| Fri 13 Jul 2007, 7:37 | | GBG - Great Basin Gold - Feasibility Study Indicat |
|
GBG
GBG
GBG - Great Basin Gold - Feasibility Study Indicates Robust Returns From A
High Grade Gold-Silver Operation At Great Basin Gold`s Hollister Project
Great Basin Gold Limited
(Incorporated in Canada and registered as an External Company in South Africa)
(External Company Registration number 2006/021304/10)
Share code: GBG ISIN: CA3901241057
("Great Basin Gold")
FEASIBILITY STUDY INDICATES ROBUST RETURNS FROM A HIGH GRADE GOLD-SILVER
OPERATION AT GREAT BASIN GOLD`S HOLLISTER PROJECT
July 12, 2007, Vancouver, BC - Great Basin Gold Ltd. (TSX: GBG; AMEX: GBN;
JSE: GBGold) announces excellent returns from a feasibility study on Hollister
Development Block Project on its 100% owned Hollister property in Nevada, USA.
The study is based on a 400 ore tons per day underground operation, mining the
high-grade gold-silver mineralization from the Gwenivere, Clementine and South
Gwenivere vein systems and trucking it to an off-site toll milling facility.
Using US dollars, a gold price of US$550/oz and a silver price of US$10.00/oz,
the pre-tax results from the study indicate a very robust 105.6% internal rate
of return and net present value of US$122.9 million (5% discount).
Key parameters and results are:
Proven and probable reserves at 0.28 oz/ton cut-off are: 868,500 tons grading
1.01 oz/t gold and 4.3 oz/ton silver.
Production rate is: 400 ore tons/day.
Recoveries are: 95% gold and 90 % silver.
Average Annual production is: 150,000 oz gold equivalent
Life of mine production (recovered): 834,000 ounces of gold and 3,663,000
ounces silver
Start up Capital Cost of: $ 52 million
Operating cost (split blast tons):
Mining: $175/ton
Toll milling: $42/ton
Trucking: $29/ton
General Administration: $28/ton
Cash cost: $214/equivalent oz1
Total cost: $282/equivalent oz1
Life of Mine: 6 years
Payback: 1.5 years
Internal rate of return: 105.6%
Net Present Value (5% discount): $122.9 million.
1 Gold equivalent is calculated using the above gold and silver prices and the
formula:
Au-eq oz = Au oz + (Ag oz * Ag price/Au price)
Sensitivity analyses conducted to test the key assumptions (metal prices and
capital and operating costs) show the robustness of the project, returning an
IRR of 54% and NPV of US$51.5 million (5% discount) for metal prices of
US$450/oz for gold and US$10.00/oz for silver to an IRR of 155% and NPV of
US$184.8 million (5% discount) for metal prices of US$650/oz for gold and
US$10.00/oz for silver. The project returns were also shown to be relatively
insensitive to capital and operating costs: the IRR ranges from 80% to 131%
and the NPV at a 5% discount from US$83.2 million to US$151.6 million for
variations in the capital and operating costs of +/-20%.
President and CEO Ferdi Dippenaar said:
"Management is very pleased with the results from the feasibility study. As
we have completed the appointment of a full management team at Hollister with
extensive experience in mining this type of ore body, the Company intends to
immediately advance the project through permitting and construction, into
production. As a certain amount of development has taken place in conjunction
with the study, there will be production during the 18-month construction
period. The project will reach full production of 150,000 oz/annum by 2009.
We view this important milestone as Phase 1 of exploiting the true potential
of the Hollister ore body. In-fill drilling and drilling at depth continues,
and we expect opportunities to increase both the production rate and life of
mine of the project."
Great Basin has two advanced stage gold projects in two of the world`s best
gold environments. In addition to the Hollister property on the Carlin Trend,
Great Basin recently completed an optimized feasibility study on its Burnstone
Gold Project on the Witwatersrand Goldfield in South Africa. For more
information, please visit Great Basin Gold`s website at www.grtbasin.com or
call Investor Services: Tsholo in South Africa at 27 (0) 11 884 1610; Melanee
within North America at 1-800-667-2114; or Barbara in USA at Breakstone Group
(646) 452-2334.
Ferdi Dippenaar
President and CEO
No regulatory authority has approved or disapproved the information contained
in this news release.
Cautionary and Forward Looking Statement Information
All information contained in this press release relating to the contents of
the Feasibility Study, including but not limited to statements of the
Burnstone project`s potential and information such as capital and operating
costs, production summary, and financial analysis, are "forward looking
statements" within the definition of the United States Private Securities
Litigation Reform Act of 1995. The information relating to the possible
construction of conveyor, grinding and leaching plant facilities also
constitutes such "forward looking statements." The Feasibility Study was
prepared to quantify the Hollister project`s capital and operating cost
parameters and to determine the project`s likelihood of feasibility and
optimal production rate. The capital and operating cost estimates which were
used have been developed based on detailed capital cost to production level
relationships.
The following are the principal risk factors and uncertainties which, in
management`s opinion, are likely to most directly affect the ultimate
feasibility of the Hollister project. The mineralized material at the
Hollister project is currently classified as a measured and indicated
resources, and a portion of it qualifies under Canadian mining disclosure
standards as a proven and probable reserve, but readers are cautioned that no
part of the Hollister project`s mineralization is yet considered to be a
reserve under US mining standards as all necessary mining permits would be
required in order to classify the project`s mineralized material as an
economically exploitable reserve. Although final feasibility work has been
done to confirm the mine design, mining methods and processing methods assumed
in the Feasibility Study, construction and operation of the mine depend on
securing environmental and other permits on a timely basis. Authorization has
been received for bulk sampling. Additional permits, when required, have yet
to be applied for and there can be no assurance that required permits can be
secured or secured on a timely basis. Although costs, including design,
procurement, construction and on-going operating costs and metal recoveries
have been established at a level of detail required for a feasibility study,
these could be materially different from those contained in the Feasibility
Study. The proposed operation would rely on third party toll treating and ore
purchasing agreements for metal recoveries. There can be no assurance that
the infrastructure facilities can be accessed on a timely and cost-effective
basis. Energy risks include the potential for significant increases in the
cost of fuel and electricity. The Feasibility Study assumes specified, long-
term prices levels for gold. The price of this metal is historically
volatile, and the Company has no control of or influence on its price which is
determined in international markets. There can be no assurance that the price
of gold will continue at current levels or that it will not decline below the
prices assumed in the Feasibility Study. Prices for gold have been below the
price ranges assumed in Feasibility Study at times during the past ten years,
and for extended periods of time. The project may require additional
financing, probably a combination of debt and equity financing. Although
interest rates are at historically low levels, there can be no assurance that
debt and/or equity financing will be available on acceptable terms. Other
general risks include those ordinary to very large construction projects,
including the general uncertainties inherent in engineering and construction
cost, the need to comply with generally increasing environmental obligations,
and accommodation of local and community concerns.
Caution about the use of Measured, Indicated and Inferred Resources
This news release uses the terms `measured resources`, `indicated resources`
and `inferred resources`. Great Basin Gold advises investors that although the
term is recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S.
Securities and Exchange Commission does not recognize them. Investors are
cautioned not to assume all of the mineral resources in these categories will
ever be converted into reserves. In particular, `inferred resources` have a
great amount of uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of feasibility
or pre-feasibility studies, or economic studies except for Preliminary
Assessment as defined under 43-101. Investors are cautioned not to assume that
part or all of an inferred resource exists, or is economically or legally
mineable.
Date: 13/07/2007 07:37:06 Produced by the JSE SENS Department.
