Great Basin Gold Reports Operational and Financial Results for the Quarter Ended
March 31, 2012
VANCOUVER, May 15, 2012 /PRNewswire via COMTEX/ -- Great Basin Gold Ltd. ("Great
Basin Gold" or the "Company"), (CA:GBG)(GBG)(GBG) (jse:GBG) announces that its
interim consolidated financial statements and Management Discussion and Analysis
for the quarter ended March 31, 2012 have been filed, and the Company refers the
reader to those materials for further information. All currency values in this
release are stated in Canadian dollars unless otherwise indicated. The Company
will review the results during an investor conference call scheduled for May 15,
2012.
3 months ended
March 31 2012 March 31 2011
Recovered Au eqv oz22,91129,593
Au eqv oz sold21,55520,118
Realized Au eqv price$1,548$1,309
Revenue ($'000)$33,373$26,343
Loss from operating activities ($'000)($7,650)($377)
Net loss for the quarter ($'000)($17,770)($20,341)
Cash generated from (utilized by) operations ($'000) $565($9,482)
Adjusted loss per share($0.03)($0.02)
Hollister
The Nevada operations produced 16,240 Au eqv oz1 for the quarter (q1 2011:24)(q1
2011:082 Au eqv oz), compared to the forecast of 19,749 Au eqv oz. Ineffective
carbon stripping, while the final upgrade to the acid wash and carbon
regeneration circuit was being completed, resulted in lower than planned Au (87%)
and Ag (62%) recoveries at the Esmeralda mill during the quarter. The upgrade to
this circuit was completed in late April 2012. All dor? will be poured on site
starting May 2012.
Although lower than Q1 2011, Au and Ag grades as well as tonnes extracted from
trial mining were in-line with the production plan and good progress has been
made in improving mining flexibility through additional focus on ore development.
15,357 Au eqv oz were sold during the quarter (q1 2011:17)(q1 2011:324) with the
amount of Au eqv oz locked up in carbon and awaiting processing through third
party refiners increasing by 1,352 to 14,447 Au eqv oz on March 31, 2012. It is
expected that this carbon will be treated during Q2 2012 and inventory levels
will return to normalized levels by the end of Q2 2012. Cash costs per ounce of
$850/oz were recorded for the quarter (q1 2011:$670); costs were impacted by the
lower recoveries achieved as well as the additional transportation costs incurred
to process the carbon at the Rand Refinery in South Africa. Following the recent
receipt of the Dam Safety Permit (which authorizes the impounding of tails,
slimes and water on the TSF) and the updated reclamation bond, construction
commenced on the three-phase expansion of the tailings storage facility (TSF). At
the currently planned production rates, Phase 1 and 2 will provide tailings
storage capacity for the next 6 years and the completion of Phase 3 can extend
this to 25 years. The current facility has sufficient capacity for the
impoundment of tails until the planned completion of the expanded tailings
facility.
Burnstone
The Burnstone operations produced 6,671 Au oz for the quarter (q1 2011:5)(q1
2011:511 Au oz), compared to the forecast of 6,327 Au oz. Production volumes were
generally in-line with the production plan with a slightly higher stoping Au
grade compensating for minor volume variances. Square meters available for
stoping more than doubled from December 31, 2011 with over 14,000 square meters
being available at March 31, 2012. Available square meters has increased further
since that time with approximately 16,200 square meters being available for
stoping at the end of April 2012. Good progress was made during the quarter on
infrastructure upgrades that will enable the mine to maintain its momentum to
meet increasing development and production targets. Cash costs per ounce for the
quarter of $2,181 were recorded (q1 2011:$2)(q1 2011:471) and were impacted by
additional water handling and employee related costs incurred.
Financial results and corporate matters
Revenue of $33 million was recorded for the quarter, an increase of 27% over the
comparative period in 2011. The increase in revenue can be ascribed to a 7%
increase in ounces sold as well as an 18% increase in the realized gold price.
