GREAT BASIN GOLD LIMITED - GBG Update

Release Date: 27/12/2012 07:05
Code(s): GBG
 
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GBG Update

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 PROVIDES UPDATE


December 24, 2012, Vancouver, BC - Great Basin Gold Ltd. (“Great Basin
Gold” or the “Company”) initiated creditor protection proceedings
under CCAA in Canada in September 2012 and provides this general
situation update. Under the CCAA proceedings, the stay of any
potential creditor lawsuits was extended until January 14, 2013. As
previously announced, the Company’s executive officers are now
provided by a professional restructuring services firm which was
appointed by agreement with the bank lenders who are the Company’s
principal creditors.


The third fiscal quarter’s management’s discussion and analysis
(“MD&A”) filed November 14, 2012 at www.sedar.com discloses that the
Company will require additional funding by mid-January 2013 in order
to allow the planned sales and/or recapitalization process for its two
principal mining projects (Hollister in Nevada, Burnstone in South
Africa). While discussions with the lenders about securing additional
funding are ongoing, no assurances can be given that the required
funding will be obtained. The third quarter MD&A also stated that
reviews of the lowered Hollister reserve and resource estimates were
also ongoing (the Company recognizes reserves at Hollister for
Canadian but not US purposes). Based on ongoing analyses, in-house
staff now estimates a further reduction in Hollister resources and
reserves is appropriate which implies a 3 year mine life based on the
current reserve estimate at current production rates versus the 6
years previously estimated. Engineering and geological staff believe
this life could potentially be extended by further developmental
drilling which the Company has not been in a position to fund. The
Company has initiated preparation of a NI 43-101 technical report to
be filed within 45 days which will provide data and analyses to
support these tentative conclusions and to serve as a basis to
determine if an impairment charge from the approximately $90 million
carrying value of Hollister is now warranted.


The revised mineral resource estimates reflect changes in geological
modeling adopted for the purposes of stringent grade control for the
mineral reserve estimation process based on trial mining experience.
The mineral resources are comprised of epithermal vein and
disseminated Tertiary mineralization. At a 0.15 gold ounce per ton
(“opt”) cutoff grade Measured and Indicated Resources have been
reduced to 545,000 gold equivalent ounces1 (“Au eqv oz”) in 0.49 Mt
grading 0.918 opt Au and 5.7 opt Ag. The estimate also includes
254,000 Au eqv oz in Inferred Mineral Resources. Re-estimated Proven
and Probable Mineral Reserves total 187,000 Au eqv oz in 0.29 Mt
grading 0.590 opt Au and 2.7 opt Ag2. Additional detail is shown in
the tables appended to this release.

1 Au eqv oz is calculated by using the following metal prices:
US$1400/oz for Au and US$30/oz for Ag. Metallurgical recoveries are
not applied to resource values; contained metal estimates assume 100%
recoveries.

2 Mineral reserves are fully diluted, and grades adjusted for
metallurgical recoveries of Au (92%) and Ag (75%) and stated at a 0.25
opt cut-off grade. The cut-off is based on an analysis of fully-
diluted pay limit (breakeven) grades which incorporate a gold and**

A limited underground drilling program that has continued over the
past 18 months has focused on increasing confidence in the estimates
of mineral resources and reserves to allow for improved mine planning
and forecasting. The outcome of this drilling has been a considerable
tightening up of the geological vein modeling, which resulted in a
higher-grade lower-tonnage resource model being used for the purposes
of mine planning and mineral reserve estimation. Critical to the
sustainability of the project will be the funding and completion of
underground development necessary to access the mineral resources and
reserves, with the objective of extending the current 3-year life of
the project. Future work should include phases of surface drilling to
test targets peripheral to the current underground infrastructure. The
revised mineral resources and reserves also reflect depletion from
trial mining in excess of 370,000 tons which yielded approximately
400,000 Au eqv oz since commencement in 2008.


