VANCOUVER, April 2, 2012 /CNW/ - Great Basin Gold Ltd. ("Great
Basin Gold" or the "Company"), announces that its audited annual
financial statements and Management Discussion and Analysis for the
year ended December 31, 2011 have been filed. The Company will
review the results during an investor conference call scheduled for
April 3, 2012. Highlights for the year included: -- Year on year
increase of 27% in Au eqv oz produced and 70% increase in revenue
-- Burnstone capital project completed with commercial production
in February 2011 -- 42% increase in Au eqv oz recovered from
Hollister through our Esmeralda mill compared to 2010 -- $24
million in cash generated by operations compared to $3 million
utilized by operations in 2010 -- 46% improvement in adjusted loss
per share year on year
___________________________________________________________________
| | 12 months ended | | |_________________________________| |
|December 31 2011|December 31 2010|
|_________________________________|________________|________________|
|Recovered Au eqv oz1 | 120,971| 95,186|
|_________________________________|________________|________________|
|Au eqv oz sold | 114,228| 88,789|
|_________________________________|________________|________________|
|Realized Au eqv price | $1,491| $1,123|
|_________________________________|________________|________________|
|Revenue ('000) | $170,324| $99,706|
|_________________________________|________________|________________|
|Profit/(loss) from operating | $1,514| ($17,908)| |activities
('000) | | |
|_________________________________|________________|________________|
|Net loss for the year ('000) | ($17,737)| ($27,141)|
|_________________________________|________________|________________|
|Cash generated from (utilized by)| $24,190| ($2,725)| |operations
('000) | | |
|_________________________________|________________|________________|
|Adjusted loss per share | ($0.06)| ($0.13)|
|_________________________________|________________|________________|
Ferdi Dippenaar, Great Basin Gold President and CEO, commented:
"Our Nevada operations continue to perform in line with their
current production potential by delivering a much improved set of
results from trial mining for 2011. We expect a similar
performance for 2012. The planned completion of the EIS during 2012
will allow the project to enter into commercial production which
will have a positive impact on cash costs and the manner in which
we report our earnings. Burnstone, in its first year of production
build-up, made significant strides but was constrained by
unexpected geological and infrastructural challenges. The
continuing additional infill drilling is mitigating the risk in the
short to medium term. Significant improvements have been, and are
being made to the shaft and permanent underground infrastructure
over the last 3 months. The continued improvement in ore
development and stoping rates at Burnstone is reassuring, with more
improvement expected in the second quarter of 2012 to get to the
planned production levels." Financial results The Company recorded
a 70% increase in revenue as a result of a 29% increase in Au eqv
oz sold as well as a 33% increase in the realized Au price. The
increased revenue and improved operating margin allowed for much
improved results from operating activities which recorded a profit
of $1.5 million compared to the loss of $17.9 million in 2010.
Profit from operating activities is expected to improve as
production from our Burnstone mine increases. Burnstone recorded a
net operating loss of $15 million in 2011, the first year of its
production build-up. The interest expense recorded in earnings for
2010 is net of $30.6 million interest capitalized to mine
development while our Burnstone mine was under construction. An
impairment provision for $13.6 million was recorded against the
loan advanced to our Black Economic Empowerment ("BEE") partner,
Tranter Burnstone (Pty) Ltd, under the 2010 guarantee agreement as
a result of the decrease in the value of the shares our BEE partner
owns in the Company that serves as collateral for the advance. Loss
on derivative instruments include the $8.8 million loss on the
advance settlement of the 2008 Senior Secured Notes in February
2011 as well as a net $21.2 million fair value adjustment on the
zero-cost-collar hedge structures entered into as a result of the
Term Loan facilities executed during 2011. Our Nevada operations
have demonstrated their ability to generate taxable earnings and
therefore recognized a net $49.7 million deferred tax asset on
their unused tax losses and resource pools. Basic loss per share
improved 50% from $0.08 in 2010 to $0.04 in 2011 but remains
impacted by fair value adjustments and capitalized interest.
Adjusted loss per share eliminates the impact of these transactions
and shows a 46% improvement from $0.13 loss per share in 2010 to
$0.06 loss per share in 2011. Hollister The Nevada operations
produced 97,610 Au eqv oz for the year (2010: 95,186 Au eqv oz),
compared to the forecast of 100,000 Au eqv oz for the year. Fiscal
2011 was the first year that all material extracted from trial
mining activities was processed at our Esmeralda mill, which showed
a marked improvement in Au recovery from 2010, increasing from 82%
to 92%. The performance of the acid wash and carbon regeneration
circuit, which was commissioned during November 2011, has not yet
reached planned levels and the mill continues with the process of
replacing carbon on a continuous basis which, in the short term,
impacts on the amount of Au eqv oz sold as well as the cash costs
reported. In an effort to mitigate the time delay in recognizing
produced metal as revenue and the insufficient capacity of local
refiners, a shipment of loaded carbon was sent to Rand Refinery in
South Africa in late December 2011 at an additional cost of
approximately US$35 per Au eqv oz. Regular shipments of carbon to
Rand Refinery will continue until April 2012 when the improvements
to the acid wash and carbon regeneration circuit is expected to be
completed. The year-on-year cash costs decreased by 9% to
US$674 per Au eqv oz which is only marginally above the 2011
forecast of US$650 per Au eqv oz. Additional emphasis on ore
development is improving mining flexibility with the availability
of additional stopes allowing for improved grade blending of
extracted ore and a more consistent performance on a monthly basis
is expected during 2012. The completion of the Upper-Zone ramp now
allows for easy access for delineation drilling, with information
obtained improving mine planning and scheduling. The good
operational performance from the Nevada Operations is expected to
continue in 2012, with production of 90,000 to 100,000 Au eqv oz at
a cash cost of US$700 - 750 per Au eqv oz expected from trial
mining. Burnstone The production ramp up at Burnstone continued
during 2011, with ore development meters increasing by 149% from
1,167 meters in Q1 2011 to 2,900 meters in Q4 2011. Stoping
square meters also increased by 77% from 3,760 in Q1 2011 to 6,653
in Q4 2011. Results from the long hole stoping mining method remain
positive, with stoping widths of approximately 80 cm being achieved
on a consistent basis. Improved dilution control on ore development
is positively impacting on the head grade of material delivered to
the mill. An 80 meter Graben fault was intersected in early 2011
and this, as well as infrastructural challenges experienced during
the year, significantly impacted on the first year of production
build-up at Burnstone. The temporary water handling system was
unable to handle the volumes of water generated from the
increasing mining activities, so underground flooding
occurred in the latter part of 2011 and early 2012, which has
impacted on the advancement of development. This short term issue
has now been resolved following the upgrading of the temporary
water handling system. Additional pumps and back-up pump
columns are providing additional capacity to not only reticulate
the water, but also to transport service water to all working ends,
which will further improve rates of development and stoping.
