REPORTS 100% INCREASE IN REVENUE
VANCOUVER, Aug. 4, 2011 /PRNewswire/ - Great Basin Gold Ltd.
("Great Basin Gold" or the "Company"), (TSX: GBG; NYSE Amex: GBG;
JSE: GBG) reports an operational update for the 3 months ended
June 30, 2011. The Company will file
its interim financial statements for Q2 2011 on August 15, 2011 and will hold an earnings call on
August 16, 2011 at 9 am (EST).
Great Basin Gold returned a much improved
quarter in respect of Au and Ag ounces sold which combined with an
expected improvement in cash costs should allow the Company to
report adjusted earnings per share for the quarter (Q1 2011:
adjusted loss per share of $0.01).
Hollister
The Nevada operations recorded
$49 million in revenue during the
quarter on record sales of 34,522 Au eqv1 oz, an
increase of 100% quarter on quarter. During the continuing
construction and installation of the acid wash and carbon
regeneration system at the Esmeralda Mill, loaded carbon is sent to
the refiner as opposed to dore. Improved refining terms resulted in
a decrease of approximately 5,000 Au eqv oz in inventory held at
the refiner from Q1 2011. The Esmeralda Mill treated 22,237 tonnes
during the quarter (Q1 2011:21,634) with a marked improvement in Au
and Ag recoveries of 95% and 75%. Cash production costs for the
quarter is expected to improve a further 8% quarter on quarter to
approximately $611 per Au eqv
oz in Q2 2011.
Underground exploration and stope delineation drilling continued
during the quarter, with a record footage of 45,000 feet or 13,636
meters completed from 84 boreholes. The focus has been on
completing phases of drilling on the Blanket Zone and south east
Gwenivere targets, providing further data for incorporation in the
upcoming mineral resource update (anticipated release date
September 2011). The stope
delineation drilling has continued to tighten up controls for short
interval trial stope planning. Surface exploration has continued
collating geological and geophysical data as well as reviewing
surface expressions of interpretations with structural and
geological observations.
Burnstone
Operational efficiencies at Burnstone improved significantly with
mechanized ore development increasing by 33% quarter on quarter to
1,550 meters in addition to 1,872 meters of waste development
completed during the quarter. The increase in ore development
allowed for an increase of 36% in the square meters stoped quarter
on quarter. Despite the relatively close drill spacing in the
current mining area, the exact position and orientation of
geological faults could not be identified earlier as most of these
are of a graben nature. Additional infill and delineation drilling
as well as extensive mapping and interpretation of the structural
information from the over 10 kilometers of underground development,
now provides management with more detailed data to incorporate
these faulting into the mine plan. An additional 66% waste
development was completed during the 6 months ended June 30, 2011 in response to the geological
faulting encountered compared with the original planned meters.
Excellent progress has been made with long hole stoping as the
mining method, with the efficiency of the teams improving on a
monthly basis. The improved hanging and footwall conditions
experienced in the C block allowed for a significant improvement in
decreasing the stoping width which was measured as low as 67 cm in
some stopes. This also had a positive impact on the mining grade of
stope material which improved 60% from Q1 2011.
The Metallurgical Plant is performing in line with expectation
with approximately 202,660 tonnes processed during the quarter (Q1
2011:199,878 tonnes).Tonnes processed however remain predominantly
from development ore which includes more dilution than stoped
material and negatively impacts on the mill head grade. Recoveries
for the quarter improved to 85% (Q1 2011:83%) although still
impacted by the low head grade ore delivered to the mill.
Recoveries are expected to improve to the planned 95% as the
head grade increases. The impact of the lower head grade is
reflected in the 5,619 Au ounces sold (Q1 2011:2,794 Au eqv oz) as
well as the cash production cost per ounce of approximately
$1,450 (ZAR
10,130) expected for the quarter. During the build-up phase
a more accurate measurement is cost per tonne which improved 12% to
approximately $60 (ZAR420) (Q1 2011:$68) per tonne for the quarter.
_________________________
1 Au eqv oz is calculated based on US$1,400Au and US$30Ag.
Corporate
The Company, with the assistance of RBC Capital markets, offered a
$0.07 per warrant early exercise
discount to holders of the $1.25
warrants expiring November 2011. Ten
million of the warrants were exercised prior to June 30, 2011 with another 9.2 million warrants
exercised subsequently, leaving approximately 223,000 warrants to
be exercised prior to expiry on November 15,
2011.
The Company had approximately $38 million in cash reserves on June 30, 2011 and has also negotiated a
US$40 million standby debt facility
with Credit Suisse AG. This facility will be available in the event
that additional working capital is required at Burnstone as a
result of the slower than planned production build-up. Legal
documentation is nearing completion with the targeted signature
date being mid-August, 2011.
Ferdi Dippenaar,
Great Basin Gold President and CEO, commented: "Although
experiencing the usual challenges with bringing a new mine into
production, Burnstone is settling into a production rhythm and
although the progress made by the team on a monthly basis is
reassuring, it is not yet at planned levels. The need for
additional waste development to access the mining blocks impacted
negatively on ore development which in turn impacts on stopes
available for mining. Production for the remainder of the year will
unfortunately be impacted by this approximate 3 month delay in ore
development and we expect to recover between 50,000 to 60,000 Au oz
for the second half of the year and an estimated 60 000 to
70 000 ounces for the 12 month period. The Nevada operations showed improvements in a
number of areas during the quarter, notably in ounces extracted
through trial mining as well as the improved recoveries at our
Esmeralda Mill. The latter improvement is especially pleasing with
the impact already evident in the reduced cash costs and the
increased ounces delivered to the refinery. The current performance
from our Nevada operations and the
standby debt facility provides the Company with adequate cash
resources to fund the delayed production build-up at Burnstone. Our
short to medium term focus at both of these operations remains to
increase production, manage costs and unlock the intrinsic value of
these quality projects."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating
Officer of Great Basin Gold, and Phil
Bentley, Pr. Sci. Nat., Vice President: Geology &
Exploration, Qualified Persons as defined by regulatory policy,
have reviewed and assumed responsibility for the technical
information contained in this release.
No regulatory authority has approved or
disapproved the information contained in this news release.
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 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 Technical Reports 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. The Company undertakes no obligation to update
forward-looking information if circumstances or management's
estimates or opinions should change except as required by law.
Cautionary Note regarding Non-GAAP
Measurements
Cash production 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. 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 production cost per ounce/tonne" as determined
by the Company compared with other mining companies. Cash
production 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
production costs should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP. There is material limitations associated with the use of such
Non-GAAP measures.
SOURCE Great Basin Gold Ltd.