Including initial Production and Revenue
from the Burnstone Mine
VANCOUVER, May 3 /PRNewswire/ - Great Basin Gold Ltd.
("Great Basin Gold" or the "Company"), (TSX: GBG) (NYSE: GBG)
(Amex: GBG) (JSE: GBG) reports an operational update for the
quarter ended March 31, 2011 (Q1
2011). The Company will file its interim financial statements for
Q1 2011 on May 16, 2011 and will hold
an earnings call on May 17, 2011 at
9 am (EST).
Burnstone
The Metallurgical Plant, as well as all other major capital
projects was successfully commissioned by the end of January 2011. During the quarter, Burnstone
recovered 5,511 gold ounces (Au oz) and sold 2,794 oz to record its
maiden revenue of $3.8 million. The
cash production cost per tonne for the period is estimated at
US$70 (ZAR490), which is in-line with the planned cost
during production build-up. Ounces recovered were predominantly
from development ore processed, which at a lower head grade of 0.03
Au oz/t (1.03 g/t) grade resulted in a gold recovery of 83%.
Gold recoveries are expected to improve as the grade of the mill
feed increases. The impact of the lower head grade resulted
in a cash production cost of approximately US$1,365 (ZAR
9,555) per oz.
The Metallurgical Plant processed approximately 200,000 tonnes
during the quarter, in-line with the production build-up plan.
Underground tonnes are being augmented with the stockpile material
to allow the mill to operate at an average of 90,000 tonnes per
month until such time as production from underground is sufficient
to increase to the planned processing rate of 125,000 tonnes per
month.
Mechanized development continued with 3,288 meters being
developed during the quarter against a plan of 3,600 meters,
bringing the total development for the project to date to 12,402
meters of which 6,855 are on reef. Long Hole Stoping
continued with a total of 6,000 square meters stoped to date. Good
progress was made with the second phase of the shaft infrastructure
on 40 and 41 Level, with the tramming loop and second access to the
shaft tip being completed. This will alleviate the congestion at
the tips and allow for the further ramp-up of tonnes though the
shaft system. Over and above the area stoped to date, 16 panels
were also drilled and available for blasting at the end of March,
2011.
Hollister
During the quarter, 21,828 tonnes were extracted through trial
mining at Hollister, an average grade of 1.03 gold equivalent oz
(Au eqv oz)1. Hollister maintained its production
momentum from Q4 2010 by recovering 28,500 Au eqv oz, of which only
17,500 Au eqv oz were recognized in revenue as an additional 11,000
Au eqv oz were delivered but not sold to the refiner by quarter
end. Until such time as the installation of the acid regeneration
system has been completed at the Esmeralda Mill, the Company will
continue to ship-loaded carbon to the refinery as opposed to doré,
there will be a timing delay on when the revenue from these ounces
can be recognized.
Since the introduction of clean carbon in February 2011, Au recoveries have exceeded 90%,
with the Au recovery for the quarter being 88%, and Ag recoveries
increasing to 68%. The Esmeralda Mill treated 21,634 tonnes during
the quarter with an average head grade of approximately 1 Au eqv
oz/t (32.15 g/t). Cash costs for the quarter are estimated at
US$680 per Au eqv ounce.
Although the overall average in-situ grades in the Blanket Zone are
lower than what was encountered in the super high grade area, an
additional 1,025 tons were mined during the quarter, at an average
grade in excess of 3 Au eqv oz/t.
The delay in recognizing revenue from the
Nevada operations had a negative
impact on the earnings for the quarter. The net loss for the
quarter is also impacted by the fair value charges attributable to
the mark-to-market of the zero-cost collar hedge programs, as well
as the settlement loss recognized on repayment of the Senior
Secured Notes in March 2011. The
adjusted loss per share for the quarter is estimated at
$0.01 with the loss per share
$0.05. The Company had $68 million in cash reserves on March 31, 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 the
progress made by the team on a monthly basis is reassuring.
Production is expected to increase to 18,000 ounces in Q2 2011. The
Nevada operations showed
improvements in a number of areas during the quarter, notably on
ounces recovered through trial mining as well as the improved
recoveries at our Esmeralda Mill. The latter improvement
especially pleasing with the impact already evident in both the
resulting cash costs and the ounces delivered to the refinery. Not
being able to recognize all ounces at the refiners has impacted our
operating margins as well as earnings. Our short to medium term
focus at both of these operations is to increase production and
manage costs, and unlock the intrinsic value of these quality
projects."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating
Officer of Great Basin Gold, a Qualified Person as defined by
regulatory policy, has 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.
_______________________________
1 Gold equivalent is calculated using metal prices of
$1,350 per ounce for gold and
$25 per ounce for silver.
SOURCE Great Basin Gold Ltd.