Great Basin Gold Provides Update on Financing Activities and Unaudited Results for Q4 2010 and the Financial Year Ended December
February 24 2011 - 8:00AM
PR Newswire (Canada)
VANCOUVER, Feb. 24 /CNW/ -- 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
share(1) 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 /CNW/ - 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 oz(2) 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
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. 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. To view this news release in HTML
formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/February2011/24/c5615.html
pFor additional details on Great Basin and its gold properties as
well as further particulars about the financial and operational
update, please visit the Company's website at a
href="http://www.grtbasin.com/"www.grtbasin.com/a or contact
Investor Services:bi/i/b/p table valign="top"
border="0"trtd /td td /td td /td td /td
td /td td /td td /td tdTsholo Serunye in South
Africa /td td /td td27 (0) 11 301
1800/td/tr trtd /td td /td td /td td /td
td /td td /td td /td tdMichael Curlook in North
America /td td /td td1
(888) 633 9332/td/tr trtd /td td /td td /td
td /td td /td td /td td /td tdBarbara Cano at
Breakstone Group in the USA
/td td /td td(646) 452 2334/td/tr/table
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