Great Basin Gold Limited (GBG) – an emerging mid-tier gold producer listed on the Toronto and American stock exchanges – has set up a gold exploration and mining operation in Mozambique. GBG is the company behind the US$153 million (almost R1.1 billion) Burnstone gold project in South Africa, scheduled to produce an average of 214 000 ounces of gold per annum from 2011 for at least 14 years.
Now the company has concluded a memorandum of understanding to enter a joint venture with G S Minas E Refinaria Limitade (GSR) of Mozambique for this purpose. GBG will have the exclusive right to explore all GSR’s properties.
GBG will have an 80% interest in the joint venture, and has committed to exploration expenditures of approximately US$2 million (R14 million) over a three year period on the Tsetsera Property, which is located 80 km south of Manica in Mozambique, and on other properties over which GSR holds mineral rights. Should financing be required at a later stage for any mining activities, the parties will contribute pro rata in terms of their interests in the joint venture.
Should GSR not be in a position to contribute any required finance in respect of any property or project, GBG will have the right of first refusal to buy GSR’s remaining 20% share. The consideration payable by GBG in respect of the 20% share will be settled in either cash or company shares, and the value will be based on resources reported at that time and valued at fair market price. GSR, however, will retain a 3% net smelter royalty.
GBG will manage the joint venture and will be responsible for the day-today management of the exploration and other activities to be conducted.
GSR currently owns the 17 square km Tsetsera property, which was worked historically by artisanal miners who crushed quartz vein material and panned gold from the fines. The artisinal miners have exposed over 300 m strike length of quartz veins. Rock samples taken during a field visit returned gold assay values of between 0.22 g/t and 26.8 g/t from grab samples, and a chip sample across a 60 cm quartz vein returned 5.6 g/t Au. No other work has been completed on the property at this stage.