Permanent water reticulation infrastructure is under construction
for completion in Q2 2012. Total Au production for the year came to
23,361 Au ounces, approximately 6,000 Au ounces less than the
revised guidance of 30,000 ounces. In-fill drilling, comprising
19,051 meters from surface and 7,966 meters from underground, was
completed to January 31, 2012, increasing confidence in the 24 to
30 months mine plan. No significant faults were intersected
over this period. In-fill drilling will continue over the medium to
longer term. The Metallurgical Plant is performing in line with
expectation with 775,524 tonnes processed during 2011, an average
of 65,000 tonnes per month. Mill feed is controlled to account for
the lower than planned ore from development and stopes with the
mill capacity being in excess of 145,000 tonnes per month. Due to
the loss of ore development ends following the Graben fault, a
program to re-establish ore development ends commenced in Q2 2011
which increased ore development ends from 2 in June 2011 to 38 by
the end of February 2012. As the remaining 12 temporarily flooded
ore development ends become available during Q1 2012, the mine
plans to meet its first development milestone of 1,500 ore
development meters per month in Q2 2012, and this should allow the
mine to reach its first production milestone of 22,000 sq meters of
stoping and a production rate in excess of 10,000 oz per month in
early Q3 2012. Following a review of the current production levels
and progress of underground development and infrastructure, the
Company expects Burnstone to produce between 90,000 and 100,000 Au
oz at a cash cost of US$900 - US$1,000 per oz for the 2012 fiscal
year. These cash cost targets represent a marked improvement on the
US$1,801 per oz achieved in 2011. As planned, the high ratio of
development to stoping ore will continue to impact on the head
grade delivered to the mill and cash costs for the balance of 2012.
Liquidity and funding Net cash of $24.2 million was generated from
operations during 2011, a marked improvement on the $2.7 million
utilized by the operations in the prior year. In addition, capital
expenditure was reduced from $230 million in 2010 to $159 million
in 2011, decreasing the net financing requirement during 2011 to
$135 million compared to $233 million in 2010. In order to ensure
adequate funding is available, the Company executed 2 term loan
facilities during 2011 with net proceeds, after settling existing
debt and interest, of $36 million. Equity related transactions
which included a bought deal public offering in February 2011 ($81
million) and warrants exercised ($29 million), contributed a net
$115 million to cash reserves. Cash flow from operations is
expected to increase during 2012 and beyond as our Burnstone mine
increases its production to designed levels. Burnstone is expected
to be cash flow positive by Q3 2012 (using a gold price of US$1,650
and a US$/ZAR exchange rate of 7.5) with its cash contribution to
Group activities to increase in line with the production build-up.
To ensure the Company has adequate funds available to fund the
production build-up, it launched and closed a $50 million bought
deal public offering in March 2012 (see March 30, 2012 press
release.) Ferdi Dippenaar President and CEO Shareholders of the
Company are reminded that they may request a hard copy of the
complete audited financial statements free of charge upon request
from any of the Investor Services personnel above or from the
Company's Corporate Office at Tel: +27 (0) 11 301 1800, Fax: +27
(0) 11 301 1840 or Email: info@za.grtbasin.com. 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 o mine expansions,
environmental protection and associated compliance costs arising
from exploration, mine development, mine operations and mine
closures; o expected effective future tax rates in jurisdictions in
which our operations are located; o the protection of the health
and safety of mine workers; and o 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. Cautionary Note regarding Non-GAAP Measurements Cash
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 of operations. 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 cost per ounce/tonne" as determined by the Company compared
with other mining companies. Cash 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 costs should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP. Adjusted loss per share is also a Non-GAAP measure and is
calculated by excluding the impact of certain fair-value accounting
charges and once-off transactions. We also make reference in our
disclosures to "working capital" which is also a Non-GAAP measure
and includes cash and cash equivalents, trade and other
receivables, current inventories, trade payables and accrued
liabilities. There is material limitations associated with the use
of such Non-GAAP measures. 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. --------------------------------- (1)Gold equivalent
("Au eqv") calculations use US$1,400/oz for Au and US$30/oz for Ag.
Great Basin Gold Ltd. CONTACT: For additional details on Great
Basin Gold Ltd. and its goldproperties, please visit the Company's
website at www.grtbasin.com orcontact Investor Services:Tsholo
Serunye in South Africa 27 (0)11 301 1800Michael Curlook in North
America 1 888 633 9332Barbara Cano at Breakstone Group in the USA
(646) 452-2334
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