HomeGoldInsolvency experts are running Great Basin

Insolvency experts are running Great Basin

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Johannesburg, South Africa — 07 December 2012 – New management skilled in insolvency processes has taken the helm at Great Basin Gold, which has mothballed its South African mine in an attempt to lock in value.

BDlive reports that Johannesburg and Toronto-listed Great Basin has the Hollister mine in Nevada, US, and the Burnstone mine in Mpumalanga, South Africa, but the company has launched insolvency proceedings, including a business rescue process in South Africa and Canada.

The report adds that one or both of the mines may be sold. A market source said Gold One had indicated interest in buying Burnstone, but at a price well below what the company wanted to realise for it.

CEO Ferdi Dippenaar quit suddenly in mid-August after a run of missed production targets and continuing difficulties at Burnstone. He was replaced on an interim basis by Lou van Vuuren, the financial director.

Great Basin revealed this week that it had appointed Ray Dombrowski and Peter Gibson as CEO and CFO respectively with immediate effect. van Vuuren has quit as interim CEO and as a director of the company, but remains available as a consultant.

According to the minutes of Burnstone’s creditors in late October, a toll treatment for Burnstone’s gold is being put in place with a company called Copper Eagle. It is a family-run mining company on the East Rand that specialises in treating gold-bearing tailings and producing aggregate. There is also a history of gold mining in the family.

Copper Eagle has signed a four-month toll treatment deal with Burnstone. It has first option at the end of that time to buy the mine, a Copper Eagle official said. Copper Eagle will use Burnstone’s plant to treat ore from a Benoni dump. It has enough ore to feed the plant for 10 months.

In September, Great Basin was offered a US$35 million debtor-in-possession loan, and the company said that in addition it needed up to US$20 million more by January next year to fund the business rescue process. The Hollister gold and silver mine continues to operate.

In the September quarter, Great Basin sold 24,449 gold equivalent ounces. It posted a net loss of US$89.6 million for the period, up from the June quarter’s US$22 million loss.

On a nine-month basis, gold sales fell to 66,477oz, down from 89,567oz, and its net loss more than doubled to US$129.4 million.

Source: BDlive. For more information, click here.