[miningmx.com] – GREAT Basin Gold (Great Basin) has returned to the
market to fund its South African mine, Burnstone, raising C$50m (R378.5m) through
a share placement. CEO Ferdi Dippenaar said the additional funding was to make sure
there was financing should there be any other mishaps at the operation.
“We’re virtually at the end of our capital development programme, so this is to just
make sure we don’t get caught short,’ he said. The shares were placed with banks,
including RBC Capital Markets, and would be sold to “loyal shareholders’ at a price of
C$0.82c/share, a 7.5% discount, Dippenaar said.
“It’s not a bad discount,’ he said. “I think it’s around the market average and it’s
cheap because we will start to ramp up this year.’
Great Basin announced earlier this week that it expected Burnstone to be cash flow
positive from the third quarter of the calendar year.
It is expected 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, the company said.
This is not the first time in the last while that Great Basin has sought to shore up its
balance sheet.
In December, it secured a US$150m (R1.1bn) credit facility which it said was enough
to finance additional development at Burnstone. In terms of the refinancing, Great
Basin retired existing debt, leaving US$80m for development.
However, the Burnstone orebody has tested management. A miscalculation on the
mine’s geology last year effectively delayed the project build-up by a year, while in
January there was flooding.
“Underground flooding experienced in the latter part of 2011 and early 2012 had an
impact on the advancement of development,’ Dippenaar said. “This issue has been
resolved following the upgrading of the temporary water handling system.’
“The company expects that achieving the planned production build-up will allow
Burnstone to turn cash flow positive after capital investment [using a gold price of
$1,650/oz and a US$/ZAR exchange rate of 7.5] during Q3 2012,’ Dippenaar said
earlier this week.
“All equipment required for the production build-up is in place. All of our mining teams
are currently in place and are undergoing intensive refresher team training to enable
them to plan, assess and adjust to the constantly increasing rate of production,’ he
said.
The mine would continue the high ratio of development to stoping ore in 2012 in order
to provide Burnstone with continued mining flexibility.
