Great Basin Gold Ltd.
TSX : GBG
JSE : GBG
NYSE Amex : GBG

Great Basin Gold Ltd.

October 29, 2009 15:52 ET

Great Basin Gold Announces C$110 Million Bought Deal Public Offering Of Convertible Debentures

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 29, 2009) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Great Basin Gold Ltd. ("Great Basin Gold" or the "Company"), (TSX:GBG)(NYSE Amex:GBG)(JSE:GBG) announces that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and including, BMO Capital Markets, Raymond James Ltd. and Thomas Weisel Partners Canada Inc., pursuant to which the underwriters will purchase C$110 million principal amount of senior unsecured convertible debentures (the "Debentures") at a price of C$1,000 per Debenture (the "Offering"), by way of a short form prospectus. The Company has granted the underwriters an over-allotment option to purchase up to an additional 15% of the Offering, for a period of 30 days following the closing.

Net proceeds from the Offering will be used for repayment of amounts drawn down on the Company's project finance facility, development of the Company's Burnstone project (replacing the proposed Burnstone project finance facility) and general corporate purposes.

The Debentures will mature on November 30, 2014 and will accrue interest at the rate of 8.0% per annum payable on a semi-annual basis. At the holder's option, the Debentures may be converted into common shares of Great Basin Gold at any time up to the maturity date. The conversion price will be C$2.15 for each common share, representing a premium of approximately (25)% to the closing price on October 29, 2009, subject to adjustment in certain circumstances.

The Debentures will be senior unsecured obligations of Great Basin Gold, will rank pari passu with all other existing and future senior unsecured indebtedness of the Company, and will be effectively subordinated to all existing and any future secured debt of Great Basin Gold to the extent of the assets securing such debt. The Debentures will be guaranteed, on a senior unsecured basis, by each subsidiary through which Great Basin Gold holds title to the Burnstone project.

The Debentures will not be redeemable before November 30, 2012. From November 30, 2012 through to the maturity date, Great Basin Gold may, at its option, redeem the Debentures, in whole or in part, at par plus accrued and unpaid interest provided that the weighted average trading price of the common shares on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 135% of the conversion price.

Great Basin Gold will repay the outstanding principal amount of the Debentures, on maturity or redemption, in cash.

The Offering is scheduled to close on or about November 17, 2009 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

Under the terms of the agreement, the Company is required to file a preliminary short-form prospectus and obtain a receipt from the securities regulatory authorities in all provinces of Canada by November 4, 2009. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registrations requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction in which such offer, sale or solicitation would be unlawful.

Ferdi Dippenaar, President and CEO, commented:

"We have been reviewing funding alternatives given the long timeline and restrictions that project debt facilities require. Due to the extended time it has taken to finalise the facility, as well as the costs and constraints, including high upfront equity contribution and complex associated hedging structures, the Company has been evaluating alternative funding options. The sale of convertible debentures is the preferred option with fewer encumbrances on Great Basin Gold's balance sheet, no requirements to hedge gold production and, on a relative basis, comes at a lower cost of capital in a rising gold price environment. As we are making good progress with the delivery of the project, we are pleased that we could complete this convertible debenture offering on an equally timely basis."

Copies of the preliminary prospectus may be obtained from RBC Capital Markets, Attention: Distribution Centre, 277 Front St. W., 5th Floor, Toronto, Ontario M5H 2X4 (tel: 416-842-5349).

For additional details on Great Basin Gold and its gold properties, please visit the Company's website at www.grtbasin.com.

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 financing events or technical 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 financial market conditions, metals prices, exploitation and exploration successes, continuity of mineralization, uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition, geopolitical uncertainty, changes in government policies regarding mining and natural resource exploration and exploitation, 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 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 40-F filing with the United States Securities and Exchange 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
    Investor Services
    27 (0) 11 301 1800
    or
    Great Basin Gold Ltd. - North America
    Michael Curlook
    Investor Services
    1 (888) 633 9332
    or
    Breakstone Group - USA
    Barbara Cano
    Investor Services
    (646) 452-2334