GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

March 14, 2007 15:01 ET

GBS Gold International Inc.: Strategic Partnership With Northern Mining Explorations Ltd. (TSX-MDN)

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 14, 2007) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") has agreed to purchase 8,000,000 units ("Unit") of Northern Mining Explorations Ltd. (TSX:MDN) ("MDN") for total proceeds of $9.6 million or $1.20 per Unit (all amounts in Canadian Dollars unless otherwise indicated).

"We are very pleased to enter into this strategic partnership with MDN, an exploration Company with a proven track record of making gold discoveries in Tanzania. It allows GBS Gold to gain a foothold into the prospective Lake Victoria District of Tanzania, which currently hosts over 25 million ounces of gold resources," stated Gil Playford, GBS Gold's Chairman and Chief Executive Officer.

MDN holds a 30% interest in the Tulawaka Mine Joint Venture located in Tanzania with Barrick Gold Corporation ("Barrick") as the 70% operating partner. In 2006, the Tulawaka gold mine produced 139,655 ounces of gold through the processing of 500,181 tonnes of ore at an average grade of 9.18 g/t gold and a metallurgical recovery rate of 94.7%. The annual total cash costs averaged US$279 per ounce and gross revenues were US$88.7 million, about US$26.4 million higher than budgeted. The gross profit was US$32.9 million, compared with a budget of US$9.7 million. With these excellent results, the Tulawaka gold mine distributed approximately US$11 million to MDN, which was applied entirely to the reduction of its project debt with Barrick. At December 31, 2006, the project debt was approximately US$16 million. With 80% of the use of proceeds from the private placement earmarked for prepayment of that debt and based on current production plans, MDN expects to be debt-free in early 2008.

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 another 30,000 metres in 2007 into its various Tanzanian exploration targets.

"This strategic partnership with MDN increases GBS Gold's attributable mineral resources and annual production and lowers our attributable cash cost per ounce without the need for additional personnel or capital. It also adds a very attractive exploration land tenement package, which is supported by MDN's current exploration team and existing cashflows. We are also very encouraged by the underground drilling results at the Tulawaka gold mine (refer MDN news release dated January 31, 2007) and the potential for extending the resource. We look forward to providing strategic, technical and corporate support to MDN in the advancement of their projects for the betterment of both MDN and GBS Gold shareholders," further stated Mr. Playford.

Each Unit consists of one MDN common share and one common share purchase warrant exercisable within 18 months of the closing date at a price of $1.60 per share. The transaction has been conditionally approved by the TSX and is expected to close no later than April 9, 2007. It is conditional upon the satisfaction of GBS Gold's due diligence.

On the closing date, Mr. Playford will be appointed to the Board of Directors of MDN.

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 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