Great Basin Gold Ltd. (fka GBGLF)

[goldenpolarbear]

One of the more interesting projects that Sibanye has in its portfolio is Burnstone. In December 2013, Sibanye made an offer to acquire 100% of Wits Gold. Wits was in the process of acquiring the Burnstone project. After doing its due diligence and getting approval from creditors, Sibanye decided to let Burnstone come into the fold. The project was previously owned by Great Basin Gold, and Great Basin spent over $500 million on the project before it was ultimately mothballed. Given that Sibanye bought Wits for less than $50 million, clearly it made a low-risk acquisition.

Burnstone was supposed to be a brand new, 250,000 ounce per year gold mine in South Africa, but it ended up bankrupting Great Basin. I'm very familiar with this project and it was pretty clear early on (around 2010-2011) that Great Basin just didn't know what it was doing. Burnstone was more of a pipe dream at that point. The company kept missing target after target, and its ultimate demise wasn't unexpected.

Great Basin tried to use long-hole stopping to mine Burnstone, even though many in the industry in SA questioned if this was the right mining method for a deposit like this. If done wrong, it can lead to excess dilution and poor recovery. In the end, it turned out to be an improper method as the resource model was incorrect. Great Basin was mining the wrong sections at a huge loss.

After extensively reviewing the deposit, Sibanye feels it has a detailed understanding of the orebody. A revised geological model resulted in a mineral resource estimate of 8.9 million ounces of gold at a grade of 5.1 g/t. The company plans to use conventional breast mining and selectively focus on mining the higher-grade sections. This will result in production in the 80,000-100,000 ounce range annually.

http://seekingalpha.com/article/3487206-sibanye-gold-long-term-issues-remain
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