| Wed 11 Aug 2010, 17:17 | | GBG - Great Basin Gold Ltd - Great Basin reports much improved second quarter |
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GBG
GBG
GBG - Great Basin Gold Ltd - Great Basin reports much improved second quarter
results
GREAT BASIN GOLD LTD
(Incorporated in Canada and registered as an External Company in South
Africa)
(Registration No. 2006/021304/10)
Share Code: GBG ISIN Number: CA3901241057
("Great Basin Gold")
GREAT BASIN REPORTS MUCH IMPROVED SECOND QUARTER RESULTS
Burnstone mine nears completion: 39,418 Au Equivalent ounces sold from
Hollister
August 11, 2010, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin" or the
"Company") (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces results for the
second fiscal quarter ended June 30, 2010.
Highlights at its nearly completed Burnstone Project in South Africa include:
* mine hook up to the Eskom national electricity grid,
* on-site metallurgical plant nearing completion, and
* underground mine development being advanced with the decline and
vertical shaft accesses completed, enabling station construction
and installation of underground infrastructure.
Highlights at its Hollister Project in Nevada, USA, include:
* improved performance for both trial mining and Esmeralda mill
processing, and
* stockpile processing through three mills accelerates cash flow.
Hollister Project
Net revenue improved significantly to a quarterly record of CDN$34 million;
39,418 gold equivalent ounces (1) (Au eqv oz) were sold during the quarter
(compared with 6,108 Au eqv oz in the quarter ended March 31, 2010). Revenue
is net of toll milling charges. Production cost for metal recovered through
the Company`s Esmeralda mill decreased 20% quarter on quarter and contributed
to achieving a gross profit (revenue less production costs) of CDN$13 million
(CDN$0.04 earnings per share) for the period. After non-cash charges,
including depletion, foreign exchange movement and share based compensation
of CDN$8.6 million (CDN$0.03 per share), resulted in a net loss of CDN$5.4
million (CDN$0.02 loss per share) for the quarter. The loss per share
decreased 50% year-on-year, and it should be noted that the second quarter
was burdened disproportionately by annual equity based compensation charges.
Production costs were still relatively high at the Esmeralda mill at CDN$201
per Au eqv oz recovered, but off-site gold retention and carbon stripping
charges equivalent to US$80 per eqv oz will be eliminated going forward as
the second carbon stripping unit and larger Merrill Crowe system were
successfully commissioned in July 2010. This means that dore can be poured
directly on site at Esmeralda on a continuous basis.
Contained Au eqv oz extracted through trial mining activities improved 11%
quarter on quarter: the average grade of 1.33 Au eqv oz per ton (45.7 g/t) of
the material extracted offset the slightly lower ore tons extracted during
the quarter.
The Esmeralda mill`s operational performance improved 36% quarter on quarter;
A total of 21,819 tons were processed in the quarter, with a recovery of
17,789 Au eqv oz, and will improve further as the optimization project was
only completed during July 2010. The installation of the Merrill Crowe gold
recovery system as well as the addition of lead nitrate is expected to
improve the recoveries to 90% on an Au eqv oz basis.
At June 30, 2010, the Hollister ore stockpile contained 19,391 tons with an
estimated metal content of 18,039 Au eqv oz. Post quarter end, an additional
3,956 tons from the stockpile were delivered to Newmont`s Midas mill. A
further 10,000 tons are being treated at the Jerritt Canyon mill pursuant to
the toll milling and settlement agreement reached in May 2010, the revenue
from which will be recognized in the third quarter.
Burnstone Project
For Burnstone, development costs of CDN$63 million were capitalized in the
quarter compared to CDN$33 million in the quarter ended March 31, 2010. Since
the bulk of the expenditures related to the construction of the Burnstone
mill have been completed, capital expenditure is expected to decrease to
CDN$38 million and CDN$11 million in the third and fourth quarters,
respectively.
After an earlier reported delay, the Burnstone Project was successfully tied
into the national power grid on August 8, 2010. This significant milestone in
the development of the Project will allow for the sequential commissioning of
the general surface infrastructure, the shaft and underground infrastructure,
the ventilation shafts and, finally, the metallurgical plant. The majority of
the construction and installation of the metallurgical plant infrastructure
has now been completed (i.e the mills have been installed and lined, and the
jaw crusher, CIL tanks, thickener and other aspects have been constructed)
and the current focus is on completing the electrical reticulation and
piping.
Good progress continues to be made with the development of surface and
underground infrastructure at the Burnstone Project. The decline had been
holed with the vertical shaft, thereby allowing access to construction crews
to establish station and associated infrastructure. This infrastructure
includes the shaft loading bins, conveyors and other equipment which will
allow the shaft to be used for hoisting by the end of the current quarter.
Following completion of the sinking of the vertical shaft in the previous
quarter, the focus has shifted to shaft equipping. Initial development on 41
Level and 40 Level Stations has been completed, and as of August 9, 2010 a
total of 709 ft (216 m) of shaft equipping remains to be done.
