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- Hollister updated Mineral Reserve and 2011E production guidance
of approximately 110,000 recovered gold equivalent ounces (Au(eqv) oz)
- Hollister forecast Life of Mine ("LOM") average
production of 110,000 Au(eqv)
oz over 8 years at steady state with a cash cost, inclusive of royalties
of approximately US$527 per Au(eqv) oz
recovered over the LOM.
- Burnstone updated Mineral Reserve increased by 55% and 2011E production
guidance of 110,000 to 140,000 recovered gold oz (Au oz)
- Burnstone forecast LOM average production of 254,000 Au oz over 25 years
at steady state with a cash cost, inclusive of royalties, of US$450 per
Au oz recovered over the LOM
- Final credit approval for Term Loan financing of US$60 million of
which US$52 million will be used to retire senior secured notes
VANCOUVER, Feb. 2
/CNW/ - Great Basin Gold Ltd. ("Great Basin Gold" or the
"Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces
increases for both its Hollister Project and Burnstone
Mine Mineral Reserve and life-of mine ("LOM") estimates. The
Company has also received credit committee approval for a US$60 million Term
Loan financing from Credit Suisse AG, the proceeds of which will be used to
repay the high cost Senior Secured Notes issued during the 2008 credit
crisis.
Hollister Project, Carlin Trend, Nevada
Ongoing technical work at Hollister has
resulted in a 13% increase, on a directly comparable basis, in the Mineral
Reserves from those published in January 2009.
(Capitalized terms not otherwise defined herein have the meanings set out in
Canadian National Instrument 43-101 Standards of Disclosure for Mineral
Projects) The Hollister project is still in the trial mining stage,
however, based on production techniques tested to date, the Company has
estimated applicable call factors for mining of approximately 85% and
metallurgical recoveries of approximately 92% for Au and 85% for Ag. Since
the 2009 Mineral Reserve estimate, a total of 165,772 tons have been extracted
at an average grade of 1.06 Au(eqv)
oz/ton (36.4 g/t), delivering 176,387 Au(eqv)
contained ounces. At a cut-off grade of 0.25 oz/ton (8.57 g/t) Au, the
combined Proven and Probable Mineral Reserves contain an estimated net
907,000 Au(eqv) ounces, grading 0.79 oz/ton (27.02
g/t) Au and 4.75 oz/ton (163 g/t) silver (Ag) after application of the noted
call factors for mining and metallurgical recoveries.
Results of Hollister's January 2011 Mineral Reserve Estimate are shown below:
Reserve category
|
Cut-off
oz/ton
|
Tons
|
Au
oz/ton
|
oz Au
|
Ag
oz/ton
|
oz Ag
|
Au
equivalent
oz
|
Proven
|
0.25
|
347,100
|
1.33
|
460,300
|
7.75
|
2,689,400
|
500,700
|
Probable
|
0.25
|
701,800
|
0.53
|
371,800
|
3.27
|
2,296,600
|
406,300
|
Total Proven & Probable
|
0.25
|
1,048,900
|
0.79
|
832,100
|
4.75
|
4,986,000
|
907,000
|
Note: *The equivalent gold ounces reported herein
were calculated using a gold price of US$1,000/oz, a silver price of
US$15/oz. A call factor of 85% and metallurgical recovery factors of 92% for
Au and 85% for Ag were applied.
The table below shows the reconciliation
between the depleted January 2009 and January 2011 Mineral Reserve estimates, using a cut-off
of 0.25 oz/t Au and applying similar call factors and metallurgical
recoveries:
Description
|
Cut-off
oz/ton
|
Tons
('000)
|
Au
equivalent
oz/ton
|
Au
equivalent
oz
('000)
|
January
2009
Reserve estimate*
|
0.25
|
1,398
|
0.90
|
1,257
|
Apply 85% call factor
|
N/A
|
-
|
-
|
(188)
|
Trial
mined 2009 -2011
|
N/A
|
(166)
|
1.06
|
(176)
|
Apply metallurgical recoveries
|
N/A
|
-
|
-
|
(90)
|
Restated January 2009 Reserve estimate
|
N/A
|
1,232
|
0.65
|
803
|
January
2011
Reserve estimate
|
0.25
|
1,048
|
0.87
|
907
|
Mineral Reserves added
|
|
|
|
104
|
Note:
|
*No mining and plant recovery
factors applied
|
A minimum stoping
width of 0.91 meters (36 inches) was assumed for purposes of Mineral Reserve
estimation, along with dilution defined as waste tonnes
(or tons) carrying zero grade and 100 percent in-stope
extraction. An analysis by the Company's technical staff confirms that no
systematic, in-stope pillars will be required
because of the cut-and-fill trial mining method now being utilized.
