Great Basin Gold subsidiary seeks creditor protection pending loan negotiations
JOHANNESBURG, SA, Sept. 18, 2012 /PRNewswire via COMTEX/ -- Great Basin Gold Ltd.
("Great Basin Gold"), (CA:GBG)(nyse mkt:GBG)(jse:GBG) announces that its
principal South African subsidiary, Southgold Exploration (Pty) Ltd.
("Southgold") owner of the Burnstone mine, has filed for protection under the
South African business rescue ("BR") procedures. Great Basin Gold itself expects
to seek creditor protection this week. The insolvency filings are intended to
allow Southgold and the Company a period of time to seek buyers and partners for
Great Basin Gold's two gold mining projects and/or corporate level financiers in
an effort to return to solvency. The BR proceeding constitutes a default under
the Company's unsecured convertible debentures which have a principal amount of
$126 million. Trading in Great Basin Gold's shares and debentures will remain
suspended and the NYSE MKT, TSX and JSE are expected to initiate delisting
procedures for these securities.
Great Basin Gold is currently endeavoring to negotiate a debtor-in-possession
working capital loan with certain lenders which if successfully concluded and if
approved by any necessary Court approvals, would provide Great Basin Gold with
liquidity to pursue an orderly shutdown of Burnstone while it seeks a
restructuring and/or sale of its assets. As of the time of this news release
there can be no certainty the negotiations will succeed.
Lou van Vuuren, interim CEO, commented, "The BR creditor protection filing was
necessary to provide the Company with some additional time to see results from
its strategic restructuring process. Assuming our DIP loan negotiations are
successful, those funds will be used firstly to ensure the orderly suspension of
operations at Burnstone and to provide some additional funds for Hollister."
Lou van Vuuren CEO (interim)
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 related to the Company's liquidity challenges and need for near
term financing
uncertainties related to project realization values
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 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 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.
There is currently no certainty that Southgold Exploration (Pty) Ltd will
successfully emerge from business rescue proceedings and thereby prevent
liquidation.
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.gov and home jurisdiction filings that are available at
sedar.com. |
