₪ David Pescod's Late Edition March 3, 2008
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 others 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.
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