| Thu 24 Feb 2011, 15:00 | | GBG - Great Basin Gold Limited - Great Basin Gold provides update on financing |
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GBG
GBG
GBG - Great Basin Gold Limited - Great Basin Gold provides update on financing
activities and unaudited results for Q4 2010 and the financial year ended
December 31, 2010
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 GOLD PROVIDES UPDATE ON FINANCING ACTIVITIES AND UNAUDITED RESULTS
FOR Q4 2010 AND THE FINANCIAL YEAR ENDED DECEMBER 31, 2010
Highlights
- Earnings per share of $0.02 for Q4 2010
- Revenue for Q4 2010 of $43 million with 31,911 Au eqv oz sold
- Cash cost improved 19% quarter on quarter
- Revenue more than doubled in 2010 with the adjusted loss per share (1)
reduced by 69% to $0.05
- Burnstone completes commissioning of all major capital infrastructure
- Successfully closed $75 million bought deal public offering as well as
15% over-allotment
- Executed the Credit Agreement for a US$60 million Term Loan Financing to
repay in full the Senior Secured Notes
February 24, 2011, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin Gold"
or the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces updates on
the recently announced financing transactions as well as unaudited financial
results for the quarter and the financial year ended December 31, 2010. The
Company will file its audited financial statements for the year ended December
31, 2010 on or before March 31, 2011.
Finance transactions
The previously announced $75 million bought deal public offering, as well as
the 15% over-allotment option, was closed on February 23, 2011 with the
proceeds from this transaction mainly being utilized for working capital
requirements during the production build-up at the Burnstone Mine.
The Company also executed the Credit Agreement relating to the previously
announced US$60 million Term Loan Financing with Credit Suisse AG. The loan
has a term of 4 years and is repayable in quarterly installments commencing
September 2011, and will bear interest at a premium of 3.75% over the 3-month
US LIBOR rate. The Company will execute a zero cost collar hedging program,
consisting of a total of approximately 105,000 gold equivalent ounces (Au eqv
oz) spread over a 4-year term, prior to draw down. Draw down on this facility
is set for March 15, 2011 with approximately US$52 million to be applied
towards full and final settlement of the Senior Secured Notes issued in
December 2008.
Operating results
Fourth quarter (Q4) 2010 gold production of 31,911 Au eqv oz (2) from trial
mining activities at the Company`s Hollister project was in line with
expectations and an increase of 190% over third quarter (Q3) 2010 results.
Revenue for the quarter totaled $43 million and $100 million for the fiscal
year, an increase of $66 million year on year. Cash costs for the quarter
(inclusive of royalties) decreased by 19% to $690 (US$670) per Au eqv oz and
11% to $563 (US$546) per ton from Q3 2010 and were in-line with estimates for
the quarter. The Company`s Esmeralda mill processed 27,553 tons during Q4 2010
and recovered 21,901 Au eqv oz. Recoveries for the quarter of 80% Au and 61%
Ag are still below our targeted rate of 92% Au and 85% Ag due to the high
metal content fouling the carbon in the process. This is being addressed by
the installation of a carbon regeneration system and automation of certain
components within the mill.
The Company achieved its first positive earnings per share of $0.02 during Q4
2010 (Q3 2010: $0.07 loss per share). The adjusted loss per share for the year
ended December 31, 2010 decreased to $0.05, an improvement of 69% over the
$0.16 adjusted loss per share reported in fiscal 2009.
Burnstone project update
Commissioning of all major capital projects at Burnstone was completed during
January 2011 and the Company will be reporting revenue and production costs
during Q1 2011. The Burnstone metallurgical plant is now available for
commercial levels of production with the completion of the commissioning of
the Carbon-in-Leach (CIL) circuit. Over 90,000 tons of lower grade development
ore were milled in January 2011. The Burnstone Mine was ceremonially opened
with a gold pour celebration by the South African Minister of Mineral
Resources, Ms Susan Shabangu, on February 22, 2011.
