| Fri 5 Aug 2011, 9:01 | | GBG - Great Basin Gold Limited - Provides operational update reports 100% |
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GBG
GBG
GBG - Great Basin Gold Limited - Provides operational update reports 100%
increase in revenue
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 GOLD PROVIDES OPERATIONAL UPDATE
REPORTS 100% INCREASE IN REVENUE
August 4, 2011, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin Gold" or the
"Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) reports an operational update
for the 3 months ended June 30, 2011. The Company will file its interim
financial statements for Q2 2011 on August 15, 2011 and will hold an earnings
call on August 16, 2011 at 9 am (EST).
Great Basin Gold returned a much improved quarter in respect of Au and Ag ounces
sold which combined with an expected improvement in cash costs should allow the
Company to report adjusted earnings per share for the quarter (Q1 2011: adjusted
loss per share of $0.01).
Hollister
The Nevada operations recorded $49 million in revenue during the quarter on
record sales of 34,522 Au eqv oz, an increase of 100% quarter on quarter. During
the continuing construction and installation of the acid wash and carbon
regeneration system at the Esmeralda Mill, loaded carbon is sent to the refiner
as opposed to dore. Improved refining terms resulted in a decrease of
approximately 5,000 Au eqv oz in inventory held at the refiner from Q1 2011. The
Esmeralda Mill treated 22,237 tonnes during the quarter (Q1 2011:21,634) with a
marked improvement in Au and Ag recoveries of 95% and 75%. Cash production costs
for the quarter is expected to improve a further 8% quarter on quarter to
approximately $611 per Au eqv oz in Q2 2011.
Underground exploration and stope delineation drilling continued during the
quarter, with a record footage of 45,000 feet or 13,636 meters completed from 84
boreholes. The focus has been on completing phases of drilling on the Blanket
Zone and south east Gwenivere targets, providing further data for incorporation
in the upcoming mineral resource update (anticipated release date September
2011). The stope delineation drilling has continued to tighten up controls for
short interval trial stope planning. Surface exploration has continued collating
geological and geophysical data as well as reviewing surface expressions of
interpretations with structural and geological observations.
Burnstone
Operational efficiencies at Burnstone improved significantly with mechanized ore
development increasing by 33% quarter on quarter to 1,550 meters in addition to
1,872 meters of waste development completed during the quarter. The increase in
ore development allowed for an increase of 36% in the square meters stoped
quarter on quarter. Despite the relatively close drill spacing in the current
mining area, the exact position and orientation of geological faults could not
be identified earlier as most of these are of a graben nature. Additional infill
and delineation drilling as well as extensive mapping and interpretation of the
structural information from the over 10 kilometers of underground development,
now provides management with more detailed data to incorporate these faulting
into the mine plan. An additional 66% waste development was completed during the
6 months ended June 30, 2011 in response to the geological faulting encountered
compared with the original planned meters.
Excellent progress has been made with long hole stoping as the mining method,
with the efficiency of the teams improving on a monthly basis. The improved
hanging and footwall conditions experienced in the C block allowed for a
significant improvement in decreasing the stoping width which was measured as
low as 67 cm in some stopes. This also had a positive impact on the mining grade
of stope material which improved 60% from Q1 2011.
The Metallurgical Plant is performing in line with expectation with
approximately 202,660 tonnes processed during the quarter (Q1 2011:199,878
tonnes).Tonnes processed however remain predominantly from development ore which
includes more dilution than stoped material and negatively impacts on the mill
head grade. Recoveries for the quarter improved to 85% (Q1 2011:83%) although
still impacted by the low head grade ore delivered to the mill.
Au eqv oz is calculated based on US$1,400Au and US$30Ag.
Recoveries are expected to improve to the planned 95% as the head grade
increases. The impact of the lower head grade is reflected in the 5,619 Au
ounces sold (Q1 2011:2,794 Au eqv oz) as well as the cash production cost per
ounce of approximately $1,450 (ZAR 10,130) expected for the quarter. During the
build-up phase a more accurate measurement is cost per tonne which improved 12%
to approximately $60 (ZAR420) (Q1 2011:$68) per tonne for the quarter.
Corporate
The Company, with the assistance of RBC Capital markets, offered a $0.07 per
warrant early exercise discount to holders of the $1.25 warrants expiring
November 2011. Ten million of the warrants were exercised prior to June 30, 2011
with another 9.2 million warrants exercised subsequently, leaving approximately
223,000 warrants to be exercised prior to expiry on November 15, 2011.
The Company had approximately $38 million in cash reserves on June 30, 2011 and
has also negotiated a US$40 million standby debt facility with Credit Suisse AG.
This facility will be available in the event that additional working capital is
required at Burnstone as a result of the slower than planned production build-
up. Legal documentation is nearing completion with the targeted signature date
being mid-August, 2011.
Ferdi Dippenaar, Great Basin Gold President and CEO, commented: "Although
experiencing the usual challenges with bringing a new mine into production,
Burnstone is settling into a production rhythm and although the progress made by
the team on a monthly basis is reassuring, it is not yet at planned levels.
The need for additional waste development to access the mining blocks impacted
negatively on ore development which in turn impacts on stopes available for
mining. Production for the remainder of the year will unfortunately be impacted
by this approximate 3 month delay in ore development and we expect to recover
between 50,000 to 60,000 Au oz for the second half of the year and an estimated
60 000 to 70 000 ounces for the 12 month period. The Nevada operations showed
improvements in a number of areas during the quarter, notably in ounces
extracted through trial mining as well as the improved recoveries at our
Esmeralda Mill. The latter improvement is especially pleasing with the impact
already evident in the reduced cash costs and the increased ounces delivered to
the refinery. The current performance from our Nevada operations and the standby
debt facility provides the Company with adequate cash resources to fund the
delayed production build-up at Burnstone. Our short to medium term focus at both
of these operations remains to increase production, manage costs and unlock the
intrinsic value of these quality projects."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating Officer of Great Basin Gold, and
Phil Bentley, Pr. Sci. Nat., Vice President: Geology & Exploration, 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 Gold 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
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 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. 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 production cost per ounce/tonne 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. It is determined by dividing the relevant mining
and processing costs including royalties by the ounces produced/tonnes milled in
the period. There may be some variation in the method of computation of "cash
production cost per ounce/tonne" as determined by the Company compared with
other mining companies. Cash production costs per ounce/tonne 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. As a Non-
GAAP Financial Measure cash production costs should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. There is material limitations associated with the use of such Non-
GAAP measures.
5 August 2011
Sponsor
Nedbank Capital
Date: 05/08/2011 09:01:01 Produced by the JSE SENS Department.
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