JOHANNESBURG, SA, Sept. 18, 2012 /PRNewswire/ - Great Basin Gold Ltd. ("Great Basin Gold"), (TSX: GBG; NYSE MKT: GBG; JSE: GBG) announces that its principal South African subsidiary, Southgold Exploration (Pty) Ltd. ("Southgold") owner of the Burnstone mine, has filed for protection under the South African business rescue ("BR") procedures. Great Basin Gold itself expects to seek creditor protection this week. The insolvency filings are intended to allow Southgold and the Company a period of time to seek buyers and partners for Great Basin Gold's two gold mining projects and/or corporate level financiers in an effort to return to solvency. The BR proceeding constitutes a default under the Company's unsecured convertible debentures (TSX:GBG.DB) which have a principal amount of $126 million. Trading in Great Basin Gold's shares and debentures will remain suspended and the NYSE MKT, TSX and JSE are expected to initiate delisting procedures for these securities.
Great Basin Gold is currently endeavoring to negotiate a debtor-in-possession working capital loan with certain lenders which if successfully concluded and if approved by any necessary Court approvals, would provide Great Basin Gold with liquidity to pursue an orderly shutdown of Burnstone while it seeks a restructuring and/or sale of its assets. As of the time of this news release there can be no certainty the negotiations will succeed.
Lou van Vuuren, interim CEO, commented, " The BR creditor protection filing was necessary to provide the Company with some additional time to see results from its strategic restructuring process. Assuming our DIP loan negotiations are successful, those funds will be used firstly to ensure the orderly suspension of operations at Burnstone and to provide some additional funds for Hollister."
Lou van Vuuren
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