GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

November 13, 2006 09:17 ET

GBS Gold International Inc.: September Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 13, 2006) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") has today filed its unaudited financial statements and management's discussion and analysis for the three months ended September 30, 2006 ("September quarter"). During the September quarter, GBS Gold commenced mining operations, successfully commissioned the Union Reefs treatment plant, poured its first gold and signed a strategic licensing agreement for the use of the GEOCOAT® heap leach bio-oxidation process to process refectory ores. Operating and financial highlights include:

- Mining - Mining commenced at the Rising Tide open pit and the Brocks Creek underground mines, and first ore deliveries to the Union Reefs plant from these sources occurred in early October. Preliminary mining activities have since commenced at the Fountain Head open pit deposit. The combined output of these three mines will provide the majority of the Company's gold production in 2007.

- Production targets - Gold production utilizing one of the Union Reefs plant's milling circuits to treat free-milling ores is targeted to increase to an annualized rate of approximately 150,000 ounces in mid 2007. In 2008, with the planned mining and treatment of refractory gold ores through the second milling circuit, production is targeted to increase to an annualized rate of 250,000 ounces.

- Key capital expenditures - The Company spent $8.1 million on pre-production and exploration activities during the September quarter. This expenditure related to mining ($1.6 million), processing ($1.7 million), maintenance ($1.8 million), administration and safety ($1.2 million) and exploration ($1.7 million). The Company also spent $2.2 million to purchase fixed and mobile assets, including underground mining equipment.

- Financial result for the September quarter - The Company recorded a net loss for the September quarter of $1.7 million related primarily to imputed interest expense on outstanding purchase obligations, stock based compensation, travel and promotion and corporate office administration. All costs related to pre-production activities are currently being capitalized for accounting purposes. Since the end of the September quarter, the Company has continued its pre-production and exploration activities, and cash holdings as at November 10, 2006 were approximately $28 million. The Company does not have any bank debt or hedging contracts.

- Pre-production - To date the Company has poured approximately 2,500 ounces of gold. The Company expects to achieve commercial production levels at the end of the current quarter and to report production and operating statistics from January 1, 2007.

Operations

During the September quarter, GBS Gold continued its development and commissioning activities within the Union Reefs Operations Centre in the Northern Territory of Australia. Since commissioning of the Union Reefs treatment plant on low-grade stockpiles during the quarter, the Company has poured approximately 2,500 ounces of gold. The Company expects to achieve commercial production levels at the end of the current quarter and to report production and operating statistics from January 1, 2007.

Mining commenced at the Rising Tide open pit and the Brocks Creek underground mines, and first ore deliveries to the Union Reefs plant from these sources occurred in early October. Preliminary mining activities have since commenced at the Fountain Head open pit deposit. The combined output of these three mines will provide the majority of the Company's gold production in 2007.

Exploration programs were successfully completed at Cosmo Deeps, Fountain Head and various other open pit gold deposits. Resource updates were announced for the Brocks Creek underground mine and the Rising Tide and Fountain Head deposits. Further resource updates are expected in the current quarter for Cosmo Deeps, Fountain Head and other open pit deposits.

Gold production utilizing one of the Union Reefs plant's milling circuits to treat free-milling ores is targeted to increase to an annualized rate of approximately 150,000 ounces in mid 2007. In 2008, with the planned mining and treatment of refractory gold ores through the second milling circuit, production is targeted to increase to an annualized rate of 250,000 ounces.

Financial Results

For the September quarter, the Company spent $8,063,000 on pre-production and exploration activities. This expenditure related to mining ($1,633,000), processing ($1,657,000), maintenance ($1,820,000), administration and safety ($1,165,000) and exploration ($1,716,000). Mining activities included the mobilization of the mining contractor, commencement of open pit and underground mining operations, commissioning of mining equipment and build-up of the mining workforce. Processing and maintenance costs were related to the commissioning and operation of the Union Reefs plant, and to maintenance activities on fixed and mobile equipment. The Company also spent $2,232,000 to purchase fixed and mobile assets, including underground mining equipment, IT hardware and software, and light fleet vehicles.

The Company recorded a net loss for the September quarter of $1,729,000 related primarily to imputed interest expense on outstanding purchase obligations, stock based compensation, travel and promotion and corporate office administration. The Company had total liabilities as at September 30, 2006 of $12,871,000 comprising accounts payable and accrued liabilities, asset retirement obligations and the final outstanding installment payment of A$5.35 million due in September 2007 for the purchase of 50% of the Burnside Joint Venture.

As of September 30, 2006, the Company held $31,659,000 in cash, excluding security deposits. Since the end of the September quarter, the Company has continued its pre-production and exploration activities, and cash holdings as at November 10, 2006 were approximately $28 million. The Company does not have any bank debt or hedging contracts.

Conference Call and Webcast

Shareholders and other interested parties are invited to a conference call on Tuesday November 14, 2006 at 9:00am EST for a presentation of the financial results and an open-forum question and answer session. Individuals can participate by dialing one of the following numbers: Toronto (416) 340-2216, North America 1-866-898-9626, Europe 00-800-8989-6323 and Australia 0011-800-8989-6323 (and ask for GBS Gold) or via webcast on the GBS Gold website at www.gbsgold.com.

About GBS Gold International Inc.

GBS Gold is an emerging gold producer with 1.9Moz of Measured and Indicated Resources and 1.6Moz 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 per annum. 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 per annum 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".

Gilbert Playford, Chairman and CEO

This news release has been approved by GBS Gold's in house geologist, Peter Harris, a qualified person under NI43-101. 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, and news releases filed on January 20, July 10, September 14 and October 26, 2006, 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