GMN Gobimin Inc

(TSXV: GMN) GobiMin Inc. (“GobiMin” or the “Company”, together with its subsidiaries collectively the “Group”) reports its financial results for the year ended December 31, 2020.

Financial Highlights

As at / For the year ended December 31,	2020	2019	2018
	$	$	$
Revenue	0.9 million	1.3 million	1.5 million
Gain on disposal of financial assets	0.3 million	0.6 million	3,500
Fair value (loss)/gain on financial assets	(0.1 million)	0.9 million	(1.1 million)
Net loss for the year	(3.3 million)	(0.5 million)	(2.9 million)
Loss attributable to shareholders of the Company	(3.1 million)	(0.3 million)	(2.8 million)
LBITDA (1)	(3.0 million)	(0.6 million)	(3.2 million)
Basic and diluted loss per share	(0.062)	(0.007)	(0.056)
LBITDA per share (1)	(0.061)	(0.013)	(0.064)
Cash and cash equivalents	19.5 million	17.8 million	17.1 million
Cash and cash equivalents per share (1)	0.40	0.36	0.34
Working capital	21.3 million	21.3 million	19.3 million
Total current liabilities	2.5 million	2.5 million	3.5 million
Total non-current financial liabilities	-	0.4 million	-
Total assets	75.0 million	76.0 million	78.1 million
Annual dividend per share	-	-	0.01

Note: (1) As non-IFRS measurements, LBITDA (loss before interest income and expense, income taxes, depreciation and amortization), LBITDA per share and Cash and cash equivalents per share do not comply with IFRS and, therefore, the amounts presented in the above table may not be comparable to similar data presented by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Business Summary and Development

1. Gold Project in Xinjiang

The Company owns a 70% equity interest in Xinjiang Tongyuan Minerals Limited which holds Sawayaerdun Gold Project (“Gold Project”) in Xinjiang. Its exploration licence had been renewed with expiry date on August 22, 2021. Its mining licence expired on December 23, 2019 and the renewal process involved multiple approval levels. The application procedures were delayed attributable to the work piled in government authorities during the COVID-19 pandemic and additional time required for finalizing the resources assessment report on the Gold Project prepared by an independent valuer. As at December 31, 2020, approval from the Department of Natural Resources of both the county and prefecture levels were received. As at the date of hereof, the renewal application was approved by the Department of Natural Resources of Xinjiang Uyghur Autonomous Region after submission of related geological documents and the land rehabilitation report. The renewal application of the mining licence will be processed pending the determination of the reserve assessment amount and payment for the related fee based on the assessment. The on-site industrial test on applying bio-tech methodology on extraction of metals from large-scale samples of gold ores was affected by the COVID-19 pandemic during the year under review. Due to reduction of social contact and transportation restrictions, the progress of the industrial test was delayed by the inadequacy of technical manpower and test materials, especially sulphuric acid. By virtue of recurrence of infections during this year, the test site had conducted closed-off management several times. Therefore, professional researchers of the Research Institute were not able to return to Xinjiang on time and had to rely on remote working for nearly three months to give guidance on our industrial test. In addition, delivery of ore samples to the Research Institute was disrupted, analysis of which had to be conducted by local labs. Based on the analysis of the samples collected in July 2020, the cultured bacteria were found active in the ore heap which indicated the pre-oxidation of ores has gone well. Additional samples were also collected in November 2020, the analysis results show that the iron and arsenic content in the ores decreased after the pre-oxidation process which indicate that arsenic and iron in the ore sample is successfully removed by oxidation. Moreover, the acid spray and other on-site works were suspended during the winter, and has resumed since late March 2021. After the pre-oxidation stage and subject to the analysis result of the samples, the industrial test would enter the final stage of immersion gold process probably in the second half of 2021.

For the year ended December 31, 2020, there were addition of $0.2 million in the exploration and evaluation assets. As at December 31, 2020, the Group had a contractual commitment of $1.6 million for the future development of the Gold Project.

