AN INTERVIEW WITH LARRY CICCARELLI,
CHAIRMAN OF GLOBESTAR MINING
(As of February 26, 2008)
We are here with Larry Ciccarelli, who has played a
prominent role in both the founding of and the development
of Globestar Mining Corp.
David Pescod: Larry, can you give us some of the background
to your affiliation with this company?
Larry Ciccarelli: As founders, we began investing in the
Dominican Republic in 1997 through a company that I am
partnered in called Karr Securities Inc. We began in 1997
and through a series of transactions, we took control of
the wholly-owned subsidiary of Globestar today – CMD in
2000.
It was an easy transaction for us to do at that time
because when we purchased the CMD subsidiary from
Falconbridge, not only did we receive all those Falconbridge’s
non nickel exploration assets, we also purchased
the data, the team, the offices, and what not.
Thereby in purchasing CMD, along with it came the Falconbridge
trained team that was headed by Julio Espaillat,
who is still with us today and is our country manager.
Subsequent to that, I believe it was in 2002, we acquired
the Cerro de Maimon deposit after we had received approval
for an RTO with a company called Boreale Exploration
Inc. out of Quebec. Through the years after this
acquisition of Cerro de Maimon, we did two feasibility
studies one with Pincock Allen and Holt updated with
Behre Dolbear and then we brought JP Chauvin in 2006
and updated those feasibility studies.
D.P: There had been a few personnel changes, Mr.
Fisher making a recent exit and you resuming the Chairmanship…
is there something there one should know?
L.C: Going back to 1997, when Karr Securities was making
an investment into the Dominican Republic, we were
also making an investment at that time between 1997 and
2000 with a company called Ambrex, which is Karmin
Exploration today.
Karmin is a large zinc resource in Brazil and Bill Fisher
was the founding President of that company and that’s
how we got to know Bill and he is the still the CEO of Karmin
today. Karr Securities is the controlling shareholder
of Karmin. Bill resigned to pursue other opportunities and
Karmin is one of those other opportunities.
D.P: All of this is a preamble to what is really becoming
an exciting story. A mine is actually getting built. We
have so many projects around the world that are stalled
because of environmental concerns, permitting, nationalistic
concerns, etc. That’s a nice little mine shaping up in
the Dominican and it looks like you could be on production
in July?
L.C: That is correct. With that being said, keep in mind
this was a long haul for us. Again, we began working on
this deposit in 2003 through two feasibility studies mentioned
so it has been a long time coming, but we maintained
our focus and kept moving the project forward.
D.P: There are a lot of people with a lot of respect for the
technical team out of the Dominican that is building this.
Any comments on that?
L.C: Getting back to our country manager, a gentleman by
the name of Julio Espaillat who is a former Falconbridge
employee for 13 years, as well as our mine manager, a
gentleman by the name of Jose Antonio Ruiz. Jose Antonio
was the mine manager at Pueblo Viejo, one of the largest
gold mines in the Americas. In the area, surrounding
the Cerro de Maimon mine, we have the Falcondo nickel
operation as well.
Thus, between Pueblo Viejo and Falcondo,
we are in a mining district, so there is a skilled labor
pool in the area. I think we were fortunate enough to
get our project built before the Barrick operation, but with
those two gentlemen and obviously adding a couple of
expatriates operationally everything seems to be running
quite smoothly down in the Dominican. In addition, with
Eric Olson, GlobeStar VP of Projects, he is supervising
and responsible for the construction and commencing of
production for GlobeStar.
Eric is the engine behind GlobeStar. We have a good team and all should be mentioned,
as well as a good contractor RSW, an engineering
firm Met Chem and mining contractor Sococo.
D.P: When you reach production, the suggestion is that
you could have nice cash flow, approaching $100 million a
year. Is that true?
L.C: That is correct. It’s great to have current commodity
prices. When we first started investing in the Dominican
Republic, we were looking at $0.50 copper. So yes, if the
current commodity prices stay the same, those are the
types of economics that we will see out of this mine.
D.P: You also have the nickel asset right beside the play. What kind of size do you think those assets are today?
L.C: We issued a press release last Monday using a 1% cut off. Our resources are at 6.2 million tonnes at 1 ½% nickel and using a .9% cut off, we are over 7 million tonnes at 1.4%. The drill has not stopped. What type of resources are potentially out there? I think we set a goal for ourselves to get to the 10 million tonnes. Given the press release from Monday, I think that goal is pretty reachable. We are drilling one hole approximately every three days.
D.P: Wow! We notice several analysts are following the stock these days as we get closer to production startup. By the way, what is the exact date expected for start up?
L.C: We think summer of 2008. Realistically, July or August is a realistic time frame in terms of start up.
D.P: Now there are several analysts following this stock at this time and they seem to have expectations from anywhere
between $2.50 and $3.00 a share based on the copper and of course no one knows what to think about the
nickel at this point. Any thoughts on these expectations?
L.C: I think based on current commodity prices; those types of targets are pretty achievable given the financial matrix of the mine. However, I believe the ratings are conservative based on the commodity prices they are using for valuation.
We continue to drill for nickel and we continue to look at exploration on the base metal side on the Maimon belt that we call it – the massive sulphide belt surrounding Cerro de Maimon. It’s two-fold. We are going to look at mine life extension and also production expansion as we continue to explore for additional resources on the mine side. On the nickel side, we will see what happens here. We need to do develop alternatives to the Falcondo smelter. Now
that’s not to say that Falcondo may or may not take our feed and that’s just one possibility, but Falcondo cannot be our only alternative. So we want to look at developing some alternative to processing our ore, or shipping our ore, or whatever the other alternative can be. We are just on the beginning stages on our nickel exploration and now that we have the 10 million tonnes in sight, we know what type of resources that we potentially can have and based on that,
we need to develop alternatives.
