Great Basin Gold – A Global Mining Company
idea implementation delivery
Great Basin Gold began with people who saw the potential value, and believed in an idea...
...With tenacity, expertise and dedication, GBG has crossed the threshold and is now implementing the production phase. The abstract has become real...
...and a powerful vision of delivery in the future is driving its development and growth. Responsible Delivery
Contents
Preliminary Notes 01
Our Culture 02
Corporate Profile 04
Corporate Structure 06
Overview and Performance Summary 08
Chairman’s Letter 09
Chief Executive Officer’s Review 11
Health and Safety 13
Review of Operations Burnstone 16 Hollister 32 Other Projects 51
Leadership Development and People 61
Environmental Management 64
Corporate Social Responsibility 69
Directors and Executives 77
Corporate Governance 86
Strategic Risks 97
Glossary 115
This Annual Report includes certain statements that may be deemed forward-looking statements and forward-looking information. This Annual Report is based on certain United States securities filings. Accordingly, we advise that these forward-looking statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this Annual Report, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects to take place in the future are forward-looking statements or information. Although the Company believes the expectations expressed in such forward-looking statements or information are based on reasonable assumptions, such statements or information are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements or information. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices for gold and silver, exploitation and exploration successes, continued availability of capital and financing and general economic, market, business, or governmental conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements or information.
Annual Report 2009 Idea, Implementation, Delivery Preliminary Notes
Incorporation of Continuous Disclosure for the fiscal years ended December 31, 2009 and at www.sedar.com. All financial information in this Annual Documents by Reference 2008, together with the auditors’ reports thereon, Report is prepared in accordance with Canadian GAAP. In this Annual Report, “the Company”, “we”, “us”, “GBG” interim consolidated financial statements, reconciliations or “Great Basin Gold” refers to Great Basin Gold Limited to United States (US) Generally Accepted Accounting The foregoing documents have been filed publicly by and all its subsidiaries together, unless the context otherwise Principles (GAAP), proxy circulars, news releases and Great Basin Gold, paper copies of which are available clearly requires. other continuous disclosure documents. These documents on request from the offices of Great Basin Gold or on the are available for review on the System for Electronic SEDAR website indicated above. See also our audited Consolidated Financial Statements Document Analysis and Retrieval (SEDAR) website located
Currency and Metric Equivalents Metric Units Multiply by Imperial Units All currency amounts in this Annual Report are stated in Canadian Dollars (CAD) unless otherwise indicated. hectares 2.471 = acres
Conversion of metric units into imperial equivalents is meters (m) 3.281 = feet (ft) as follows: kilometers (km) 0.621 = miles (5,280ft)
grams 0.032 = troy ounces (oz)
tonnes 1.102 = short tons (2,000lbs)
grams/tonne (g/t) 0.029 = troy ounces/ton (oz/ton)
Currency conversions used herein are based on December 31, 2009, published by the Bank of Canada as follows: US$1 = CAD1.05
The following table sets forth: Years Ended December 31 (i) the rate of exchange for the CAD, expressed in US Dollars (US$), in effect at the end of the periods 2009 2008 2007 indicated; Rate at end of period 0.9515 0.8166 1.0120 (ii) the average of exchange rates in effect on the last day of each month during such periods; and Average rate for period 0.8760 0.9381 0.9304 (iii) the high and low exchange rates during such periods, High for period 0.9716 1.0289 1.0905 each based on the noon rate of exchange as reported by the Bank of Canada for conversion of CAD into US$. Low for period 0.7692 0.7711 0.8437
The following table sets forth: Years Ended December 31 (i) the rate of exchange for the South African Rand (ZAR) expressed in US$, in effect at the end of the periods 2009 2008 2007 indicated; Rate at end of period 0.1355 0.1071 0.1457 (ii) the average of exchange rates in effect on the last day of each month during such periods; and Average rate for period 0.1218 0.1229 0.1419 (iii) the high and low exchange rates during such periods, High for period 0.1378 0.1483 0.1551 as reported by the Bank of Canada. Low for period 0.0939 0.0886 0.1332
The following table sets forth: Years Ended December 31 (i) the rate of exchange for ZAR, expressed in CAD, in effect at the end of the periods indicated; 2009 2008 2007 (ii) the average of exchange rates in effect on the last day Rate at end of period 0.1418 0.1311 0.1440 of each month during such periods; and Average rate for period 0.1362 0.1299 0.1523 (iii) the high and low exchange rates during such periods, as reported by the Bank of Canada. High for period 0.1502 0.1514 0.1692 Low for period 0.1195 0.1108 0.1415
Idea Implementation Delivery
1 Great Basin Gold Annual Report 2009 Our Culture
Committed to “Think, Say, Do”
• We uphold the principle of Responsible Delivery and therefore we are responsible to all our stakeholders. • We value honesty, integrity, respect and trust. • We engage, communicate, develop and deliver. • We focus on ideas, growth, development and creating value. • We strive to maintain an open, honest and diverse environment that encourages mutual respect. • We build high-performance teams focused on safe and responsible delivery. • Our approach is problem elimination based on high levels of employee engagement and commitment. • We get involved to make a difference.
