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Great Basin Gold provides update

Wednesday, Dec 26, 2012

VANCOUVER, Dec. 24, 2012 /PRNewswire/ - Great Basin Gold Ltd. ("Great Basin Gold" or the "Company") initiated creditor protection proceedings under CCAA in Canada in September 2012 and provides this general situation update. Under the CCAA proceedings, the stay of any potential creditor lawsuits was extended until January 14, 2013. As previously announced, the Company's executive officers are now provided by a professional restructuring services firm which was appointed by agreement with the bank lenders who are the Company's principal creditors.

The third fiscal quarter's management's discussion and analysis ("MD&A") filed November 14, 2012 at discloses that the Company will require additional funding by mid-January 2013 in order to allow the planned sales and/or recapitalization process for its two principal mining projects (Hollister in Nevada, Burnstone in South Africa). While discussions with the lenders about securing additional funding are ongoing, no assurances can be given that the required funding will be obtained. The third quarter MD&A also stated that reviews of the lowered Hollister reserve and resource estimates were also ongoing (the Company recognizes reserves at Hollister for Canadian but not US purposes). Based on ongoing analyses, in-house staff now estimates a further reduction in Hollister resources and reserves is appropriate which implies a 3 year mine life based on the current reserve estimate at current production rates versus the 6 years previously estimated. Engineering and geological staff believe this life could potentially be extended by further developmental drilling which the Company has not been in a position to fund. The Company has initiated preparation of a NI 43-101 technical report to be filed within 45 days which will provide data and analyses to support these tentative conclusions and to serve as a basis to determine if an impairment charge from the approximately $90 million carrying value of Hollister is now warranted.

The revised mineral resource estimates reflect changes in geological modeling adopted for the purposes of stringent grade control for the mineral reserve estimation process based on trial mining experience. The mineral resources are comprised of epithermal vein and disseminated Tertiary mineralization.  At a 0.15 gold ounce per ton ("opt") cutoff grade Measured and Indicated Resources have been reduced to 545,000 gold equivalent ounces1 ("Au eqv oz") in 0.49 Mt grading 0.918 opt Au and 5.7 opt Ag. The estimate also includes 254,000 Au eqv oz in Inferred Mineral Resources. Re-estimated Proven and Probable Mineral Reserves total 187,000 Au eqv oz in 0.29 Mt grading 0.590 opt Au and 2.7 opt Ag2.  Additional detail is shown in the tables appended to this release.

A limited underground drilling program that has continued over the past 18 months has focused on increasing confidence in the estimates of mineral resources and reserves to allow for improved mine planning and forecasting. The outcome of this drilling has been a considerable tightening up of the geological vein modeling, which resulted in a higher-grade lower-tonnage resource model being used for the purposes of mine planning and mineral reserve estimation. Critical to the sustainability of the project will be the funding and completion of underground development necessary to access the mineral resources and reserves, with the objective of extending the current 3-year life of the project. Future work should include phases of surface drilling to test targets peripheral to the current underground infrastructure. The revised mineral resources and reserves also reflect depletion from trial mining in excess of 370,000 tons which yielded approximately 400,000 Au eqv oz since commencement in 2008.

There has been a downgrading in the estimate of reserves primarily because of the lower volume vein resource model used and the exclusion of reserves previously estimated for the Tertiary material. The Tertiary mineralization occurs in broad pod-like zones of low-grade gold concentration that are generally developed around very high-grade, narrow structures that are sometimes linked to underlying epithermal veins. There is a need for continued underground development and drilling before reserve status can be assigned to this material. The trial mining operation continues to extract ore from zones of the Tertiary mineralization as there is a very significant upside mineralized component to these areas. During 2012, trial mining of a number of Tertiary zones has realized 12,915 Au eqv oz from 13,200 tons grading 0.897 opt Au and 3.747 opt Ag. It is believed that considerable upside exists through further refinement and development of the Tertiary material through a combination of maximizing access and stoping options from the trackless infrastructure afforded by the spiral ramp, and optimization of pillar/backfill designs to maximize profitable extraction.

SOURCE Great Basin Gold Ltd.

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