financing is finally done for Burnstone. With this last major risk gone and production ramping up to 250koz/y after commercial production complete next year. cash cost is expected to be 320/oz. annual cash flow @ 950/oz would be 158M. Add in 120koz from Hollister, cash cost is $425/oz. annual cash flow would be 63M. total operating cash flow will exceed $221M. current market cap is 506M, so GBG is trading at about 2.3x op cash flow.
Burnstone will keep expending as M&I turn into P&P and exploration upside at Hollister, GBG is so undervalued.
Great Basin Gold Obtains Credit Approval For Burnstone Project Finance
8/31/2009 8:30 AM - Canada NewsWire
VANCOUVER, Aug. 31, 2009 (Canada NewsWire via COMTEX News Network) --
GreatBasin Gold Ltd, ("Great Basin" or the "Company"), (TSX: GBG; NYSE Amex:GBG; JSE: GBG) today announced that it has obtained Credit approvalthereby securing the finance facility for its Burnstone Project inSouth Africa. The facility consists of a ZAR850 million (US$106million) senior debt facility and a ZAR180 million (US$23 million)standby debt facility to be utilized for potential cost overruns.
Thefacilities are subject to the execution of suitable loan and securitydocumentation, and include conditions precedent usual for facilities ofthis nature. The Company does not plan to draw down on this facilityuntil the end of 2009.
The facility will be provided byInvestec Bank Limited, Nedbank Capital, ABSA Capital (a division ofAbsa Bank Limited) and the Development Bank of Southern Africa ("theLenders") and will have a maximum term of 7 years with interestrepayment commencing December 30, 2010 and capital repayment commencingon June 30, 2011. The senior debt facility carries interest at theJohannesburg Interbank Agreed Rate ("JIBAR") plus a margin of 5%pre-completion and JIBAR plus a margin of 4.5% post completion.
Ahedging structure customary for facilities of this nature is requiredby the Lenders and a participation collar hedge for an estimated285,000 ounces (approximately 20% of production over the repaymentterm) has been agreed upon. This structure retains the objective of azero-cost-collar by eliminating upfront or downstream finance cost tothe Company. The Company has retained the option to early settle thehedge structure as well as to restructure the hedge, to thesatisfaction of the hedge providers, thereby allowing the Companyincreased upside participation for rising gold prices. The hedgestructure will be ZAR denominated with pricing of the structure to bedetermined prior to the first draw down of the facilities.
TheCompany is required to contribute equity amounting to approximately 55%of the total Burnstone Project cost and deposit ZAR180 million (US$23million) in standby equity, to be allocated to potential cost overruns,into an escrow account under the control of the Lenders prior to firstdraw down. The Company will also repay the existing ZAR200 million(US$25 million) loan facility, as well as accrued interest ofapproximately ZAR30 million (US$4 million), advanced by Investec BankLimited in July 2008 for purposes of the Burnstone Project. The projectfinance facility will be secured by the assets of the BurnstoneProject, with a completion guarantee to be put in place from theCompany.
Development of the Burnstone Project is well underwaywith multiple access points to the mining blocks currently beingestablished to allow for the build-up in reef tonnage in the secondhalf of 2009. The current Project schedule indicates end of June 2010as the date for mill commissioning and first revenue to be generated inthe subsequent months.
Ferdi Dippenaar, CEO and Presidentcommented; "Although the current financial market volatility has had asignificant impact on the process to obtain final approval for theproject funding facility, we are delighted that this facility has nowbeen secured. A major risk in completing this low cost, long lifeproject with a Life of Mine production of some 4.1 million ounces(1)has now been negated. We are making good progress with the delivery ofthe project with the development of the vertical shaft andmetallurgical plant on schedule for completion by June 2010. To date,approximately 11,000 ore tons have been placed on the surface stockpilewhich will be used for the commissioning of the metallurgical plant.The Burnstone project has been subjected to significant scrutiny by theLenders during their approval process and the Project came out strongon every occasion. This is also testament to the economic robustness ofthe Project."
<< No regulatory authority has approved ordisapproved the information contained in this news release. >>
Cautionary and Forward Looking Statement Information
Thisrelease includes certain statements that may be deemed "forward-lookingstatements". All statements in this release, other than statements ofhistorical facts, that address possible future commercial production,reserve potential, exploration drilling results, development,feasibility or exploitation activities and events or developments thatGreat Basin expects to occur are forward-looking statements. Althoughthe Company believes the expectations expressed in such forward-lookingstatements are based on reasonable assumptions, such statements are notguarantees of future performance and actual results or developments maydiffer materially from those in the forward-looking statements. Factorsthat could cause actual results to differ materially from those inforward-looking statements include market prices, exploitation andexploration successes, and continued availability of capital andfinancing, and general economic, market or business conditions.Investors are cautioned that any such statements are not guarantees offuture performance and those actual results or developments may differmaterially from those projected in the forward-looking statements. Formore information on the Company, Investors should review the Company'sannual Form 40-F filing with the United States Securities and ExchangeCommission and its home jurisdiction filings that are available atwww.sedar.com.
<< -------------------------- (1) Basedon proven and probable mineral reserves of 30 million tonnes grading4.2 g/t at a 4 g/t gold cut-off, see Great Basin News Release datedFebruary 10, 2009. >>
SOURCE: Great Basin Gold Ltd.
onGreat Basin and its gold properties, please visit the Company's websiteat www.grtbasin.com or contact Investor Services: Tsholo Serunye inSouth Africa, 27 (0) 11 301 1800; Michael Curlook in North America,1-888-633-9332; Barbara Cano at Breakstone Group in the USA, (646)452-2334
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