| Tue 16 Nov 2010, 15:01 | | GBG - Great Basin Gold Limited - Great Basin reports third quarter results |
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GBG
GBG
GBG - Great Basin Gold Limited - Great Basin reports third quarter results
GREAT BASIN GOLD LIMITED
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" or "the Company")
GREAT BASIN REPORTS THIRD QUARTER RESULTS
November 16, 2010, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin" or the
"Company") (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces results for the third
fiscal quarter which ended September 30, 2010.
Highlights at its nearly-completed Burnstone Project in South Africa include:
- on-site metallurgical plant commissioning underway;
- achieved first gold pour on October 31, 2010; and
- completed vertical shaft equipping and licensing of hoists and
infrastructure.
Highlights at its Hollister Project in Nevada, USA, include:
- improved performance for both trial mining and Esmeralda mill processing;
- 14% increase in Measured and Indicated resource to 1.6 million gold
equivalent ounces (Au eqv oz); and
- bonanza grades encountered in trial mining at Blanket Zone.
Earnings for the quarter were negatively impacted by extraordinary charges that
included a CDN$7 million fair value charge on the zero-cost-collar hedge program
executed in August 2010, a stockpile adjustment of CDN$1.3 million and a
negative adjustment of CDN$3 million to revenue following the completion of the
milling campaigns. Excluding these charges results in an adjusted loss per share
of CDN$0.03, which is a 67% improvement on the CDN$0.05 loss per share reported
in the third quarter of 2009.
Hollister Project
The Company sold 13,702 Au eqv oz recovered through its trial mining activities
during the quarter. A CDN$3.1 million negative adjustment upon completion of
milling of Hollister ore at Newmont facilities and a further adjustment related
to the stockpiles were recorded in the quarter, resulting in a net revenue of
CDN$12 million. The refurbishment project at the Esmeralda mill was completed
during the quarter, following a 3-week shutdown of the mill in July 2010, which
had a negative impact on the mill capacity, recoveries and cash production
costs. Cash production costs amounted to CDN$854 per Au eqv oz for the quarter.
Mill throughput at Esmeralda has subsequently improved to exceed 9,000 tons per
month, and cash production costs have decreased to less than CDN$600 per Au eqv
oz for the months of September and October 2010.
Contained Au eqv oz extracted through trial mining activities decreased by 22%
quarter-on-quarter: Ore tons extracted during the quarter were marginally lower
(803 tons). The average grade of 1.07 Au eqv oz per ton (36.8 g/t) of the
material extracted (Q2 2010: 1.33 Au eqv oz/ton) was the main contributor to the
decrease in contained Au eqv oz extracted. The average grade of the material
extracted during the quarter was in-line with Q1 2010 and the average grade
achieved in 2009, whereas the average grade of material extracted in Q2 2010 was
higher than the norm.
The Esmeralda mill`s recoveries improved by 5% to 87% for gold and by 11% to 66%
for silver. A total of 19,611 tons were processed in the quarter, with a
recovery of 16,778 Au eqv oz. Performance is expected to improve further as the
optimization project in the mill has now been completed.
On September 30, 2010, the ore stockpile contained 10,879 tons with an estimated
metal content of 7,717 Au eqv oz, which includes 4,769 tons containing an
estimated 850 Au eqv oz that was delivered to the Jerritt Canyon mill in 2008.
The latter material will be treated in the fourth quarter and our need for third
party milling arrangements will be concluded.
During the third quarter, trial stoping on the Clementine #18 vein progressed
upwards to the unconformity horizon with overlying Tertiary volcanic strata.
Lift 43 followed the structures controlling vein #18 at depth, and exposed these
structures in heavily clay and iron oxide altered volcanic tuffs. Spectacular
channel sample results, averaging 270 oz/ton gold (9,277 g/t) undiluted and 66.4
oz/ton gold (2,404 g/t) diluted over the 3.5-foot stope width were received
along the entire 180 feet (
55 meters) of strike exposure (see Great Basin news
release dated November 9, 2010).
