GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

January 09, 2007 09:02 ET

GBS Gold International Inc.: Operations and Resource Update

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 9, 2007) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") is pleased to provide the following operations and resource update for its Union Reefs Operations Centre in the Northern Territory of Australia:

- GBS Gold commenced commercial gold production effective January 1, 2007. During the commissioning and pre-production phase in late 2006, GBS Gold focused on plant commissioning, infrastructure refurbishment, haul road preparation, establishment of the site operating team, resource drilling, initial mining and pre-stripping activities and the build-up of ore and metal inventories. Up to December 31, 2006, GBS Gold milled 359,000 tonnes of low-grade material for the production of 10,380 ounces of gold, net of the build-up of gold-in-circuit inventories. The processed material was sourced as planned from historical stockpiles and from initial mining of the Brocks Creek underground and Rising Tide open pit mines. The Union Reefs processing plant is performing as expected and production is steadily increasing.

- The Company is targeting gold production of 20,000-25,000 ounces during the first quarter of 2007 from the milling of 300,000-350,000 tonnes of ore sourced from the Brocks Creek underground mine and the Rising Tide and Fountain Head open pit mines. Achievement of this target is dependent upon minimal unplanned interruptions from the Northern Territory tropical wet season rains which typically finish early in the second quarter. Gold production is expected to increase over the first half of 2007 with the Company targeting to achieve an annualized production rate of 150,000 ounces per year in mid 2007.

- The Company is pleased to report that operations, including ore haulage, have continued unaffected by the train derailment incident reported on December 12, 2006.

- Drilling and evaluation work continues to test the potential for a large open pit comprising various deposits within the Chinese "big pit" zone located approximately 5km northwest of the Company's Cosmo Deeps project. These deposits include Chinese South Extension, Mottrams and Chinese Howley. Following drilling programs undertaken in 2006, the resource estimate for the Mottrams deposit has been increased and, as a result, the Chinese "big pit" zone now hosts indicated resources of 1,310,000 tonnes at 1.4g/t for 57,000 ounces of contained gold, plus inferred resources of 2.1Mt at 1.7g/t for 110,000 ounces of contained gold. An update for the Chinese South Extension resource estimate is expected in the current quarter. In addition, the zone hosts other resources reported by former owners and these are currently being reviewed under the standards of National Instrument 43-101. The Chinese "big pit" zone has the potential to host a large open pit or series of open pits which, in conjunction with the nearby Cosmo Deeps underground project, will enable the area to be a long term ore source for the Union Reefs Operations Centre.

- GBS Gold's total gold resource estimate now comprises measured and indicated resources of 21.0 million tonnes (Mt) at 3.2g/t for 2.1 million ounces of contained gold, and inferred resources of 20.7Mt at 2.3g/t for 1.5 million ounces of contained gold. Further resource updates are expected in the current quarter.

Operations Update

Effective January 1, 2007, the Company completed its commissioning and pre-production phase and commenced commercial gold production. As a result, from this date forward GBS Gold will report production and financial statistics on an operational basis.

During the commissioning and pre-production phase in late 2006, GBS Gold focused on plant commissioning, infrastructure refurbishment, haul road preparation, establishment of the site operating team, resource drilling, initial mining and pre-stripping activities and the build-up of ore and metal inventories. Up to December 31, 2006, GBS Gold milled 359,000 tonnes of low-grade material for the production of 10,380 ounces of gold, net of the build-up of gold-in-circuit inventories. The processed material was sourced as planned from historical stockpiles and from initial mining of the Brocks Creek underground and Rising Tide open pit mines. Achieved gold production was less than management's internal targets due to open pit mining and grade control commissioning difficulties, particularly in the shallow rain-affected oxide ores, and to the delayed contribution of ore from the Brocks Creek underground mine. As a result, initial milled grades were lower than planned. The Union Reefs processing plant is performing as expected and gold production is steadily increasing as the predicted grades are realized from the various ore sources.