The increase in cash and non-cash costs had a negative impact on the loss from
operations which amounted to $7.7 million (2011:$0.4 million). A $2 million
increase in net interest paid when compared to Q1 2011 is due to interest for
January 2011 being included in the Burnstone project development costs. A further
$2.6 million impairment charge on the loan advanced to our Black Economic
Empowerment partner (Tranter Burnstone (Pty) Ltd ("Tranter")) was recorded as a
result of the decline in the Company's share price. The valuation of the
zero-cost-collar hedge structures was immaterial for the quarter as a result of
the relative sideways movement in gold prices during this period.
The Company closed the previously announced $50 million public offering (see
press release March 15, 2012) on March 30, 2012 with the 15% over-allotment
option granted to the Underwriters closing on April 5, 2012. Net proceeds from
the Offering, totalling $54 million, will be used as working capital for the
development and production ramp up at Burnstone. At March 31, 2012, the Company
had net working capital of $15 million, which included $44 million in cash
reserves, and also had $10 million available to be drawn upon under the US$150
million term facility.
Following negotiations between the Company, Tranter and Investec Bank Limited
("Investec"), a Term sheet was agreed to in late April 2012 to settle a mutually
beneficial proposal whereby the Company provides Tranter with further financial
assistance over a period of 18 months to enable them to meet their proposed
restructured loan repayment obligations to Investec and thereby remove their
current breach of the loan agreement. In terms of the proposal, Investec will
remove all cash margin requirements and also restructure the repayment in such a
matter that the required assistance from the Company does not impact on its short
term cash requirements. The parties are currently working on finalizing the legal
agreements and obtaining the required approvals to enter into the binding legal
agreements. It is anticipated that this restructured loan and financial
assistance agreement will be executed before May 30, 2012.
Ferdi Dippenaar, Great Basin Gold President and CEO, commented: "Good progress
has been made at both Hollister and Burnstone during the first quarter of 2012.
The focus has been to improve mining flexibility through the increase in ore
development and the establishment of additional stopes, thereby enabling the
Company to meet its annual production targets.
Burnstone achieved its planned quarterly production targets whilst addressing
short-term infrastructural challenges, which impacted on efficiencies in late
2011 and the first few months of 2012. This has resulted in a 6% increase in ore
development meters, up from a monthly average of 845 meters in Q1 2012 to over
900meters in April 2012. In addition, ore development ends at the end of April
were 62, which is an improvement of48% over the 42 ends available on March 31,
2012. Continued infill drilling has shown no further geological challenges
similar to the Graben fault that significantly influenced our production build-up
at Burnstone in 2011.
The operational benefit from increased flexibility at our Hollister Mine and the
completion of the acid wash and carbon regeneration circuit at the Esmeralda Mill
is expected to allow cash costs from trial mining activities to decrease to the
planned levels for the year."
Ferdi Dippenaar President and CEO
Shareholders of the Company are reminded that they may request a hard copy of the
complete audited financial statements free of charge upon request from any of the
Investor Services personnel above or from the Company's Corporate Office at Tel:
+27 (0) 11 301 1800, Fax: +27 (0) 11 301 1840 or Email: info@za.grtbasin.com.
This document contains "forward-looking statements" that were based on Great
Basin Gold'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 the extent of mineral
resources or reserves which exist on a property;
uncertainties related to feasibility studies 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 political, 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.
Cautionary Note regarding Non-GAAP Measurements
Cash 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 of operations. 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 cost
per ounce/tonne" as determined by the Company compared with other mining
companies. Cash 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 costs 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 and once-off transactions. We also make reference
in our disclosures to "working capital" which is also a Non-GAAP measure and
includes cash and cash equivalents, trade and other receivables, current
inventories, trade payables and accrued liabilities. There is material
limitations associated with the use of such Non-GAAP measures.
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 sec.com and home jurisdiction filings that are available at
sedar.com.
_________________________
1 Gold equivalent ounces calculated using metal price of US$1,400/oz for Au and
US$30/oz for Ag. |
