GREAT BASIN GOLD LIMITED - GBG Updates Insolvency Proceedings and DIP Loan Status

Release Date: 05/10/2012 07:23
Code(s): GBG
 
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GBG Updates Insolvency Proceedings and DIP Loan Status

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
("GBG" or "the Company”)


Great Basin Gold Updates Insolvency Proceedings and DIP Loan
Status


October 4, 2012, Johannesburg, SA - Great Basin Gold Ltd.
(“Great Basin Gold”), (TSX: GBG; NYSE MKT: GBG; JSE: GBG)
announces that further to its news release of September 20,
2012, the $35 million debtor-in-possession loan from its current
lenders (“Lender    DIP Loan”) authorized by the Supreme Court of
British Columbia on September 19, 2012 and reaffirmed on
September 27 with amendments, closed on October 3, 2012. An
initial utilisation of US$14,235,000 under the Lender DIP Loan
has now been advanced of which approximately US$9,235,000 was
used to pay down the emergency loan advanced by the lenders on
September 20 as an amendment of the existing 2010 Burnstone $150
million secured credit facility (“the 2010 Burnstone Facility”).


A British Columbia appellate court has today denied an
application made by an ad hoc committee of holders of the Great
Basin Gold’s convertible debentures (“CD Committee”) for leave
to appeal the September 27 decision of the British Columbia
Supreme Court.     The CD Committee’s main objection to the Lender
DIP Loan is the granting by Great Basin Gold Inc. (“GBGI”),
parent of the Great Basin Gold    subsidiaries in Nevada which own
the Hollister and Esmeralda assets, of a guarantee (the

                                                                     1
“Guarantee”) of the obligations of the 2010 Burnstone Facility,
which is a requirement under the Lender DIP Loan.   The British
Columbia Supreme Court rejected this objection, and the British
Columbia Court of Appeal today denied leave to appeal that
decision. Yesterday, the CD Committee obtained from a Nevada
State court a 7 day temporary restraining order (“TRO”)
restricting GBGI from entering into the Guarantee. The CD
Committee is also seeking a receivership order against GBGI.
GBGI will vigorously defend itself in the Nevada litigation.


In other developments, TSX has determined to delist the Common
Shares, Debentures and Warrants (Symbols: GBG, GBG.DB and
GBG.WT) (collectively, the “Securities”) of the Company at the
close of market on October 25, 2012 for failure to meet the
continued listing requirements of TSX. The Securities will
remain suspended from trading.

Lou van Vuuren
CEO (interim)


For additional details on Great Basin Gold Ltd. and its gold
properties, please visit the Company’s website at
www.grtbasin.com or contact Michael Curlook, Head of Investor
Services at 1-888-633-9332.



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 related to the Company’s insolvency and
related legal proceedings and need for near term financing
- uncertainties related to project realization values
- 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.
- There is currently no certainty that Southgold Exploration
(Pty) Ltd will successfully emerge from business rescue
proceedings and thereby prevent liquidation.


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
5 October 2012


Sponsor
Sasfin Capital ( a division of Sasfin Bank Limited)
                                                                  
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