GREAT BASIN GOLD REPORTS QUARTERLY RESULTS
May 17 2011 - 8:30AM
PR Newswire (Canada)
VANCOUVER, May 17 /CNW/ -- Including initial Production and Revenue
from the Burnstone Mine VANCOUVER, May 17 /CNW/ - 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's(1)
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 cost(2) 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
equivalent(3) 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
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 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. To view this news release in HTML
formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/May2011/17/c5089.html p
For additional details on Great Basin Gold 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: /p p /p table border="0" valign="top" tr td
Tsholo Serunye in South Africa br/ Michael
Curlook in North America br/ Barbara
Cano at Breakstone Group in the USA
/td td /td td /td td /td td /td td
/td td /td td /td td /td td /td
td /td td /td td 27 (0) 11 301 1800br/ 1 (888)
633 9332br/ (646) 452 2334 /td /tr /table
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