Great Basin Gold Ltd.
TSX : GBG
AMEX : GBN
JSE : GBGOLD

Great Basin Gold Ltd.

October 02, 2007 11:19 ET

Great Basin Announces Closing of BEE Transaction Agreements for Burnstone Gold Project in South Africa

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 2, 2007) - Further to its previous announcements on its BEE transaction agreements Great Basin Gold Ltd. ("Great Basin Gold" or the "Company") (TSX:GBG)(AMEX:GBN)(JSE:GBGold) announces that it has fulfilled all of the suspensive conditions to and implemented the terms of the Subscription and Acquisition Agreement between, among others, Great Basin Gold and Tranter Gold (Proprietary) Limited ("Tranter Gold"), which had been entered into on 21 February 2007.

On Monday, 1 October, Tranter Burnstone (Proprietary) Limited ("Tranter Burnstone"), a subsidiary of Tranter Gold, subscribed for 812 new ordinary shares in Southgold Exploration (Proprietary) Limited ("Southgold"), a wholly-owned subsidiary of Great Basin Gold, for a purchase consideration of R260 million in cash, which, following the issue and allotment of the new Southgold shares, constituted 26% of the entire issued share capital of Southgold. Following the implementation of the Southgold subscription, Great Basin Gold purchased the new Southgold shares from Tranter Burnstone in exchange for the issue by Great Basin Gold of 19,938,650 new ordinary shares in Great Basin Gold to Tranter Burnstone. There is an agreed lock-up period of at least 3 years during which the shares cannot be traded.

Accordingly, Tranter Burnstone has become the owner of the new Great Basin Gold shares, which represented an equivalent effective interest on a see-through basis of at least 26% in Great Basin Gold's South African Burnstone project as required by the Mineral and Petroleum Resources Development Act, 2002, and the Mining Charter.

The issue and allotment of the new Great Basin Gold shares, constitutes approximately 9.3% of the issued share capital of Great Basin Gold on a fully diluted basis.

The purchase consideration paid by Tranter Burnstone is US$38.0 million (R260 million) and the transaction effectively settles the net smelter royalty that Gold Fields held over the Burnstone Project.

The funding of Tranter Burnstone was effected as follows:

- US$29.2 million (R200 million) received from Investec Bank Limited ("Investec") through a loan facility provided by Investec to Tranter Burnstone; and

- US$8.8 million (R60 million) out of an aggregate US$9.3 million (R80 million) contribution received as a donation from GFI Mining South Africa (Proprietary) Limited ("GFIMSA") in terms of the memorandum of agreement entered into on 27 June 2007 between Gold Fields Limited, GFL Mining Services Limited, GFIMSA, Great Basin Gold, Southgold and Tranter, through which Great Basin Gold fully settled the royalty that GFL Mining held in relation to a portion of the Burnstone Project for a consideration of US$9.3 million (R80 million).

The balance of US$2.9 million (R20 million) in cash remaining in Tranter Burnstone will be utilised to settle certain transaction costs and otherwise for the establishment, administration and day-to-day operational costs relating to its objective to become a black-owned, active and operational prospecting, mining and procurement company in the gold mining sector. Tranter has recently appointed Mr. Joshua Ngoma as its Chief Executive Officer. Great Basin Gold is currently supplying administrative support to Tranter.

Ferdi Dippenaar, President and CEO of Great Basin Gold commented, "This is a significant milestone in the development of Great Basin Gold's Burnstone Project in South Africa. Over and above delivering a win-win BEE transaction, which serves the interest of all the parties involved, Great Basin Gold has received cash of US$38.0 million (R260 million) which will be utilised as capital expenditure towards the construction of the Burnstone Project. Great Basin Gold has made a submission to the Department of Minerals and Energy ("DME") to the effect that it has now completed and satisfied the principal requirements to acquire its mining rights licence, which was submitted and accepted by the DME in September 2007."

Great Basin has two advanced stage gold projects in two of the world's best gold environments. In addition to its Burnstone Gold Project in South Africa's Witwatersrand Goldfield, the Company holds a 100% interest in the Hollister Property on the Carlin Trend in Nevada, USA.

Ferdi Dippenaar, President and CEO

Cautionary and Forward Looking Statement Information

This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address possible future commercial production, reserve potential, exploration drilling results, development, feasibility or exploitation activities and events or developments that Great Basin Gold expects to occur are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, and continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's annual Form 20-F filing with the United States Securities Commission and its home jurisdiction filings that are available at www.sedar.com.

No regulatory authority has approved or disapproved the information contained in this news release.

Contact Information

  • Great Basin Gold Ltd. - South Africa
    Tsholo Serunye
    27 (0) 11 884 1610
    or
    Great Basin Gold Ltd. - North America
    Melanee Henderson
    Toll Free: 1-800-667-2114
    Website: www.grtbasin.com
    or
    Breakstone Group - USA
    Barbara Cano
    (646) 452-2334