Vancouver – After closing a $46-million bought deal financing, GBS Gold International (GBS-T, GBSFF-O) has a well padded treasury ready for its acquisition and project development plans.
Fully exercising its overallotment option, Haywood Securities sold 46,000 GBS Gold units priced at $1,000 apiece. Each unit consists of a $1,000 promissory note and 135 warrants with each exercisable at $3.75 for a common share until September 29, 2008. Promissory notes have a two-year term and pay an annual rate of 12%, paid semi-annually.
GBS Gold intends to use $9.6 million for its planned acquisition of 8 million units of Northern Mining Explorations (MDN-T) at $1.20 per unit.
The unit purchase will give GBS Gold about a 10% position in Northern Mining, which owns a 30% participating interest in the Tulawaka gold mine in Tanzania that is held 70% and operated by Barrick Gold (ABX-T, ABX-N). The mine produced 139,655 oz. of gold in 2006.
Northern Mining also holds a number of licences in the Tulawaka region and is exploring projects in Eritrea and in Quebecs Abitibi region.
Funds from the recent financing are also earmarked for prefeasibility work and development of the companys Cosmo Deeps and Maud Creek underground gold projects at the Union Reefs operation in Australias Northern Territory.
GBS Golds main focus has been on ramping up production from its Union Reefs operation where it celebrated commencement of mining and its first gold pour in Q3 of last year. Full commercial production was achieved at the beginning of 2007.
Union Reefs is an assembled complex of past producing open pit and underground operations, and deposits within trucking distance to a centralized processing plant. The company has modeled positive economics on recommissioning of a number of the past producing projects.
GBS Gold acquired its Australian processing and project portfolio in 2005 by taking over Northern Gold and Terra Gold Mining.
Northern Gold was previously partnered 50-50 with Harmony Gold Mining Company (HMY-N, HRM-L, HAR-J) on the Burnside joint venture before it orchestrated the purchase of the majors half-interest. Burnside consists of a significant land position plus the 2.8-million-tonne-per-year dual mill at Union Reefs.
The Burnside projects cumulatively host a measured and indicated resource of 5.8 million tonnes grading 4.4 grams gold per tonne (about 840,000 contained oz.) plus an additional 20.8 million inferred tonnes at 2.3 grams gold (about 1.56 million contained oz.).
Terra Gold held the Maud Creek gold project that hosts an indicated resource of 9.3 million tonnes of 3.1 grams gold (about 935,000 contained oz.) and is within trucking distance of Union Reefs. Mineralization is refractory for which GBS Gold plans to construct a flotation plant and bio-oxidation heap leach facility at Union Reefs.
GBS Gold has tabled a production target of 150,000 oz. gold in 2007 then rising to 300,000 oz. annually by 2009. The company has consolidated more than 2,500 sq. km of tenements within 125-km trucking distance of the Union Reefs plant.