Great Basin Gold (TSE:GBG) (AMEX:GBG) said late Thursday that it has agreed to a C$50 million bought deal financing.
The company said it entered into the agreement with a syndicate of
underwriters led by RBC Capital Markets, who will purchase, on a bought
deal basis, 61 million Great Basin common shares at a price of 82 cents
Great Basin Gold
has also granted the underwriters an over-allotment option to purchase
up to an additional 15 percent of the offering, for a period of 30 days
following the closing of the deal.
The new funds will be used toward working capital for the development
and ramp up of the company's Burnstone Mine in South Africa, it said.
"The company has reviewed its cash flow forecast and based on the
significant amount of progress and underground development already
completed and underway at Burnstone, the resolution of the water issues
affecting the mine, and development rates at target levels, we believe
the fundraising is sufficient to fund working capital at Burnstone until
Q3 2012 when we expect the mine to be cash flow positive," said
president and CEO, Ferdi Dippenaar.
"Equipment and mining teams required to achieve the target levels of
production are in place and long hole stoping is performing in line with
The financing is scheduled to close around March 28, 2012, subject to the approval of the Toronto Stock Exchange.
On Wednesday, the company gave an operation update on its Burnstone
Mine. It said "significant progress" had been made on the ramp-up in
drilling since the end of December last year, with the water issues
resolved and reef development rates achieving planned levels of 40
metres per month.
Burnstone is the first greenfield operation to come online in South Africa's Witwatersrand Basin in 30 years.
Great Basin Gold
said that square metres available for stoping at the South African mine
were up 71 percent to 12,356 square metres, with an additional 6,000
square metres partially developed.
Underground productivity has been improving through de-bottlenecking
and infrastructure development, and Burnstone is expected to be cash
flow positive - after capital investment - by early in the third-quarter
Burnstone's production targets for the coming year are 90,000 to
100,000 ounces gold at a cash cost of $900 to $1,000 per ounce, Great Basin Gold said.