Vancouver, Canada — MININGREVIEW.COM — 25 February 2009 – Great Basin Gold Limited (GBG) – an emerging mid-tier gold producer listed on the Toronto and American stock exchanges – is to issue shares to raise US$100 million (R1 billion) to bring its Burnstone mine in South Africa into commercial production over the next 15 months.
Making this announcement here, CEO Ferdi Dippenaar expressed the hope that there would not be too much of a discount to the market price “The market to raise debt funding has changed markedly in the past six months and banks require mining companies to put more skin in the game,” he said. Fin24.com quoted him as telling Miningmx “there are different pressures on us now as to how we put these kinds of things together.”
The banks will match the funding GBG puts into Burnstone, but the company has to raise the money first.
This involves raising US$50 million (R500 million) towards the Burnstone project, another US$26 million (R260 million) towards a standby facility for potential overruns, and then US$24 million (R240 million) more towards operating capital for the mine until it starts commercial production in June 2010.
“By the end of 2010 we should be cash flush, but we need money now,” Dippenaar said.
Mining will start at Burnstone this year and stockpile ore ahead of the commissioning of the plant from June 2010. Burnstone’s output is forecast at 250 000 oz in 2010. It recently bought a metallurgical plant from Papua New Guinea which it hopes to fully commission in the same year.
The book-building exercise is under way and should be completed early next week, and the price determined by around Tuesday, 2 March. The book will close a week to 10 days later.
“Now it’s all a function of interest in the issue. I’d expect we’ll not see a significant discount to the current share price,” Dippenaar said. “We are working at full speed at Burnstone and want to maintain that momentum. We do not want anything to hold it up," he added.