The winder house and the installation of the rock and personnel conveyance
winders have been completed.
As at August 8, 2010, a total of 11,142 ft (3,396 m) of on-reef development
has been completed, and continues to show the good continuity in the exposed
reef. The Long Hole Stoping trials are progressing well and the rate of
mining should increase as more mining areas become available. The focus in
Block B is on establishing more stopes, while activities in Block C are
mainly focused on reef development. Middle portions of Block C have now been
accessed; these additional access points will allow for an increase in
opening up higher grade mining areas. A total of approximately 146,000 tons
have been accumulated on the ore stockpiles which will be used for mill
commissioning.
(1) Gold equivalent here and elsewhere in this document was calculated using
a gold price of US$1,000 per ounce and a silver price of US$15 per ounce.
Corporate
The Company also closed the previously announced US$47 million export finance
facility with Credit Suisse during the quarter and subsequently upsized the
facility by a further US$25 million. There has also been an increase in
interest in the 57.5 million in-the-money warrants (strike price of CDN$1.60)
during the quarter with certain warrant holders early exercising their
warrants prior to the expiry date of October 15, 2010.
President and CEO Ferdi Dippenaar commented: "The second quarter was marked
as a milestone quarter in the existence of Great Basin with record revenue
and cash flow from our Hollister project and construction at our Burnstone
project nearing completion. Our Esmeralda mill is now ready to treat all the
ore recovered at Hollister and at Burnstone, we are about to see the
commissioning of the mill and vertical shaft, which are part of the final
steps in the successful delivery of this long life quality gold project."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating Officer of Great Basin and a
qualified person, as defined by regulatory policy, has reviewed and assumed
responsibility for the technical information contained in this release.
For additional details on Great Basin and its gold properties, please visit
the Company`s website at www.grtbasin.com or contact Investor Services:
Tsholo Serunye in South Africa 27 (0) 11 301 1800
Michael Curlook in North America 1 (888) 633 9332
Barbara Cano at Breakstone Group in the USA (646) 452 2334
No regulatory authority has approved or disapproved the information
contained in this news release.
Cautionary and Forward Looking Statement Information
This document contains "forward-looking statements" that were based on Great
Basin`s expectations, estimates and projections as of the dates as of which
those statements were made. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as "outlook",
"anticipate", "project", "target", "believe", "estimate", "expect", "intend",
"should" and similar expressions. Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause the
Company`s actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such forward-
looking statements. These include but are not limited to:
* uncertainties and costs related to the Company`s exploration and
development activities, such as those associated with determining
whether mineral resources or reserves exist on a property;
* uncertainties related to feasibility studies that provide estimates of
expected or anticipated costs, expenditures and economic returns from a
mining project; uncertainties related to expected production rates,
timing of production and the cash and total costs of production and
milling;
* uncertainties related to the ability to obtain necessary licenses,
permits, electricity, surface rights and title for development projects;
* operating and technical difficulties in connection with mining
development activities;
* uncertainties related to the accuracy of our mineral reserve and mineral
resource estimates and our estimates of future production and future
cash and total costs of production, and the geotechnical or
hydrogeological nature of ore deposits, and diminishing quantities or
grades of mineral reserves;
* uncertainties related to unexpected judicial or regulatory proceedings;
* changes in, and the effects of, the laws, regulations and government
policies affecting our mining operations, particularly laws, regulations
and policies relating to
* mine expansions, environmental protection and associated compliance
costs arising from exploration, mine development, mine operations
and mine closures;
* expected effective future tax rates in jurisdictions in which our
operations are located;
* the protection of the health and safety of mine workers; and
* mineral rights ownership in countries where our mineral deposits
are located, including the effect of the Mineral and Petroleum
Resources Development Act (South Africa);
* changes in general economic conditions, the financial markets and
in the demand and market price for gold, silver and other minerals
and commodities, such as diesel fuel, coal, petroleum coke, steel,
concrete, electricity and other forms of energy, mining equipment,
and fluctuations in exchange rates, particularly with respect to
the value of the U.S. dollar, Canadian dollar and South African
rand;
* unusual or unexpected formation, cave-ins, flooding, pressures, and
precious metals losses (and the risk of inadequate insurance or
inability to obtain insurance to cover these risks);
* changes in accounting policies and methods we use to report our
financial condition, including uncertainties associated with
critical accounting assumptions and estimates;
* environmental issues and liabilities associated with mining
including processing and stock piling ore;
* geopolitical uncertainty and political and economic instability in
countries which we operate; and
* labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we
operate mines, or environmental hazards, industrial accidents or
other events or occurrences, including third party interference
that interrupt the production of minerals in our mines.
For further information on Great Basin Gold, investors should review the
Company`s annual Form 40-F filing with the United States Securities and
Exchange Commission www.sec.com and home jurisdiction filings that are
available at www.sedar.com.
Sponsor
Nedbank Capital
Date: 11/08/2010 17:17:20 Produced by the JSE SENS Department.
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