Burnstone’s Area 1 grows

Following more than 20,000 metres of infill drilling on the Burnstone gold project in South Africa, Great Basin Gold (GBG-V) has raised mineral resources in the Area 1 deposit.

Based on a cutoff grade of 0 gram-cm per tonne, measured resources are pegged at 8.4 million tonnes grading 13.7 grams gold per tonne, or 3.7 million contained ounces of gold. Another 4.8 million tonnes averaging 15.5 grams gold, or 2.4 million oz., are classified as indicated.

When the cutoff grade is raised to 350 gram-cm per tonne, measured resources slip to 4.7 million tonnes grading 18.5 grams gold, or 2.8 million oz. Indicated resources come in at 2.8 million tonnes of 20.8 grams, or 1.9 million contained ounces.

Completed by Behre Dolbear & Co., the estimate is based on 57 core holes.

A 2002 scoping study envisages an underground operation capable of producing 2,500 tonnes per day, from which would be extracted 130,000 oz. gold annually over 24 years. Initial capital costs are pegged at US$50.6 million; cash costs, at US$175 per oz.

Great Basin plans to sink 10 more holes in Area 1, with an eye toward converting more resources to the measured category. The drilling will be done in conjunction with an ongoing, 10,000-metre drill program on Area 2, about 16 km to the southeast.

Inferred resources at Area 2 stand at 24.3 million tonnes running 14.7 grams gold. The estimate is based on nine drill holes.

The 400-sq.-km Burnstone property is also home to several untested targets.

Engineering studies and cost estimates for underground development of Area 1 have begun, in anticipation of starting a feasibility study later this year.

Gold at Burnstone is hosted by the Kimberley reef, a 30-to-100-cm-wide conglomerate (averaging 40 cm at Burnstone).

Great Basin can acquire an 80% stake in Burnstone by acquiring privately held, South African-based Southgold, which holds the right to acquire the property subject to a 20-26% sale to Tanter Investments, a South African black empowerment group.

Following an initial payment in early May, Great Basin still needs to issue Southgold 11 million shares and 5.5 million like-priced warrants by the end of January 2004 to wrap up the deal.