[miningmx.com] – GREAT Basin Gold (Great Basin) has filed for business
rescue proceedings over Southgold Exploration, the South African subsidiary that owns
Burnstone, ahead of two possible bids for the Mpumalanga mine.
The business rescue proceedings, which will keep the liquidators from the door for up
to a month and allow Great Basin to either recapitalise the R470m business or sell its
assets, will also be extended to parent company Great Basin Gold, which is registered
in Canada.
This will trigger the repayment of $126m in convertible debentures requiring a debtor-
in-possession that will be appointed to provide interim finance. The debtor-in-
possession will have “first dibs’ on the company’s assets in the event of liquidation,
said interim CEO Lou van Vuuren, who added that there were some 25 parties that
had also expressed an interest in buying Hollister, Great Basin’s Nevada-based mine.
As part of the business rescue proceedings, Great Basin may be asked to delist from
the Toronto Stock Exchange, an outcome described by Van Vuuren as “highly
possible’.
“We need the time to run a proper process. There are 25 parties looking at Hollister
and two potential bids for Burnstone. We have three to four weeks to get some offers
on the table at least. We’re realistic about the assets, but at least it’s not a fire sale,’
he said of the business-rescue proceedings.
WITS GOLD
The resignation of independent director Philip Kotze, effective from September 6 from
Great Basin’s board, has stoked speculation that Witwatersrand Consolidated Gold
Resources (Wits Gold), of which Kotze is CEO, was mulling a bid for Burnstone.
Responding to questions sent by text last week, Van Vuuren said that queries ought to
be directed to Kotze. Kotze has declined to respond to several telephonic messages.
An industry source said that Wits Gold was likely to have an interest in inspecting
Burnstone. Interestingly, Wits Gold’s share price has been under significant pressure
for much of the week despite the improvement in the gold price.
Analysts believe Great Basin’s days are numbered. “n the unlikely event that there is
a full takeover of these operations, we believe there is not much in value that will be
left as equity,’ said Percy Takunda, an analyst for Imara SP Reid.
“Hollister in the US could also be sold [as well as Burnstone] with little benefit to
current shareholders. This is a monumental failure and marks the end of the road for
GBGold [Great Basin Gold],’ he said in a note.
BMO Capital Markets said it ascribed no value to Burnstone, while RBC Europe analyst
Jonathan Guy slashed Great Basin’s valuation to 2 Canadian cents/share from 25 cents
per share previously.
