Wrap Text
GBG - Great Basin Gold updates Hollister and Burnstone mineral reserves and
life of mine estimates and announces new term loan financing
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 UPDATES HOLLISTER AND BURNSTONE MINERAL RESERVES AND LIFE
OF MINE ESTIMATES AND ANNOUNCES NEW TERM LOAN FINANCING
Highlights
- Hollister updated Mineral Reserve and 2011E production guidance of
approximately 110,000 recovered gold equivalent ounces (Au (eqv) oz)
- Hollister forecast Life of Mine ("LOM") average production of 110,000
Au (eqv) oz over 8 years at steady state with a cash cost, inclusive of
royalties of approximately US$527 per Au (eqv) oz recovered over the
LOM.
- Burnstone updated Mineral Reserve increased by 55% and 2011E production
guidance of 110,000 to 140,000 recovered gold oz (Au oz)
- Burnstone forecast LOM average production of 254,000 Au oz over 25
years at steady state with a cash cost, inclusive of royalties, of
US$450 per Au oz recovered over the LOM
- Final credit approval for Term Loan financing of US$60 million of which
US$52 million will be used to retire senior secured notes
February 2, 2011, Vancouver, BC - Great Basin Gold Ltd. ("Great Basin Gold"
or the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces increases
for both its Hollister Project and Burnstone Mine Mineral Reserve and life-of
mine ("LOM") estimates. The Company has also received credit committee
approval for a US$60 million Term Loan financing from Credit Suisse AG, the
proceeds of which will be used to repay the high cost Senior Secured Notes
issued during the 2008 credit crisis.
Hollister Project, Carlin Trend, Nevada
Ongoing technical work at Hollister has resulted in a 13% increase, on a
directly comparable basis, in the Mineral Reserves from those published in
January 2009. (Capitalized terms not otherwise defined herein have the
meanings set out in Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects) The Hollister project is still in the trial
mining stage, however, based on production techniques tested to date, the
Company hasestimated applicable call factors for mining of approximately 85%
and metallurgical recoveries of approximately 92% for Au and 85% for Ag.
Since the 2009 Mineral Reserve estimate, a total of 165,772 tons have been
extracted at an average grade of 1.06 Au(eqv) oz/ton(36.4 g/t),delivering
176,387 Au(eqv)contained ounces. At a cut-off grade of 0.25 oz/ton (8.57 g/t)
Au, the combined Proven and Probable Mineral Reserves contain an estimated
net 907,000 Au(eqv) ounces, grading 0.79 oz/ton (27.02 g/t) Au and 4.75
oz/ton (163 g/t) silver (Ag) after application of the noted call factors for
mining and metallurgical recoveries.
Results of Hollister`s January 2011 Mineral Reserve Estimate are shown below:
Reserve Cut- Tons Au oz Au Ag oz Ag Au
category off oz/ton oz/ton equival
oz/to ent oz
n
Proven 0.25 347,100 1.33 460,300 7.75 2,689,400 500,700
Probable 0.25 701,800 0.53 371,800 3.27 2,296,600 406,300
Total Proven & 0.25 1,048,900 0.79 832,100 4.75 4,986,000 907,000
Probable
Note: *The equivalent gold ounces reported herein were calculated using a
gold price of US$1,000/oz, a silver price of US$15/oz. A call factor of
85% and metallurgical recovery factors of 92% for Au and 85% for Ag were
applied.
The table below shows the reconciliation between the depleted January 2009
and January 2011 Mineral Reserve estimates, using a cut-off of 0.25 oz/t Au
and applying similar call factors and metallurgical recoveries:
Description Cut-off Tons Au Au
oz/ton (`000) equivalent equivalent
oz/ton oz (`000)
January 2009 Reserve 0.25 1,398 0.90 1,257
estimate*
Apply 85% call factor N/A - - (188)
Trial mined 2009 - N/A (166) 1.06 (176)
2011
Apply metallurgical N/A - - (90)
recoveries
Restated January 2009 N/A 1,232 0.65 803
Reserve estimate
January 2011 Reserve 0.25 1,048 0.87 907
estimate
Mineral Reserves 104
added
Note: *No mining and plant recovery factors applied
A minimum stoping width of 0.91 meters (36 inches) was assumed for purposes
of Mineral Reserve estimation, along with dilution defined as waste tonnes
(or tons) carrying zero grade and 100 percent in-stope extraction. An
analysis by the Company`s technical staff confirms that no systematic, in-
stope pillars will be required because of the cut-and-fill trial mining
method now being utilized. Based on the results of trial stoping and grade
reconciliation studies, where vein widths of 0.76 meters (30 inches) or
greater were considered, a total of 0.15 meters (six inches) of hanging wall
dilution and 0.15 meters (six inches) of footwall dilution was applied.
