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Highlights
- Earnings per share of $0.02 for Q4 2010
- Revenue for Q4 2010 of $43 million with 31,911 Au eqv oz sold
- Cash cost improved 19%
quarter on quarter
- Revenue more than doubled in
2010 with the adjusted loss per share1 reduced by 69% to $0.05
- Burnstone completes
commissioning of all major capital infrastructure
- Successfully closed $75 million bought deal public offering
as well as 15% over-allotment
- Executed the Credit Agreement
for a US$60 million Term Loan Financing to repay
in full the Senior Secured Notes
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VANCOUVER,
Feb. 24
/PRNewswire-FirstCall/ - Great Basin Gold Ltd. ("Great Basin Gold"
or the "Company"), (TSX:GBG.to - News) (NYSE Amex: GBG) (JSE:
GBG) announces updates on the recently announced financing transactions as
well as unaudited financial results for the quarter and the financial year
ended December 31, 2010.
The Company will file its audited financial statements for the year ended December
31, 2010
on or before March 31, 2011.
Finance
transactions
The
previously announced $75 million
bought deal public offering, as well as the 15% over-allotment option, was
closed on February 23, 2011
with the proceeds from this transaction mainly being utilized for working
capital requirements during the production build-up at the Burnstone Mine.
The
Company also executed the Credit Agreement relating to the previously announced
US$60 million Term Loan Financing
with Credit Suisse AG. The loan has a term of 4 years and is repayable in
quarterly installments commencing September 2011,
and will bear interest at a premium of 3.75% over the 3-month US LIBOR rate.
The Company will execute a zero cost collar hedging program, consisting of a
total of approximately 105,000 gold equivalent ounces (Au eqv oz) spread over
a 4-year term, prior to draw down. Draw down on this facility is set for March
15, 2011
with approximately US$52 million to be applied towards
full and final settlement of the Senior Secured Notes issued in December
2008.
Operating
results
Fourth
quarter (Q4) 2010 gold production of 31,911 Au eqv oz2 from trial
mining activities at the Company's Hollister project was in line with
expectations and an increase of 190% over third quarter (Q3) 2010 results.
Revenue for the quarter totaled $43 million
and $100 million for the fiscal year,
an increase of $66 million year on year. Cash
costs for the quarter (inclusive of royalties) decreased by 19% to $690
(US$670) per Au eqv oz and 11%
to $563 (US$546)
per ton from Q3 2010 and were in-line with estimates for the quarter. The
Company's Esmeralda mill processed 27,553 tons during Q4 2010 and recovered
21,901 Au eqv oz. Recoveries for the quarter of 80% Au and 61% Ag are still
below our targeted rate of 92% Au and 85% Ag due to the high metal content
fouling the carbon in the process. This is being addressed by the
installation of a carbon regeneration system and automation of certain
components within the mill.
The
Company achieved its first positive earnings per share of $0.02
during Q4 2010 (Q3 2010: $0.07
loss per share). The adjusted loss per share for the year ended December
31, 2010
decreased to $0.05, an improvement of
69% over the $0.16 adjusted loss per
share reported in fiscal 2009.
Burnstone
project update
Commissioning
of all major capital projects at Burnstone was completed during January
2011
and the Company will be reporting revenue and production costs during Q1
2011. The Burnstone metallurgical plant is now available for commercial
levels of production with the completion of the commissioning of the Carbon-in-Leach
(CIL) circuit. Over 90,000 tons of lower grade development ore were milled in
January 2011. The Burnstone Mine
was ceremonially opened with a gold pour celebration by the South African
Minister of Mineral Resources, Ms Susan Shabangu,
on February 22, 2011.
Exploration
update
At
Hollister, the evaluation of the very high grade Blanket Zone material (November
9, 2010
news release) progressed during the quarter. Bulk sampling involved the
successful extraction of some 500 tons grading on average 12 oz/ton Au
eqv. An initial phase of underground drilling was initiated to determine
the grade profile and strike continuity of the Blanket Zone style of
mineralization exposed at 3000N 1E. As at February
21,
five boreholes (each approximately 600 feet long) had been completed. A
further 11 holes are planned for completion by the end of March
2011
to enable preliminary mineral resource modelling. The high grade (averaging
>10 oz/ton Au) zones are directly related to vertical extensions into the
Tertiary volcanic strata of narrow mineralised structures from the underlying
Ordovician metasediments.
The
first long flat underground borehole testing the Velvet area to the north of
current infrastructure (HDB 432; EOH 2,800 feet) was completed on February
14, 2010.
The borehole intersected a number of silicified and weak to moderately
mineralized silicified zones and fault structures that are indicative of
fluid circulation and alteration. As at February
22,
a second hole had reached 1,520 feet depth with approximately 1,480 feet
remaining to be drilled.
Underground
drilling during Q4 2010 continued to gain positive results for the recently
discovered SE Gwenivere vein system. Preliminary modelling of the vein system
has been initiated.
At
Burnstone, drilling within the 24-month mine plan area continued from
underground and surface, providing detailed coverage of structural breaks and
mining block infill valuation data. Other exploration was focused on
maintaining mineral rights outside of the Burnstone Mine Mining Right.
Ferdi
Dippenaar,
Great Basin Gold CEO, commented: "We are very pleased with the operating
results achieved during Q4 2010. This was the first quarter that we were able
to demonstrate the operating potential of our Nevada
operations with our Esmeralda mill able to process all material from trial
mining at Hollister. Burnstone achieved a significant milestone by
completing the commissioning of all major capital projects and thereby
concluding its project construction phase in January
2011.
With underground development rates increasing, we are gaining momentum to
deliver on our production targets in a safe and efficient manner. The closing
of the public offering as well as the execution of the Credit Agreement for
the US$60 million Term Loan Financing
provides us with the required working capital to finance the planned production
build-up at Burnstone. The higher revenue from increased production in 2010
resulted in our adjusted loss per share reducing by more than 69% in 2010; we
expect further operational and financial improvements for fiscal 2011 with
Burnstone starting to contribute to our bottom line."
Johan
Oelofse, Pr.Eng., FSAIMM, Chief Operating
Officer and Phil Bentley, Pr. Sci. Nat , Vice
President: Geology and Exploration of Great Basin, both 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.
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For
further information on Great Basin, 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. 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
cost per ounce produced 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 of test mining at the Hollister project. It is determined
by dividing the relevant mining and processing costs including royalties by
the ounces produced in the period. There may be some variation in the method
of computation of "cash cost per ounce produced" as determined by
the Company compared with other mining companies. In this context,
"ounces produced" includes in-process and doré inventory
along with ounces of gold sold in the period. Cash costs per ounce produced
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 of test mining at Hollister. As a
Non-GAAP Financial Measure cash cost per ounce should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. Adjusted loss per share is also a Non-GAAP
measure and is calculated by excluding the impact of certain fair-value
accounting charges. There are material
limitations associated with the use of such Non-GAAP measures.
_________________________________
1 Adjusted loss per share and cash cost are non-GAAP measures.
Refer to cautionary note regarding non-GAAP measures included in this press
release.
2 The equivalent gold ounces reported in this document were
calculated using a gold price of US$1,000/oz,
a silver price of US$15/oz.
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