GBS Gold International Inc.

GBS Gold International Inc.

April 18, 2008 09:31 ET

GBS Gold Secures New Bought Deal $46.0 Million 3-Year Long-Term Debt to Replace Existing Debt due March 2009

TORONTO, ONTARIO--(Marketwire - April 18, 2008) - GBS Gold International Inc. (TSX:GBS) ("GBS Gold" or the "Company") announces that it has secured a bought deal three year financing facility arranged by Haywood Securities Inc. for $46,000,000 (all amounts expressed in Canadian dollars).

The proceeds of the offering will be used to repay the Company's existing $46.0 million 12% notes due on March 30, 2009 ("the March 2009 Notes"). The March 2009 Notes are pre-payable without penalty with a minimum of 25 days' notice to the note holders and trustee.

Commenting on the new notes, GBS Gold's Chairman stated, "This new financing, which enables us to replace the March 2009 Notes with longer term debt, is an important step for GBS Gold. The transaction strengthens our balance sheet and will provide a stable financial platform that allows us to focus on our operational development and growth projects over the next three years."

Terms of the Notes

The finance facility consists of 46,000 units to be placed by Haywood Securities Inc. ("Haywood") for total proceeds of $46 million. Each unit will consist of one $1,000 promissory note and 175 share purchase warrants. The notes have a term of three years with interest payable semi-annually at an annual rate of 12% for the first two years, increasing to 15% in the third year. Each share purchase warrant is exercisable for the purchase of one GBS Gold common share. If exercised within six months from the closing date, the price per share is $1.50. After six months, the warrants are exercisable at a price of $1.80 per share until 24 months from the closing date. If, at any time after the 12 months from the date of closing, the share price of GBS Gold trades above $2.50 per share for 20 consecutive business days, the Company can require warrant holders to exercise their warrants within 15 days.

GBS Gold can prepay the facility in whole or in part at any time after 12 months without penalty. On closing, the lenders will receive a pledge of security over the assets of the Company with certain exceptions relating to the ongoing conduct of the business.

Haywood will receive an agent's fee of 4%, half to be paid in cash, and half to be paid in either cash or units at the option of GBS Gold.

The transaction is scheduled to close on May 20, 2008, and is subject to the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities.

The Company expects to provide notice to the holders of the March 2009 Notes of prepayment in accordance with the required notice period.

About GBS Gold International Inc.

GBS Gold is an emerging gold producer with 2.4Moz of 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 commence production at its Tom's Gully and Cosmo Deeps free-milling projects in 2008-10 to increase production to an annualized rate of up to 250,000 ounces and to construct a GEOCOAT® circuit, a heaped bio-oxidation process, at the Union Reefs plant to treat refractory ores and further increase gold production from the Union Reefs Operations Centre to 300,000 ounces per year. 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".

For more information about GBS Gold, please visit our website at or email us at

The Company's mineral resources comprise indicated resources of 22.8 million tonnes at 3.3g/t for 2.4 million ounces of contained gold and inferred resources of 20.3 million tonnes at 2.5g/t for 1.6 million ounces of contained gold. The Company will shortly file a technical report for the updated resource estimate for its non-Tom's Gully properties and the feasibility study and reserve estimate for its Cosmo Deeps project. The Company has filed two technical reports on the Tom's Gully project being a technical report entitled "Form 43-101 Technical Report on the Tom's Gully Project" 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" dated December 2007 and filed on January 31, 2008. The Company has completed a feasibility study on the Tom's Gully Project and declared a probable mineral reserve estimate of 740,000 tonnes at 7.1g/t for 170,000 ounces of contained gold (refer the news release dated December 18, 2007). Other than the feasibility studies completed on the Tom's Gully and Cosmo Deeps projects, the Company has not completed a feasibility study and there is no certainty that its projects will be economically successful. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Any potential updates to GBS Gold's mineral resources discussed in this news release are conceptual in nature and subject to further drilling, analytical and test work and/or data verification. All estimates of updates to mineral resources are based on the drilling results and resource modeling described herein.

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.
    Ted Mayers
    Executive Vice President, Business Development
    (416) 777-1508
    In Perth, Australia:
    GBS Gold International Inc.
    Peter Kerr, Chief Financial Officer
    +61 8 9492 2500