[miningmx.com] – SHARES in Great Basin Gold (Great Basin) suffered
another body blow on Wednesday as it announced it was in discussions to support a
US$27m loan held by black economic empowerment partner, Tranter Burnstone.
The stock was down 8.5% by close of the Toronto Stock Exchange, while in
Johannesburg shares in Great Basin were down just over 2% in early morning trade.
Shares in Great Basin are down about two-thirds in the past 12 months on the JSE. It
was last trading at R6.15/share or C$0.75c/share in Toronto.
Great Basin said it had been notified that Tranter Burnstone was in default on part of
a R200m (US$27m) loan agreement with South African bank, Investec, which has
Great Basin’s shares as collateral. “The default is due to an approximate R45m
(US$6m) unfunded cash margin call as a consequence of the decline in the value of
Great Basin Gold shares serving as collateral for the loan,’ Great Basin said in an
announcement.
Great Basin has provided a guarantee on the loan of R140m (US$19m), of which R14m
(US$1.82m) remained available to meet the unfunded cash margin. This leaves some
R31m of Tranter’s loan that remains unfunded.
Ferdi Dippenaar indicated that Great Basin may not have to provide as much as R31m
to avoid Tranter Burnstone defaulting. “There is a discussion with three parties here,
which includes Investec,’ he said.
“It has been common knowledge that Tranter Burnstone may be in default of its loan,
but we made this announcement in terms of disclosure,’ he added. As for the
weakness in Great Basin shares this week, Dippenaar said all gold stocks had been
hit hard following a $50 to $60 per ounce decline in the gold price.
There’s no denying, however, that Tranter Burnstone’s troubles come at an
inconvenient time for Great Basin, which is hoping to apply the finishing touches to a
C$50m (R378.5m) share placement announced last week.
The share was to be placed with “loyal shareholders’, as Dippenaar termed it, at a
price of C$0.82c/share – a 7.5% discount to the then price. Dippenaar said an update
on the share placement was due, possibly later today.
