Great Basin Gold's secondary listing on the JSE
By: Tessa Kruger
Posted: '27-OCT-06 15:00' GMT © Mineweb 1997-2006
JOHANNESBURG (Mineweb.com) --The secondary listing of emerging gold producer Great Basin Gold on the JSE today will provide local investors with an appetite for gold with a wider selection of junior mining stocks.
Chief executive of GBG, South African Ferdi Dippenaar, who used to work for Bernard Swanepoel at Harmony, said at the listing in Johannesburg that the company’s principal Burnstone gold mining project in South Africa made the JSE the “logical” choice for a secondary listing.
GBG, a company with a current market capitalisation of R1.4 billion (around US$185 million) was not aiming to raise capital with the secondary listing, but wanted to raise its profile in order to be able to raise capital in future, he said.
Great Basin, which is also bringing a gold and silver property in Nevada, U.S.A. into production, is also listed on the Toronto and the American Stock Exchanges.
Dippenaar believes GBG will receive support from investors as mining is still a prominent activity in South Africa and it is constructing its key Burnstone mine near Balfour in South Africa’s Mpumulanga province.
“We would like South African residents to directly invest in the company to enhance liquidity in its shares,” he said.
Burnstone is expected to deliver 214,000 ounces of gold annually over a mine life of 14 years at a total cost of $314 per ounce.
However, production could be lifted as Burnstone has total measured and indicated resource of 7.1 million ounces. The current mining plan includes a mineable reserve of 2.4 million ounces only.
Construction of the Burnstone mine has started with the building of a decline to 321 metres below surface from where a shaft will be sunk further underground.
Dippenaar said they had the advantage of an ore body starting 220 metres below surface and, at the lowest point, only reaching 800 to 900 metres underground.
This meant that capital cost of building the mine per ounce was low compared with a deep level gold mine, which would have to sink a number of shafts to a lower level.
Burnstone is expected to deliver 214,000 ounces annually over a mine life of 14 years at a total capital and operating cost of $323 per ounce. Its reserves are on The Kimberley reef which carries what GBG describes as moderate to high grade gold mineralisation amenable to underground mining. The Kimberley reef has been mined very successfully, for example, in the Randfontein/Krugersdorp area in the past.
Burnstone promises investment rate returns of 19% at a gold price of $450 per ounce and an SA Rand exchange rate of R7 to the US$.
The recent average gold price reached a level of $620 compared to $554 in the first quarter of 2006, according to GBG.
“But there is definitely opportunity for growth at the mine, as exploration activities are aimed at converting the remaining 4.7 million ounce resource to reserve ounces.”
Great Basin has acquired 8 of 10 new order exploration licenses in order to expand measurable reserves. The company is currently negotiating a BEE deal with a local consortium and will make its application for new order mining rights after it is finalised.
Great Basin’s second large core project - the Hollister Development project in Nevada - will start production in two years.
The 520- ton a day undergound mine will have an estimated life of 5.9 years, annual production of 150,000 ounces of gold and 760,000 ounces of silver. The internal rate of return is estimated at 78%.
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