There has been a downgrading in the estimate of reserves primarily
because of the lower volume vein resource model used and the exclusion
of reserves previously estimated for the Tertiary material. The
Tertiary mineralization occurs in broad pod-like zones of low-grade
gold concentration that are generally developed around very high-
grade, narrow structures that are sometimes linked to underlying
epithermal veins. There is a need for continued underground
development and drilling before reserve status can be assigned to this
material. The trial mining operation continues to extract ore from
zones of the Tertiary mineralization as there is a very significant
upside mineralized component to these areas. During 2012, trial mining
of a number of Tertiary zones has realized 12,915 Au eqv oz from
13,200 tons grading 0.897 opt Au and 3.747 opt Ag. It is believed that
considerable upside exists through further refinement and development

**silver price of US$1400/oz and US$30/oz, respectively, and estimated
costs for mining, ore transport, milling, and royalties.
of the Tertiary material through a combination of maximizing access
and stoping options from the trackless infrastructure afforded by the
spiral ramp, and optimization of pillar/backfill designs to maximize
profitable extraction.


The epithermal vein mineral resource and reserve estimates were
completed by Hollister staff and reviewed by specialists at Deswik
Mining Consultants PTY Ltd, an international consulting firm based in
South Africa. The Tertiary mineral resource estimate was completed by
Deswik. The work was done under the supervision of Phil Bentley,
Pr.Sci.Nat., Great Basin Gold’s Vice President: Geology & Exploration
and Dana Roets, FSAIMM, Great Basin Gold’s Chief Operating Officer,
both of whom are Qualified Persons as defined by Canadian National
Instrument 43-101 (Disclosure Standards for Mineral Projects), both of
whom have reviewed and approved the technical information in this
news release.

Great Basin Gold is applying to voluntarily delist its common shares
from the JSE and NYSE MKT effective immediately. Notwithstanding that
the Company will apply to delist its securities, it will continue to
comply with its continuous disclosure obligations. For additional
details on Great Basin Gold Ltd. and its gold properties, please visit
the Company’s website at www.grtbasin.com or contact Ray Dombrowski,
Great Basin CEO or Peter Gibson, Great Basin CFO care of Alvarez &
Marsal Canada ULC. email: rdombrowski@alvarezandmarsal.com

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-recognised reserves. Similarly proved and
probable reserves which may be recognized under Canadian standards may
not be recognized as such under SEC standards.

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 liquidity challenges and
need for near term financing
-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.

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.



Mineral Resources
                                                                                Ag
                 Cut-                                                          Oz     Au Eqv
                  Off   Tonnes    Tons     Au       Au     Ag    Ag   Au Oz              Oz
Classification    opt    (000)   (000)    opt      g/t    opt   g/t   (000)   (000)    (000)
    Measured     0.15     166     183    1.119    38.37   6.8   234    205    1,248     231
   Indicated     0.15     280     308    0.914    31.33   4.9   167    282    1,500     314
  Measured &
   Indicated     0.15     446     491    0.990    33.95   5.6   192    487    2,748     545
    Inferred     0.15     433     477    0.489    16.76   2.0    69    233      954     254

Notes:
1 Gold equivalent ounces (Au eqv oz) were calculated by using the
following metal prices: US$1400/oz for Au and US$30/oz for Ag.
Metallurgical recoveries are not applied to resource values; contained
metal estimates assume 100% recoveries.
2 Parameters for Measured = 50 feet (1/2 range), minimum number of
informing samples 12; Indicated = 100 feet (1 x range), minimum number
of informing samples 8; Inferred = 750 feet (7.5 x range), minimum
number of informing samples 4.
3 Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
5 Effective date June 2012; depleted to September 30 2012.

Mineral Reserves

                                                           Ag  Ag            Au Eqv
                   Cut-off Tonnes Tons   Au    Au  Au oz (oz/ (g/t  Ag oz        Oz
  Classification    (oz/t) (000)  (000) opt    g/t  (000) t)     )  (000)      (000)
      Proven         0.25    101   111 0.602 20.62    67  2.7  91    296         73
     Probable        0.25    161   178 0.582 19.97   104  2.7  94    488        114
     Proven &
     Probable        0.25    262   289 0.590 20.22   170  2.7  93    785        187

Notes:
1 Mineral reserves are fully diluted, and grades adjusted for
metallurgical recoveries of Au (92%) and Ag (75%).
2 Metal prices of US$1,400 Au and US$30 Ag have been applied.
3 The mineral reserves are included in the mineral resources above.
4 Effective date June 2012; depleted to September 30 2012.

Canada
24 December 2012

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)



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