2. Financial Assets

(i) Listed Securities

As at December 31, 2020, the fair value of listed securities held by the Group amounted to $0.2 million (2019: $0.1 million) which mainly included $0.1 million (2019: $11,000) investment in listed stock, futures and options trading through registered brokerage firms in Hong Kong and $0.1 million (2019: $0.1 million) for a stock listed in Canada. For the year ended December 31, 2020, the gain on disposal of listed securities amounted to $0.2 million (2019: $0.5 million) and fair value gain was $15,000 (2019: $0.9 million).

(ii) Unlisted Investments

The Group holds 670,000 shares of Dragon Silver Holdings Limited (“Dragon Silver”) representing 9.90% of its total issued capital at an investment cost of $1.1 million (HK$8,710,000). Dragon Silver is a Hong Kong based company mainly engaged in trading, production, processing and investment in precious metals and non-ferrous metals and related products.

Pursuant to the subscription agreement dated December 29, 2017, the guarantor of the agreement irrevocably guaranteed to the Group that (i) the audited net profit after tax of Dragon Silver shall not be less than $1,926,233 (HK$15,000,000) for each of the financial years ending from June 30, 2018 to 2022; and (ii) the amount of dividends declared and paid by Dragon Silver during each of the financial years ending from June 30, 2018 to 2022 shall not be less than $0.16 (HK$1.25) per share (“Dividend Guarantee”). On April 17, 2020, the Group agreed with Dragon Silver to waive the profit guarantee for the years ended June 30, 2019 and 2020. In October 2020, the guarantor paid to the Group the Dividend Compensation Amount of $0.1 million for the financial year ended June 30, 2020. The carrying value of the investment together with the Dividend Guarantee, the related profit guarantee and put option as at December 31, 2020 was $1.3 million (2019: $1.4 million) and the Group recognized a fair value loss on financial asset of $0.1 million (2019: $0.2 million).

As at December 31, 2020, other unlisted investments held by the Group amounted to $0.3 million (2019: $0.2 million). During the year under review, the fair value gain on other unlisted investments was $18,000 (2019: $3,000).

(iii) Debentures and Certificate of Deposit

The Group would hold debentures and certificate of deposit bearing low risks and reasonable interest return from various industries through the open market. Debentures are held to receive coupon interest payments as well as to realize potential gains. The Group may dispose of debentures through the open market when the Group requires funds for operational or other investment needs.

As at December 31, 2020, the Group held debentures of $2.7 million (2019: $4.6 million) with coupon rates ranged from 4.250% to 7.375% (2019: 4.250% to 7.750%) per annum and maturities ranged between May 31, 2021 and perpetual (2019: January 17, 2020 and perpetual). For the year ended December 31, 2020, the interest income on debentures and certificate of deposit was $0.2 million (2019: $0.3 million) and fair value loss was $13,000 (2019: gain of $0.2 million) respectively.

3. Investment Properties

As at December 31, 2020, the investment properties in Shenzhen with carrying amount of $3.1 million (2019: $3.1 million) was higher than the estimated fair value of $2.0 million and therefore an impairment loss on investment properties of $1.1 million was recognized for the year ended December 31, 2020 (2019: nil).

4. Liquidity and Capital Resources

As at December 31, 2020, working capital of the Group was amounted to about $21.3 million (2019: $21.3 million), by netting off its current assets of $23.8 million (2019: $23.8 million) with current liabilities of $2.5 million (2019: $2.5 million). Taking into account of its financial position, the management of the Group considered that its cash and cash equivalents will be more than sufficient to finance its operation, including the contractual commitments of the Gold Project of approximately $1.6 million.

For further information, please contact:

Felipe Tan, Chief Executive Officer
Tel: (852) 3586-6500
Email: felipe.tan@gobimin.com

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. Forward looking information includes without limitation, statements regarding the size and quality of the Company’s mineral resources, progress in development of mineral properties, the prospective mineralization of the properties, and planned exploration programs. 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.

“Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.”

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