GBS Gold International Inc.

GBS Gold International Inc.

March 31, 2006 12:03 ET

GBS Gold International Inc.: Completion of Burnside JV Acquisition

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 31, 2006) -


GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or "the Company") is pleased to announce that it has today completed the acquisition of the remaining half of the Burnside JV in the Northern Territory of Australia:

- GBS Gold, through one of its wholly-owned Australian subsidiaries, Northern Gold NL, has today completed the acquisition of the remaining 50% of the Burnside JV it does not already own from an Australian subsidiary of Harmony Gold Mining Company Ltd ("Harmony").

- GBS Gold now owns 100% of the Burnside JV comprising the Greater Burnside Projects and the 2.5Mtpa Union Reefs gold plant.

- To complete the acquisition, GBS Gold today paid the first installment comprising a cash payment of CAD$3.3 million (A$4 million), the issue of 1.91 million GBS Gold common shares at an effective price of CAD$2.19 per share (the shares having a current market value of approximately C$4.3 million), and replacement of tenement performance bonds totaling C$0.9 million (A$1.05 million).

- Two further installments remain, comprising A$5 million cash and A$4.4 million in GBS shares (at the then prevailing market price) in September 2006, and a final cash payment of A$5.35 million in September 2007.

- Following completion of the acquisition today, GBS Gold has 99.4 million common shares on issue, with a current (undiluted) market capitalization of approximately CAD$224 million.


In September 2005, Northern Gold NL ("Northern Gold") contracted with an Australian subsidiary of Harmony to purchase another of Harmony's subsidiaries which holds Harmony's 50% interest in the Burnside JV in the Northern Territory of Australia. At that time, Northern Gold paid an initial deposit of A$0.25 million to Harmony with the purchase subject to finance and various other conditions. GBS Gold acquired 100% of Northern Gold pursuant to a successful takeover offer which was completed in early January, 2006, and the various conditions to the purchase agreement with Harmony have now been satisfied.

The Burnside JV comprises the Greater Burnside Projects, including the Zapopan underground mine, the Cosmo Deeps gold deposit, various near-surface gold resources, mining infrastructure and the modern Union Reefs gold plant.

To complete the acquisition with Harmony, GBS Gold has today paid the following first installment:

- Cash of CAD$3.3 million (AUD$4 million);

- The issue to Harmony of 1.91 million common shares in GBS Gold with a current market value of approximately CAD$4.3 million (AUD$5 million). The effective issue price of the shares under the Harmony purchase agreement was CAD$2.19 per share. The shares are subject to a hold period which expires July 31, 2006; and

- Replacement of tenement performance bonds to the value of CAD$0.9 million (AUD$1.0 million). These bonds are granted in favour of the Northern Territory Minister for Mines to secure certain future environmental reclamation obligations relating to the Greater Burnside Projects.

Source of Funds and Future Payments

The cash amounts for the above payments were sourced from the proceeds of the recent CAD$67 million prospectus fundraising completed at CAD$2.10 per share.

Following today's payments, two further installments remain payable to Harmony for the purchase of its interests in the Burnside JV, comprising the following:

- 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.

GBS Gold has provided Harmony with an interim mortgage over the shares in the acquired subsidiary as security for the remaining installments.

Sole Ownership

As a result of the completion of the acquisition, GBS Gold is now the sole owner of the Burnside JV and the Union Reefs gold plant. The Company is now focused upon the development of its gold properties in the Northern Territory of Australia, and is currently targeting a formal production commencement decision in mid-2006.

Issued Share Capital

Following today's completion of the acquisition of the remainder of the Burnside JV from Harmony, GBS Gold now has 99,361,072 common shares on issue, with a current (undiluted) market capitalization of approximately CAD$224 million at a share price of CAD$2.25 per share.

Escrowed Shares

In September 2005, pursuant to the successful bid by GBS Gold to acquire Terra Gold Mining Ltd ("Terra"), the principals of Terra were required to place in escrow the GBS Gold shares they received pursuant to that bid. As a result, 17,373,425 GBS Gold shares were placed in escrow. Following the recent listing of the shares of GBS Gold on the Toronto Stock Exchange, the escrow release provisions have been accelerated resulting in 8,686,712 GBS Gold shares being released from escrow immediately. One half of the remaining escrowed shares will be released effective September 7, 2006 with the balanced being released effective March 7, 2007.

About GBS Gold International Inc.

GBS Gold is a new 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. Through recent acquisitions of two Australian companies, GBS Gold has consolidated an extensive land position, a large mineral resource base, and modern processing and infrastructure assets in a historically productive goldfield in the Northern Territory of Australia, with potential for future gold production. These assets comprise the modern dual-mill Union Reefs gold plant and a range of potential open pit and underground mines within a 125km trucking radius of the plant, including the Zapopan underground mine, the Maud Creek gold deposit, and the Cosmo Deeps gold deposit. These deposits are located on the Company's large prospective land holding covering an area of approximately 2,500km2. Scoping studies are now underway with a production decision targeted for mid-2006. GBS Gold also has interests in several other gold exploration properties elsewhere in Australia and in Canada. GBS Gold trades on the TSX under the symbol "GBS".

On behalf of the Board of Directors

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 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.
    Gilbert Playford
    Chairman and CEO
    (778) 328-9801