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Ferdi Dippenaar, CEO of Great Basin Gold
» Great Basin sees chances for growth
» Great Basin's "year of delivery" - Dippenaar
» GBG to accelerate SA gold prospect
» Market jitters hold up Great Basin deal
» AfGold bid "completely off the table" for Great Basin
» Great Basin boosts SA gold to 254,000oz/yr
» JSE:GREAT BASIN GOLD LIMITED:
2094c 0%
Newmont's charges sting Great Basin Gold
Allan Seccombe
Posted: Wed, 13 Aug 2008
[miningmx.com] -- GREAT Basin Gold and its investors are deeply unhappy with the toll treatment costs imposed on it at Newmont’s Midas plant in Nevada, prompting management to actively talk about setting up a dedicated mill and finding another outlet in the interim.
Judging from CEO Ferdi Dippenaar’s comments during Great Basin’s maiden quarterly conference call it would appear Yukon-Nevada Gold Corp. is a likely candidate to toll treat the company’s ore until a decision is made on securing a dedicated mill.
Yukon-Nevada’s Jerritt Canyon operation is actively looking for ore to put through its milling plant to make up tonnages.
with tears in my eyes every timeThe Midas mill was initially chosen by Great Basin because it is close to its Hollister development project and the early discussions put costs below what they’ve turned out to be now that Great Basin has put 8,500 tonnes of material through that plant to recover 8,700 gold equivalent ounces, Dippenaar said.
Dippenaar said he had sent material to Midas “with tears in my eyes every time.”
The cash cost per ounce to recover gold and silver from its ore came in at a startling $625/oz, which was inflated by scale of economies and development costs as production at Hollister is ramped up, but analysts said the amount paid on toll treatment was “the biggest surprise” of the June quarter’s news.
Great Basin paid $192/oz for metallurgical processing, of which $138 was made up of Midas’s capital recovery, nearly three times what Great Basin had been counting on.
“You’re right. It was a surprise, but we will not accept it and we will get beyond that,” Dippenaar said. “Bear with us a month or two as we put an alternative in place.”
Click Here to subscribe to our daily newsletterDippenaar stuck with a production target for 2008 of 80,000 gold equivalent ounces. It has already processed 8,700 oz and has another nearly the same again in surface stockpiles. The underground stoping is in high grade areas and production will ramp up as the year unwinds.
The average recovery at Midas was 88% for gold and silver. At Jerritt Canyon gold recovery is at 90% and around 75% for silver, but the latter number could be tweaked upwards by not roasting the ore, Dippenaar said.
“They’re looking at fine tuning recoveries. We are in the negotiation phase,” he said.
Great Basin could source its own mill for around $50m, which, on a larger scale mining operation at Hollister, would pay for itself quite quickly, Dippenaar said. One of the issues to resolve is where to place the mill, with one option being to build it on private land nearby depending on the permitting limitations at Hollister.
At Great Basin’s Burnstone project in South Africa, the main development block is 31 metres deeper than initially thought, entailing another three months of work to extend the decline to reach it, Dippenaar said.
However, this will not impact on the output profile of the mine, which will have a 45,000 oz production build up during 2009.
By November next year, the bulk of the remaining $100m capital on the two mines will have been spent. Great Basin has drawn down C$28m of a C$124m loan facility.
Great Basin posted a deeper loss of C$0.16/share from C$0.08 in the March quarter because of development and exploration expenditure.
It generated revenues of C$7.8m from its Hollister gold and silver sales.
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