Great Basin Gold Ltd. (fka GBGLF)

[amarksp]

Great Basin to add 1-2moz gold to Burnstone
Allan Seccombe
Posted: Mon, 15 May 2006
[miningmx.com] -- GREAT Basin Gold wants to add up to two million more ounces to its mine plan at the shallow Burnstone project in South Africa to increase gold output and extend the life of the operation beyond the planned 14 years, CEO Ferdi Dippenaar said on Monday.


The mine is still some two years away from production. So far, it has 7.1 million ounces of measured and indicated resources, but will continue a drilling programme to push more ounces into these categories, Dippenaar told Miningmx in an interview.

There are an estimated five million ounces of low-confidence resource material at Burnstone, 80km southeast of Johannesburg, TSX-listed Great Basin Gold plans to drill to bump more ounces into higher confidence level categories.

“We could probably add one to two million more ounces to our project over the next 12 to 18 months, which we will use to either increase our production or extend the life of mine, but the idea is to add a bit to both plans,” Dippenaar said.
We could probably add one to two million more ounces
In the newly released feasibility study data, the mine will produce 214,000 oz/year at a forecast cash cost of $254/oz. The current 14-year life-of-mine plan includes a four-year pre-production period. The study used a gold price of $450/oz and a rand/dollar exchange rate of R7 to one. Gold is now at $690 and the rand at R6.43.

Great Basin Gold has contracted JP Morgan to assist it in discussions with the Johannesburg bourse about a South African listing, he said.

Before spending an enormous amount of cash on a vertical shaft and developing the mine, Great Basin Gold plans to extract a 26,000 tonne sample when a planned 327-metre decline intersects the reef at 250 metres.

Great Basin Gold is awaiting approval of its new-order prospecting permit application and is preparing an application for a new-order mining licence. If by the end of June the prospecting permit is in place, it will take up to 22 months to complete the decline.

One of the key requirements for government approval of new-order rights is the inclusion of a black economic empowerment partner. Great Basin has granted Tranter Investments, headed by Eyesizwe Coal’s Sipho Nkosi, the option of buying into the project.

Tranter can take a 15% or 20% stake in the Burnstone project and pay either 15% or 20% of the R972m ($139m) net present value, which carries a five percent discount.

The empowerment deal should be in place within a month, Dippenaar said.

Great Basin Gold is raising C$35m in an equity placement exercise, of which C$25m has been earmarked for developing Burnstone and a further C$2m for exploration there.

Great Basin will come to the market again, but “not soon”, Dippenaar said. It will use cash from its Hollister Block at its Ivanhoe property in Nevada once the mine is in full production in 2009 to fund Burnstone. Cash costs in Nevada are forecast at $100/oz.

“When the market recognises the quality and progress we’ve made on our two assets there will be an appreciation in the stock price which will make it cheaper to raise capital,” Dippenaar said.

At Burnstone, a vertical shaft down to about 327 metres will supplement the decline, and will be used to haul ore. The processing plant will be built near the vertical shaft.

Great Basin Gold plans to mine seven different regions underground, each with a dedicated haulage system, which will give the company greater flexibility.