Gold producer Great Basin Gold (TSE:GBG) (AMEX:GBG) said Monday that full year losses narrowed and revenues jumped 70 percent as gold equivalent ounces sold increased with the price of gold.
For the 12 months that ended December 31, the company posted a net
loss of $17.74 million, versus a loss of $27.14 million a year ago.
Adjusted loss per share, which excludes fair value adjustments and
capitalized interest, narrowed to six cents from 13 cents a year
The company generated a profit from operating activities of $1.51 million in 2011, up from a loss of $17.91 million in 2010.
Revenue rose to $170.32 million from $99.71 million, as gold
equivalent ounces sold increased 29 percent to 114,228 ounces, and the
realized gold price jumped 33 percent to $1,491 per ounce.
Great Basin recovered 120,971 ounces of gold equivalent during the
year from its Burnstone mine in South Africa and its Hollister project
in Nevada, 27 percent more than the 95,186 ounces produced in 2010.
"Our Nevada operations continue to perform in line with their current
production potential by delivering a much improved set of results from
trial mining for 2011," said president and CEO Ferdi Dippenaar.
"We expect a similar performance for 2012. The planned completion of
the EIS during 2012 will allow the project to enter into commercial
production which will have a positive impact on cash costs and the
manner in which we report our earnings.
"Burnstone, in its first year of production build-up, made
significant strides but was constrained by unexpected geological and
infrastructural challenges. The continuing additional infill drilling is
mitigating the risk in the short to medium term."
Indeed, the company said profit from operating activities is expected
to improve as production from its Burnstone mine increases. Burnstone,
which started commercial production in February last year, recorded a
net operating loss of $15 million in 2011, the first year of its
"Significant improvements have been, and are being made to the shaft
and permanent underground infrastructure over the last 3 months. The
continued improvement in ore development and stoping rates at Burnstone
is reassuring, with more improvement expected in the second quarter of
2012 to get to the planned production levels," Dippenaar continued.
At the Burnstone mine, ore development metres more than doubled from
the first quarter of 2011 to 2,900 metres in the fourth quarter. Stoping
square metres also increased by 77 percent to 6,653 in the last quarter
The company said results from the long hole stoping mining method
remain positive, "with stoping widths of approximately 80 cm being
achieved on a consistent basis".
Improved dilution control on ore development is also benefiting the
head grade of material delivered to the mill, the company said.
Last year, infrastructural challenges hampered production, with
underground flooding occurring in the latter part of the year. This
issue has been resolved, however, as the temporary water handling system
was upgraded. Permanent water reticulation infrastructure is under
construction for completion in the second quarter.
As a result of the challenges, total gold production for the year for
Burnstone came to 23,361 ounces, approximately 6,000 ounces less than
the revised guidance of 30,000 ounces, Great Basin said.
The metallurgical plant is performing in line with expectations
though, the gold miner added, at an average of 65,000 tonnes per month,
with a mill capacity in excess of 145,000 tonnes per month.
As the remaining 12 temporarily flooded ore development ends become
available during the first quarter, Burnstone is targeted to meet its
first development milestone of 1,500 ore development metres per month in
the second quarter, which should allow the mine to reach 22,000 square
metres of stoping and a production rate in excess of 10,000 ounces per
month early in the third quarter.
The company said it expects Burnstone to produce between 90,000 and
100,000 gold ounces at a cash cost of US$900 to US$1,000 per ounce for
the 2012 fiscal year, a marked improvement from the US$1,801 cash cost
seen in 2011.
Meanwhile, in-fill drilling will continue at the site over the medium to longer term.
At the Hollister mine in Nevada, 97,610 gold equivalent ounces were
produced for the year, just below the forecast of 100,000 ounces, but
still up from 2010. Fiscal 2011 was the first year that all material
extracted from trial mining activities was processed at the company's
Esmeralda mill, which allowed gold recovery rates to improve from 82
percent to 92 percent.
Gold equivalent ounces recovered from Hollister through Esmeralda rose by 42 percent in 2011.
The company said improvements to the regeneration circuit at the mine
are expected to be completed this month, while Hollister also undergoes
additional emphasis on ore development.
Production from Hollister in 2012 is expected in the range of 90,000
to 100,000 gold equivalent ounces at a cash cost of US$700 to 750 per
gold equivalent ounce.
Net cash of $24.2 million was generated from the company's operations
during 2011, compared to $3 million utilized by operations in 2010.
Burnstone is expected to be cash flow positive by the third quarter,
with its cash contribution to group activities to increase in line with
the production build-up, Great Basin concluded.
To ensure enough funds for the ramp up, the gold miner closed a $50 million bought deal financing last month.