GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

November 14, 2007 07:00 ET

GBS Gold International Inc.: Operations Update and Third Quarter 2007 Results

TORONTO, ONTARIO--(Marketwire - Nov. 14, 2007) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") reports its operating and financial results for the third quarter of 2007 ("Q3") (all amounts in Canadian dollars unless otherwise stated; A$ refers to Australian dollars, US$ refers to United States dollars):



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September 2007 June 2007
Quarter (Q3) Quarter (Q2)
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Gold produced 25,444 oz 29,058 oz
Gold sold 23,787 oz 25,764 oz

Sales price:
- A$/oz A$795/oz A$774/oz
- US$/oz US$673/oz(ii) US$673/oz

Cash operating cost(i):
- A$/oz A$783/oz A$828/oz
- US$/oz US$663/oz(ii) US$688/oz
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(ii) Calculated at the average exchange rate for the quarter of
A$1.00:US$0.8468.


- Production for the fourth quarter ("Q4") is expected to be 28,000-30,000oz. Cash operating costs(i) are expected to decrease by at least 10% from Q3 to Q4. Cash operating costs decreased by 5% in Q3 from the previous quarter to A$783/oz. The average sales price for Q3 was A$795/oz and the spot gold price has since improved significantly to around A$890/oz.

- Cash generated from operations during Q3 was $1.3 million. Cash at September 30, 2007 was $16.8 million following the payment of the final installment for the March 2006 acquisition of 50% of the Burnside JV from Harmony Gold Mining Company Ltd, interest on the Company's promissory notes and government stamp duty on the Tom's Gully acquisition. Cash as at November 9, 2007 is approximately $22 million following gold sales receipts and exercise of the Company's warrants expiring in October.

- Substantial progress has been made on the Tom's Gully, Cosmo Deeps and Maud Creek production growth projects, with ore reserve estimates expected to be released before the end of the first quarter of 2008. Encouraging drilling results were also obtained at the Fountain Head and Chinese "big pit" areas, and at the Nicolsons project.

Gil Playford, GBS Gold Chairman and CEO said: "Since commencement of commercial production on April 1, 2007, we have produced 54,500 ounces. Operations are now stabilizing and we are planning for increased production with lower cash costs. We expect to commence production at the recently acquired Tom's Gully mine in mid-2008 increasing the output from that mine to 40,000-50,000 ounces per year. We are building on our 150,000 ounce per year production base in 2008 with the 100,000 ounce per year Cosmo Deeps mine scheduled to commence in the second half of 2009 to reach our production target from non-refractory ores of 250,000 to 300,000 ounces per year."

Teleconference Call: Thursday November 15, 2007 at 9.00am EST/Toronto Time

Please call the following numbers and ask for GBS Gold: Toronto: +1-416-340-2216; North America: 1-866-898-9626; Europe: 00-800-8989-6323; Australia: 0011-800-8989-6323; Website: The webcast can be accessed on the GBS Gold website at www.gbsgold.com.

- Production during Q3 was from the processing of 317,400 tonnes of ore at an average gold grade of 2.7g/t and metallurgical recovery of 93.8%. The Union Reefs plant continued to operate efficiently with all ore processed through the larger of the two installed ball milling circuits, with the unutilized ball mill providing spare capacity for production growth. High-grade underground ore tonnage increased during Q3, however plant throughput was reduced as single-source batch milling programs were completed in order to obtain increased accuracy of open pit ore grade information. This activity confirmed the open pit ore grades and has led to improved in-pit grade control and mining practices.

- Head grades and gold production increased in September (65,200 tonnes at 3.7g/t for 7,352oz) and October (82,600 tonnes at 3.5g/t for 8,827oz) leading to the expectation for an improved Q4.

- GBS Gold reported an operating profit before depreciation and amortization(i) in Q3 of $42,000. After recognizing depreciation and amortization, corporate and interest costs and other non-cash charges, the reported net loss was $10.8 million.

- The Company has re-located its head office from Vancouver to Toronto and employed senior executive personnel for finance, investor relations and strategic development.

Growth Projects

Substantial progress has been made on the Tom's Gully, Cosmo Deeps and Maud Creek production growth projects. Work has focused on development scheduling and detailed mine planning. The Company expects to release ore reserve estimates for these projects prior to the end of the first quarter of 2008.

The acquisition of the Tom's Gully mine assets was completed on July 25, 2007. GBS Gold expects to commence mine production at Tom's Gully in mid-2008 through the existing Tom's Gully plant, instead of the Union Reefs plant, with output building to an annualized rate of 40,000-50,000 ounces per year. Capital costs are estimated in the range $8-10 million for the purchase and installation of fine grinding circuit components and for underground mining development into the main orebody.

Cosmo Deeps is expected to be developed during 2008-09 with production commencing in the second half of 2009. Work undertaken to date has focused on the dewatering plans for the existing open pit, and has confirmed the mine as a 100,000 ounces per year underground operation. Capital costs are estimated in the range $20-25 million for establishment of site infrastructure, removal of water and tailings from the existing open pit, and decline development into the upper levels of the orebody.

