GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

April 05, 2007 18:04 ET

GBS Gold International Inc.: Close of Strategic Investment in Northern Mining Explorations Ltd.

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 5, 2007) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") has today closed its previously announced strategic investment in Northern Mining Explorations Ltd. (TSX:MDN) ("MDN") through the purchase on a private placement basis of 8,000,000 units ("Units") for total consideration of $9.6 million or $1.20 per Unit (all amounts expressed in Canadian Dollars unless otherwise indicated). Each Unit consists of one MDN common share and one warrant entitling GBS Gold to purchase one MDN common share at a price of $1.60 per share on or before October 5, 2008.

"We see this strategic partnership with MDN as an opportunity to gain a foothold into the prospective Lake Victoria District of Tanzania, which currently hosts over 25 million ounces of gold resources. We believe this is a very attractive opportunity to grow our operations outside of our current base in Australia by adding a prospective exploration land tenement package in Tanzania, which is supported by MDN's experienced exploration team and the expected future cashflows from the Tulawaka gold mine. This acquisition opens the door to several potential future strategic growth opportunities including GBS Gold's possible participation in the development of MDN's properties," stated Gil Playford, GBS Gold's Chairman and Chief Executive Officer.

MDN holds a 30% interest in the Tulawaka gold mine with Barrick Gold Corporation as the 70% operating partner. In 2006, the Tulawaka mine produced 139,655 ounces of gold at a total cash cost of US$279/oz through the processing of 500,000 tonnes of ore at an average grade of 9.2 g/t gold. The forecast for 2007 is for total production of 210,000 ounces of gold at a total cash cost of US$220/oz through the processing of 439,000 tonnes of ore at an average grade of 15.6 g/t gold. The use of proceeds from the private placement is earmarked for prepayment of MDN's project debt and working capital purposes.

MDN also controls 20 Prospecting Licences within a 50km radius of the Tulawaka gold mine on which it has already made a number of gold discoveries. MDN plans to drill over 25,000 metres during the next twelve months into its various Tanzanian exploration targets around Tulawaka.

As a result of this acquisition, GBS Gold owns 9.83% of the issued and outstanding common shares of MDN and has the option, by exercising the warrants, to acquire ownership of a further 8.06% potentially representing a total of 17.89% of the issued and outstanding common shares of MDN (based on current issued shares). Pursuant to a subscription agreement entered into between GBS Gold and MDN, GBS Gold has also been granted the right to participate in any future offering of securities by MDN so as to entitle it to maintain its pro rata ownership of MDN common shares. GBS Gold currently does not have an intention to acquire ownership of, or control over, additional securities of MDN but will evaluate its investment in MDN on a continuing basis.

About GBS Gold International Inc.

GBS Gold is an emerging gold producer with 2.1Moz of Measured and Indicated Resources and 1.5Moz of Inferred Resources of gold at its Union Reefs Operations Centre located in historically productive goldfields in the Northern Territory of Australia. GBS Gold produces gold through its modern dual-mill 2.5Mtpa Union Reefs processing plant and plans to ramp up production from free milling ores during 2007 to a targeted annualized rate of 150,000 ounces. The Company expects to construct a flotation plant and bio-oxidation heap leach facility using the GEOCOAT® technology at the Union Reefs Plant to process refractory ores and increase gold production from all sources to a targeted annualized rate of 300,000 ounces in 2009. Management has extensive experience in bringing mineral projects into production, operating open pit and underground gold mines and has assembled a team with valuable mining experience in the Northern Territory of Australia. The Union Reefs plant is adjacent to the main Stuart Highway and the trans-continental Adelaide-Darwin railway line, and is on the Northern Territory power grid. Within 125km trucking distance of the Union Reefs plant, GBS Gold has consolidated over 2,500km2 of prospective tenements and gold deposits and also holds gold exploration properties in Western Australia and Canada. GBS Gold trades on the Toronto Stock Exchange under the symbol "GBS".

On behalf of the Board of Directors

Gilbert Playford, Chairman and CEO

The technical disclosure in this news release of GBS Gold's properties was approved by John Vinar, an employee of GBS Gold and a qualified person under National Instrument 43-101. The technical disclosure regarding MDN properties was provided to the Company by MDN. 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 20.9 million tonnes at 3.1g/t for 2.1 million ounces of contained gold and inferred resources of 20.7 million tonnes at 2.3g/t for 1.5 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 (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, 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.

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.

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

Contact Information

  • GBS Gold International Inc.
    Samuel Yik
    Vice President, Corporate Finance and Investor Relations
    (778) 328-9801
    Email: gbs@gbsgold.ca
    Website: www.gbsgold.com