Including initial Production and Revenue from the
Burnstone Mine
VANCOUVER, May 17 /PRNewswire-FirstCall/ - Great Basin Gold
Ltd. ("Great Basin Gold" or the "Company"), (TSX: GBG; NYSE Amex:
GBG; JSE: GBG) reports results for the quarter ending March 31, 2011.
Highlights for the quarter include:
- Completion of all the main capital projects at Burnstone with
maiden revenue recognized.
- Improvement of recoveries at Esmeralda plant.
- Continued decrease in loss from operating activities as
revenues from both projects increase.
- Hollister operation removed from MSHA's1 potential
pattern of violation watch list (see release March 23, 2011).
- Successful completion of a $86
million bought deal public offering (which included exercise
of the underwriters' 15 percent over-allotment right) at a record
high price for a Great Basin offering of common equity.
- Completed Credit Agreement with a major international bank for
a US$70 million term loan financing
to allow repayment of the high cost 2008 Senior Secured Notes.
Revenue of $26.4
million from the sale of 17,324 Au eqv oz from our
Nevada operations as well as 2,794
Au oz from our South African operations was recorded for the
quarter. Approximately 11,000 Au eqv oz delivered to refiners were
not included in sales (approximately $15
million in revenue) for the quarter due to the transfer of
ownership to the buyer only taking place in April. The delay in
recognizing revenue from the Nevada operations had a negative impact on the
earnings for the quarter. Loss from operating activities
significantly improved from the $6.6
million loss recorded in the comparable quarter in 2010 to a
loss of $827 thousand recorded in Q1
2011. The net loss for the quarter of $20.3
million was impacted by the fair value charges attributable
to the initial recognition and mark-to-market adjustment of the
zero cost collar hedge programs ($6.0
million) as well as the settlement loss recognized on
repayment of the Senior Secured Notes ($8.8
million). The loss for the quarter was $0.05 per share.
The Company closed an $86
million bought deal public offering 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. A
US$70 million Term Loan facility was
also closed on March 16, 2011 with
the proceeds being utilized to settle the Senior Secured Notes. The
Company had $68 million in cash
reserves on March 31, 2011.
Burnstone
At Burnstone, the Metallurgical Plant as well as all other major
capital projects were commissioned during January 2011. 5,511 gold ounces (Au oz) were
recovered during the quarter with 2,794 oz sold to record maiden
revenue of $3.8 million. Cash
production cost2 per tonne was $68 (ZAR490) for
the quarter, which is in-line with the planned cost during
production build-up. Ounces recovered were predominantly from
development ore processed, which includes more dilution than stoped
material and negatively impacts on the mill head grade. This lower
head grade also impacts on recoveries, with 83% recovery achieved
for the quarter on the 0.03 Au oz/t (1.03 g/t) head grade.
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 cash production cost per ounce of $1,344 (ZAR 9,555)
recorded for the quarter. The Metallurgical Plant is performing in
line with the production build-up plan with 199,878 tonnes
processed during the quarter.
Ore tonnes to surface increased steadily
throughout the quarter in line with the increase in development
meters. Development rates are planned to increase from a monthly
average of 3,300 ft (1,000 meters) in Q1 2011 to 10,000 ft (3,000
meters) by the end of Q4 2011. The majority of ore tonnes for the
quarter came from on-reef development, with only 26% of contained
ounces extracted from stoping. Congestion underground and the
ability to clean the material from stopes and development ends
still remain a challenge while infrastructure development work is
continuing around the vertical shaft on 40 and 41 levels.
Additional travel ways and material handling systems around the
shaft bottom are being developed to enable maximum hoisting through
the vertical shaft which will alleviate the congestion and improve
cleaning time.
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 meters are on-reef. Progress
with long hole stoping remains encouraging: efficiencies of the
teams are improving on a monthly basis. Dilution is well managed
and the teams have shown that they can stope at the required rate
given the availability of stopes and the ability to clean the
material. Long hole stoping commenced in the C Middle block in
early May 2011; a more competent
footwall in this area resulted in further improvements in dilution
and grade control.
Hollister
Hollister maintained the momentum from Q4 2010 by recording
17,324 gold equivalent3 ounces (Au eqv oz) in sales
during the quarter, with an additional 11,000 Au eqv oz delivered
to the refiner by quarter end that has not been included in sales.
During the continuing installation of the acid regeneration system
at the Esmeralda Mill, loaded carbon is being sent to the refiner
instead of doré, resulting in a timing delay of when the revenue on
these ounces can be recognized. In total, approximately 28,500 Au
eqv oz were delivered to the refiner during the quarter.
Notwithstanding the delay caused in recognizing the revenue on
carbon sent to the refiner, the strategy of introducing new carbon
delivered the planned results, with Au recoveries increasing to an
average of 88% during the quarter. The program to continuously
replace carbon commenced in February
2011 and since then, Au recoveries have exceeded 90%, with
Ag recoveries exceeding 70%. The Esmeralda Mill treated 21,634
tonnes during the quarter with an average head grade of
approximately 1 Au eqv oz/t (32.15 Au eqv g/t). Cash production
costs for the quarter were 3% lower quarter on quarter at
$670 per Au eqv oz and are still
impacted by the lower recoveries and the additional costs incurred
in replacing carbon. The installation of the acid
regeneration system is planned for completion in Q3 2011.
During the quarter fifteen boreholes were
completed to test the extensions of Blanket zone mineralization
exposed by trial mining at 3000N 1E; assays from nine boreholes are
still awaited. The drilling is indicating structural cutoffs of
this mineralization in-line with the structures controlling the
Clementine #18 vein pay shoot below. The evaluation strategy for
the Blanket zone mineralization is being modified as mining and
drilling advance. It is clear that the bulk sampling of exposures
is proving to be more accurate in evaluating the variable extent of
the bonanza grade mineralization. The close relationship of the
development of bonanza grades with underlying high grade
"pay-shoot" epithermal veins is becoming evident. As a
consequence, the Blanket drilling program is being modified and
extended to test other targets within the mine development.
Ferdi Dippenaar,
Great Basin Gold President and CEO, commented:
"With the successful completion of the Burnstone
Mine commissioning, our focus in 2011 has changed from construction
to production. Despite experiencing the usual challenges with
bringing a new mine into production, good overall progress is being
made with increasing rates of development and production.
The Nevada
operations continued to show 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.
Mining of the Blanket Zone continued with a total of 2,961 tons
mined to date which, at grades of 3.75 Au oz/t and 6.55 Ag oz/t,
resulted in 11,382 Au eqv ounces being extracted. Indications are
that a number of these lenses of mineralization will be encountered
above the high grade zones of the underlying veins. Following the
receipt of the necessary approvals, surface exploration to possibly
extend the current Hollister vein system to the Hatter Graben area
is planned to recommence in Q3 2011."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating
Officer of Great Basin Gold, and Phil
Bentley, PrSciNat, 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.
1 Mine Safety and Health Administration
2 Cash production cost is a non-GAAP measure and is
calculated by deducting non-cash charges from production costs
(refer to section 12.2 of Management's Discussion and Analysis
filed with the Q1 Financial Statements)
3 Au eqv oz is calculated based on metal prices of
US$1,325/oz for Au and US$30/oz for Ag.
SOURCE Great Basin Gold Ltd.