Our Pledge
• Our people are our greatest differentiator. • Safety remains paramount and central to all that we do; we relentlessly pursue zero harm. • We are guided by our core values of respect, trust, honesty and integrity for people, our local communities and the environment. • Our workplace allows stakeholders to say: “This is our mine, the best place to work, a place where diversity is nourished and where communities are engaged in true developmental partnership. We are truly world class.” • We share one vision, one dream and one reality, and ensure we deliver what we promise.
Idea Implementation Delivery
3 Great Basin Gold Annual Report 2009 Responsible Delivery Corporate Profile
“When we started our Company, we made a decision to ensure that we had a strong ability to manage projects. We established a corporate business intelligence office for planning, reporting and managing information and, on the frontline, we established exchange rooms for planning and reporting on a technical level. The idea is to have business information available to all. It is work in progress, but we believe it is something which makes Great Basin Gold different.”
Louis Scheepers, Project Management Executive
Annual Report 2009 Idea, Implementation, Delivery 4 Corporate Profile
Idea Implementation Delivery
ImPlemeNtINg aND DelIverINg At the Hollister Property, an ore processing facility which the oN IDeas underground exploration and Company has been refurbishing. The Great Basin Gold is an “emerging development program is underway Company has not prepared a technical producer” mining company engaged to conduct trial mining and to obtain report in respect of the Esmeralda in the acquisition, exploration and bulk samples to help confirm a Property as it is not considered material development of precious metal feasibility analysis done in 2007 and no significant exploration work is deposits. The Company currently has and updated in 2009. currently budgeted for it. two material projects, both of which are at the trial mining stage, namely: At the Burnstone Property, an initial The Company is also conducting early- feasibility study was completed in stage exploration on a number of other • the Hollister gold project, located on 2006, followed by an optimized prospects, primarily in Africa. the Carlin Trend in Nevada, United feasibility study completed in 2007 States of America (USA); and and updated in October 2009. The We currently do not have any • the Burnstone gold project, development of an access decline, commercial mining operations. acquired in 2002, located in the surface infrastructure, vertical and Revenues generated during 2009 Witwatersrand Basin goldfields in the ventilation shafts and a metallurgical are attributable to gold and ore sales Republic of South Africa (RSA). plant is now nearing completion. from the ore extracted during the trial mining activities conducted at the Updated technical reports were filed A second Nevada property, Hollister Property. for both the Hollister Property and Esmeralda, was acquired in the Burnstone Property in November December 2008 for US$2 million 2009, available on Great Basin’s and the assumption of the existing profile at www.sedar.com. environmental bond, primarily for its
Above: Esmeralda Mill, Nevada
5 Great Basin Gold Annual Report 2009 Responsible Delivery Corporate structure
struCtureD to DelIver We were incorporated under the name Sentinel Resources Ltd on March 19, 1986, under the laws of the province of British Columbia, Canada. From that date through 1997, we underwent various mergers and acquisitions and became Great Basin Gold Limited with our final merger on December 31, 1997.
We continue to be governed by the laws of British Columbia, especially the Business Corporations Act (BC), but are also subject to corporate and securities laws in South Africa and securities laws in the USA.
The subsidiaries noted below will be subject to the corporate laws of their jurisdiction of incorporation.
Our registered office is located at 1108-1030 West Georgia Street, Vancouver, British Columbia, V6E 4N6, and our operational head office is located at 138 West Street, Sandton, 2146, RSA.