D.P: I guess we have to end this with something like a question like, okay, if you could only buy one stock today other than your own (and it has to be a double) what would it be?
L.C: I really like all these single-mine producers (the Sherwood’s, the Capstone’s, the Roca’s) or ot hers who are financed and about to achieve that status although they have all moved up over the last 30 or 60 days. Given this environment, these one-mine producers, I think you’ll see a consolidation in the industry at some point. It doesn’t make sense in the long term for any of these companies (including ourselves) to be a one-mine company. I like to continue to focus on these one-mine (whether it’s base metals or precious metal companies) I think there is some upside. I do not know if there is a double but in consolidation there is always upside.
D.P: Thank you for your time, Mr. Ciccarelli.
Disclosure: Globestar Mining: Canaccord Capital covers this stock and has a Speculative Buy rating on it. (Speculative buy: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.)
David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Fax: 780-408-1501
Monday, March 3, 2008
AN INTERVIEW WITH LARRY CICCARELLI,
Gold, oil rocket to record highs
Gold prices scaled unprecedented heights Monday, hitting record territory alongside crude oil as investors looked for a safe place to park their money while the U.S. economy and greenback struggle.
Gold futures jumped to $992 (U.S.) an ounce on the Comex division of the New York Mercantile Exchange, pushing to within a whisper of the milestone $1,000 level as the U.S. dollar fell to its lowest ever against the euro. Bullion eventually closed Monday's session at $984.20, up $9.20. Gold prices rallied nearly 32 per cent in 2007 and have shot up more than 15 per cent this year.
Not to be outdone, crude oil futures surged to an unprecedented $103.95 a barrel in New York on Monday. The gains sent the benchmark price of oil above an inflation-adjusted historical record reached 28 years ago. Oil peaked at $39.50 a barrel in April, 1980, which translates into $103.76 a barrel in today's money.
Matthew Turner, a precious metals analyst at Virtual Metals Consulting Ltd. in London, said a struggling greenback and the raft of weak U.S. economic data are supporting gold's gains.
“As long as the U.S. dollar is falling and the economic news from the U.S. stays this bad, gold could go much higher,” he said in an interview.
Bullion started to regain its lustre last year, as investors flocked to it for its safe-haven qualities, Mr. Turner said. The ongoing financial crisis has also boosted the yellow metal's appeal
“The nature of the financial crisis has been a collapse of trust in the banking sector, and if you can't trust financial intermediaries, then metal dug out of the ground make sense again,” he said. “This has been the perfect crisis for gold.”
A report on manufacturing released Monday suggested the U.S. economy is already in a recession, while another showed that construction spending plummeted. The negative news, which pushed the U.S. greenback to a record low against the euro on Monday, is expected to drive commodity market trading until at least March 18, when the U.S. Federal Reserve is to release its next interest rate decision.
“Right now it is all doom and gloom, and that is what metals thrive on,” said Jon Nadler, a senior analyst at Kitco Bullion Dealers in Montreal.
The confluence of a weaker U.S. dollar, higher crude oil prices, and further subprime woes are “playing right into the hands of a speculative metals trader,” Mr. Nadler said. “This is an anxiety premium that is being built into this by the convergence of all these news flows.
Hedge funds, he said, are “throwing tons and tons of money at these markets, mostly for a lack of better alternatives. So that is snowballing and to some degree actually distorting the fundamentals.”
Mr. Nadler said gold could rise to $1,010 and $1,080, but warned that the “risk of a correction has risen exponentially.” Some traders believe that bullion's runup will ease after the Fed's next meeting.
Bullion's run toward $1,000 is unfolding as the annual Prospectors and Developers Association of Canada Convention (PDAC) takes place in Toronto. Although Canadian gold stocks have lagged the jump in gold prices, the S&P/TSX gold subindex was leading the gains on Monday.
Still, shares of Canadian junior miners have remained on ice when compared with gold's massive run, Mr. Nadler said. “PDAC euphoria notwithstanding, the problem is that they just have not done enough. No matter how good the gold story is, sluggish global stock markets, fluctuating currency markets and management risk are all still factors to contend with.”
Gordon Stothart, the chief operating officer of Iamgold Corp., said higher gold prices will add “some very significant value to our bottom line” in the form of higher revenue.
Rising bullion grants the Toronto-based company the “financial wherewithal” to develop projects, he said. “It provides some additional impetus to push our projects as quickly as possible and try to bring them online so we can take advantage of the high gold price.”
However, the price spike can also translate into higher costs and increasing unease in the investment world, Mr. Stothart said.
He expects gold prices to remain elevated: “Gold should hang in at a very high price ... a lot of people are moving away from the U.S. dollar currency and locking into something solid to help replace it.”
Jeff Nichols of American Precious Metals Advisors said that because gold's runup is being driven by investment buying, prices are bound to keep on climbing.
“Don't be surprised to see gold trade up to $1,100 or even $1,200 before year-end 2008,” he said. “And – with the right confluence of economic and geopolitical developments – we could see gold spike to $1500 or even $2000 in the next few years.”
With a file from reporter Virginia Galt.
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