The Company is targeting gold production of 20,000-25,000 ounces during the first quarter of 2007. This production will be from the milling of 300,000-350,000 tonnes of ore at an average blended grade of 2.5g/t sourced from the Brocks Creek underground mine and the Rising Tide and Fountain Head open pit mines. Achievement of this target is dependent upon minimal planned interruptions from the Northern Territory tropical wet season rains which typically finish early in the second quarter. Gold production is expected to increase over the first half of 2007 with the Company targeting to achieve an annualized production rate of 150,000 ounces per year in mid 2007.

The train derailment incident reported by the Company on December 12, 2006, involving a collision between the Ghan passenger railway train and a truck operated by a road construction contractor engaged by the Company has not affected mining operations, including ore haulage activities. The Company gives special thanks to the GBS Gold personnel who responded quickly to the incident and provided support to the passengers on board the train. Various governmental investigations into the incident are ongoing.

Resource Update

Drilling and evaluation continues to test the potential for a large open pit comprising various deposits within the Chinese "big pit" zone located approximately 5km northwest of the Company's Cosmo Deeps project, and 65km by road northwest of the Union Reefs processing plant. These deposits include Chinese South Extension, Mottrams and Chinese Howley.

To view Map 1 please click on the following link: http://www.ccnmatthews.com/docs/GBSa.jpg

Following resource definition drilling undertaken in 2006, an updated geological model was completed for the Mottrams deposit. This model incorporates three main shoots of continuous gold mineralization within bedding-parallel quartz and quartz-pyrite stockwork veins. The mineralization is developed over a strike length of approximately 490 metres within host rocks that dip between 45-60 degrees towards the southwest along the western limb of the regionally significant Howley Anticline.

Based on the new geological model, the resource estimate for the Mottrams deposit has been increased to comprise indicated resources of 1,310,000 tonnes at 1.4g/t for 57,000 ounces of contained gold, plus inferred resources of 683,000 tonnes at 1.2g/t for 24,000 ounces of contained gold, as tabulated below. The updated estimate represents an increase in total contained gold of approximately 90% across all resource classifications. The previous resource estimate was solely in the inferred resource category.



-------------------------- --------------------------
Updated Resource Estimate Previous Resource Estimate
(Reported at a (Reported at a
0.7g/t cut-off grade) 0.7g/t cut-off grade)
----------------- -------------------------- --------------------------
Grade Grade
Resource Category Tonnes (g/t) Ounces Tonnes (g/t) Ounces
----------------- -------------------------- --------------------------
Indicated 1,310,000 1.4 57,000 - - -
Inferred 683,000 1.2 24,000 825,000 1.6 42,400
----------------- -------------------------- --------------------------


The increase in contained gold is attributable to the additional drilling which successfully extended the strike continuity of the deposit, and to the use of a reduced grade threshold for modeling of the mineralization boundaries. The resource estimate is based on detailed modeling of the Mottrams mineralized lodes, with grade determination calculated using top-cut grades in the range 5-15g/t.

The resource model is depicted graphically below, showing the continuous nature of the mineralization with an earlier optimized open pit shell superimposed. With the expansion of the resource following the drilling undertaken in 2006 (shown in blue), the optimized open pit is expected to increase along strike.

To view the resource model please click on the following link: http://www.ccnmatthews.com/docs/GBSb.jpg

The increase in the Mottrams resource means that the resource estimate for the Chinese "big pit" zone comprising the Mottrams and Chinese South Extension deposits now totals indicated resources of 1,310,000 tonnes at 1.4g/t for 57,000 ounces of contained gold, plus inferred resources of 2.1Mt at 1.7g/t for 110,000 ounces of contained gold. An update for the Chinese South Extension resource estimate is expected in the current quarter. In addition, the Chinese Howley deposits host resources reported by former owners in accordance with the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (December 2004) which are currently being reviewed under the standards of Canadian Securities Administrators' National Instrument 43-101.

The Chinese "big pit" zone is the focus of continued exploration, drilling and resource modeling work, as depicted in the diagram below. Given the positive results of the drilling programs to date, the zone has the potential to host a large open pit or series of open pits which, in conjunction with the nearby Cosmo Deeps underground project, will enable the area to be a long term ore source for the Union Reefs Operations Centre.