Drilling & Exploration

During Q3, the Company continued its resource definition drilling programs focusing on the Fountain Head and Chinese "big pit" areas. The results of these programs are expected to lead to increases in the resource estimates for these deposits and/or to potentially larger mine designs. Open pit mining operations have commenced at Fountain Head and are planned to commence in the Chinese area in early 2008.

At Fountain Head, drilling within and underneath the existing deposit boundaries has infilled the current resource model and importantly confirmed the strike continuity of depth extensions. The depth extensions will be followed up to test the potential for higher grade zones which may be amenable to underground mining.

Within the Chinese "big pit" area, drilling has confirmed higher grade continuity along the primary structures of the Chinese South Extension deposit and identified mineralization along the eastern limb of the deposit. The drilling has also identified significant high-grade northern extensions and parallel zones to the known mineralization that will expand the scale and life of the planned open pit mining operations. The results continue to confirm the potential for a larger open pit mine in the Chinese area. Re-modeling of the existing resource and mine optimizations are scheduled to commence in the current quarter.

During Q3, the Company also commenced resource definition drilling at its Nicolsons gold mine project in Western Australia, with a view to identifying sufficient near-surface resources to warrant re-starting the Nicolsons operation. Results show a number of high-grade intersections that indicate the potential of the area. These results are currently being interpreted with follow-up drilling and initial resource modeling planned for 2008.

Uranium and Base Metals

During Q3, GBS Gold signed separate uranium exploration transactions with two Australian public companies which have acquired the rights to explore for uranium on GBS Gold's Northern Territory tenements. These two transactions with Rum Jungle Uranium Ltd and Thundelarra Exploration Ltd were announced on September 17, 2007. GBS Gold benefits through: (1) the immediate commencement of uranium exploration programs on its properties, (2) receipt of share and warrant consideration in each exploration company with the potential for future cash payments, (3) 30% free-carried interest in any uranium discovery on approximately two thirds of the Company's Northern Territory tenement package, and (4) increase in GBS Gold's exploration landholdings through reciprocal exploration rights. The transactions provide GBS Gold with valuation upside while enabling the Company to focus on its core business of gold production and exploration.

GBS Gold is also currently investigating various potential transactions to realize value for its base metal deposits and exploration prospectivity.

Production for Q3

Production results from the Union Reefs Operations Centre for Q3 were as follows:



-------------------------------
September 2007 June 2007
Quarter (Q3) Quarter (Q2)
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Ore tonnes milled:
- Open pit 261,900 384,700
- Underground 37,300 36,500
- Low-grade stockpiles 18,200 29,000
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- Total (tonnes) 317,400 450,200
Head grade milled 2.66 g/t 2.13 g/t
Metallurgical recovery 93.8% 94.4%

Gold produced: 25,444 oz 29,058 oz

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Production was 11,800oz in July, 6,292oz in August and 7,352oz in September. Production through the Union Reefs plant is blended from a number of ore sources. During the months of August and September, discrete single-source batch milling programs were completed in order to provide information regarding ore grades and grade control practices within the open pit mines. These programs have successfully confirmed the open pit ore grades and resource models, and have led to improved in-pit grade control and mining practices.

All ore was processed through the larger of the two installed ball milling circuits at the Union Reefs plant, with the unutilized ball mill providing spare capacity for production growth.

Cash operating costs(i) reduced by 5% from the previous quarter to A$783/oz. During July and September, costs improved towards targeted levels - A$729/oz in July and A$625/oz in September. However, the costs for Q3 were adversely affected by the result for August which reflected batch milling programs of the lower grade open pit ore. The milled head grade in August was 2.2g/t versus 2.5g/t in July and 3.7g/t in September.

Financial Results for Q3

The Company recorded a net operating profit before depreciation and amortization(i) of $42,000 for Q3. After recognizing expenses for depreciation and amortization, stock-based compensation, an unrealized loss on the fair value derivatives and corporate and interest charges, the Company reported a net loss for Q3 of $10.8 million, or $0.10 per share, versus a net loss in Q3 2006 of $1.7 million, or $0.02 per share. The increase in the net loss reflects the fact that commercial production had not commenced in the prior corresponding period. The result also reflects that monthly gold production is still rising to targeted levels.

During Q3 the Company sold 23,787oz of gold for total revenues of $16.7 million. The average sales price during Q3 was A$795/oz (US$673/oz). The spot gold price has since improved significantly to around A$890/oz.

Operating expenditure before depreciation and amortization was $16.7 million for Q3 reflecting mining, processing and site administrative costs, net of inventory movements and silver by-product sales credits. Including depreciation and amortization charges, the total cost of gold sold was $22.8 million. The Company also incurred a $0.9 million unrealized loss on the fair value of MDN Inc. share purchase warrants.

