JOHANNESBURG, SA, Sept. 20, 2012 /PRNewswire/ - Great Basin Gold
Ltd. ("Great Basin Gold"), (TSX: GBG; NYSE MKT: GBG; JSE: GBG)
announces that it has agreed to a comprehensive term sheet from its
existing bank lenders for a $35
million working capital loan which was approved as a
debtor-in-possession ("DIP") loan by order of the British Columbia
Supreme Court pursuant to a Companies Creditors Arrangement Act
("CCAA") filing made on September
19th, 2012 (Vancouver Registry 126583) . The DIP
Loan will be a post-commencement financing under the previously
announced business rescue ("BR") provisions of the South African
Companies Act which were commenced September
14, 2012. CCAA is a Canadian insolvency statute which will
allow the Company a period of time to seek buyers and partners for
its two gold mining projects and/or corporate level financiers in
an effort to return Great Basin Gold to solvency.
The DIP Loan has a term of 6 months, extendable
for up to 3 months, and is subject to certain fees, interest and
costs. It contemplates that the Company will dispose or sell
down its interest in its two gold projects or otherwise refinance
or recapitalize over certain periods within the term of the DIP
Loan. The DIP loan will be subject to a super-priority lien on the
assets of Great Basin Gold, and will also have the benefit of liens
and claims over the assets of its Nevada and South African subsidiaries.
As part of their security package for the DIP loan, the DIP lenders
will also receive from Great Basin Gold's U.S. holding company a
guarantee of the obligations of its South African subsidiaries'
obligations under an existing South African credit facility. The
DIP Loan has received lenders' credit committee approval and it is
now principally subject to negotiation and execution of definitive
documentation and other customary closing conditions. The DIP Loan
proceeds will be used, subject to the concurrence of a business
rescue practitioner in South
Africa and KPMG LLP, the CCAA-appointed monitor in
Canada, to affect an orderly
suspension of operations at Burnstone, ongoing care and maintenance
of Burnstone assets, and for working capital at Hollister.
Hollister is expected to continue profitably producing gold at the
rate of 6,000-7,000 ounces per month for the foreseeable future and
no insolvency filings are currently expected for the Nevada operations.
Lou van Vuuren,
interim CEO, commented on the recent developments, "We believe
the DIP loan will be in the best interest of our workforce and
other key stakeholders, as its proceeds will be use to ensure the
proper treatment of our Burnstone employees and the responsible
care and maintenance of this valuable project while Hollister
operations will be enhanced by some additional working capital. We
are confident that given the industry interest we are seeing in
these two assets we will see one or more realization or
recapitalization transactions complete within the term of the DIP
Loan."
Lou van
Vuuren
CEO (interim)
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 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.
SOURCE Great Basin Gold Ltd.