Idea
Implementation
Delivery
Top: Drilling at Hollister Mine Bottom: At work at Burnstone Mine
Annual Report 2009 Idea, Implementation, Delivery 6 Great Basin Gold Group Structure
Incorporate Relationship Great Basin Gold Limited We operate directly and through our subsidiaries as follows: Incorporated: Canada (BC)
100% 100% 100% N5C Resources Inc GBG Rusaf Gold Ltd Great Basin Gold Inc Incorporated: Incorporated: Incorporated: Cayman Islands Canada (BC) USA (Nevada)
80% earn in 100% 15% 100% 100% Tsetsera JV N6C Resources Inc Kryso Resources PLC Antler Peak Gold Inc Rodeo Creek Gold Inc Manica, Incorporated: Incorporated: Incorporated: USA Incorporated: Mozambique Cayman Islands United Kingdom (Nevada) USA (Nevada)
100% ESMERALDA 100% 100% Hollister Ventures Touchstone PROPERTY Rock Creek Resources 100% Hawthorne, Nevada Corporation Conservancy LLC Great Basin Gold Incorporated: Company USA Nevada Incorporated: RSA (Pty) Ltd USA (Nevada) USA Incorporated: USA (Nevada) 25% RSA 75% HOLLISTER PROPERTY Elko, Nevada 100% 100% 100% 100% 100% 100% USA
Boulder Kurils Graceholme Franklyn Ltd Goldtone Ltd Investments Ltd Holdings Ltd Finance Ltd (BVI) (BVI) (Cyprus) (BVI) (BVI)
100% 100% 100% 100% 100%
100% Shield Kurils Project Kurils Reef Premier Protocol Southgold Resources Ltd Holdings Ltd Resources LLC Miners Ltd Resources Ltd Exploration Ltd Exploration (Pty) Ltd (Tanzania) (BVI) (Russia) (Tanzania) (Tanzania) (Tanzania) Incorporated: RSA BURNSTONE PROPERTY 100% Balfour, Mpumalanga RSA 100% Puma Gold (Pty) Ltd Incorporated: RSA
7 Great Basin Gold Annual Report 2009 Responsible Delivery Overview and Performance Summary
Corporate Highlights Burnstone Highlights Hollister Highlights • We raised the capital needed to • We completed the sinking of a • We extracted approximately continue with our mine developments, shallow vertical shaft to a depth 81,000 ounces of gold at a grade and completed the commissioning of 485m; equipping is currently of 1.15oz/ton (35g/t). and upgrading of the Esmeralda in progress. • The Hatter Graben discovery, made processing plant. • We completed the raise boring of early in 2008, was followed by the • We finalized an equity offering to a 305m ventilation shaft and the Gloria discovery in 2009, again raise $149 million (US$135 million) installation of surface fans. underpinning the prospective nature in March and then replaced the of the Hollister Property. • We made progress with the planned project funding facility with development of the decline, which • We completed the refurbishment of a $126,5 million (US$115 million) will link up with the vertical shaft the Esmeralda Mill in August 2009; five-year convertible debenture, before the end of June 2010. commissioning proceeded and thereby enabling the development of culminated in the first gold pour on the Burnstone Project to continue. • We made good progress with the April 14, 2010. construction of the metallurgical plant and associated surface infrastructure, which is planned for commissioning in July 2010.
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 8 Chairman’s Letter
“I am very proud to have been and to continue to be associated with the Great Basin Gold management and development team, and look forward to a prosperous future.”
