Vancouver, Canada — MININGREVIEW.COM — 02 April, 2008 – Great Basin Gold Limited (GBG) – an emerging mid-tier gold producer listed on the Toronto and American stock exchanges – says the increase in the company loss in 2007 is due mainly to higher exploration and development costs incurred in advancing its two growth projects in South Africa and the United States.
Nevertheless, GBG president and CEO Ferdi Dippenaar commented: “Great Basin Gold is at an interesting and exciting phase of its development, as it is in the process of transformation from an advanced explorer to a junior producer. Good progress is being made in all areas of the business and we are looking forward to 2008, as we plan to deliver ounces from production at Hollister in the United States and from bulk sampling at Burnstone in South Africa, he emphasised
Announcing its results for the year ended 31 December 2007 here late yesterday, the company revealed that it had incurred a loss of 31 cents per share last year, compared to 11 cents per share in fiscal 2006.
In addition it had incurred 100% of the costs with regard to the development of the Hollister project in the United States, following the acquisition of Hecla Mining Company’s 50% earn-in rights in the Hollister Development Block (HDB), according to the announcement. The rise in expenditures at HDB – as well as the additional development and exploration activities at the Burnstone project in South Africa – increased the total exploration and development costs more than fivefold to US$42.0 million R340 million) compared to US$8.0 million (R65 million) in 2006, it added.
The development cost of US$17.9 million (R145 million) incurred at the Hollister Property consists of mainly equipment rental and services, surface infrastructure, underground infrastructure and general site activities and – based on its current permit provisions – is in line with the company’s plan to produce approximately 80 000 ounces in 2008.
The announcement revealed that exploration costs for the Burnstone Property had risen to US$3.3 million (R26 million) compared to US$2.5 million R20 million in 2006, mainly due to an increase in drilling activities during the year. This expenditure was in line with the company’s focus on expanding its mineral reserves and resources. Total gold contained in measured and indicated resources had increased by 41% to approximately 11 Moz. Approximately 2 Moz had been added to inferred resources, increasing to a total of 2.4 Moz, it continued.
In addition to further exploration to expand and upgrade the mineral resources at the Burnstone property, construction of the decline and surface infrastructure for the bulk sampling programme and future mining activities was advanced. Total costs of US$10.8 million (R87 million) were incurred compared to US$2.9 million (R24 million) in 2006, according to the company announcement.
Construction of the vertical shaft and design of the metallurgical plant commenced during the fourth quarter of 2007. “As at 31 March 2008, the decline had progressed to some 1 534m from the portal entrance, and it is expected to reach the first breakaway to the reef structure that hosts the mineral reserves at the beginning of the June 2008 quarter,” GBG calculates.
At December 31, 2007, the company had working capital of approximately US$78.2 million R630 million), as compared to US$33.8 million (R270 million) at the end of 2006. The announcement concluded that it also had a strong balance sheet, no debt and project funding of US$57.0 million R460 million) available with no hedging commitments.