[miningmx.com] – GREAT Basin Gold (Great Basin) cancelled an earlier
$50m share placement – replacing it with a offering that is cheaper per share, to
which warrants have been added as a sweetener.
Great Basin hopes the $50m raised from the new share placement will see its South
African mine, Burnstone, through to positive cash flow estimated to be in the third
quarter of this year.
The market continued to turn its back on Great Basin’s aspirations, however. The
share was down another 5.3% on the Toronto Stock Exchange, taking the monthly
decline to 26%.
The return over the last year in Great Basin shares has been a negative 73%,
highlighting the difficulty of building a mine when management fails to meet
expectations on production.
In terms of the new agreement, which will be lead by RBC Capital Markets, some 66.7
million new Great Basin shares will be issued at C$0.75 per unit. This compares to an
earlier offering of 61 million shares at C$0.82 per unit.
The new share placement also contains a one-half-of-a-purchase warrant that can be
exercised for two years at a price of C$0.90 per share. Great Basin also provided the
underwriters with an option to purchase an additional 15% of the offering for 30 days
after the closing of the share offering.
Great Basin said on March 9 that it expected Burnstone to produce between 90,000 to
100,000 oz of gold in 2012, at a cash cost of between $900 and $1,000/oz – a
“marked’ improvement on the $1,737/oz cash cost average of 2011.
DIFFICULT TIMES
Dippenaar remained adamant the Burnstone mine would start to meet production
targets. “Everyone is committed. Everyone loves what they do here,’ he said, adding
that this was the time to show resolve. “This mine will happen,’ he said.
Yet Dippenaar is tackling a lot of off-stage events. The share weakness triggered
a restructuring of empowerment partner Tranter Burnstone’s loan agreement with
Investec, which is underwritten with Great Basin shares.
Dippenaar said he was hopeful that the margin call that has kicked in – because the
value of Tranter Burnstone’s shares in Great Basin are not enough to repay the loan –
can be renegotiated with Investec’s cooperation.