Ronald W Thiessen, Chairman of the Board
Idea Implementation Delivery
9 Great Basin Gold Annual Report 2009 Responsible Delivery
Recovery and Relief currencies and government budgets 2009 was a year of recovery and around the world under pressure from a welcome relief after 2008. We the hangover of 2008 and 2009, started the year with a great deal of there is no better time to be invested in trepidation and work to do; 2008 had gold – the ultimate measure of security left many companies scarred from the and wealth, and a hedge against price economic crisis and this could not be inflation and currency depreciation. simply swept away by the passage of days on a calendar. I recently returned from a trip to China, and as I passed through the Beijing We at Great Basin Gold focused on airport I came upon a very high-end rebuilding our capital, restoring financial shop – not selling the latest in fashion, liquidity, continuing to develop Burnstone but “gold”. Gold was being sold in and Hollister and initiating a plan to many forms: wafers, bars (25g to 1kg), rebuild Esmeralda to become a viable coins, bracelets and rings. All were alternative to our ore processing issues. of very high quality. It struck me that it is probably easier for the average Even in the face of continued liquidity person to acquire a very high-grade issues in the capital and debt markets gold piece in China than anywhere through much of 2009, we were able else in the world. China, with one to raise the capital needed not only to of the largest populations on the continue with our mine developments, planet, a growing middle and wealthy but also to substantially complete class, and a healthy economy, is a a rebuild and renovation of the very logical market for gold investors. Esmeralda processing plant. This store at the Beijing airport is a demonstration of just how interested the 2009 was not without challenges – as Chinese market is in gold. Gold buying is the case when mines are being built in China has increased substantially (and your company is building two!) – over the past few years and it is and the crisis of 2008 magnified and anticipated to continue to grow very intensified some of these challenges. I significantly in the years to come. visited all of our projects in 2009 and came away with a sense of satisfaction I am very proud to have been and that we have assembled a strong, to continue to be associated with the dedicated and committed team to see Great Basin Gold management and our projects through to production. development team, and look forward to a prosperous future. The next few years are going to see the transition of the Company to a producer; first at Burnstone and then at Hollister. These changes will be significant, and I fully expect that to be Delivery reflected in our market capitalization.
In terms of the markets in general, I think the timing for bringing two gold projects into production in the next Ronald W Thiessen two years could not be better. With Chairman of the Board
Annual Report 2009 Idea, Implementation, Delivery 10 Chief Executive Officer’s Review
“Our ongoing commitment to Responsible Delivery means our philosophy at Great Basin Gold has been to take the way we do things a step further than is really necessary, with the resources that are available, and deliver according to our values of respect, honesty, trust and integrity.”
Ferdi Dippenaar, President, CEO and Director
Responsible Delivery of our two quality projects under last remaining hurdle was cleared to At Great Basin Gold, we are development and to scale down ensure the continuation of the capital responsible to all our stakeholders – on other activities proved to be the expenditure program at Burnstone. our people, the environment and the correct one. We have made significant communities in which we operate – but progress at both the Burnstone and The project is nearing completion after ultimately we remain accountable to Hollister Projects, which will transform nearly four years, with a number of our shareholders. Great Basin Gold from a late-stage major milestones achieved over the exploration company to the ranks of past few months: Our ongoing commitment to emerging producers. • completion of the sinking of a Responsible Delivery means our shallow vertical shaft to a depth of philosophy at Great Basin Gold has Gold mining remains a long-term 485m – equipping is currently in been to take the way we do things a business which requires a quality progress; step further than is really necessary, orebody, a detailed exploration with the resources that are available, program and, of course, funding from • the raise boring of a 305m and deliver according to our values of shareholders to deliver the project. In ventilation shaft and the respect, honesty, trust and integrity. 2009 we were faced with a challenge installation of surface fans; to raise funding to continue with the • progress with the development of the The different operating conditions Burnstone Project and we completed decline which will link up with the encountered in the latter half of 2008 an equity offering to raise $126 million vertical shaft before the end of June continued into the first half of 2009 (US$110 million) in March. However, 2010; and and we had a number of challenges the process to complete the project to deal with in an environment which funding facility with a syndicate of • good progress with the construction featured market uncertainty and low South African banks became long and of the metallurgical plant and levels of capital liquidity. protracted. The Company then opted associated surface infrastructure, to replace this funding facility with a which is planned for commissioning Our decision to focus on the delivery five-year convertible debenture and the in July 2010.
