Great Basin Gold shapes up to survive the carnage
CEO Ferdi Dippenaar says the company will still deliver its Hollister and Burnstone projects on time.
Posted: Wednesday , 12 Nov 2008
Great Basin Gold (TSX:GBG, AMEX:GBN, JSE:GBG) has cut costs and scaled down spending to ensure the company is in good shape to survive the current economic carnage and deliver its mine projects on time.
Chief executive officer Ferdi Dippenaar said today the company has put grassroots exploration on hold and scaled back advanced exploration to ensure it brings operating mines into production on time.
The company has taken a cash preservation focus at all operations to see it through this difficult period, while it expected trial mining at Hollister to deliver revenue that would support "ongoing operational activities", he said.
Great Basin was however continuing with surface exploration in the "exciting" Hatter Graben area of the Hollister property where a new vein system was discovered, as exploration work pointed to the existence of an interesting and prospective deposit.
He said Great Basin has taken a good view of all its activities and would focus on doing what is required to bring its projects online on time, without making a significant impact on its cash reserves.
Project funding will also be employed to see the company through the current market volatility and project funding of CDN$122m has been recommended by both Investec Bank and Nedbank Capital. Dippenaar said that final approval was outstanding, but expected in the next few days.
Dippenaar gave the assurance that Great Basin would continue with the development of the decline and vertical shaft at its Burnstone project as the mine was very close to production scheduled to start in the beginning of 2009.
He said the company was making good progress at Burnstone with both surface and underground infrastructure. The receipt of a new order mining right from the South African department of minerals and energy meant it could complete the project as planned. "It is starting to look like a real mine at Balfour as we speak," he said.
The company's cash conservation focus did mean it has moved out the commissioning of the vertical shaft and the completion of the metallurgical plant at Burnstone from respectively December 2009 and August 2009 to March 2010, but this rescheduling would not impact on eventual production.
Dippenaar also painted a picture of good progress at Hollister, saying grades of 1.5oz/t of gold and 12oz/t of silver and recoveries of 88% and 93% exceeded expectations. A net 15,418 gold equivalent ounces were recovered here from 11,239t mined in trial stoping during the quarter ending 30 September.
Dippenaar indicated that Great Basin was still planning to have a new milling agreement for Hollister production in place by the end of the year. He said the company wanted to take off $100/ounce from current high toll costs incurred at Newmont's Midas Mill to get returns in line with plans again.
The company said in its release metallurgical costs incurred on the ore treated after the quarter end was $175/ounce, including $10 transport costs.
The purchasing of a mothballed mill was high on the company's list of options if it could afford to have "revenue lying on a pile" for a while.
Dippenaar stressed the company was in a fortunate position in these tough times as it could see revenue from both operations within the next six months.