Where appropriate, other average dilution rates were applied. The in-situ
wireframe model generated with the Mineral Resource update announced
September 9, 2010, were used as basis for this mineral reserve update.
Using the updated Mineral Reserve estimate, an average production profile of
110,000 Au(eqv) oz over 8 years was projected with the estimated cash cost,
inclusive of royalties, amounting to US$527 per Au(eqv) oz recovered over the
LOM. Cash costs for 2011 are forecast to be in the range of US$550 - US$600
per Au eqv oz. The estimated Net Present Value ("NPV") of the Hollister
Project (using metal prices of US$1,000/oz for Au and US$15/oz for Ag) at a
5% discount rate is calculated at US$236 million.
Burnstone Mine, Witwatersrand Basin, South Africa
At Burnstone, Mineral reserves increased by 55% with the majority of the
increase attributable to the improved geological information obtained from
underground development and drilling conducted since the January 2009 reserve
update as well as additional reserves included from Area 2.Detailed planning
has shown that production at Area 2 of the Burnstone property can be
increased and be extracted through separate infrastructure. Since the January
2009 reserve update, Great Basin Gold has completed over 6,000 meters
(19,685feet) of on-reef development and over 3,851meters2 (41,452 feet2) of
long hole stoping ("LHS"). The January 2011 Mineral reserve update and LOM
planning is based on LHS as the preferred mining method, and the decrease in
dilution from this mining method also positively impacted on the updated
reserve estimate.
At a cut-off gold content of 350 centimeter-grams per tonne (cmg/t) the
combined Proven and Probable Mineral reserves contain 6.4 million Au oz
grading 4.47 g/t (0.13 oz/ton) Au after application of a 95% call factor for
mining and a 95% metallurgical recovery. Currently,53% of the Measured and
indicated Mineral resources have been converted into Proven and Probable
Reserves.
Results of Burnstone`s January 2011 Mineral Reserve Estimate are tabulated
below:
Reserve category Cut-off Tonnes Au oz Au
cmg/t g/t
Proven 350 29,784,000 4.11 3,933,000
Probable 350 14,436,000 5.23 2,427,000
Total Proven & 350 44,220,000 4.47 6,360,000
Probable
Using the updated Mineral Reserve estimate, an average annual production
profile of 254,000 Au oz over 25 yearswas scheduled with the cash cost,
inclusive of royalties, amounting to US$450/ozof Au recovered over the LOM.
The estimated NPV for Burnstone(using a metal price of US$1,000/oz for Auand
an exchange rate of USD1: ZAR9) at a 5% discount rate is US$1,530 million.
The potential for an increase in the production build-up in the medium term
using LHS as the preferred mining method is demonstrated by the updated LOM
plan. On-reef development remains the key to delivering the planned
production build-up and will therefore be the priority focus for 2011. The
production range of 110,000 to 140,000 Au oz is therefore the result of the
increased focus on on-reef development. Cash costs for 2011 are forecast in
the range of US$520 - US$620/oz and are impacted by the diluted grade from
the additional on-reef development.
The metallurgical plant has achieved its targeted rate for January 2011 of
90,000 tonnes milled. The current focus is to ramp up production and achieve
a milling rate of 125,000 tons per month.
The Burnstone Mineral Resources have been revised in-line with the Mineral
reserve update. The Mineral Resources announced August 23, 2010 were based on
a "4 2 1 model", which uses a minimum of 4 informing samples for a Measured
Resource classification, 2 for an Indicated classification and 1 for an
Inferred classification. The current model uses the same estimation
parameters but more stringent classification criteria, which is a minimum of
6 informing samples for Measured, 3 for Indicated and 2 for Inferred.