Based on the results of trial stoping and grade
reconciliation studies, where vein widths of 0.76 meters (30 inches) or
greater were considered, a total of 0.15 meters (six inches) of hanging wall
dilution and 0.15 meters (six inches) of footwall dilution was applied.
Where appropriate, other average dilution rates were applied. The in-situ
wireframe model generated with the Mineral Resource update announced September 9, 2010, were used as basis for this mineral
reserve update.
Using the updated Mineral Reserve
estimate, an average production profile of 110,000 Au(eqv) oz over 8 years was projected with the estimated cash
cost, inclusive of royalties, amounting to US$527 per Au(eqv)
oz recovered over the LOM. Cash costs for 2011 are forecast to be in the
range of US$550 - US$600 per Au eqv oz. The
estimated Net Present Value ("NPV") of the Hollister Project (using
metal prices of US$1,000/oz for Au and US$15/oz for Ag) at a 5% discount rate
is calculated at US$236 million.
Burnstone Mine, Witwatersrand Basin, South Africa
At Burnstone,
Mineral reserves increased by 55% with the majority of the increase
attributable to the improved geological information obtained from underground
development and drilling conducted since the January
2009 reserve update as well as additional reserves included from Area
2. Detailed planning has shown that production at Area 2 of the Burnstone property can be increased and be extracted
through separate infrastructure. Since the January 2009
reserve update, Great Basin Gold has completed over 6,000 meters (19,685
feet) of on-reef development and over 3,851 meters2 (41,452 feet2)
of long hole stoping ("LHS"). The January 2011 Mineral reserve update and LOM planning is
based on LHS as the preferred mining method, and the decrease in dilution
from this mining method also positively impacted on the updated reserve
estimate.
At a cut-off gold content of 350
centimeter-grams per tonne (cmg/t)
the combined Proven and Probable Mineral reserves contain
6.4 million Au oz grading 4.47 g/t (0.13 oz/ton) Au after application
of a 95% call factor for mining and a 95% metallurgical recovery. Currently,
53% of the Measured and indicated Mineral resources have been converted into
Proven and Probable Reserves.
Results of Burnstone's
January 2011 Mineral Reserve Estimate are
tabulated below:
Reserve category
|
Cut-off
cmg/t
|
Tonnes
|
Au g/t
|
oz Au
|
Proven
|
350
|
29,784,000
|
4.11
|
3,933,000
|
Probable
|
350
|
14,436,000
|
5.23
|
2,427,000
|
Total Proven & Probable
|
350
|
44,220,000
|
4.47
|
6,360,000
|
Using the updated Mineral Reserve
estimate, an average annual production profile of 254,000 Au oz over 25 years
was scheduled with the cash cost, inclusive of royalties, amounting to
US$450/oz of Au recovered over the LOM. The estimated NPV for Burnstone (using a metal price of US$1,000/oz for Au and
an exchange rate of USD1: ZAR9) at a 5% discount rate is US$1,530 million.
The potential for an increase in the
production build-up in the medium term using LHS as the preferred mining
method is demonstrated by the updated LOM plan. On-reef development remains
the key to delivering the planned production build-up and will therefore be
the priority focus for 2011. The production range of 110,000 to 140,000 Au oz
is therefore the result of the increased focus on on-reef development. Cash
costs for 2011 are forecast in the range of US$520 - US$620/oz and are
impacted by the diluted grade from the additional on-reef development.
The metallurgical plant has achieved its
targeted rate for January 2011 of 90,000 tonnes milled. The current focus is to ramp up production
and achieve a milling rate of 125,000 tons per month.
The Burnstone
Mineral Resources have been revised in-line with the Mineral reserve update.
The Mineral Resources announced August 23, 2010
were based on a "4 2 1 model", which uses a minimum of 4 informing
samples for a Measured Resource classification, 2 for an Indicated
classification and 1 for an Inferred classification. The current model uses
the same estimation parameters but more stringent classification criteria,
which is a minimum of 6 informing samples for Measured, 3 for Indicated and 2
for Inferred.