The dimensions of this zone of mineralization are being established through a
combination of short diamond drill holes and underground cross-cut and raise
excavations. Previous work on the Blanket zones elsewhere in the mine was based
on drilling. Individual assays range from 0.1 to 17 oz/ton gold (3.4 to 582.9
g/t) and intersections are generally broad zones with geometry of approximately
30 feet in thickness, 200-300 feet in length and 50-100 feet in width. These
tend to occur in tuffaceous zones (which are more permeable) at or close to the
base of the volcanic units. There is a clear relationship between these very
high grade zones (that exist within these grade shells) and the underlying
structures that control epithermal vein gold and silver mineralization.
Burnstone Project
For Burnstone, development costs of CDN$67 million were capitalized in the
quarter compared to CDN$69 million in the quarter ended June 30, 2010. Pre-
operating expenses of CDN$20 million for the quarter are included in the
capitalized development cost due to the project not achieving commercial
production. As the bulk of the expenditures relating to the construction of the
Burnstone mill have now been completed and the focus has moved to development
accessing mining areas, capital expenditures are expected to be lower,
approximately CDN$45 million, in the fourth quarter.
After being connected to the national power grid on August 8, 2010, electrical
reticulation to the general surface infrastructure, vertical shaft, underground
infrastructure, ventilation shafts and the metallurgical plant was successfully
completed. Good progress is being made with the metallurgical plant with the
crusher section, Semi Autogenous Grinding and ball mills, gravity circuit and
first three Carbon-In-Leach tanks commissioned. The current focus is completion
of the carbon, cyanide, elution and gold room commissioning. The first gold pour
took place on October 31, 2010 from gold recovered through the gravity circuit.
Good progress also continues to be made with the development of surface and
underground infrastructure with shaft equipping to surface completed during
August. After completion of the shaft loading bins, conveyors and other
equipment, hoisting commenced in the shaft on November 2, 2010.
At November 10, 2010, a total of 15,842 feet (4,830 metres) of on-reef
development has been completed and good continuity continues to be shown in the
exposed reef. The Long Hole Stoping trials are progressing well and the rate of
mining is increasing as more mining areas become available. The focus in Block B
is on establishing more stopes, while activities in Block C Middle and Upper are
mainly focused on reef development; these additional access points will allow
for an increase in opening up higher grade mining areas. A total of
approximately 192,000 tonnes has been accumulated on the ore stockpiles, which
is being used for mill commissioning.
Corporate
By October 15, 2010, approximately 57.5 million warrants (strike price of
CDN$1.60) had been exercised, resulting in CDN$92 million being added to
treasury.
President and CEO Ferdi Dippenaar commented: "The third quarter results contain
a number of out of the ordinary activities, including the completion of the
third party milling campaigns. These matters have now all been dealt with and we
can look forward to a much improved performance from our Nevada operations in
the fourth quarter. It will be the first period for which we will report results
as one operational unit, with all of the material extracted processed though our
own mill. This will more accurately reflect our cash cost structure and ensure
full exposure to the gold price by eliminating the impact of toll milling and
ore purchase agreements. We also expect more information on the extent of
tonnage and grades in the higher grade area above Clementine Vein #18.
"Although good progress was made with the commissioning of the metallurgical
plant at our Burnstone Project in South Africa, the impact of receiving the
supply of electricity four months later than anticipated has had a negative
impact on our production plans, with a maximum of 10,000 ounces now expected to
be sold in 2010. Our estimates for 2011 have not been affected."
Great Basin is a mining company engaged in the exploration and development of
gold properties. The Company is currently focused on bringing two mines in the
world`s two richest gold producing regions into production. The Hollister gold
project is located on the Carlin Trend in Nevada, USA and the Burnstone gold
mine is located in the Witwatersrand Basin goldfield of South Africa.
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.gov and home jurisdiction filings that are available at
www.sedar.com.
Sponsor
Nedbank Capital
16 November 2010
Date: 16/11/2010 15:01:00 Produced by the JSE SENS Department.
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