Even better prospects for Great Basin Gold at Hollister?
[2008-12-23 17:04:27]
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Great Basin Gold’s (TSX: GBG; AMEX: GBN; JSE: GBG) purchase of its own mill for its Hollister project in Nevada brings the project more in line with its original plans that assumed milling costs of $75/t and could boost the economics of the project, particularly if production and processing is lifted from 400t per day to 600t per day in line with new plans. Chief executive officer Ferdi Dippenaar told Mineweb today it was too early to make noise about higher production and improved economics at Hollister, but this was a real possibility as the company had found better than expected surface exploration results with the discovery of the Hatter Graben vein system, which could enable it to process 600t of ore per day. Dippenaar said the company was in fact continuing to make good discoveries at Hatter Graben and he expected “things to work out nicely for the company over the next two years”. Great Basin believed its use of the mothballed Esmeralda mill bought from Metallic Ventures Gold will bring total milling costs down to $95/ounce, sharply lower than the 20% revenue royalty charged by Newmont which treated the first ore from Hollister at its nearby Midas mill. Dippenaar said Newmont’s toll charge was unacceptable and would have had an immense impact on the business’ cashflow as it amounted to immediately letting 20% of revenue go. Great Basin has run into some good fortune with the timing of the mill purchase as it could negotiate a price of $2m for the processing plant and Esmeralda mine and related infrastructure due to the current economic climate. He suggested GBG could look at replicating the Hollister underground mining method at Esmeralda, adding to the feedstock for the plant. The company will spend $8m to recommission, reconfigure and upgrade the plant located 290 miles from Hollister over four months. Dippenaar said while the company was doing work on the plant it would use the opportunity to expand its capacity from about 400t per day to 600t per day. Transporting costs from Hollister to the plant was estimated at $55 per ton and operating costs were estimated at $40 per ton. Dippenaar said Great Basin would conduct a review of the Esmeralda property for which some geological information was available. He said it might be better to mine part of the property from underground as open pit mining diluted the grade mined although it allowed for mining greater tonnage. Commenting on general progress at Hollister, he said the company was making good progress with both the development of the mine and exploration here. At Burnstone in South Africa, Great Basin Gold has completed a third of the mine shaft, while its mine development work was less than 140m away from reef position. The company was on track to kick off production here in February, said Dippenaar.
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