Great Basin Gold provides operational update
VANCOUVER, Aug. 4, 2011 /PRNewswire via COMTEX/ -- REPORTS 100% INCREASE IN
REVENUE
Great Basin Gold Ltd. ("Great Basin Gold" or the "Company"),
(CA:GBG)(GBG)(jse:GBG) reports an operational update for the 3 months ended June
30, 2011. The Company will file its interim financial statements for Q2 2011 on
August 15, 2011 and will hold an earnings call on August 16, 2011 at 9 am (EST).
Great Basin Gold returned a much improved quarter in respect of Au and Ag ounces
sold which combined with an expected improvement in cash costs should allow the
Company to report adjusted earnings per share for the quarter (q1 2011:adjusted
loss per share of $0.01).
Hollister The Nevada operations recorded $49 million in revenue during the
quarter on record sales of 34,522 Au eqv1 oz, an increase of 100% quarter on
quarter. During the continuing construction and installation of the acid wash and
carbon regeneration system at the Esmeralda Mill, loaded carbon is sent to the
refiner as opposed to dore. Improved refining terms resulted in a decrease of
approximately 5,000 Au eqv oz in inventory held at the refiner from Q1 2011. The
Esmeralda Mill treated 22,237 tonnes during the quarter (q1 2011:21)(q1 2011:634)
with a marked improvement in Au and Ag recoveries of 95% and 75%. Cash production
costs for the quarter is expected to improve a further 8% quarter on quarter to
approximately $611 per Au eqv oz in Q2 2011.
Underground exploration and stope delineation drilling continued during the
quarter, with a record footage of 45,000 feet or 13,636 meters completed from 84
boreholes. The focus has been on completing phases of drilling on the Blanket
Zone and south east Gwenivere targets, providing further data for incorporation
in the upcoming mineral resource update (anticipated release date September
2011). The stope delineation drilling has continued to tighten up controls for
short interval trial stope planning. Surface exploration has continued collating
geological and geophysical data as well as reviewing surface expressions of
interpretations with structural and geological observations.
Burnstone Operational efficiencies at Burnstone improved significantly with
mechanized ore development increasing by 33% quarter on quarter to 1,550 meters
in addition to 1,872 meters of waste development completed during the quarter.
The increase in ore development allowed for an increase of 36% in the square
meters stoped quarter on quarter. Despite the relatively close drill spacing in
the current mining area, the exact position and orientation of geological faults
could not be identified earlier as most of these are of a graben nature.
Additional infill and delineation drilling as well as extensive mapping and
interpretation of the structural information from the over 10 kilometers of
underground development, now provides management with more detailed data to
incorporate these faulting into the mine plan. An additional 66% waste
development was completed during the 6 months ended June 30, 2011 in response to
the geological faulting encountered compared with the original planned meters.
Excellent progress has been made with long hole stoping as the mining method,
with the efficiency of the teams improving on a monthly basis. The improved
hanging and footwall conditions experienced in the C block allowed for a
significant improvement in decreasing the stoping width which was measured as low
as 67 cm in some stopes. This also had a positive impact on the mining grade of
stope material which improved 60% from Q1 2011.
The Metallurgical Plant is performing in line with expectation with approximately
202,660 tonnes processed during the quarter (q1 2011:199)(q1 2011:878
tonnes).Tonnes processed however remain predominantly from development ore which
includes more dilution than stoped material and negatively impacts on the mill
head grade. Recoveries for the quarter improved to 85% (q1 2011:83%) although
still impacted by the low head grade ore delivered to the mill.
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 5,619 Au ounces
sold (q1 2011:2)(q1 2011:794 Au eqv oz) as well as the cash production cost per
ounce of approximately $1,450 (ZAR 10,130) expected for the quarter. During the
build-up phase a more accurate measurement is cost per tonne which improved 12%
to approximately $60 (ZAR420) (q1 2011:$68) per tonne for the quarter.
_________________________ 1 Au eqv oz is calculated based on US$1,400Au and
US$30Ag.
Corporate The Company, with the assistance of RBC Capital markets, offered a
$0.07 per warrant early exercise discount to holders of the $1.25 warrants
expiring November 2011. Ten million of the warrants were exercised prior to June
30, 2011 with another 9.2 million warrants exercised subsequently, leaving
approximately 223,000 warrants to be exercised prior to expiry on November 15,
2011.
The Company had approximately $38 million in cash reserves on June 30, 2011 and
has also negotiated a US$40 million standby debt facility with Credit Suisse AG.
This facility will be available in the event that additional working capital is
required at Burnstone as a result of the slower than planned production build-up.
Legal documentation is nearing completion with the targeted signature date being
mid-August, 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 although the progress made by
the team on a monthly basis is reassuring, it is not yet at planned levels. The
need for additional waste development to access the mining blocks impacted
negatively on ore development which in turn impacts on stopes available for
mining. Production for the remainder of the year will unfortunately be impacted
by this approximate 3 month delay in ore development and we expect to recover
between 50,000 to 60,000 Au oz for the second half of the year and an estimated
60000 to 70000 ounces for the 12 month period. The Nevada operations showed
improvements in a number of areas during the quarter, notably in ounces extracted
through trial mining as well as the improved recoveries at our Esmeralda Mill.
The latter improvement is especially pleasing with the impact already evident in
the reduced cash costs and the increased ounces delivered to the refinery. The
current performance from our Nevada operations and the standby debt facility
provides the Company with adequate cash resources to fund the delayed production
build-up at Burnstone. Our short to medium term focus at both of these operations
remains to increase production, manage costs and unlock the intrinsic value of
these quality projects."
Johan Oelofse, Pr.Eng., FSAIMM, Chief Operating Officer of Great Basin Gold, and
Phil Bentley, Pr. Sci. Nat., 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 sec.com and home jurisdiction filings that are available at
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.
SOURCE Great Basin Gold Ltd. |
