Johannesburg, South Africa — MININGREVIEW.COM — 11 June 2009 – Great Basin Gold Limited (GBG) – an emerging mid-tier gold producer listed on the Toronto and American stock exchanges – has granted a mandate to Investec Bank Limited to arrange project funding for the company’s Burnstone project in South Africa. The facility consists of a US$106 million (R850 million) senior debt facility and a US$23 million (R180 million) debt facility to cover potential cost overruns.
Revealing this development in a news release issued here and in Vancouver, GBG said that significant progress had been made in the finalisation of a syndicate of banks for this purpose, with final credit approvals already obtained by some of the envisaged participants and in-principle approvals by the other potential syndicate members.
It added that the facility would have a maximum term of seven years with capital and interest repayment commencing on 30 June 2011. Interest rates were linked to the Johannesburg inter-banking borrowing rate (JIBAR) with a premium of 4.5% above JIBAR post completion and a 5% premium prior to completion.
The company is required to contribute equity amounting to approximately 55% of the total Burnstone project cost. The estimated required equity contribution (based on the current project plan) amounts to US$134 million (R1 075 million), of which US$70 million (R560 million had been spent by 31 March 2009.
The facilities are subject to the completion of suitable loan and security documentation, and include conditions precedent usual for project funding of this nature. These conditions precedent include completion of technical and legal due diligence, and an updated and agreed financial model. “Technical and legal due diligence is well advanced and it is envisaged that the loan documentation will be concluded prior to June 30, 2009,” the release revealed.
Development of the Burnstone project is well underway with multiple access points to the mining blocks currently being established to allow for the build-up in reef tonnage available for production in the second half of 2009. The current project schedule indicates 30 June 2010 as the date for mill commissioning, and for first revenue to be generated in the subsequent months.
GBG president and CEO Ferdi Dippenaar commented: “Although the current financial market volatility has had a significant impact on the process to obtain approval for the project funding facility, the returns from the Burnstone project remain extremely positive under the current market conditions. The project has been subjected to significant scrutiny by the lenders during their approval process, and the project came out strongly on every occasion,” he added.