BAD news for Great Basin Gold continued on Thursday, with its Hollister mine in Nevada facing an impairment after its reserves were cut in half, and the company’s new management wants to delist from bourses in Johannesburg and New York.
Toronto Stock Exchange and JSE-listed Great Basin, which launched creditor protection proceedings during September in Canada, ran into financial and operational problems at its second mine, the Burnstone project it was building in Mpumalanga.
Burnstone has been mothballed to protect its value by the newly appointed management, which is skilled in insolvency and restructuring processes.
Great Basin CEO Ferdi Dippenaar stepped down in August, having missed a string of production forecasts.
The life of the Hollister silver and gold mine has been cut to three years from six years because of the downward revision of the mine’s reserves.
Its proven and probable reserves now total 187,000 equivalent ounces of gold. "Engineering and geological staff believe this life could potentially be extended by further developmental drilling, which the company has not been in a position to fund," Great Basin said yesterday.
Further work on reserves and resources would be carried out over the next 45 days and a decision would be taken whether to impair the $90m carrying value of Hollister, the company said.
"Great Basin is applying to voluntarily delist its common shares from the JSE and NYSE … effective immediately," it said.
A business rescue practitioner was appointed in September for the South African subsidiary, Southgold Exploration, against which claims of $38m have been lodged. There are interested parties in the Burnstone mine.
Gold One is believed to have made a bid for the mine but it was below what Great Basin wanted for the asset.
Other interested groups may include Wits Gold, which recently pulled out of a venture with Pan African Resources to buy Harmony Gold’s Evander mine. It is clearly in the market for an operating asset.
Pan African is bedding down a R1.5bn deal with Harmony after going it alone to buy Evander and it would be an unlikely suitor for the nearby Burnstone.
The business rescue practitioners expect bids to be tabled in February and final negotiations will be held in March.
According to court papers filed in Toronto, Great Basin needs $60m in the period to end-March next year, which is regarded as a milestone date for the sale of Burnstone and/or the sale of the Hollister mine in Nevada.
Great Basin is looking to sell its assets in Tanzania to boost its cash holdings. In September, Great Basin was offered a $35m debtor-in-possession loan and the company needs $25m more to get through March to fund the operations and to pay creditors.
Its shares were suspended at a trading price of 70c on the JSE.
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