Top: View of the Burnstone Metallurgical Plant from the top of the vertical shaft headgear
11 Great Basin Gold Annual Report 2009 Responsible Delivery
Idea Implementation Delivery
This project, which started with the Nevada, where early indications organization, as well as trading in line construction of a decline shaft box-cut in suggest that prospects are positive. with our peer group. July 2006, will be completed by mid- We have appointed a project team to 2010, with production of approximately evaluate all historical exploration and The progress towards delivery was 80,000 ounces planned for the year. drilling data and geological reports on made possible by input from all the property. Any decision on either members of the team, not only my During the past year we made good future exploration or mining will be team, but also General Managers progress with trial mining at Hollister, taken in the latter part of the year. Paul Huet and Vusi Khumalo and their extracting approximately 81,000 teams from Hollister and Burnstone, ounces at a grade of 1.15oz/ton We are confident that continued respectively. We have accelerated (54g/t), whilst focusing on various exploration at both Burnstone and in leadership maturity and the mining methods which can be applied Hollister will deliver more of the exciting development of our people. We will to ensure that we are able to results we have seen to date. continue to develop a values-based successfully extract the narrow organization spurred on by exceptional high-grade gold and silver veins. Although we curtailed active exploration levels of employee engagement. on all our other prospects in 2009, The Hatter Graben discovery, made some advanced-stage exploration During the year ahead, our focus will early in 2008, was followed by the continued at our Hollister and Burnstone continue to be on cash preservation Gloria discovery in 2009, again Properties. With respect to our Tanzanian and increasing production from current underpinning the prospective nature exploration projects, technical reports operations. We made good progress of the Hollister Property. on work undertaken during 2008 and in 2009. 2010 will be a defining year 2009 were completed. We will soon in positioning Great Basin Gold as a Our dependence on third parties to be able to better assess continuing serious emerging producer, focused on process underground tonnage from exploration expenditure once funding delivering value to our shareholders. Hollister was eliminated, following the becomes available from operations. acquisition of the Esmeralda Mill in December 2008. The refurbishment We are entering an exciting phase in the was completed in August 2009 and development of the Company, with both commissioning proceeded and culminated projects potentially reaching commercial in the first gold pour on April 14, 2010. production levels at below industry A program to upgrade the facility is average cash costs. We also believe that currently underway. as we eliminate the risks associated with start-up projects in the remainder of this We are also completing a technical year, our share price will recover to levels Ferdi Dippenaar review of the Esmeralda Property in which take into account the value of the President, CEO and Director
Annual Report 2009 Idea, Implementation, Delivery 12 health and safety
Idea Implementation Delivery
“At a high level, we believe in the integration of safety and training. Although in its initial phase, we are already seeing the benefits of this approach. The Safety and Training Officer can identify training needs underground and then solve any problems far more quickly than if the two departments were separate.”
André Lantze, Burnstone Safety Manager
13 Great Basin Gold Annual Report 2009 Responsible Delivery
“We’ve made a commitment to focus on safety as a paramount priority. To ensure a safety- driven culture, the group’s leadership introduces the importance of safety right from the initial interview stage. Safety should be at the forefront of everyone’s minds. Our employees are taught to look after themselves and their fellow team mates. We’ve found that any safety problems which have occurred have been the result of people taking short-cuts.”
Johan Oelofse, Chief Operating Officer (COO)
t Great Basin Gold, the health and Safety Assessment Series (OHSAS) and safety of our people is 18000 model against which to measure Aa paramount priority; the its health and safety management cornerstone of operational excellence. systems, the effectiveness of which will be It is a philosophy that is embedded in monitored and reviewed. the way we work, the decisions we make and the actions we take. Burnstone It with sadness that we report two Our goal is to be “Always Safe”. fatalities at Burnstone during 2009. We have a culture of zero tolerance for anything unsafe – actions, decisions, Mr Pule Seatle, a Grinaker employee conditions, equipment and attitudes. As who worked as an assistant Rock Drill part of the overall Risk Management Operator during the sinking of the process and culture, good health and vertical shaft, was injured on January safety management will help to eliminate 6, 2009, by an excavator working injury and loss, promote a healthy in the shaft. He was admitted to workforce and protect all who are Union hospital in Alberton, where he affected by the Company’s operations. subsequently passed away.
Great Basin Gold recognizes and Mr Moeketsi Esau Komak, who worked will meet its statutory health and safety as an Engineering Learner at Burnstone responsibilities. We will provide safe and Mine, was fatally injured on the evening healthy environments for our staff and all of July 14, 2009, during a tramming / persons affected by our operations, be transport accident at the decline shaft. they for learning, leisure or work, as well as safe systems of work, safe equipment On behalf of the management and and materials for use at work, and employees of Great Basin Gold and individuals who are competent. Burnstone Mine, we would like to express our sincere condolences to their Great Basin Gold will maintain families and friends. appropriate health and safety management systems, arrangements These incidents indicate that greater and organizational structures to ensure effort is required to ensure that we are adequate health and safety for all people “Always Safe”. A number of additional affected by its operations. The company initiatives have been implemented to has adopted the Occupational Health achieve our goal.
