Wed, 11 Jul 07
Ferdi's still young...
Posted: Tue, 10 Jul 2007
[miningmx.com] -- BEFORE the first ounce of gold is poured at Great Basin Gold’s projects, the TSX-listed company could be the target of corporate action that would carve off the Nevada project and leave the Burnstone project as the possible base for a merger in South Africa.
There is interest from a US-based mining company in Great Basin’s Hollister project in Nevada, which leaves the South African development project at Burnstone to be merged with other South African assets of a similar ilk.
North American companies have historically shown a deep-seated aversion to mining gold in South Africa because of the poor safety record on the ultra-deep mines, which are also expensive. Miningmx believes this makes it unlikely any North American suitor for Great Basin would keep the R2.6bn, 254,000 oz/year Burnstone project.
So far just R800m has been spent acquiring Burnstone and exploring it. A further R1.8bn will be spent on the decline system and plant. An application for a new-order mining right will be made at the end of July and it normally takes about a year to work its way through the system if all goes well.
A logical fit with Burnstone would be Uranium One’s 68%-held subsidiary Aflease Gold, which is developing the Modder East and Sub Nigel mines on the East Rand of the Wits Basin. Great Basin has a listing on the Johanneburg bourse.
“At the moment we are reviewing all our strategic options, but our main focus is on completing the feasibility study at Hollister and getting that into production,” Great Basin CEO Ferdi Dippenaar said when asked by Miningmx whether Aflease Gold would be a desirable addition to the company.
“In three to six months we will review our strategic options,” he said.
He declined any comment on speculation that a potential buyer is conducting a due diligence of the Hollister asset, which recently upgraded its gold resources to two million ounces.
Uranium One CEO Neal Froneman has said his company will exit Aflease Gold, which is a non-core asset. There are additional gold assets within Uranium One that can be vended into Aflease Gold to give the junior gold company critical mass, he has told Miningmx.
Froneman has categorically ruled out a transaction with Pamodzi Gold, which acquired Bema’s Petrex mine, which is close to Modder East and Sub-Nigel. He argued that the assets would make a better fit with a company that has a similar strategy of mining shallow, low technical risk projects.
It was long speculated that Petrex would form part of some corporate activity with Aflease Gold on the East Rand, but Pamodzi Gold acquired an onerous hedge book and deep-level, historically under-capitalised East Rand assets when it took on Petrex.
Froneman said at a media briefing this week the Aflease Gold transaction could be completed this year via either a merger or a reverse takeover.
Of course, if the transaction is with Great Basin, the Hollister transaction will have to be completed first otherwise the valuations for Great Basin will change, potentially frightening off the American buyer.
Great Basin has set up a defence against a hostile takeover, forcing it to become a friendly offer, and gives Great Basin the chance of inviting other possible suitors to make a rival bid.
“There’s been quite a bit of interest shown in the company, particularly as people understand the North American assets,” Dippenaar told Miningmx a month ago. “You try hold off the suitors until you’ve done the feasibility and resource statements to see the value.”
“We have no debt, no hedge, we have cash, and we can build the project. If ever there was a clean company you could do something with, it’s Great Basin Gold, but it’s also the vehicle we want to grow the company with,” he said.
“But if there’s a good offer showing value and shareholders like it, I’d recommend it. I’m young enough to start all over again.”
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