Great Basin breaks ground at Burnstone

South Africa’s Department of Minerals and Energy has granted Great Basin Gold (GBG-T, GBN-X) a pair of new order prospecting permits for its Burnstone gold project, 80 km southeast of Johannesburg, South Africa.

The company now holds three new, 5-year permits covering a “major portion” of the Area 1 mining area at Burnstone. The rights also allow Great Basin to apply a mining permit for Burnstone; it plans to do so by the end of October.

Meanwhile, the company has already broken ground on the project, with an underground decline already advanced some 55 metres from the access portal. The underground development is designed to allow for the collection of a 26,000-tonne bulk sample, which will be collected in around 17 months. The 4.5-metre-by-4.8-metre decline will thereafter be used for worker and equipment access. A 7.5-metre diameter production shaft would subsequently be sunk.

Plans at Burnstone call for mining at a rate of 1.5 million tonnes per year to produce an average of 214,000 oz. of gold per year, over 14 years. Cash costs are forecast at US$254.42 per oz.

The scheme focuses on proven and probable reserves in Area 1, which amount to 15.9 million tonnes grading 4.65 grams gold per tonne, for 2.4 million contained ounces. The reserve is contained in a measured and indicated resource at Area 1 totalling 29 million tonnes running 7.63 grams gold, or 7.1 million oz. Both estimates are based on a cutoff grade of 4 grams gold.

The US$144.5-million plan promises to deliver an internal rate of return of 18.3%, with a pre-tax net present value of US$138.9 million, based on a 5% discount rate and gold price of US$450 per oz.

The mine is expected to hit its commercial stride in 2009; it will employ around 2,000 people at full steam.

“The development of the Burnstone mine in South Africa marks an exciting milestone in the history of Great Basin. With production forthcoming from both Burnstone and our Hollister Development Block project in Nevada in the next few years, the company is on track to establish itself as a mid-tier gold producer,” said Great Basin CEO Ferdi Dippenaar.