To view the Chinese "Big Pit" Zone diagram please click on the following link: http://www.ccnmatthews.com/docs/GBSc.jpg

Total Gold Resource

GBS Gold's measured and indicated resources now total 21.0Mt at 3.2g/t for 2.1 million ounces of contained gold, and inferred resources now total 20.7Mt at 2.3g/t for 1.5 million ounces of contained gold, as tabulated below. The resource estimates are reported at a range of cut-off grades as set out in the Technical Reports and subsequent news releases (refer the table source note below).



--------------------------------------------------------------------------
Measured &
Measured Indicated Indicated Inferred
Deposit(s) Resources Resources Resources Resources
--------------- ---------------- ---------------- ----------------
Ton- Ton- Ton- Ton-
nes Gra- Oun- nes Gra- Oun- nes Gra- Oun- nes Gra- Oun-
(mill- de ces (mill- de ces (mill- de ces (mill- de ces
ion) (g/t)('000) ion)(g/t)('000) ion)(g/t)('000) ion)(g/t)('000)
--------------------------------------------------------------------------
Free-
milling
deposits:

Cosmo
Deeps - - - 4.6 4.6 690 4.6 4.6 690 5.2 3.6 600
Brocks
Creek
U/G
mine 0.1 20.6 56 0.2 16.2 94 0.3 17.6 150 0.1 5.1 23
Open
Pits - - - 6.8 1.7 362 6.8 1.7 362 14.2 1.8 835
------------------------------------------------------------------
0.1 20.6 56 11.6 3.1 1,145 11.7 3.2 1,201 19.6 2.3 1,458

Refractory
deposits:
Maud
Creek - - - 9.3 3.1 935 9.3 3.1 935 1.1 2.4 82
------------------------------------------------------------------

TOTAL 0.1 20.6 56 20.9 3.1 2,080 21.0 3.2 2,136 20.7 2.3 1,540
--------------------------------------------------------------------------
Source: Technical Reports and news releases filed on SEDAR on January 20,
July 10, September 14, October 26, November 27 and December 13,
2006, and this news release.


The following chart depicts the resource updates achieved by GBS Gold since its acquisition of the Union Reefs Operations Centre in December 2005:

To view the chart please click on the following link: http://www.ccnmatthews.com/docs/GBSd.jpg

Further resource updates for the Princess Louise and North Point deposits are also expected in the current quarter.

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 250,000 ounces in 2008 at a targeted cash cost of US$300 per ounce. 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 has no hedging commitments, no existing bank debt and sufficient cash to meet its short term production objectives. GBS Gold trades on the Toronto Stock Exchange under the symbol "GBS".

Note

The drilling results and mineral resource estimates detailed in this news release were prepared by or under the supervision of Mr. Peter Harris, B.Sc(Geol), M.AIG, the Chief Geologist of GBS Gold and a qualified person for the purposes of National Instrument 43-101.

GBS Gold manages its drilling and assaying activities in accordance with industry standard quality assurance/quality control (QA/QC) procedures. Samples are collected by GBS Gold personnel and prepared in accordance with specified procedures at the relevant assay laboratories. The primary assay laboratory is North Australia Laboratories in Pine Creek, Northern Territory. Laboratory site reviews are undertaken. Assay QA/QC involves the use of assay standards (sourced from reputable suppliers and cross-checked through umpire laboratories), field duplicates, blanks and barren quartz flushes. A third party "umpire" laboratory (Amdel in Perth, Western Australia) is used to cross-check and validate approximately 5% of the assay results. Sample coarse rejects are retained and approximately 5% of samples are re-submitted for further assay verification. All sample pulps, half-core and rock-chip samples are retained at site.

On behalf of the Board of Directors

Gilbert Playford, Chairman and CEO

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 this news release, 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 Finace and Investor Relations
    (778) 328-9801
    Email: gbs@gbsgold.ca
    Website: www.gbsgold.ca