GBS Gold International Inc.

GBS Gold International Inc.

September 18, 2008 08:46 ET

GBS Gold International Inc.: Parent Company Update

TORONTO, ONTARIO--(Marketwire - Sept. 18, 2008) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") provides the following update regarding its existing C$46 million promissory note debt facility and its obligations with respect to the former owner of the Tom's Gully gold mine, Renison Consolidated Mines NL ("Renison").

The Administrators of the Company's Australian subsidiaries have now made contact with the Company's promissory noteholders and their trustee (together, the "Noteholders"). As previously advised, the secured promissory note debt facility became repayable following the appointment of Voluntary Administrators to the Australian subsidiaries on September 15, 2008. Discussions with the Noteholders have included a proposed forbearance agreement which would provide the Company with time to work with the Administrators and Noteholders on potential restructuring plans. Discussions regarding the proposed agreement and other matters are continuing.

The Company also advises that it has received a demand for payment on behalf of Renison in the amount of A$24 million pursuant to the Tom's Gully Sale Agreement entered into between the Company, Renison and certain subsidiaries of both entities on May 27, 2007. The demand notice also states that, without prejudice to any of their rights, Renison would be prepared to participate in a temporary debt moratorium to allow time to develop and consider any restructuring and refinancing plans of the Company, subject to reaching agreement on the precise terms of the moratorium. Accordingly, Renison is currently working on a forbearance agreement to effect the moratorium based on a draft provided by the Company.

The Renison demand notice alleges that, as a result of the appointment of Administrators by the Company's Australian subsidiaries, the following cash payments are now due and payable by the Company to Renison:

1) A$10 million originally scheduled for payment on January 25, 2009 in cash or shares at the Company's election;

2) A$8 million originally scheduled for payment on July 25, 2009 in cash or shares at the Company's election; and

3) A$6 million representing the buyout amount of a 2% gross royalty on gold produced and sold once cumulative production from the Tom's Gully tenements exceeds 300,000 ounces of gold, payable in cash or shares at the Company's election.

The Company notes that Renison's claim is unsecured. The Company is also seeking legal advice as to whether the amount claimed in paragraph 3 above is valid given that production at Tom's Gully commenced in August 2008 and has not exceeded 300,000 ounces. The Tom's Gully operation is currently being placed on care and maintenance by the Administrators pending re-evaluation.

About GBS Gold International Inc.

GBS Gold is a junior gold producer with 2.7 million ounces of Indicated Resources and 1.7 million ounces of Inferred Resources of gold at its Union Reefs Operations Centre located in the Northern Territory of Australia. GBS Gold produces gold through its 2.5Mtpa Union Reefs processing plant. The Company has recently commenced gold production at its Tom's Gully operation and plans to develop its Cosmo Deeps underground mine in 2009-10. GBS Gold has consolidated over 3,500km2 of prospective tenements and gold deposits and also holds gold exploration properties in Western Australia. The Company trades on the Toronto Stock Exchange under the symbol "GBS".

For further information regarding the Australian subsidiaries, the conduct
of the Australian business or to discuss the administration process, the
Administrators may be contacted at the following:

In Perth, Australia:

Mr. Andrew Saker
Partner, Ferrier Hodgson
Joint and Several Administrator
Level 26, 108 St George's Terrace
Perth, Western Australia, 6000
Tel: +61 (0)8 9214 1444
Fax: +61 (0)8 9214 1400

The Company's mineral resources comprise indicated resources of 26.8 million tonnes at 3.1g/t for 2.7 million ounces of contained gold and inferred resources of 21.5 million tonnes at 2.4g/t for 1.7 million ounces of contained gold as set out in its technical reports (refer below) and news releases dated May 13 and July 2, 2008. The Company has filed on May 8, 2008 a technical report entitled "GBS Gold International: Burnside, Union Reefs, Maud Creek and Moline Projects, Northern Territory, Australia" dated February 2008 and authored by Jeames McKibben and Christine Standing of Snowden Mining Industry Consultants Pty Ltd and Heath Gerritsen of HG Mine Design Pty Ltd. The Company has also filed two technical reports on its Tom's Gully project being a technical report entitled "Form 43-101 Technical Report on the Tom's Gully Project" authored by Paul Payne of Resource Evaluations Pty Ltd dated and filed on January 14, 2008 and a technical report entitled "Technical Report on the Mineral Reserves of the Tom's Gully Gold Mine" authored by Heath Gerritsen of HG Mine Design Pty Ltd dated December 2007 and filed on January 31, 2008.

The Company has completed feasibility studies on its Tom's Gully and Cosmo Deeps projects, and a life-of-mine study on its operating Brocks Creek underground mine, all of which have declared mineral reserves in accordance with the above technical reports. Where the Company has not completed a feasibility or life of mine study on a particular project, there is no certainty that such 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, 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

  • In Toronto, Canada:
    GBS Gold International Inc.
    Gil Playford, Chairman and CEO
    (416) 777-1508
    In Perth, Australia:
    GBS Gold International Inc.
    Peter Kerr, Chief Financial Officer
    +61 (0)8 9492 2500