that the
contract is consistent with international mining industry standards
and is compliant with Western Africa (OHADA) business law.
In September 2007, Geovic and GeoCam reached an agreement
whereby approximately $31 million of expenditures and advances made
by Geovic on behalf of GeoCam for the years 1995 through 2006 would
be reduced to approximately $23 million, subject to final
documentation, and recorded as an advance by Geovic that would be
applied to Geovic's share of future capital increases of GeoCam. An
amount of accrued interest on this balance will be recorded as an
interest-bearing loan. The final documentation is expected to be
agreed upon before the end of this fiscal year.
GeoCam has appointed Citibank as financial advisor. However, we
do not expect any firm lending agreement or other financing
commitment at least until we have received an acceptable
independent bankable feasibility study of the Nkamouna project.
GeoCam commissioned such a study from an independent engineering
firm in mid-2006. Based on preliminary information furnished by
such firm from the feasibility study underway, the anticipated
initial capital costs of the Nkamouna project could be in the range
of $400 million and the anticipated operating costs will be
substantially higher. The final results of this study have been
delayed due in part to global escalations in the demand for mining
and processing equipment as well as construction materials which
could impact the overall cost of the project. GeoCam expects to
receive this study, but may seek a supplemental report from an
additional provider to help assure bankability and reliability.
Based on the results of a preliminary feasibility study which we
received in early 2006, from a different independent consulting
firm and our own extensive review, we expect that a final report
will conclude that profitable mining operations on the Nkamouna
project will be feasible and that the resulting study will,
therefore, support significant debt financing. Such a final report
will include detailed mine plans, milling and processing facilities
plans and budgets for anticipated construction and related costs
including operating costs. The amount of required financing will
depend in large part on the conclusions reached in the final
feasibility study and subsequent final engineering and design
studies.
At the time our preliminary feasibility study was completed in
March 2006, we expected to experience increasing capital and
operating costs at moderately rising rates. Beginning in late 2006
and continuing to the present, capital and anticipated operating
expenses for mining and processing operations have increased
significantly faster than we or others in the mining industry
anticipated. These increases result in part due to much higher
demand for mining and processing equipment brought on by escalating
world-wide demand and large numbers of mining and related projects
being brought into production, or enlarged. These and similar cost
and expense increases are beyond our control, and are likely to
have, as one effect, in addition to requiring significantly more
capital to bring the Nkamouna project into production, a
significant, though still acceptable, decrease in our anticipated
return from operating the project.
Other Exploration Activities:
During the nine months ended September 30, 2007, the Company,
through its wholly-owned subsidiary Geovic Energy Corp. entered
into mineral lease agreements with a number of parties in Colorado
and Wyoming for cash consideration of $1,590,707. These lease
agreements give the Company the right to explore for, develop and
produce uranium and other minerals on these properties for periods
specified in the agreements which under certain circumstances can
be extended. To date, the Company has not made expenditures for
evaluation of the economic viability of these properties.
Subsequent Event:
On October 26, 2007, the Board of Directors ("the Board") of
Geovic Mining approved salary increases for all officers
retroactive to July 1, 2007 and approved an annual cash retainer
for outside Board members. The Board also approved a grant of
1,630,000 options under the Company's stock option plan to officers
and directors with a vesting schedule for the officers of 40%
vested at grant date, 30% vesting 12 months following grant date
and 30% vesting 24 months following grant date. The option exercise
price is Cdn$2.36.
About Geovic Mining Corp.
Geovic, through its 60% ownership of Geovic Cameroon PLC, is
planning to develop the first of seven potential
cobalt-nickel-manganese deposits in Cameroon, Africa. The S&P
profile and other information is available at the Geovic's website,
www.geovic.net.
On behalf of the Board, John E. Sherborne, CEO
The foregoing information may contain forward-looking statements
relating to the future performance of Geovic Mining Corp.
Forward-looking statements, specifically those concerning future
performance, are subject to certain risks and uncertainties, and
actual results may differ materially. These risks and uncertainties
are detailed from time to time in the Geovic's filings with the
appropriate securities commissions.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: Geovic Mining Corp. c/o Vanguard Shareholder Solutions
Inc. Keith Schaefer (604) 608-0824 Website:
www.vanguardsolutions.ca Geovic Mining Corp. Greg Hill Chief
Financial Officer (970) 256-9681 Website: www.geovic.net
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