Great Basin Gold Ltd. (GBG)

Q2 2012 Earnings Call

August 15, 2012 09:00 am ET


Ron Thiessen – Chairman & Director

Lou van Vuuren – Interim Chief Executive Officer

Patrick Cooke – Director

Dana Roets – Chief Operating Officer


Josh Wolfson – Stifel Nicolaus

Craig Gilbert – Linden Advisors

Tony Sonn – Private Investor

Jonathan Guy – RBC Capital Markets



Good day, ladies and gentlemen, and welcome to the Q2 2012 Great Basin Gold Earnings Conference call. My name is Jeff and I will be your coordinator for today. (Operator instructions.) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Lou van Vuuren, Interim CEO. And you have the floor, sir.

Lou van Vuuren

Thank you very much, Jeff. Good morning, ladies and gentlemen, and welcome to Great Basin Gold’s results presentation for Q2, ended June 30, 2012. I trust that you were all able to retrieve the information and its supporting documentation from our website or via email. If not please email Michael Curlook or any member of the team and I am sure you will get the information quickly.

I am being joined on the call today by Ron Thiessen, the Chairman of the Great Basin Gold Board as well as Patrick Cooke, who is the Chairman of the Audit Committee as well as the Chairman of the Special Committee of the Board; and then also Dana Roets, the Chief Operating Officer and other members of the current management team.

On Slide #2, this is the customary disclaimers slide about the Canadian resource and reserve terminology and forward-looking information. You obviously will have seen it before and a copy is also available on our website together with the slides. I’m now going to turn the microphone over to Ron Thiessen, Chairman of the Board, for an introduction and overview.

Ron Thiessen

Thank you, Lou. Turning to Slide #3 and saying good morning to everyone on the call. You will have received the material and we’ll start looking at [the Special Committee] announced that the Board of Directors has now initiated a review process to consider a range of strategic alternatives. We have a commitment to preserve and enhance shareholder value, and in light of our continuing financial challenges deriving mainly from the ramp-up productions we’ve been facing at the Burnstone Mine. And we’ll hear about those later in the call.

The strategic alternatives that we’re looking at by the Committee primarily include the possible sale of one of the company’s projects, a capital raising, a loan restructuring or even the possible merger of the company. We have retained CIBC World Markets as financial advisor to the Board and the Special Committee. This strategic review process is expected to take a number of weeks, perhaps even months if any of the fundamental changes are on the table. But we will have to make some important decisions in the very near term given our very limited cash resources.

The company’s management and Board is working closely with our lenders to potentially restructure the current term loan facilities to improve the company’s cash flow in the short to medium term. Management has also implemented an aggressive cost reduction program involving off-mine site costs and overheads. I wish I could tell you that we’ve reached an understanding with our lenders but we’re not there yet and they are following the strategic review process very closely as well. Importantly, we have reviewed the Burnstone assets with technical consultants retained by the lenders and as disclosed in these quarterly results we’ve determined no impairment charges are warranted at this time.

As part of our corporate restructuring Mr. Dippenaar has resigned as CEO and has been replaced by Mr. von Vuuren as the company’s Interim CEO. As you know, Ferdi oversaw the development of the company’s two gold mining projects during a period which witnessed the worldwide financial crisis, skyrocketing capital costs and other challenges which the company ultimately overcame. We thank him for his dedication and we wish him well in his future endeavors.

Lou has been Great Basin’s CFO since 2008 and understands every facet of the company’s operations. He will be of key assistance to the Special Committee and we welcome his assumption of duties as Interim CEO.

Despite the setbacks the Board remains confident that startup challenges at these two mines will be overcome and investors will be rewarded for their patience. I’ll now ask Lou to take you through some of the more important financial aspects of the quarter. Over to you, Lou.

Lou von Vuuren

Thank you, Ron, and moving on to Slide #4 which is a summary of the results for the quarter. Dana, our Chief Operating Officer will get into more detail of the operational performance in the later slide, but in summary ounces recovered and ounces sold at both operations were below plan, and this impacts on our cost and obviously on the earnings as well.

In comparison to Q2 2011, which was a record quarter for our Nevada operations as we not only mine exceptionally high-grade material during that quarter but we also sold some of the ounces during that quarter which was recovered in Q1 2011. We do expect a significant improvement from our Nevada operations in the next two quarters as higher-grade areas of the mine have been scheduled for mining, which should deliver results more in line with the historical results of that operation. We know what this asset can do and we will get it back to that level that it has been operating at before.

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