GBS Gold International Inc.
TSX : GBS

GBS Gold International Inc.

September 17, 2007 08:45 ET

GBS Gold International Inc.: Uranium Exploration Transactions

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 17, 2007) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") is pleased to announce that it has entered into two transactions to realize value for the uranium exploration potential of its tenement holdings in the Northern Territory of Australia:

- GBS Gold's tenement position totals approximately 3,500sqkm within a region which hosts existing and historical uranium mining operations, as well as known uranium deposits.

- Through the two transactions, GBS Gold will benefit through the following:

- Immediate commencement of uranium exploration activities on its tenements by specialized and experienced uranium exploration professionals;

- Receipt of share and warrant consideration totaling approximately $3.7 million, with the potential for additional future cash payments and uranium production royalties;

- 30% free-carried interest in any uranium discovery (to completion of a feasibility study) on approximately 2,500sqkm of GBS Gold's tenement holdings; and

- Increase in GBS Gold's gold exploration land holdings through reciprocal exploration rights.

- The first transaction is with a wholly-owned subsidiary of listed Australian company Thundelarra Exploration Ltd ("Thundelarra") which has purchased the right to explore for uranium on approximately 2,500sqkm of GBS Gold's tenements, in consideration for the issue of 4.5 million shares and 4.5 million warrants in Thundelarra having a current fair value of approximately C$2 million. The share position provides GBS Gold with a 4.0% interest in Thundelarra. In addition, GBS Gold will receive approximately A$1 million on the development of a uranium deposit, and will have a 30% free-carried interest in any uranium discovery to completion of a feasibility study. Thundelarra must spend a minimum of A$0.5 million on exploration within each of the next three years.

- The second transaction is with new Australian public company Rum Jungle Uranium Ltd ("RJU") which is completing its initial public offering and listing on the Australian Stock Exchange. RJU's landholding includes exploration tenements near to the historic Rum Jungle Uranium mine in the Northern Territory of Australia. RJU purchased the right to explore for uranium on GBS Gold's recently acquired Tom's Gully tenement package, in consideration for the issue of 5 million shares and 5 million warrants having a current fair value of approximately C$1.7 million, plus the grant of a royalty over future uranium production. The share position provides GBS Gold with a 4.3% interest in RJU.

- The above transactions provide GBS Gold with valuation upside while enabling the Company to focus on its core business of gold production and exploration.

Thundelarra Exploration Limited ("Thundelarra")

Thundelarra is an Australian exploration company listed on the Australian Stock Exchange ("ASX") (code: THX) with a current market capitalization of approximately C$32 million. Thundelarra holds an extensive portfolio of exploration tenements in the north of Western Australia and in the Northern Territory where it is focusing on exploration for uranium and base metals. It is also due to commence production in 2008 through its joint venture interest in an open pit nickel operation in Western Australia.

The key terms of the transaction with Thundelarra are as follows:

- Thundelarra has acquired the right to explore for uranium on approximately 2,500sqkm of GBS Gold's tenements. GBS Gold retains ownership of the tenements.

- The purchase consideration comprises 4.5 million shares and 4.5 million warrants in Thundelarra having a combined fair value of approximately C$2 million. Thundelarra's current share price is around A$0.33 per share. The warrants are exercisable at any time within three years of completion for A$0.45 per warrant. The share position provides GBS Gold with a 4.0% shareholding interest in Thundelarra.

- GBS Gold will also receive A$1 million in cash or Thundelarra shares upon the commencement of a uranium mine.

- GBS Gold retains a 30% free-carried interest in any uranium discovery to the completion of a feasibility study, and thereafter GBS Gold can contribute to maintain its interest or can dilute to a 2% net smelter royalty.

- Thundelarra must spend a minimum of A$1.5 million on exploration through the expenditure of at least A$0.5 million in each of the first three years, which will also assist GBS with meeting its minimum expenditure requirements and maintaining its extensive landholding position.

- GBS Gold has acquired the right to explore for gold on various of Thundelarra's tenements in the Pine Creek region.

The Thundelarra agreement is conditional upon GBS Gold obtaining the required consents from its promissory noteholders before the end of November 2007.

Rum Jungle Uranium Limited ("RJU")

RJU is a new Australian exploration company currently completing its A$12 million initial public offering and listing on the ASX in October this year. At its IPO issue price of A$0.25 per share, RJU has a market capitalization of approximately C$25 million. RJU has an experienced team of uranium exploration geologists and holds a portfolio of uranium exploration tenements in the Northern Territory both within the Pine Creek region and near the town of Alice Springs.

The key terms of the transaction with RJU are as follows:

- RJU has acquired the right to explore for uranium on approximately 1,000sqkm of GBS Gold's northern tenements within the Company's Tom's Gully land package. GBS Gold retains ownership of the tenements.

- The purchase consideration comprises 5 million shares and 5 million warrants in RJU having a combined fair value of approximately C$1.7 million based on the IPO issue price. The warrants are exercisable at any time within five years of completion for A$0.25 per warrant. The share position provides GBS Gold with a 4.3% interest in RJU assuming the full IPO raising.

- RJU must spend a minimum of A$0.5 million on exploration before the end of 2008, plus other specified minimum annual amounts thereafter.

- GBS Gold retains a 1% gross royalty on the value of any uranium production.

- GBS Gold has acquired the right to explore for gold on some of RJU's exploration tenements in the Pine Creek region.

The RJU agreement is subject to various conditions, including RJU listing on the ASX by December 31, 2007 and GBS Gold obtaining the required consents from its promissory noteholders before November 30, 2007.

About GBS Gold International Inc.

GBS Gold is an emerging gold producer with 2.6Moz 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. 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 2009-2010. 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 3,500km2 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 technical disclosure in this news release regarding GBS Gold's properties was approved by John Vinar, an employee of GBS Gold and a qualified person under NI 43-101. The Company's mineral resources comprise measured resources of 84,800 tonnes at 20.6g/t for 56,100 ounces of contained gold, indicated resources of 24.6 million tonnes at 3.2g/t for 2.6 million ounces of contained gold and inferred resources of 21.2 million tonnes at 2.4g/t for 1.6 million ounces of contained gold. 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, the technical report entitled "Form 43-101 Technical Report on the Tom's Gully Project" dated June 13, 2007 and filed on June 14, 2007 (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 and May 10, 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.ca