Great Basin Gold receives Nevada mine assesment
Great Basin Gold Ltd GBG
Shares issued 38,182,133 Dec 5 2001 close $.540
Thursday Dec 6 2001 News Release
Mr. Ronald Thiessen reports
Great Basin Gold's president and chief executive officer, Ronald Thiessen, has provided the results of a preliminary economic assessment of the high-grade, gold-silver vein deposit delineated at its Ivanhoe property on the Carlin trend, Nevada. The assessment was carried out by independent qualified person, Ross Glanville BASc, PEng, MBA, and Great Basin's in-house qualified person, Ross Banner, PEng. The results indicate that the Ivanhoe project is economically robust and should be rapidly developed towards prefeasibility, feasibility and production. Economic projections from this engineering work compare favourably with well-known, high-margin, bonanza grade operating mines such as the nearby Ken Snyder mine, Nevada and the El Penon mine located in Chile.
This economic assessment was based on the recently completed independent Audit of Preliminary Resource Estimate for the High-Grade Gold-Silver Veins of the Ivanhoe District by Behre Dolbear & Co. Ltd.; the Ivanhoe Project Report of Milling Studies by Kappes Cassiday & Associates; and industry standard vein mining methods and conceptual plans. Information was also obtained from other mining companies, mining contractors, in-house data and field investigations.
By way of background, two east-west trending, high-grade gold-silver vein groups, named the Clementine and Gwenivere systems, have been identified to date on the property. Individual veins within the two groups have a strike length from a few hundred feet to more than 2000 feet. The veins are steeply dipping to the southwest and are open at depth. Vein widths vary from one foot to ten feet. Gold grades in individual vein samples range up to more than 32 ounces per ton. In a detailed audit by Behre Dolbear & Co. Ltd., it was confirmed that, at a cut-off grade of 0.25 ounces per ton (opt)of gold the current inferred mineral resource for the veins totals 719,000 tons at an average grade of 1.29 opt gold and 7.00 opt silver, containing 926,000 ounces of gold and 5,033,000 ounces of silver (1,008,000 ounces gold equivalent). This vein system is open to further expansion with additional drilling and sampling.
The base-case economic model for the Ivanhoe project assumes underground mining at 600 tons of ore per day, trucking ore to a local toll mill for treatment, and metal prices of $275 (U.S.)per ounce gold and $4.50 (U.S.) per ounce silver. The base case model utilizes 50 per cent mining dilution and carbon in leach processing with metallurgical recoveries of 95 per cent for gold and 90 per cent for silver, as indicated by test work undertaken by Kappes Cassiday. Dore treatment charges and refining terms were based on published rates experienced by other operators in the region. The model's underground mining cost of $55.50 (U.S.) per ton ore, toll milling charge of $25.00 (U.S.) per ton milled, plus transportation and G&A costs of $20.00 (U.S.) per ton milled, compare with costs experienced by mine operators in the area and recent publications from Mining Cost Services Ltd. Overall project capital costs of $22-million (U.S.) were estimated from preliminary project reviews by Dynatec Corporation and Merit Consultants International Inc., both of which have managed recent mining projects in Nevada.
The base-case model predicts steady state annual production of 179,000 ounces gold and 920,000 ounces silver (193,000 ounces gold equivalent) for five years. Cash cost of production is projected to be $114 (U.S.) per ounce of gold equivalent with total cost of production estimated to be $134 (U.S.) per ounce of gold equivalent. The undiscounted stream of annual operating profits before interest, taxes and depreciation yields a project internal rate of return of 116 per cent and a net present value for the Ivanhoe project of $107-million (U.S.). The annual operating profits, before interest, taxes and depreciation are estimated to be $28-million (U.S.) each year with a payback of the $22-million (U.S.) capital cost in the first year of operation.
Sensitivity analysis of the base-case model indicates that the Ivanhoe project is financially very attractive and can withstand a combination of pessimistic input assumptions. Within a range of metal prices varying from $325 (U.S.) per ounce gold and $5.00 (U.S.) per ounce silver to $250 (U.S.) per ounce gold and $4.25 (U.S.) per ounce silver the base case rates of return are excellent, varying from 157 per cent to 94 per cent. Similarly, the present value (discounted at 8 per cent) ranged from $107-million (U.S.) to $59-million (U.S.) prior to income taxes. When the model tested sensitivity to mining dilution, it showed that over the range of 50 per cent grade dilution to 100 per cent grade dilution the rates of return were high, varying from 116 per cent to 59 per cent. Even at low metal prices of $250 (U.S.) per ounce gold and $4.25 (U.S.) per ounce silver combined with 100 per cent mining dilution at zero grade the rate of return was still comparatively high, at 42 per cent.
Mr. Thiessen stated "this economic assessment of the Ivanhoe project is extremely encouraging. It clearly demonstrates the undervalued nature of the project and the importance of fast tracking it towards production".
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