Highlights
- Earnings per share of $0.02
for Q4 2010
- Revenue for Q4 2010 of $43
million with 31,911 Au eqv oz sold
- Cash cost improved 19% quarter on quarter
- Revenue more than doubled in 2010 with the adjusted loss per
share1 reduced by 69% to $0.05
- Burnstone completes commissioning of all major capital
infrastructure
- Successfully closed $75
million bought deal public offering as well as 15%
over-allotment
- Executed the Credit Agreement for a US$60 million Term Loan Financing to repay in
full the Senior Secured Notes
VANCOUVER, Feb. 24 /PRNewswire-FirstCall/ - Great Basin Gold
Ltd. ("Great Basin Gold" or the "Company"), (TSX: GBG) (NYSE Amex:
GBG) (JSE: GBG) announces updates on the recently announced
financing transactions as well as unaudited financial results for
the quarter and the financial year ended December 31, 2010. The Company will file its
audited financial statements for the year ended December 31, 2010 on or before March 31, 2011.
Finance transactions
The previously announced $75
million bought deal public offering, as well as the 15%
over-allotment option, was closed on February 23, 2011 with the proceeds from this
transaction mainly being utilized for working capital requirements
during the production build-up at the Burnstone Mine.
The Company also executed the Credit Agreement relating to the
previously announced US$60 million
Term Loan Financing with Credit Suisse AG. The loan has a term of 4
years and is repayable in quarterly installments commencing
September 2011, and will bear
interest at a premium of 3.75% over the 3-month US LIBOR rate. The
Company will execute a zero cost collar hedging program, consisting
of a total of approximately 105,000 gold equivalent ounces (Au eqv
oz) spread over a 4-year term, prior to draw down. Draw down on
this facility is set for March 15,
2011 with approximately US$52
million to be applied towards full and final settlement of
the Senior Secured Notes issued in December
2008.
Operating results
Fourth quarter (Q4) 2010 gold production of 31,911 Au eqv
oz2 from trial mining activities at the Company's
Hollister project was in line with expectations and an increase of
190% over third quarter (Q3) 2010 results. Revenue for the quarter
totaled $43 million and $100 million for the fiscal year, an increase of
$66 million year on year. Cash costs
for the quarter (inclusive of royalties) decreased by 19% to
$690 (US$670) per Au eqv oz and 11% to $563 (US$546) per
ton from Q3 2010 and were in-line with estimates for the quarter.
The Company's Esmeralda mill processed 27,553 tons during Q4 2010
and recovered 21,901 Au eqv oz. Recoveries for the quarter of 80%
Au and 61% Ag are still below our targeted rate of 92% Au and 85%
Ag due to the high metal content fouling the carbon in the process.
This is being addressed by the installation of a carbon
regeneration system and automation of certain components within the
mill.
The Company achieved its first positive earnings per share of
$0.02 during Q4 2010 (Q3 2010:
$0.07 loss per share). The adjusted
loss per share for the year ended December
31, 2010 decreased to $0.05,
an improvement of 69% over the $0.16
adjusted loss per share reported in fiscal 2009.
Burnstone project update
Commissioning of all major capital projects at Burnstone was
completed during January 2011 and the
Company will be reporting revenue and production costs during Q1
2011. The Burnstone metallurgical plant is now available for
commercial levels of production with the completion of the
commissioning of the Carbon-in-Leach (CIL) circuit. Over 90,000
tons of lower grade development ore were milled in January 2011. The Burnstone Mine was ceremonially
opened with a gold pour celebration by the South African Minister
of Mineral Resources, Ms Susan
Shabangu, on February 22,
2011.
Exploration update
At Hollister, the evaluation of the very high
grade Blanket Zone material (November 9,
2010 news release) progressed during the quarter. Bulk
sampling involved the successful extraction of some 500 tons
grading on average 12 oz/ton Au eqv. An initial phase of
underground drilling was initiated to determine the grade profile
and strike continuity of the Blanket Zone style of mineralization
exposed at 3000N 1E. As at February
21, five boreholes (each approximately 600 feet long) had
been completed. A further 11 holes are planned for completion by
the end of March 2011 to enable
preliminary mineral resource modelling. The high grade (averaging
>10 oz/ton Au) zones are directly related to vertical extensions
into the Tertiary volcanic strata of narrow mineralised structures
from the underlying Ordovician metasediments.
The first long flat underground borehole testing
the Velvet area to the north of current infrastructure (HDB 432;
EOH 2,800 feet) was completed on February
14, 2010. The borehole intersected a number of silicified
and weak to moderately mineralized silicified zones and fault
structures that are indicative of fluid circulation and alteration.
As at February 22, a second hole had
reached 1,520 feet depth with approximately 1,480 feet remaining to
be drilled.
Underground drilling during Q4 2010 continued to
gain positive results for the recently discovered SE Gwenivere vein
system. Preliminary modelling of the vein system has been
initiated.
At Burnstone, drilling within the 24-month mine
plan area continued from underground and surface, providing
detailed coverage of structural breaks and mining block infill
valuation data. Other exploration was focused on maintaining
mineral rights outside of the Burnstone Mine Mining Right.
Ferdi Dippenaar,
Great Basin Gold CEO, commented: "We are very pleased with the
operating results achieved during Q4 2010. This was the first
quarter that we were able to demonstrate the operating potential of
our Nevada operations with our
Esmeralda mill able to process all material from trial mining at
Hollister. Burnstone achieved a significant milestone by
completing the commissioning of all major capital projects and
thereby concluding its project construction phase in January 2011. With underground development rates
increasing, we are gaining momentum to deliver on our production
targets in a safe and efficient manner. The closing of the public
offering as well as the execution of the Credit Agreement for the
US$60 million Term Loan Financing
provides us with the required working capital to finance the
planned production build-up at Burnstone. The higher revenue from
increased production in 2010 resulted in our adjusted loss per
share reducing by more than 69% in 2010; we expect further
operational and financial improvements for fiscal 2011 with
Burnstone starting to contribute to our bottom line."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating
Officer and Phil Bentley, Pr.
Sci. Nat , Vice President: Geology and Exploration of Great Basin,
both 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,
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 cost per ounce produced 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 test mining at the Hollister project. It is
determined by dividing the relevant mining and processing costs
including royalties by the ounces produced in the period. There may
be some variation in the method of computation of "cash cost per
ounce produced" as determined by the Company compared with other
mining companies. In this context, "ounces produced" includes
in-process and doré inventory along with ounces of gold sold in the
period. Cash costs per ounce produced 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 of test mining at Hollister. As a Non-GAAP
Financial Measure cash cost per ounce 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. There are material limitations
associated with the use of such Non-GAAP measures.
_________________________________
1 Adjusted loss per share and cash cost are non-GAAP
measures. Refer to cautionary note regarding non-GAAP measures
included in this press release.
2 The equivalent gold ounces reported in this document
were calculated using a gold price of US$1,000/oz, a silver price of US$15/oz.
SOURCE Great Basin Gold Ltd.
Copyright . 24 PR Newswire