Exploration update
At Hollister, the evaluation of the very high grade Blanket Zone material
(November 9, 2010 news release) progressed during the quarter. Bulk sampling
involved the successful extraction of some 500 tons grading on average 12
oz/ton Au eqv. An initial phase of underground drilling was initiated to
determine the grade profile and strike continuity of the Blanket Zone style of
mineralization exposed at 3000N 1E. As at February 21, five boreholes (each
approximately 600 feet long) had been completed. A further 11 holes are
planned for completion by the end of March 2011 to enable preliminary mineral
resource modelling. The high grade (averaging >10 oz/ton Au) zones are
directly related to vertical extensions into the Tertiary volcanic strata of
narrow mineralised structures from the underlying Ordovician metasediments.
The first long flat underground borehole testing the Velvet area to the north
of current infrastructure (HDB 432; EOH 2,800 feet) was completed on February
14, 2010. The borehole intersected a number of silicified and weak to
moderately mineralized silicified zones and fault structures that are
indicative of fluid circulation and alteration. As at February 22, a second
hole had reached 1,520 feet depth with approximately 1,480 feet remaining to
be drilled.
Underground drilling during Q4 2010 continued to gain positive results for the
recently discovered SE Gwenivere vein system. Preliminary modelling of the
vein system has been initiated.
At Burnstone, drilling within the 24-month mine plan area continued from
underground and surface, providing detailed coverage of structural breaks and
mining block infill valuation data. Other exploration was focused on
maintaining mineral rights outside of the Burnstone Mine Mining Right.
Ferdi Dippenaar, Great Basin Gold CEO, commented: "We are very pleased with
the operating results achieved during Q4 2010. This was the first quarter that
we were able to demonstrate the operating potential of our Nevada operations
with our Esmeralda mill able to process all material from trial mining at
Hollister. Burnstone achieved a significant milestone by completing the
commissioning of all major capital projects and thereby concluding its project
construction phase in January 2011. With underground development rates
increasing, we are gaining momentum to deliver on our production targets in a
safe and efficient manner. The closing of the public offering as well as the
execution of the Credit Agreement for the US$60 million Term Loan Financing
provides us with the required working capital to finance the planned
production build-up at Burnstone. The higher revenue from increased production
in 2010 resulted in our adjusted loss per share reducing by more than 69% in
2010; we expect further operational and financial improvements for fiscal 2011
with Burnstone starting to contribute to our bottom line."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating Officer and Phil Bentley, Pr.
Sci. Nat , Vice President: Geology and Exploration of Great Basin, both
Qualified Persons, as defined by regulatory policy, have reviewed and assumed
responsibility for the technical information contained in this release.
For additional details on Great Basin and its gold properties as well as
further particulars about the financial and operational update, 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
1 Adjusted loss per share and cash cost are non-GAAP measures. Refer to
cautionary note regarding non-GAAP measures included in this press release.
2 The equivalent gold ounces reported in this document were calculated using a
gold price of US$1,000/oz, a silver price of US$15/oz.
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 Technical Reports 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, 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. The Company undertakes no obligation to update forward-looking
information if circumstances or management`s estimates or opinions should
change except as required by law.
Cautionary Note regarding Non-GAAP Measurements
Cash cost per ounce produced is a not a generally accepted accounting
principles ("GAAP") based figure but rather is intended to serve as a
performance measure providing some indication of the mining and processing
efficiency and effectiveness of test mining at the Hollister project. It is
determined by dividing the relevant mining and processing costs including
royalties by the ounces produced in the period. There may be some variation in
the method of computation of "cash cost per ounce produced" as determined by
the Company compared with other mining companies. In this context, "ounces
produced" includes in-process and dore inventory along with ounces of gold
sold in the period. Cash costs per ounce produced may vary from one period to
another due to operating efficiencies, waste to ore ratios, grade of ore
processed and gold recovery rates in the period. We provide this measure to
our investors to allow them to also monitor operational efficiencies of test
mining at Hollister. As a Non-GAAP Financial Measure cash cost per ounce
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Adjusted loss per share is also
a Non-GAAP measure and is calculated by excluding the impact of certain fair-
value accounting charges. There are material limitations associated with the
use of such Non-GAAP measures.
Sponsor
Nedbank Capital
Date: 24/02/2011 15:00:05 Produced by the JSE SENS Department.
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