Great Basin Gold Acquires Mill, Updates Operations and Finances
December 08 2008 - 8:30AM
PR Newswire (US)
VANCOUVER, Dec. 8 /PRNewswire-FirstCall/ -- Great Basin Gold Ltd.
("Great Basin Gold" or the "Company") (TSX: GBG; AMEX: GBN; JSE:
GBG) announces that it has signed an agreement with Metallic
Ventures Gold Inc (TSX:MVG), whereby the Company will purchase the
Esmeralda processing plant ("Mill") in Nevada, inclusive of the
Esmeralda mine and infrastructure for US$2 million. The Company's
decision to purchase the Esmeralda Mill follows an extensive
evaluation process whereby various milling options for its
Hollister project were considered. Esmeralda is approximately 290
miles from the Hollister project with 80% of that distance over
paved interstate roads. Transport costs from Hollister are
estimated at US$55 per ton. The Esmeralda Mill was operational
until 2004 when it was placed on care and maintenance. The Mill
processes ore through a carbon-in-leach (CIL) process with tailing
deposition into an adjacent impoundment. Other features of the mine
include crushing facilities, stockpile areas, waste rock
facilities, roads and other miscellaneous areas. MVG holds the
required permits that allow for the operation of the mining,
milling and associated crushing activities. The Mill can currently
process up to 350 tons per day. Re-commissioning and reconfiguring
of the mill is expected to take at least 120 days. Further upgrades
to improve the recovery of gold and expand the capacity of the mill
will be evaluated and implemented during this phase at an estimated
cost of approximately US$8 million. Operating costs of the Mill are
estimated to be US$40 per ton. One of the principal conditions to
the transaction is the transfer of all permits required to operate
the Mill and associated facilities. The facility has a reclamation
liability of approximately US$2 million which requires a bond of
that amount be put in place by the Company. Great Basin Gold has
undertaken an initial assessment of previous mining activities on
the property, including the quantum and quality of available
drilling, geological and mining related data. The Esmeralda
property has mineral resources, and these resources will be the
subject of a detailed review and estimate that is NI43-101
compliant. Preliminary observations and analysis of data from the
underground workings suggest that a high grade epithermal vein -
type target, not dissimilar to the Hollister, is present. At
Hollister, good progress is being made with the underground
development. Trial stoping continues to prove valuable in allowing
for a better understanding of the vein structures and
mineralization, and the future mining conditions. At this stage, it
appears that the strike length of the whole vein system will
probably be extended giving some confidence that, with more work,
close to the existing production quantum of ounces used in the
feasibility will ultimately be mined. Initial results of the trial
mining have indicated that the current mineral reserve, which does
not take into account these potential vein extensions, will be
reduced, as some of the veins cannot be mined economically. With
early trial stoping results and additional infill diamond drilling
that has been completed, the project's resource model is being
updated for release in the first quarter of 2009. A number of
stoping methods are being tested. One of the trial stoping methods
currently being assessed is a thermal fragmentation process that
allows cleaner mining of very narrow veins with the result that
some veins that are currently deemed uneconomic may become
economic. Exploration at the Hatter Graben discovery, 1 mile to the
east, has delivered good results to date and is exhibiting similar
high grade mineralization and structure to the Hollister Block;
however it is too early for resource estimates. The Bureau of Land
Management has also informed the Company that staff has reviewed
the Company's environmental submissions on the Hollister Block
Project Plan of Operations for full scale mining and require
further analysis by way of an Environmental Impact Statement (EIS).
Meetings to facilitate the EIS process have been initiated.
President and CEO Ferdi Dippenaar said: "After careful
consideration and independent assessment of the Esmeralda Mill and
mine, we are sure that this acquisition represents a strategic
advantage for Hollister and will provide the Company with control
over our processing capacity as well as reduced cash costs. At a
total of US$95 per ton, the milling costs will be significantly
lower than the 20% revenue royalty, which is based on the gold
price, currently paid for toll milling operations. Confidence in
Hollister as a result of the trial stoping, underground exploration
and area surface exploration underscores the value of the Esmeralda
acquisition. In addition, the Esmeralda property itself has the
potential for future exploration and mining activities. The Company
is in advanced negotiations towards securing a senior secured note
debt financing with warrant coverage to conclude the Esmeralda
acquisition and contribute to the equity funding requirements of
its Burnstone project in South Africa." Johan Oelofse, PrEng,
FSAIMM, Chief Operating Officer for the Company and a qualified
person, has reviewed this news release on behalf of Great Basin
Gold. No regulatory authority has approved or disapproved the
information contained in this news release. This release includes
certain statements that may be deemed "forward-looking statements".
All statements in this release, other than statements of historical
facts, that address possible future commercial production, reserve
potential, exploration drilling results, development, feasibility
or exploitation activities and events or developments that Great
Basin Gold expects to occur are forward-looking statements.
Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in the
forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements
include market prices, exploitation and exploration successes,
continuity of mineralization, uncertainties related to the ability
to obtain necessary permits, licenses and title and delays due to
third party opposition, geopolitical uncertainty, changes in
government policies regarding mining and natural resource
exploration and exploitation, and continued availability of capital
and financing, and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and those actual results or developments may
differ materially from those projected in the forward-looking
statements. For more information on the Company, Investors should
review the Company's annual Form 40-F filing with the United States
Securities and Exchange Commission and its home jurisdiction
filings that are available at http://www.sedar.com/. DATASOURCE:
Great Basin Gold Ltd. CONTACT: on Great Basin Gold Ltd. and its
gold properties, please visit the Company's website at
http://www.grtbasin.com/ or contact Investor Services: Tsholo
Serunye in South Africa, 27 (0)11 301 1800; Michael Curlook in
North America, 1-888-633-9332; Barbara Cano at Breakstone Group in
the USA, (646) 452-2334
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