Ferdi Dippenaar Has Transformed Great Basin Gold From A Plodder To A Racehorse In Short Order
By Charles Wyatt
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Interesting to find that it was back in December 2005 that Ferdi Dippenaar moved over from Harmony Gold, where he was right hand man to Bernard Swanepoel in Harmony’s golden days. The fact is that so much has gone on at Great Basin Gold since he took over as chief executive that time seems to have become compressed. In short order, at that time Great Basin was carrying out a feasibility study on its Burnstone gold project on the Witwatersrand in South Africa while an underground exploration and development programme was also underway at the company’s Hollister Development Block Project on the Carlin Trend in Nevada. These are two of the most prolific gold producing areas in the world. At the time too, Great Basin was part of the Hunter Dickinson stable in Canada which supplied management and other services to it, as it plodded along.
Once Ferdi had got his feet properly under the table - and Ferdi has very long feet - the changes came thick and fast. In May 2006 C$25 million was raised from a financing, and in July of that year Great Basin raised a further C$7.5 million and settled the remaining obligations to the vendors of Burnstone, originally agreed back in 2002. These involved payment by Great Basin based on the number of gold ounces estimated at Burnstone as well as the settlement of a potential claim by the vendors in connection with consideration paid to Great Basin by its Black Economic Empowerment partners. Towards the end of 2006 the composition of the board was changed with the balance moving towards South Africa. Four directors stepped down to let in two new ones.
At the end of that year, and 12 months on from when Ferdi joined, he was able to report that everything was going well at both projects with all drill stations established and planned underground drilling proceeding to plan at Hollister Development Block. At Burnstone the decline to take a bulk sample was on schedule and early in 2007 the company was able to report that underground drilling had increased the resource estimate at Hollister to two million ounces of gold equivalent. The following summer a project optimisation study at Burnstone, which was subsequently incorporated into the feasibility study, recommended that production should be increased to 254,000 ounces of gold per year.
By that time Ferdi could fairly claim that he had changed the whole ethos of the company towards development, with production looming on the horizon. In the context of this progress the management deal with Hunter Dickinson was terminated and right at the beginning of 2007 a deal was done whereby Hecla Mining was bought out of its earn-in on the Hollister Development Block. This Block only amounted to five per cent of the whole Hollister property, but a high grade gold-silver resource had been outlined there well before Ferdi took charge. The result was that all hangovers from the old Hunter Dickinson days had been eliminated and Great Basin was in total control of itself, and offering plenty of market visibility through listings in Toronto, Johannesburg and AMEX.
Ferdi opened the batting in 2008 with the announcement that his company was on track to produce 66,400 ounces of gold and 289,000 ounces of silver from the Hollister project in 2008 at a cash cost of US$400 per ounce. This followed an earlier announcement that the feasibility study on the Burnstone project had been completed and that the internal rate of return was 32 per cent at US$650 per ounce, and 24 per cent at US$550 per ounce. But it doesn’t take very advanced mathematics to work out what the return might be at US$900 per ounce. Initially the mine life was taken as around 19 years based on 254,000 ounces per year, but this is highly conservative as Burnstone in fact has a resource of 7.7 million ounces. There is little doubt that most of the indicated and inferred ounces can be upgraded to measured, as Burnstone looks a typical South African long life mine, but there is a critical difference as mining is going to start only 316 metres below surface.
This was the gist of the presentation Ferdi gave at Minesite’s Christmas Forum and Ferdi knows his South African mines. Harmony was a trend setter in the late 1990s when it was involved in regenerating a number of the old deep mines. The odds, therefore, are in his favour when he expresses optimism about finding plenty more gold in the South Rand Basin where surface outcrop areas are being explored. Meanwhile Great Basin is establishing itself as a producer with Hollister ramping up from the Development Block Phase 1. Burnstone should follow suit in the second half of 2008. Next year production should be well over the 250,000 ounce mark and by 2010 production is expected to crash through the 300,000 ounce barrier.
In less than two and a half years, therefore, Ferdi Dippenaar has converted an earnest explorer in two choice areas into a producer with pretensions to move into the mid tier, and operating off a low cost base. He hasn’t got to find any money and has no hedging commitments to contend with. A lot of shrewd investors appear to have hooked onto the story as the shares have risen by 45 per cent to C$3.60 since Christmas, and you can count the number of gold producers who have put up a similar performance on one hand, despite the strength of gold.
Ferdi is clearly delighted, but he is not one to rest on his laurels. Already the next generation of producing mines owned by Great Basin is being conceived and only last week the rest of Vancouver-based Rusaf Gold was acquired with its operations in Tanzania. In addition to this Great Basin is earning into projects in Mozambique and Alaska. All have been chosen with care as Rusaf’s assets are not far over the border in Tanzania and the Mozambique joint venture with GS Minas e Rafinaria involves ground with considerable artisanal workings. As indicated by the name, Rusaf also has a project in Russia where drilling is planned following confirmation of a high grade gold deposit. Finally Alaska, where Great Basin sticks to its original policy of acquiring property on a prolific gold belt – Tintina – with the 20 million Donlin Creek mine only 100 kilometres to the north east. These are the projects from which newsflow will emanate once Great Basin is hitting its production targets. |