A comparison of the Mineral Resources
estimated under the two models at a range of gold content cut-off values is
tabulated below:
Comparison of Burnstone 6 3 2 vs 4 2 1 Mineral Resource Estimates
|
|
6 3 2¹ model
|
4 2 1² model
|
Resource
Classification
|
Cut off
Cmg/t
|
Mass
M tons
|
Au grade
g/t
|
Au Content
Oz
|
Mass
M tons
|
Au grade
g/t
|
Au Content
oz
|
Measured
|
300
|
41.2
|
5.67
|
7,496,000
|
40.0
|
5.78
|
7,435,000
|
Measured
|
350
|
37.2
|
5.78
|
6,900,000
|
36.5
|
5.90
|
6,927,180
|
Measured
|
400
|
33.1
|
5.94
|
6,326,000
|
33.7
|
6.01
|
6,514,390
|
|
|
|
|
|
|
|
|
Indicated
|
300
|
23.5
|
7.31
|
5,516,000
|
31.2
|
6.44
|
6,472,770
|
Indicated
|
350
|
21.3
|
7.60
|
5,199,000
|
27.2
|
6.84
|
5,978,830
|
Indicated
|
400
|
19.8
|
7.77
|
4,956,000
|
24.1
|
7.20
|
5,567,960
|
|
|
|
|
|
|
|
|
M + I
|
300
|
64.6
|
6.26
|
13,012,000
|
71.2
|
6.07
|
13,907,770
|
M + I
|
350
|
58.4
|
6.44
|
12,099,000
|
63.7
|
6.30
|
12,906,010
|
M + I
|
400
|
53.0
|
6.63
|
11,283,000
|
57.8
|
6.50
|
12,082,350
|
|
|
|
|
|
|
|
|
Inferred
|
300
|
66.8
|
4.33
|
9,306,000
|
67.5
|
4.33
|
9,392,970
|
Inferred
|
350
|
54.9
|
4.75
|
8,374,000
|
61.0
|
4.49
|
8,799,830
|
Inferred
|
400
|
49.1
|
4.86
|
7,679,000
|
52.2
|
4.75
|
7,977,520
|
Note:
|
Mineral Resources are
undiluted and assume 100% metallurgical recoveries.
Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability.
The Mineral Resources under the 6 3 2 model above include the Mineral
Reserves reported in the previous table.
|
|
16 3 2 indicates minimum number of informing points
for Measured (6), Indicated (3) and Inferred (2)
|
|
24 2 1 indicates minimum number of informing points
for Measured (4), Indicated (2) and Inferred (1)
|
At a 350 cmg/t
cut-off, the tighter classification parameters have resulted in an 8%
decrease in total Measured and Indicated Resources tonnage, a 2% increase in
grade from 6.30 to 6.44 g/t Au, and a combined 6% adjustment downwards of
contained gold in the Measured and Indicated Resources categories to 12.1
million ounces. The 350 cmg/t cut-off is lower than
the 400 cmg/t used for previous estimates and
conversions to Mineral Reserves, reflecting increased confidence in these
estimates.
Term Loan Financing Finalized
Great Basin Gold has also obtained final
credit approval from Credit Suisse AG to enter into a Term Loan Financing for
US$60 million which is now primarily subject only to negotiation of customary
definitive loan documents. Key terms include:
- Maximum term of 4 years from date of drawdown, with interest and
capital repayment commencing 3 months after draw down.
- Interest at a margin of 3.75% over the USD LIBOR rate (currently
0.3%).
- Great Basin Gold will have the option to retire the loan 12
months after draw down at no additional cost.
- Secured by the Hollister Project and Esmeralda property.
- Hedging program typical for these facilities will be finalized
and implemented in the following weeks. It is anticipated that a
zero-cost-collar structure for a total of up to 105,000 Au oz over the
next 4 years of gold production will form the basis for the program.
It is anticipated that this transaction
will be closed before the end of February 2011.
The net proceeds from this financing will be used to settle the 2008 Senior
Secured Notes which currently bear interest at 14% per annum.
Ferdi Dippenaar,
Great Basin Gold CEO, commented:
"Our ongoing evaluations of the two
ore bodies, which encompass delineation drilling and results from trial
mining, continue to confirm the value of the Hollister and Burnstone properties, as evidenced in both increased
reserves and increased confidence in our measurements. The tighter geological
controls used in determining these estimates are also improving trial stope tonnage and grade estimates and, as a consequence,
our mine planning is benefiting from more accurate information.
