GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

May 15, 2006 09:00 ET

GBS Gold International Inc.: Production Commencement in 2006; March 31, 2006 Interim Financial Statements

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 15, 2006) - GBS Gold International Inc. (TSX:GBS) (GBS Gold or the Company) has today released its Interim Financial Statements and Management's Discussion and Analysis for the three months ended March 31, 2006 (March Quarter). Highlights include (all amounts in Canadian Dollars unless otherwise noted):

- Decision made to commence gold production at the Union Reefs Operations Centre in the Northern Territory of Australia in the 4th quarter of 2006. The production plan envisages mining from the Zapopan underground mine and open pit sources, with production targeted to increase to an annualized rate of approximately 150,000 ounces of gold per year in 2007, and then to an annualized rate of approximately 250,000 ounces per year in 2008.

- March Quarter net loss of $2.05 million, reflecting costs associated with the reorganization of the Company, recent acquisitions, the February capital raising and the build-up of personnel. GBS Gold has current cash resources of $50 million, no bank debt and is unhedged.

- Site activities during the March Quarter included permitting submissions, employment of all senior site personnel, finalization of the Zapopan underground mine design, purchase of underground mining equipment, resource delineation drilling programs, preparation of open pit mine designs, receipt of open pit mining tenders and the imminent appointment of a mining and haulage contractor, mine office establishment and initial re-commissioning activities at the Union Reefs gold plant.

- Identification of a preferred hydrometallurgical treatment route for the Maud Creek refractory ore. Testwork results to date have confirmed anticipated metallurgical recoveries.

- Completion of the acquisition of 50% of the Burnside Joint Venture giving GBS Gold 100% ownership of the Union Reefs gold plant and the Greater Burnside Projects.

- Completion of a short-form prospectus offering that raised gross proceeds of $67.2 million through the issue of 32.0 million shares at $2.10 per share in February 2006 and upgrade of the Company's share listing from the TSX Venture Exchange to the Toronto Stock Exchange.

Teleconference Call: Tuesday May 16, 2006 at 9.00am EST

Call Numbers: Toronto (416) 340-2216, North America 1-866-898-9626, Europe 00-800-8989-6323 and Australia 0011-800-8989-6323 using passcode: # 3185294

Website: The webcast can be accessed on the GBS Gold website at www.gbsgold.ca

Union Reefs Operations Centre

During the March Quarter, GBS Gold actively pursued development of its Union Reefs Operations Centre in the Northern Territory of Australia. Activities were focused on technical assessment of the Company's properties and ramp-up of general pre-production activities. Site activities included permitting submissions, employment of all senior site personnel, finalization of the Zapopan underground mine design, purchase of underground mining equipment, continuation of resource delineation drilling programs, preparation of open pit mine designs, receipt of open pit mining tenders and the imminent appointment of a mining and haulage contractor, mine office establishment and initial re-commissioning activities at the Union Reefs gold plant.

The resource delineation drilling program is focused on near-surface open pit gold deposits planned for initial production, with the results being used for new mine optimizations and designs at current higher gold prices. The results have confirmed the geological interpretations and resource models. The Company also announced the results of new diamond core drilling at the Zapopan underground mine during the March Quarter. This drilling confirmed the down-plunge continuity of the high-grade Zapopan deposit, and enabled the mine design to be finalized. On completion of the drilling programs and optimization studies during the course of 2006, the Company will update its resource statement.

The above activities have warranted a decision to commence gold production at the Union Reefs Operations Centre in the Northern Territory of Australia in the 4th quarter of 2006. The Union Reefs plant will initially be commissioned on low-grade stockpiles and historical alluvial tailings sands, following which ore will be sourced from the Zapopan underground mine and open pit sources. Production is targeted to increase to an annualized rate of approximately 150,000 ounces of gold per year in 2007, and then to increase to an annualized rate of approximately 250,000 ounces per year in 2008.

The Company has made the required permitting submissions to the Northern Territory Government relating to the commencement of production and approvals are expected in time for the planned production schedule.

GBS Gold has also advanced hydrometallurgical studies for treatment of the refractory ore from the Maud Creek gold deposit. A preferred treatment route has been identified and testwork results to date have confirmed anticipated metallurgical recoveries. A decision on the preferred hydrometallurgical processing route is anticipated in the 3rd quarter of 2006.

Quarterly Financial Result

For the March Quarter, GBS Gold incurred a net loss of $2.05 million, reflecting costs associated with the reorganization of the Company, recent acquisitions, the February capital raising and the build-up of personnel. The Company used $4.1 million in net cash for operating activities, the build-up of working capital and for exploration and evaluation activities, as planned. As at the end of the March Quarter, total assets had increased to $128.6 million and net assets had increased to $108.9 million. GBS Gold has current cash resources of approximately $50 million, no bank debt and is unhedged.

Burnside Joint Venture Purchase

At the end of the March Quarter, GBS Gold completed the acquisition of 50% of the Burnside JV thereby giving the Company 100% ownership of the Union Reefs gold plant and the Greater Burnside Projects. GBS Gold paid the first instalment comprising a cash payment of $3.3 million, the issue of 1.91 million GBS Gold common shares at an effective price of $2.19 per share (the shares having a market value of approximately $4.3 million), and replacement of tenement performance bonds totalling $0.9 million. Two further instalments remain, comprising A$5 million cash and A$4.4 million in GBS Gold shares (at the then-prevailing market price) in September 2006, and a final cash payment of A$5.35 million in September 2007.

Capital Raisings

As previously reported, on February 23, 2006 GBS Gold closed its short-form prospectus offering having successfully raised gross proceeds of $67.2 million for the issue of 32.0 million common shares at $2.10 per share. Out of the net proceeds of approximately $62 million, the Company fully repaid $8.0 million drawn down on an acquisition loan facility and funded the first instalment of the Burnside JV purchase, leaving the Company with a cash balance at March 31, 2006 of $51.9 million.

Toronto Stock Exchange Listing

On March 23, 2006, the common shares of GBS Gold were listed on the Toronto Stock Exchange ("TSX") having been listed on the TSX Venture Exchange since November 1994. GBS Gold's common shares trade on the TSX under the trading symbol "GBS".

Conference Call and Webcast

Shareholders and other interested parties are invited to join Company management in a conference call on Tuesday May 16, 2006 at 9:00 a.m. EST for a presentation of the financial results followed by an open-forum question and answer period. Individuals can participate by dialing one of the following numbers: Toronto (416) 340-2216, North America 1-866-898-9626, Europe 00-800-8989-6323 and Australia 0011-800-8989-6323 (confirmation # 3185294) or via webcast on the GBS Gold website at www.gbsgold.ca.

About GBS Gold International Inc.

GBS Gold is an international gold company focused on developing its gold assets, generating cash flow from low cost facilities and investing in strategic exploration and producing properties in acceptable risk locations. GBS Gold has consolidated approximately 2,500km2 of prospective tenements, a large mineral resource base, and modern processing and infrastructure assets in historically productive goldfields in the Northern Territory of Australia. These assets comprise the modern dual-mill 2.5Mtpa Union Reefs gold plant and a range of potential open pit and underground mines within a 125km trucking radius of that plant, including the Zapopan underground mine, the Maud Creek gold deposit and the Cosmo Deeps gold deposit. GBS Gold also has interests in several other gold exploration properties elsewhere in Australia and in Canada. GBS Gold trades on the Toronto Stock Exchange under the symbol "GBS".

Gilbert Playford, Chairman and CEO

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 exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. 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.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the information contained herein.

Contact Information

  • GBS Gold International Inc.
    Gilbert Playford
    Chairman and CEO
    (778) 328-9801