Ferdi Dippenaar
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Great Basin erects takeover defence
Allan Seccombe
Posted: Tue, 15 May 2007

[miningmx.com] -- GREAT Basin Gold, which is in development phase at projects in Nevada and South Africa, has enough cash to fund these projects and is putting in place a rights plan to protect its shareholders in event of a takeover bid.

TSX-listed Great Basin, recorded a C$6.7m loss in the quarter to end-March, with exploration and development expenditure of C$5.1m in the period, the majority going to the Burnstone project in South Africa.

Great Basin raised C$149m in April, part of which – U$45m – was used to buy out Hecla’s 50% stake in the Hollister Development Block project on Nevada’s Carlin Trend.

"It’s a great position to be in. We have sufficient cash resources to cover the capital expenditure requirements for Hollister Project and the partial funding of the development of a mine at Burnstone,” Dippenaar said.
a prudent, proactive measure
“However, if the current gold price environment continues and the company’s schedule for Hollister is met, we believe that the company’s cash flows from Hollister will be more than adequate to cover any shortfall,” he said.

Great Basin is putting in place a rights plan that will give its shareholders time to consider any takeover bid.

Dippenaar was quick to say the action was not the result of any approach for Great Basin.

“This Rights Plan is not being adopted in response to any specific proposal to acquire control of Great Basin Gold, but is simply a prudent, proactive measure that is being adopted in light of the increased pace of merger and acquisition activity in the mining industry,” he said.

The scheme will give the board time to seek alternative options and is not meant as a deterrent to any possible bids.

The plan will be in force for three years if shareholders approve the scheme at a general meeting on 19 June.

A "permitted bid" must involve a take-over bid circular that must remain open for 60 days, failing which the rights issued under the Rights Plan will entitle shareholders, other than those involved in the bid, to buy more Great Basin shares at a significant discount to the prevailing market price.

Great Basin spent C$2.1m at Hollister in the March quarter and C$3m at Burnstone, where the decline has reached 663 metres. Some 2,400m of development is required before mineralised reef is tapped.

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“The in-fill exploration drilling program at Burnstone is nearly finished, and the results will be included in a revised mining plan which will be completed by the end of the current quarter,” Dippenaar said.

The prefeasibility study pointed to a 214,000 oz/year gold mine at Burnstone, but Great Basin could revise production up to 250,000 oz/year, Dippenaar has told Miningmx.

By 8 May, 15,000 feet out of 40,000 feet of a new underground drilling programme at Hollister had been completed. A feasibility study is to be completed in June this year.

Great Basin is engaged in trial mining at Hollister to find the best method to extract the narrow mineralised veins that make up half of its resources.

A 5,000 tonnes bulk sample in May produced 24,050 oz of silver and 2,090 oz of gold.

The Hollister project, which could bring 30,000 oz of pre-production gold onto the market in 2007, will be brought into production in 2008.

Early studies have indicated a decline mine that has a six-year life and will produce 150,000 oz of gold and 760,000 oz of silver a year.