Great Basin may seek gold project funding
Allan Seccombe
Posted: Fri, 27 Oct 2006
[miningmx.com] -- GREAT BASIN GOLD is likely to come to the market to raise capital if it decides early next year to accelerate and expand its South African gold project to 250,000 oz/year from the planned 214,000 oz, CEO Ferdi Dippenaar said on Friday.
Great Basin, which listed on the Johannesburg bourse on Friday, plans to grow group production to 500,000 oz in three years from its Burnstone project in South Africa, its 50%-held Hollister project in Nevada and possible acquisitions, he told Miningmx in an interview.
The Hollister project, which could bring 30,000 oz of pre-production gold onto the market in 2007, will be brought into production in 2008.
we might have to come to the market for capital“As the projects stand now Hollister will fund Burnstone, but if we decide to optimise Burnstone, based on results from our exploration drilling, we might have to come to the market for capital in the form of debt and equity to enable us to build a mine,” Dippenaar said.
An estimated R300m to R350m would be needed for the plant and shaft.
By midday South African time the illiquid shares were untraded. Bids were recorded at R14.60 a share. The listing was not intended as a capital raising. Great Basin is listed on the TSX and AMEX.
Plans to install bigger ball mills at Burnstone are being studied. The plant will have a nameplate production capacity of 300,000 oz/year.
The Burnstone project has been brought forward by 12 months by starting work on the decline shaft under the rights granted by its prospecting licence.
An application for a new order mining right will be submitted before the end of the year, Dippenaar said, which implies an empowerment deal with Tranter Gold, headed by Eyesizwe Coal CEO Sipho Nkosi, will be finalised by then.
Great Basin, which drilled 261 holes on the Burnstone deposit to build up reserves of 2.4m oz, will drill another 24 holes before year-end to add one million oz to the mineable reserves category and bump 500,000 oz up into the measured resources category.
It currently has measured resources of 5.86m oz. The conversion rate of measured resources into the mineable category is more than 80%, he said.
There are more exploration targets on outcropping reef in a 10-20km arc to the south and south east of the proposed mine. An inexpensive drilling programme will see if these targets are economically viable.
There is another reef 300 metres below the Kimberley Reef at the Burnstone mine, which will ultimately go down 500 metres. Mining will start at 316 metres. Great Basin is awaiting assay results from a core sample taken from the deeper Main Reef.
Free news alerts: click here to subscribeAt the Ivanhoe property on Nevada’s Carlin Trend, the US version of South Africa’s Wits Basin, five percent of the block called Hollister is under development in a 50/50 joint venture with Hecla Mining.
Hecla, which will manage the mine, needs to spend $28m to complete a bankable feasibility study and bring the mine into production to earn its full stake in the project.
“I’d like Great Basin to own 100% of the Hollister project,” Dippenaar said of the decline mine that has a six-year life and produce 150,000 oz of gold and 760,000 oz of silver a year.
“I know how important Hollister is to fund Burnstone. We’d be mining more of it, no doubt. Hecla has a different level of urgency because they have other projects,” he said.
The Great Basin team has been quite aggressive in its approach to the project, taking over the building of an ore reserve model to design a mine.
Great Basin is exploring the remainder of the Ivanhoe property, which Dippenaar called “highly prospective” and which is solely owned by his company.
“There’s been quite a bit of interest in Hollister which we have chosen to ignore,” Dippenaar said, raising the point Great Basin makes an attractive takeover target. “We are dirt cheap. A company with a seven million oz resource is not something you find every day.”
“We are not putting this lady up for sale. That’s not the point,” he said.
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