| Mon 2 Apr 2012, 14:58 | | GBG - Great Basin Gold Limited - Great Basin Gold reports audited financial |
|
GBG
GBG
GBG - Great Basin Gold Limited - Great Basin Gold reports audited financial
results for fiscal December 2011
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 REPORTS AUDITED FINANCIAL RESULTS FOR FISCAL 2011
April 2, 2012, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin Gold" or
the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces that its
audited annual financial statements and Management Discussion and Analysis
for the year ended December 31, 2011 have been filed. The Company will review
the results during an investor conference call scheduled for April 3, 2012.
Highlights for the year included:
- Year on year increase of 27% in Au eqv oz produced and 70% increase in
revenue
- Burnstone capital project completed with commercial production in February
2011
- 42% increase in Au eqv oz recovered from Hollister through our Esmeralda
mill compared to 2010
- $24 million in cash generated by operations compared to $3 million utilized
by operations in 2010
- 46% improvement in adjusted loss per share year on year
12 months ended
December December
31 2011 31 2010
Recovered Au eqv oz (1) 120,971 95,186
Au eqv oz sold 114,228 88,789
Realized Au eqv price $1,491 $1,123
Revenue (`000) $170,324 $99,706
Profit/(loss) from operating activities $1,514 ($17,908)
(`000)
Net loss for the year (`000) ($17,737) ($27,141)
Cash generated from (utilized by) $24,190 ($2,725)
operations (`000)
Adjusted loss per share ($0.06) ($0.13)
(1) Gold equivalent ("AUy eg") calculations use US&1,400/oz for Au and
US$30/oz for Ag
Ferdi Dippenaar, Great Basin Gold President and CEO, commented: "Our Nevada
operations continue to perform in line with their current production
potential by delivering a much improved set of results from trial mining for
2011. We expect a similar performance for 2012. The planned completion of
the EIS during 2012 will allow the project to enter into commercial
production which will have a positive impact on cash costs and the manner in
which we report our earnings. Burnstone, in its first year of production
build-up, made significant strides but was constrained by unexpected
geological and infrastructural challenges. The continuing additional infill
drilling is mitigating the risk in the short to medium term. Significant
improvements have been, and are being made to the shaft and permanent
underground infrastructure over the last 3 months. The continued improvement
in ore development and stoping rates at Burnstone is reassuring, with more
improvement expected in the second quarter of 2012 to get to the planned
production levels."
Financial results
The Company recorded a 70% increase in revenue as a result of a 29% increase
in Au eqv oz sold as well as a 33% increase in the realized Au price. The
increased revenue and improved operating margin allowed for much improved
results from operating activities which recorded a profit of $1.5 million
compared to the loss of $17.9 million in 2010. Profit from operating
activities is expected to improve as production from our Burnstone mine
increases. Burnstone recorded a net operating loss of $15 million in 2011,
the first year of its production build-up. The interest expense recorded in
earnings for 2010 is net of $30.6 million interest capitalized to mine
development while our Burnstone mine was under construction. An impairment
provision for $13.6 million was recorded against the loan advanced to our
Black Economic Empowerment ("BEE") partner, Tranter Burnstone (Pty) Ltd,
under the 2010 guarantee agreement as a result of the decrease in the value
of the shares our BEE partner owns in the Company that serves as collateral
for the advance. Loss on derivative instruments include the $8.8 million loss
on the advance settlement of the 2008 Senior Secured Notes in February 2011
as well as a net $21.2 million fair value adjustment on the zero-cost-collar
hedge structures entered into as a result of the Term Loan facilities
executed during 2011. Our Nevada operations have demonstrated their ability
to generate taxable earnings and therefore recognized a net $49.7 million
deferred tax asset on their unused tax losses and resource pools.
Basic loss per share improved 50% from $0.08 in 2010 to $0.04 in 2011 but
remains impacted by fair value adjustments and capitalized interest. Adjusted
loss per share eliminates the impact of these transactions and shows a 46%
improvement from $0.13 loss per share in 2010 to $0.06 loss per share in
2011.
Hollister
The Nevada operations produced 97,610 Au eqv oz for the year (2010: 95,186 Au
eqv oz), compared to the forecast of 100,000 Au eqv oz for the year. Fiscal
2011 was the first year that all material extracted from trial mining
activities was processed at our Esmeralda mill, which showed a marked
improvement in Au recovery from 2010, increasing from 82% to 92%. The
performance of the acid wash and carbon regeneration circuit, which was
commissioned during November 2011, has not yet reached planned levels and the
mill continues with the process of replacing carbon on a continuous basis
which, in the short term, impacts on the amount of Au eqv oz sold as well as
the cash costs reported. In an effort to mitigate the time delay in
recognizing produced metal as revenue and the insufficient capacity of local
refiners, a shipment of loaded carbon was sent to Rand Refinery in South
Africa in late December 2011 at an additional cost of approximately US$35 per
Au eqv oz. Regular shipments of carbon to Rand Refinery will continue until
April 2012 when the improvements to the acid wash and carbon regeneration
circuit is expected to be completed. The year-on-year cash costs decreased
by 9% to US$674 per Au eqv oz which is only marginally above the 2011
forecast of US$650 per Au eqv oz.
