Great Basin rises as Burnstone nears completion

Vancouver – Great Basin Gold (GBG-T) has added some 3.5 million oz. to the gold count at its Burnstone project in South Africa, where 12 months of construction have brought the new mine within sight of commissioning.

Even though exploration was limited to a few surface holes plus underground delineation drilling, Great Basin increased the inferred gold resource at Burnstone by 75%. Inferred resources now stand at 52.2 million tonnes grading 4.75 grams gold per tonne, for 8 million oz. gold. Measured and indicated resources increased as well, though only by 3%, to stand at 57.8 million tonnes grading 6.5 grams gold for 12.1 million oz.

The Burnstone goldfield is defined by an 18-km long mineralized corridor hosting the Kimberley Reef, one of the four main gold-bearing units in the Witswatersrand Basin. At Burnstone, the central portion of the corridor has been uplifted by two subparallel faults such that a significant portion of the deposit occurs at relatively shallow depths of 200 to 750 metres below surface.

Burnstone is nearing completion, with the metallurgical plant in place and underground development progressing well. The project reached a milestone in early August when it was tied into the national power grid, which will allow Great Basin to sequentially commission the general surface infrastructure, the shaft and underground infrastructure, the ventilation shafts, and then the metallurgical plant. Work at the plant is now focused on electrical fittings and piping. Underground, the vertical shaft is complete and is now being equipped while long-hole stoping trials continue. Almost 3.5 km of on-reef development have enabled Great Basin to stockpile 132,500 tonnes of ore in preparation for commissioning.

The underground development has also allowed Great Basin to sample long, continuous sections of the reef, which the company says has “contributed to an improved understanding and higher confidence in the orebody.”

Great Basin also owns and operates the Hollister gold mine in Nevada, which generated record quarterly net revenues of $34 million in the second quarter of the year. That translated into a gross profit of $13 million. Non-cash charges, including depletion, foreign exchange movement, and $8.6 million in share-based compensation, pulled the quarter $5.4 million into the red.

Things should improve from here, however, as Great Basin finished commissioning the expansion at the Esmeralda mill, which means Great Basin will no longer have to send parts of its Hollister ore to Newmont Mining’s (NMC-T, NEM-N) Midas operation or Yukon-Nevada Gold’s (YNG-T) Jerritt Canyon facilities for toll milling.

Investors must be pleased with Great Basin’s improvements at Hollister and on-time progress at Burnstone, as the company’s share price has gained 40¢ since the beginning of August to reach a new 52-week high of $2.26. In the last year Great Basin shares have traded as low as $1.37. The company has 348 million shares outstanding.