Cash generated from operations during Q3 was $1.3 million. Investment in property, plant and equipment of $5.3 million during Q3 related to road construction, infrastructure establishment, camp refurbishment, mobile mining equipment and light vehicles. During Q3, GBS Gold invested a total of $8.2 million in underground development at the Brocks Creek mine, resource definition drilling, regional exploration and growth project expenditure. Year to date, GBS Gold has invested $21.4 million (net of pre-production gold sales proceeds) in mine development, resource definition drilling and exploration, of which $9.0 million relates to expenditure prior to the commencement of commercial production on April 1, 2007. Capital expenditure on the existing operations has now reduced following the establishment of the operations.

As at September 30, 2007, the Company held $16.6 million in cash as well as gold sales receivables of $1.8 million and bullion inventory (4,131oz) with a market value of $3.0 million. The Company's reported cash balance at the end of Q3 is net of payments made at the end of the quarter for: (1) the final installment for the March 2006 acquisition of 50% the Burnside JV from Harmony Gold Mining Company Ltd, (2) the first six-monthly interest payment on the Company's promissory notes and (3) transactional taxes on the Tom's Gully acquisition.

Cash is now $22 million following gold sales receipts and warrant exercises of $4.9 million. The Company holds its cash in operating and term deposit accounts with recognised Canadian and Australian banking institutions. GBS Gold also holds share investments with a market value of approximately $10 million.

Conference Call and Webcast

Shareholders and other interested parties are invited to a conference call on Thursday November 15, 2007 at 9:00am EST/Toronto time for a presentation of the financial results and an open-forum question and answer session. Individuals can participate by dialing one of the following numbers: Toronto +1-416-340-2216, North America 1-866-898-9626, Europe 00800-8989-6323 and Australia 0011-800-8989-6323 (and ask for GBS Gold) or via webcast on the GBS Gold website at www.gbsgold.com.

About GBS Gold International Inc.

GBS Gold International Inc. is an emerging gold producer with 2.6Moz of Measured and Indicated Resources and 1.6Moz of Inferred Resources of gold at its Union Reefs Operations Centre located in the Northern Territory of Australia. The Company produces gold at its 2.5 million tonne per annum Union Reefs processing plant. The Company expects to develop its free-milling growth projects at Tom's Gully and Cosmo Deeps to increase production to an annualized rate of 250,000 to 300,000 ounces in 2009-10 and to construct a GEOCOAT® circuit, a heaped bio-oxidation process, at the Union Reefs plant to treat refractory ores and further increase gold production to in excess of 300,000 ounces per year. GBS Gold's common shares are listed on the Toronto Stock Exchange under the symbol "GBS".

On behalf of the Board of Directors

Gilbert Playford, Chairman and CEO

The Company's mineral resources comprise measured resources of 84,800 tonnes at 20.6g/t for 56,100 ounces of contained gold, indicated resources of 24.6 million tonnes at 3.2g/t for 2.6 million ounces of contained gold and inferred resources of 21.2 million tonnes at 2.4g/t for 1.6 million ounces of contained gold. The resource estimates are reported at a range of cut-off grades as set out in the technical report entitled "Independent Technical Review of the Burnside, Union Reefs, Pine Creek and Maud Creek Gold Projects, Northern Territory, Australia", dated effective October, 2005 and filed on January 5, 2006, an addendum technical report entitled "Addendum to the Technical Review of the Burnside Gold Project, Union Reefs Gold Project, Pine Creek Gold Project and Maud Creek Gold Project, Northern Territory, Australia - Resource Update, Maud Creek Gold Project" dated February 2006 and filed on February 8, 2006, the technical report entitled "Form 43-101 Technical Report on the Tom's Gully Project" dated June 13, 2007 and filed on June 14, 2007 (collectively, the "Technical Reports"), and news releases filed on January 20, July 10, September 14, October 26, November 27 and December 13, 2006 and January 9 and May 10, 2007, all of which may be viewed on the SEDAR website, www.sedar.com. The Company has not completed a feasibility study and there is no certainty that the project will be economically successful. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Any potential updates to GBS Gold's mineral resources discussed in this news release are conceptual in nature and subject to further drilling, analytical and test work and/or data verification. All estimates of updates to mineral resources are based on the drilling results and resource modeling described herein.

Certain disclosures in this release, including management's assessment of GBS Gold's plans and projects, constitute forward-looking statements that are subject to numerous risks, uncertainties and other factors relating to GBS Gold's operation as a mineral development company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: fluctuations in gold prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; general market conditions; the uncertainty of future profitability; and the uncertainty of access to additional capital. Full descriptions of these risks can be found in the Company's Annual Information Form available on the SEDAR website, www.sedar.com. Readers are cautioned not to place undue reliance on forward-looking statements. GBS Gold expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

(i) Cash Operating Cost and Operating profit before depreciation and amortization are non-GAAP measures. See Non-GAAP Measures in the Company's Management's Discussion and Analysis for the quarter ended September 30, 2007.

The TSX does not accept responsibility for the adequacy or accuracy of the information contained herein.

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