A comparison of the Mineral Resources estimated under the two models at a
range of gold content cut-off values is tabulated below:
Comparison of Burnstone 6 3 2 vs 4 2 1 Mineral Resource Estimates
6 3 2 model 4 2 1 model
Resource Cut Mass Au Au Content Mass Au Au Content
Classific off M grade Oz M grade oz
ation Cmg/ tons g/t tons g/t
t
Measured 300 41.2 5.67 7,496,000 40.0 5.78 7,435,000
Measured 350 37.2 5.78 6,900,000 36.5 5.90 6,927,180
Measured 400 33.1 5.94 6,326,000 33.7 6.01 6,514,390
Indicated 300 23.5 7.31 5,516,000 31.2 6.44 6,472,770
Indicated 350 21.3 7.60 5,199,000 27.2 6.84 5,978,830
Indicated 400 19.8 7.77 4,956,000 24.1 7.20 5,567,960
M + I 300 64.6 6.26 13,012,000 71.2 6.07 13,907,770
M + I 350 58.4 6.44 12,099,000 63.7 6.30 12,906,010
M + I 400 53.0 6.63 11,283,000 57.8 6.50 12,082,350
Inferred 300 66.8 4.33 9,306,000 67.5 4.33 9,392,970
Inferred 350 54.9 4.75 8,374,000 61.0 4.49 8,799,830
Inferred 400 49.1 4.86 7,679,000 52.2 4.75 7,977,520
Note: Mineral Resources are undiluted and assume 100% metallurgical
recoveries.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
The Mineral Resources under the 6 3 2 model above include the
Mineral Reserves reported in the previous table.
6 3 2 indicates minimum number of informing points
for Measured (6), Indicated (3) and Inferred (2)
4 2 1 indicates minimum number of informing points
for Measured (4), Indicated (2) and Inferred (1)
At a 350 cmg/t cut-off, the tighter classification parameters have resulted
in an 8% decrease in total Measured and Indicated Resources tonnage, a 2%
increase in grade from 6.30 to 6.44 g/t Au, and a combined 6% adjustment
downwards of contained gold in the Measured and Indicated Resources
categories to 12.1 million ounces. The 350 cmg/t cut-off is lower than the
400 cmg/t used for previous estimates and conversions to Mineral Reserves,
reflecting increased confidence in these estimates.
Term Loan Financing Finalized
Great Basin Gold has also obtained final credit approval from Credit Suisse
AG to enter into a Term Loan Financing for US$60 million which is now
primarily subject only to negotiation of customary definitive loan documents.
Key terms include:
- Maximum term of 4 years from date of drawdown, with interest and
capital repayment commencing 3 months after draw down.
- Interest at a margin of 3.75% over the USD LIBOR rate (currently 0.3%).
- Great Basin Gold will have the option to retire the loan 12 months
after draw down at no additional cost.
- Secured by the Hollister Project and Esmeralda property.
- Hedging program typical for these facilities will be finalized and
implemented in the following weeks. It is anticipated that a zero-cost-
collar structure for a total of up to 105,000 Au oz over the next 4
years of gold production will form the basis for the program.
It is anticipated that this transaction will be closed before the end of
February 2011. The net proceeds from this financing will be used to settle
the 2008 Senior Secured Notes which currently bear interest at 14% per annum.
Ferdi Dippenaar, Great Basin Gold CEO, commented:
"Our ongoing evaluations of the two ore bodies, which encompass delineation
drilling and results from trial mining, continue to confirm the value of the
Hollister and Burnstoneproperties, as evidenced in both increased reserves
and increased confidence in our measurements. The tighter geological controls
used in determining these estimates are also improving trial stope tonnage
and grade estimates and, as a consequence, our mine planning is benefiting
from more accurate information.
"At Hollister, exploration drilling from underground is successfully tracking
the lateral extensions of the Hollister veins northwestward to the Gloria
vein system and the Butte bounding fault structure, and southeastward from
the Gwenivere vein system to the Hatter Graben. As the underground
development continues, there will be further opportunities to drill test the
extensions of a number of high grade zones that are emerging from this
evaluation work.