"At Hollister, exploration drilling
from underground is successfully tracking the lateral extensions of the
Hollister veins northwestward to the Gloria vein system and the Butte
bounding fault structure, and southeastward from the Gwenivere
vein system to the Hatter Graben. As the
underground development continues, there will be further opportunities to
drill test the extensions of a number of high grade zones that are emerging
from this evaluation work.
"Production from trial mining at
Hollister is expected to remain at the level of 110,000 recovered-Au(eqv) oz/annum for the near
future. We have conservatively estimated production at the Burnstone mine, which will experience its first full year
of mining in 2011, and have focused the management team on prioritizing
on-reef development to ensure that this plus 25-year life, world class
project has a solid foundation to deliver successful production in the
future.
"With the commitment of the Credit
Suisse facility, Great Basin Gold now has the necessary funds to retire the
US$52 million Senior Secured Notes, a debt facility put in place in November 2008.
This both reduces our cost of capital and provides us better financial
coordination with a single corporate lender."
The Mineral Reserve estimates and other
technical information herein were completed under the supervision of Johan Oelofse, Pr.Eng., FSAIMM, Great Basin Gold's Chief Operating Officer. Mr Oelofse is a Qualified
Person as defined by Canadian Securities Regulations in National Instrument
43-101, who has also reviewed and approved the information in this news
release.
The Mineral Resource estimate for Burnstone was completed by Freddie de Bruin, Pr.Sci.Nat.,
of Deswik Mining and Resource Consultants, under
the supervision of Phil Bentley, Pr.Sci.Nat., Great Basin Gold's Vice President: Geology
& Exploration. Mr Bentley is a Qualified Person
as defined by Canadian Securities Regulations in National Instrument 43-101,
who has also reviewed and approved the information in this news
release.
Details of these estimates will be
included in NI 43-101 compliant technical reports filed on www.sedar.com.
Ferdi Dippenaar
President and CEO
Samples collected from the Hollister
Development Block Project are delivered to Inspectorate America Corporation
(Inspectorate) in Sparks, Nevada. The primary analytical facility for the Burnstone Project from 2003-2005 has been SGS Lakefield
Research Africa (Pty) Limited and subsequently
(2006-2010), ALS Chemex has been the primary
laboratory. Both facilities are located in Johannesburg,
South Africa.
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.
Cash costs per ounce are numbers
commonly used in the mining industry to assess performance. They are
not terms recognized under generally accepted accounting principles.
Investors will wish to review the NI 43-101 technical reports which support
these estimates in order to understand the cost elements which make up the
cash cost estimate.
Information
Concerning Estimates of Measured, Indicated and Inferred Resources
This news release also uses the terms
"measured resources", "indicated resources" and
"inferred resources". The Company advises investors that although
these terms are recognized and required by Canadian regulations (under
National Instrument 43-101 Standards of Disclosure for Mineral Projects), the
U.S. Securities and Exchange Commission does not recognize them. Investors
are cautioned not to assume that any part or all of the mineral deposits in
these categories will ever be converted into SEC-recognized reserves. In
addition, 'inferred resources' have a great amount of uncertainty as to their
existence, and economic and legal feasibility. It cannot be assumed that all
or any part of an Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral Resources may
not form the basis of feasibility or pre-feasibility studies, or economic
studies except for Preliminary Assessment as defined under 43-101. Investors
are cautioned not to assume that part or all of an inferred resource exists,
or is economically or legally mineable.
The mineralized material at the
Hollister Project is currently classified as a measured and indicated
resource, and a portion of it qualifies under Canadian mining disclosure
standards as a proven and probable reserve, but readers are cautioned that no
part of the Hollister Project's mineralization is considered to be a reserve
under US mining standards as all necessary mining permits and project
financing would be required in order to classify the project's mineralized
material as an economically exploitable reserve. Although work has been
done to confirm the mine design, mining methods and processing methods
assumed in the 2011 Update, construction and operation of the mine and
processing facilities depend on securing environmental and other permits on a
timely basis. Additional permits, when required, have yet to be applied
for and there can be no assurance that required permits can be secured or
secured on a timely basis.
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 www.sec.com
and home jurisdiction filings that are available at www.sedar.com.
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