[miningmx.com] – GREAT Basin Gold said the sale of part or whole of its US gold mine, Hollister, was a preferred option as the gold junior fought to save itself, but added that South African companies had also shown an interest in its under-performing Burnstone gold mine.
“There has been a lot of interest in the asset [Hollister],” said Great Basin Gold interim CEO, Lou van Vuuren in a telephonic interview. “A couple of parties have been knocking on our door. We would love to keep a stake in the asset,” he said.
Great Basin Gold published an updated resources statement on Hollister in a clear attempt to flag its blue sky potential, a move the company announced would help accelerate the re-capitalisation of its business.
It attached an after-tax net present value (NPV) of between $170m to $190m on the mine assuming a 5% discount rate, a five-year life of mine, and a gold price of $1,400/oz. At a gold price of $1,500/oz, the NPV range improved to between $190m to $210m.
Thomson Reuters GFMS reversed earlier scepticism on the gold price on September 4, saying bullion could test $1,800/oz or possibly $2,000/oz in the second half of the calendar year. The gold price is currently trading at $1,692.oz.
“Publishing the reserves and resources is critical to the sale,” said Van Vuuren who added he expected to receive some “cheeky” offers.
Great Basin Gold said on August 15 it had assembled a special investment committee to consider the sale of assets or the company itself. This was preceeded by the resignation of CEO, Ferdi Dippenaar, and analyst calculations that it needed short-term funding of $60m. Total debt as of end-June was $296.5m (C$293m) which carried a settlement value of $322m (C$318M).
The news helped further weaken Great Basin Gold’s share price which had been falling steadily for two years as the Burnstone mine, located in Mpumalanga province, failed to meet production targets. At its lowest, Great Basin Gold was valued at $110m compared to $518m in January.
However, a company announcement on September 4 that it had expected to make rapid progress on an asset sale which would help recapitalise the business added some 13% to the stock price. Great Basin Gold now has a market value of $131m.
Said an Vuuren: “Every week that goes by is challenging to us. But alot of people have done work on the assets and have had access to the data room. We are trying to get certainty and hope to complete a sale in the next four weeks.”
Gold One International has been associated with a bid for the Burnstone mine. “There are definite synergies between Modder East [a Gold One International mine] and Burnstone,” said Van Vuuren. He was uncertain, however, whether Gold One was among the companies that requested access to the data room.
In a statement earlier on Wednesday, Great Basin Gold said: “The company continues to receive considerable interest in its projects from qualified financiers and industry players and with the information in this news release now having been disseminated we will be in a position to accelerate our strategic process.
“A range of viable options remain possible, however, the company is not yet in a position to provide any guidance as to if and when an announcement in this regard will be made,” it said.
