Picture: THINKSTOCK
Gold mine underground. Picture: THINKSTOCK

GREAT Basin Gold’s Hollister mine in Nevada has been "tentatively disposed" of for $15m plus a royalty payment, in an auction.

Great Basin has the Hollister trial mining operation in Nevada and the newly built Burnstone mine in Mpumalanga, which is also up for sale.

These are the only two operating assets within the company, which is in a business rescue process in South Africa and Canada.

According to PRNewswire, Great Basin said its Hollister mine, mineral claims and gold processing assets in Nevada had been sold in an auction. The buyer was not identified.

"The tentative terms of sale of Hollister remain subject to negotiation of definitive closing documentation and the approval of the US Bankruptcy Court, which will hear the matter on May 2 2013," the notice said.

The closing date for the sale was set for no later than May 17.

The proceeds of the Hollister sale of $15m and a 15% net profits royalty will be payable to the estate of Great Basin’s bankrupt US subsidiary up to a maximum of $90m over a nine-year period.

Buyers are being sought for Burnstone, with one of the interested parties being Wits Gold, which has no operating assets of its own and reckons it can effectively bring Burnstone into sustainable production.

No confirmation of the Hollister transaction could be found on the Great Basin website.

KPMG was appointed as Great Basin’s monitor by a Canadian court in September last year. KPMG’s report to the court on Tuesday showed how dire the situation at Hollister had become.

It reported the mine’s average weekly gold production in March this year had fallen to 600oz from 800oz a week in January and February.

"Senior management at Hollister have advised the Monitor that continued reduced gold production can be attributed to the lack of a more developed mine plan and reduced staffing levels at Hollister as a result of continued retention issues," it said.

KPMG said JP Morgan had been engaged since November last year to find a buyer for Burnstone and that three offers had been received by the April 15 deadline.

The business rescue practitioner at Burnstone and his advisers are assessing the offers and will meet creditors of the mine to present these offers. None of the bidders was identified.

Payments totalling $2m had been made to 240 South African creditors who were "experiencing significant hardship" as a result of the business rescue proceedings, KPMG said in its report.

Burnstone, near Balfour in Mpumalanga, is an underground mine that ran into financial difficulties because of unexpected geological structures.