Commodity prices have seen a sharp recovery this year, led by iron ore. Iron ore prices slumped last year on the back of a slowdown in China and an oversupplied market. Heading into 2016, the outlook for most commodities had been bearish.
Iron ore prices though have seen a recovery this year. Prices jumped 40% earlier this year before seeing a pullback. That rally was sparked by speculative trades in China. However, the commodity has seen another sharp recovery and this time around the gains have been driven by stimulus measures from China.
The question is whether the rally in commodities such as iron ore can be sustained, considering that the market for most metals remains oversupplied.
GobiMin Inc. (TSX-Venture:GMN) is a Toronto-based company engaged in the development and exploration of mineral properties. The company is focusing on the development of the Sawayaerdun Gold Project (Gold Project) and other exploration projects.
It holds an equity interest of over 70% in Xinjiang Tongyuan Minerals Limited (Tongyuan) to explore, develop and operate the Gold Project located in Xinjiang. It also holds an equity interest of approximately 38.3% in Loco Hong Kong Holdings Limited.
In addition, it owns over 40% equity interests each in over three companies incorporated in China to engage in base metals and precious metal exploration, including nickel, copper and gold in Xinjiang, and over 2.66% equity interest in the Yanxi Copper Property.
GMN shares are up sharply in trading today after the company announced its second-quarter financial results. For the quarter, GMN reported a net loss of $0.5 million, compared to a net oss of $0.7 million reported for the same period in the previous year. The company reported a EBITDA loss of $0.3 million, compared to an EBITDA loss of $0.6 million reported for the same period in the previous year.
At the end of the second quarter, GMN had working capital of $20.3 million, with current assets at $23 million. Working capital at the end of 2015 amounted to $23.1 million. The company noted 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 $1.8 million.
GMN shares were on the move up in yesterday’s trade when the news was announced, and the gains continued today. At last check, the stock was trading 8.89% higher at $0.490, however it was on low volume of only 1,500.