Annual Report 2009 Idea, Implementation, Delivery 14 Health and Safety
The Burnstone Project underwent a successful Presidential Audit in 2009. Below is “At Burnstone, we do things the Lost Time Injury Frequency Rate (LTIFR) (per million hours worked): differently. We have a process of ensuring safety compliance by conducting inspections and BURNSTONE SAFETY LTIFR planned task observations. 50.00
We close the loop by constantly 45.00 following up to ensure our safety 40.00 requirements are being met. We have key performance indicators 35.00
to which people need to comply 30.00 and our machines are always in 25.00 good working order. We have a good system of incident reporting, 20.00
and after any incident we analyze 15.00 it carefully and put a proper action plan in place. Our slogan 10.00 is: ‘Always safe, and zero harm 5.00 for people, equipment and the 0.00 environment.’ Jul 08 Jul 09 Jun 08 Jun 09 Jan 08 Jan 09 Feb 08 Feb 09 Oct 08 Oct 09 Apr 08 Apr 09 Sep 08 Sep 09 Dec 08 Dec 09 Aug 08 Aug 09 Mar 08 Mar 09 Nov 08 Nov 09 May 08 We have seen the results of our May 09 safety methods with a nine-month record without any reportable incident underground. Prior to Hollister was notified that Human Capital that, we had one accident at the The Hollister Mine has now worked Manager, Nevada Operations, Lee mine, and learnt that we need to 723,117 hours since the start of the Morrison had received the Nevada be continually talking to people project, with zero fatalities and only Mining Association award as Safety underground and following up.” four Lost Time Accidents. This is an Supervisor of the Year for 2008. exceptional record, given that this Edward Nethononda is a relatively new property being The Nevada team has also refurbished Burnstone Chief Safety Officer developed with new processes and and commissioned the Esmeralda Mill new employees at all levels. with no Lost Time Accidents. Below is the LTIFR for Hollister (per 200,000 In September 2009, Hollister Mine hours worked): “The sinking of our ventilation shaft is underway, with 30m to go. It will extract any contaminated air HOLLISTER SAFETY LTIFR from underground and replace it
with fresh air. 120
We are continually analyzing air 1.00 in different areas to see if they are 0.80 well-ventilated or not, and we are 0.60 in the process of sealing off unused areas so we don’t waste fresh air.” 0.40
0.20 Maoba Edison Makhetha 0.00 Burnstone Occupational
Hygienist 30 To Jun 07 Jun 08 Jun 09 Feb 08 Feb 09 Oct 07 Oct 08 Oct 09 Apr 08 Apr 09 Apr 07 Dec 07 Dec 08 Dec 09 Aug 08 Aug 07 Aug 09
15 Great Basin Gold Annual Report 2009 Responsible Delivery Review of Operations: Burnstone Property – Preparing for the First Gold Pour
Left: Planning the box-cut of the Burnstone Project decline, May 2006 Top right: Development begins, June 2006 Bottom right: Burnstone Mine, 2010
“As a start-up mine, we have a good opportunity to do things right, especially in terms of selecting the right people with appropriate skills, as well as those from the local community whom we can train.
We have developed a thinking culture, with safety and operational excellence as our main themes. We believe in empowering our people and making them accountable. If we can work with our people and get that aspect right, successful delivery of production targets will follow.”