Additional emphasis on ore development is improving mining flexibility with
the availability of additional stopes allowing for improved grade blending of
extracted ore and a more consistent performance on a monthly basis is
expected during 2012. The completion of the Upper-Zone ramp now allows for
easy access for delineation drilling, with information obtained improving
mine planning and scheduling. The good operational performance from the
Nevada Operations is expected to continue in 2012, with production of 90,000
to 100,000 Au eqv oz at a cash cost of US$700 - 750 per Au eqv oz expected
from trial mining.
Burnstone
The production ramp up at Burnstone continued during 2011, with ore
development meters increasing by 149% from 1,167 meters in Q1 2011 to 2,900
meters in Q4 2011. Stoping square meters also increased by 77% from 3,760 in
Q1 2011 to 6,653 in Q4 2011. Results from the long hole stoping mining method
remain positive, with stoping widths of approximately 80 cm being achieved on
a consistent basis. Improved dilution control on ore development is
positively impacting on the head grade of material delivered to the mill. An
80 meter Graben fault was intersected in early 2011 and this, as well as
infrastructural challenges experienced during the year, significantly
impacted on the first year of production build-up at Burnstone. The temporary
water handling system was unable to handle the volumes of water generated
from the increasing mining activities, so underground flooding occurred in
the latter part of 2011 and early 2012, which has impacted on the advancement
of development. This short term issue has now been resolved following the
upgrading of the temporary water handling system. Additional pumps and back-
up pump columns are providing additional capacity to not only reticulate the
water, but also to transport service water to all working ends, which will
further improve rates of development and stoping. Permanent water
reticulation infrastructure is under construction for completion in Q2 2012.
Total Au production for the year came to 23,361 Au ounces, approximately
6,000 Au ounces less than the revised guidance of 30,000 ounces.
In-fill drilling, comprising 19,051 meters from surface and 7,966 meters from
underground, was completed to January 31, 2012, increasing confidence in the
24 to 30 months mine plan. No significant faults were intersected over this
period. In-fill drilling will continue over the medium to longer term.
The Metallurgical Plant is performing in line with expectation with 775,524
tonnes processed during 2011, an average of 65,000 tonnes per month. Mill
feed is controlled to account for the lower than planned ore from development
and stopes with the mill capacity being in excess of 145,000 tonnes per
month.
Due to the loss of ore development ends following the Graben fault, a program
to re-establish ore development ends commenced in Q2 2011 which increased ore
development ends from 2 in June 2011 to 38 by the end of February 2012. As
the remaining 12 temporarily flooded ore development ends become available
during Q1 2012, the mine plans to meet its first development milestone of
1,500 ore development meters per month in Q2 2012, and this should allow the
mine to reach its first production milestone of 22,000 sq meters of stoping
and a production rate in excess of 10,000 oz per month in early Q3 2012.
Following a review of the current production levels and progress of
underground development and infrastructure, the Company expects Burnstone to
produce between 90,000 and 100,000 Au oz at a cash cost of US$900 - US$1,000
per oz for the 2012 fiscal year. These cash cost targets represent a marked
improvement on the US$1,801 per oz achieved in 2011. As planned, the high
ratio of development to stoping ore will continue to impact on the head grade
delivered to the mill and cash costs for the balance of 2012.
Liquidity and funding
Net cash of $24.2 million was generated from operations during 2011, a marked
improvement on the $2.7 million utilized by the operations in the prior year.
In addition, capital expenditure was reduced from $230 million in 2010 to
$159 million in 2011, decreasing the net financing requirement during 2011 to
$135 million compared to $233 million in 2010. In order to ensure adequate
funding is available, the Company executed 2 term loan facilities during 2011
with net proceeds, after settling existing debt and interest, of $36 million.
Equity related transactions which included a bought deal public offering in
February 2011 ($81 million) and warrants exercised ($29 million), contributed
a net $115 million to cash reserves. Cash flow from operations is expected to
increase during 2012 and beyond as our Burnstone mine increases its
production to designed levels. Burnstone is expected to be cash flow positive
by Q3 2012 (using a gold price of US$1,650 and a US$/ZAR exchange rate of
7.5) with its cash contribution to Group activities to increase in line with
the production build-up. To ensure the Company has adequate funds available
to fund the production build-up, it launched and closed a $50 million bought
deal public offering in March 2012 (see March 30, 2012 press release.)
Ferdi Dippenaar
President and CEO
For additional details on Great Basin Gold Ltd. 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
Shareholders of the Company are reminded that they may request a hard copy of
the complete audited financial statements free of charge upon request from
any of the Investor Services personnel above or from the Company`s Corporate
Office at Tel: +27 (0) 11 301 1800, Fax: +27 (0) 11 301 1840 or Email:
info@za.grtbasin.com.
This document contains "forward-looking statements" that were based on Great
Basin Gold`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 the extent
of mineral resources or reserves which 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 political, 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.
Cautionary Note regarding Non-GAAP Measurements
Cash 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 of operations. 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 cost per ounce/tonne" as determined by the Company compared with other
mining companies. Cash 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 costs 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 and once-off
transactions. We also make reference in our disclosures to "working capital"
which is also a Non-GAAP measure and includes cash and cash equivalents,
trade and other receivables, current inventories, trade payables and accrued
liabilities. There is material limitations associated with the use of such
Non-GAAP measures.
Canada
2 April 2012
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 02/04/2012 14:58:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
