Great Basin drills Burnstone (January 17, 2003)

Vancouver With Hecla Mining (HL-N) looking to put the Ivanhoe property into production by 2004, junior Great Basin Gold (GBG-V) has now shifted focus from Nevada’s Carlin trend to the Witwatersrand basin of South Africa.

The Hunter Dickinson led company has launched a 5-rig, 20,000 metre diamond drilling program over its newly acquired Burnstone gold property, some 100 km southeast of Johannesburg.

The project covers 400 sq. km in the prolific Witwatersrand Basin, the largest gold district in the world. Gold mineralization was first discovered in the basin in 1886, when George Harrison found an outcrop of the main reef of gold-bearing conglomerate on Langlaagte Farm near Johannesburg, The region has gone on to produce nearly half of all the gold ever mined in the World, some 1.4 billion oz.

The gold-bearing conglomerate, usually grading no more than 15 grams gold per tonne, stretches from 65 kms east of Johannesburg to 145 kms west, then swings down south-west to the Orange Free State 320 kms away. Another field, Evander, was found much later 130 kms southeast of Johannesburg. The reefs vary widely, but the majority are conglomerate, with pebbles of quartz and chert in a matrix of quartz grains, silicate and various sulphides, mainly pyrite. The reefs range from thin, small-pebble bodies, often with great lateral extent, to thick conglomerate.

Mineralization is hosted in the Witwatersrand Supergroup, a succession of late Archean to Proterozoic sediments deposited on the Archean granitoid greenstone terranes of the Kaapvaal craton. Around 3 billion years ago a subaerial extrusion of mafic volcanic rocks known as part of the Dominion Group, was followed by the deposition of the siliclastic sediments of the Witwatersrand Supergroup. Mafic volcanic rocks of the Ventersdorp Supergroup overlie the Witwatersrand succession.

The Bursnstone property lies near Harmony Gold‘s (HMY-N) Evander mine in an area of open, rolling country, traversed by major paved highways.

Mineralization at Burnstone is hosted by the Kimberley reef, at depths of 250-to-1,000 metres, a relatively shallow compared to other mines in the Witwatersrand. Gold resources have been outlined in two parts of the property, dubbed Area 1 and 2.

The initial drill program will focus on Area 1, in an effort to upgrade current indicated gold resources of 10.4 million tonnes grading 17.47 grams gold. The inferred mineral resources in Area 2 come in at 24.3 million tonnes grading 14.71 grams gold . Great Basin plans on completing a bankable feasibility study by end Jan 2004 in an effort to fast-track the project into large scale gold production by 2006. Drilling on Area 2 is slated to follow.

The cost of the study is expected to hit US$5.9 million and currently the junior envisions a mine producing 144,000 oz. of gold a year at a cash cost of US$170 per oz.

The Hunter Dickinson-led junior picked up the project late last year, by inking a deal allowing the company the right to purchase a private South African entity, which holds an option to earn an 80% stake in the Burnstone property.

Under the deal, Great Basin can exercise its option and complete its purchase of the South African company by paying US$3.25 million in cash, issuing 21 million shares and 10.5 million warrants in two staged tranches. The fist stage, which gives Great Basin a 49% stake in the company, involves US$2 million, 10 million shares and 5 million warrants payable by April 30 of next year. The junior can then acquire the remaining 51% by issuing 11 million shares and 5.5 million warrants by the end of January 2004. A US$1.25 million is due on signing a definitive agreement and the warrants are exercisable at US$0.75 for one year. Great Basin has also agreed to fund an initial US$1.5 million exploration program and is required to issue additional shares depending on the amount of gold reserves and production costs slated in an up coming feasibility study on the project.