jitters hold up Great Basin deal
David McKay
Posted: Wed, 29 Aug 2007
[miningmx.com] -- A BID for Great Basin Gold (GBG), the Toronto and Johannesburg listed gold exploration company, has been held up by market jitters related to the world’s credit problems.
A source close to the negotiations - which may involve a major US gold mining company, such as Barrick Gold or Newmont Mining – said both sides were waiting for order to return to the market before proceeding.
“Share prices are under pressure and so Great Basin doesn’t want to sell at its current share price level while the buyer isn’t keen on using its shares either.
“If there’s a cash offer on the table, maybe the bidder is wondering whether other things couldn’t be done with the cash instead,” the source said.
Great Basin’s share price has pulled back sharply on the Toronto bourse, dropping from a peak of C$3.25 in July to C$2.15/share on August 28.
“The unofficial word is that it’s about negotiating price,” a source said about talks between GBG and its suitor. “Stock prices have been trading at well below net asset value or net present values.”
The credit fears which have affected the market across the board began with the sub-prime mortgage sector which gives higher risk loans to people with poor credit histories. Sub-prime default levels rose to record highs in the US this year as mortgage rates increased.
This has raised fears credit availability could be hampered in the broader market in the US and globally.
Ferdi Dippenaar, CEO of GBG, declined to comment. But he was confident the gold price would help improve market conditions. “I think it [the gold price] is going to breakout and the reverse the current bearish trend,” he said.
Miningmx reported on July 10 that a US firm was cricling GBG wanting to buy the company’s Nevada-based project, Hollister, while floating off the African prospects, including the R1.4bn Burnstone project in South Africa.
The Hollister Block, currently the subject of a feasibility study by GBG, could have production of about 150,000 oz/year by 2009. The property is surrounded by properties owned by Barrick and Newmont.
“There’s been quite a bit of interest shown in the company, particularly as people understand the North American assets,” Dippenaar told Miningmx in June. “You try hold off the suitors until you’ve done the feasibility and resource statements to see the value.”
However, he said on August 15 that a potential deal with Aflease Gold, a Johannesburg listed company, was “completely off the table at this stage”.
“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.”
News 
Market Data 
Discover 