"Production from trial mining at Hollister is expected to remain at the level
of110,000 recovered-Au(eqv) oz/annum for the near future. We have
conservatively estimated production at the Burnstone mine, which will
experience its first full year of mining in 2011, and have focused the
management team on prioritizing on-reef development to ensure that this plus
25-year life, world class project has a solid foundation to deliver
successful production in the future.
"With the commitment of the Credit Suisse facility, Great Basin Gold now has
the necessary funds to retire the US$52 million Senior Secured Notes, a debt
facility put in place in November 2008. This both reduces our cost of
capital and provides us better financial coordination with a single corporate
lender."
The Mineral Reserve estimates and other technical information herein were
completed under the supervision of Johan Oelofse, Pr.Eng., FSAIMM, Great
Basin Gold`s Chief Operating Officer. Mr Oelofse is a Qualified Person as
defined by Canadian Securities Regulations in National Instrument 43-101, who
has also reviewed and approved the information in this news release.
The Mineral Resource estimate for Burnstone was completed by Freddie de
Bruin, Pr.Sci.Nat., of Deswik Mining and Resource Consultants, under the
supervision of Phil Bentley, Pr.Sci.Nat., Great Basin Gold`s Vice President:
Geology & Exploration. Mr Bentley is a Qualified Person as defined by
Canadian Securities Regulations in National Instrument 43-101, who has also
reviewed and approved the information in this news release.
Details of these estimates will be included in NI 43-101 compliant technical
reports filed on www.sedar.com.
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
Samples collected from the Hollister Development Block Project are delivered
to Inspectorate America Corporation (Inspectorate) in Sparks, Nevada. The
primary analytical facility for the Burnstone Project from 2003-2005 has been
SGS Lakefield Research Africa (Pty) Limited and subsequently (2006-2010), ALS
Chemex has been the primary laboratory. Both facilities are located in
Johannesburg, South Africa.
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.
Cash costs per ounce are numbers commonly used in the mining industry to
assess performance. They are not terms recognized under generally accepted
accounting principles. Investors will wish to review the NI 43-101 technical
reports which support these estimates in order to understand the cost
elements which make up the cash cost estimate.
Information Concerning Estimates of Measured, Indicated and Inferred
Resources
This news release also uses the terms "measured resources", "indicated
resources" and "inferred resources". The Company advises investors that
although these terms are recognized and required by Canadian regulations
(under National Instrument 43-101 Standards of Disclosure for Mineral
Projects), the U.S. Securities and Exchange Commission does not recognize
them. Investors are cautioned not to assume that any part or all of the
mineral deposits in these categories will ever be converted into SEC-
recognized reserves. In addition, `inferred resources` have a great amount of
uncertainty as to their existence, and economic and legal feasibility. It
cannot be assumed that all or any part of an Inferred Mineral Resource will
ever be upgraded to a higher category. Under Canadian rules, estimates of
Inferred Mineral Resources may not form the basis of feasibility or pre-
feasibility studies, or economic studies except for Preliminary Assessment as
defined under 43-101. Investors are cautioned not to assume that part or all
of an inferred resource exists, or is economically or legally mineable.
The mineralized material at the Hollister Project is currently classified as
a measured and indicated resource, and a portion of it qualifies under
Canadian mining disclosure standards as a proven and probable reserve, but
readers are cautioned that no part of the Hollister Project`s mineralization
is considered to be a reserve under US mining standards as all necessary
mining permits and project financing would be required in order to classify
the project`s mineralized material as an economically exploitable reserve.
Although work has been done to confirm the mine design, mining methods and
processing methods assumed in the 2011 Update, construction and operation of
the mine and processing facilities depend on securing environmental and other
permits on a timely basis. Additional permits, when required, have yet to be
applied for and there can be no assurance that required permits can be
secured or secured on a timely basis.
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.
Johannesburg
Wednesday, 2 February 2011
Sponsor
Nedbank Capital
Date: 02/02/2011 17:11:01 Supplied by www.sharenet.co.za
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