Dana Roets, Vice President: Corporate Development
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 16 Review of Operations: Burnstone Property
2006 2010
Unless stated otherwise, information of a technical or scientific nature related to the Burnstone Property contained in this report is summarized or extracted from a technical report entitled Revised Technical Report Update on the September 2009 Mineral Resource Estimate for the Burnstone Gold Project dated effective October 21, 2009, as amended November 9, 2009, prepared by Deon van der Heever, Pr. Sci. Nat., GeoLogix Mineral Resource Consultants (Pty) Ltd, Johan G Oelofse, Pr. Eng., FSAIMM and Philip N Bentley, Pr. Sci. Nat., and filed on Great Basin’s profile on SEDAR at www.sedar.com on November 10, 2009. Messrs Oelofse and Bentley are employees of Great Basin Gold and Mr van der Heever is independent of the Company. All information relating to the contents of the 2009 Burnstone Report, including but not limited to statements of the Burnstone Property’s potential and information such as capital and operating costs, production summary and financial analysis are forward- looking statements. The 2009 Burnstone Report was prepared to update the 2008 Burnstone Mineral Resource Estimate. The following are the principal risk factors and uncertainties which, in management’s opinion, are likely to most directly affect the ultimate feasibility of the Burnstone Property. The mineralized material at the Burnstone Property is currently classified as a Measured and Indicated Resource, and a portion of it qualifies under Canadian and US mining disclosure standards as a Proven and Probable Reserve. The Company advises investors that while the terms ‘Measured and Indicated Resources’ are recognized and required by Canadian regulations, the US Securities and Exchange Commission (SEC) does not recognize it. Investors are cautioned not to assume that all mineral deposits in the Measured and Indicated categories will ever be converted into reserves. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Although costs, including design, procurement, construction and on-going operating costs and metal recoveries have been established at a level of detail required for a feasibility study, these could be materially different from those contained in the 2009 Burnstone Report. There can be no assurance that these infrastructure facilities can be developed on a timely and cost-effective basis. Energy risks include the potential for significant increases in the cost of fuel and electricity. The 2009 Burnstone Report assumes specified, long-term price levels for gold. The price of this metal is historically volatile, and the Company has no control of or influence on its price, which is determined in international markets. There can be no assurance that the price of gold will continue at current levels or that it will not decline below the prices assumed in the 2009 Burnstone Report. Prices for gold have been below the price ranges assumed in 2009 Burnstone Report at times during the past 10 years, and for extended periods of time. Other general risks include those ordinary to very large construction projects, including the general uncertainties inherent in engineering and construction cost, the need to comply with generally increasing environmental obligations, and accommodation of local and community concerns. South African mining tenure laws require that significant economic ownership in Burnstone be held by Historically Disadvantaged South Africans (HDSAs) and for which ownership rights the Company may not be significantly compensated. The Company has an agreement with Tranter Gold (Pty) Ltd which represents the required interest by HDSAs. The economics of the Burnstone Property are sensitive to the US$ and ZAR exchange rate and this rate has been subject to large fluctuations in the last several years.
History from the Kildare Gold Mine property. In November 2002, Great Basin Gold Gold was first discovered in the South entered into an option agreement with Rand area, located in the north-eastern Exploration drilling in the Burnstone Southgold to purchase up to 100% of part of the Witwatersrand Basin in Property area was conducted Southgold on a phased basis, and hence South Africa, in 1887, leading to the intermittently during the period 1974 to Southgold became a wholly-owned establishment of a number of small 1993, initially by Union Corporation subsidiary of Great Basin Gold. The mines and prospects that operated, Ltd and later by Gencor. Anglovaal Ltd Burnstone Property now encompasses intermittently, from 1892 to 1962. The also drilled a number of holes during this approximately 35,000 hectares. Heidelberg-Roodepoort Mine was the period. Southgold Exploration (Pty) Ltd, largest single producer in the area. The a privately-owned resource company, Description and Location Kimberley Reef was well developed in drilled three boreholes, during the late The Burnstone Property is located the Heidelberg-Roodepoort Mine and 1990s and early 2000s, and drilled an approximately 80km south-east of gold mineralization was consistent, additional 15 boreholes from May to Johannesburg, near the town of making extraction viable over the full July 2002. Southgold then commissioned Balfour in the Mpumalanga province mine lease area. Operations were Global Geo Services to geologically of South Africa. eventually terminated in 1942 when model the deposit and estimate a mining encountered a fault at a depth of resource contained in an area that Geologically, it is situated in the South 300m that vertically displaced the reef. approximates the now-called Area 1 Rand Basin of the Witwatersrand Basin, The displaced portion was later mined gold deposit on the Burnstone Property. and comprises mineral rights covering
Idea Implementation Delivery
17 Great Basin Gold Annual Report 2009 Responsible Delivery
“When I joined Burnstone a year ago from Tanzania, there was nothing here. We hadn’t reached reef yet, but had certain expectations as to the reef’s characteristics.
The reef we intersected on February 4, 2010, was exactly what we expected. We have found some really nice values along a high-grade channel. Our next step will be to develop and open up the channel. Everything is going according to plan, so far, and we are already looking at the next mining block and deciding how to interpret the information we have there. It’s like going on an easter egg hunt, except the eggs are gold nuggets.”
Stephan Fourie, Burnstone Geologist approximately 35,000 hectares situated Gold occurs within the Kimberley Reef, Gold mineralization in the Resource on portions of 32 mineral titles known in a gold-bearing conglomerate unit that is Area is distributed in conglomerate South Africa as farms. one of four main gold-bearing horizons beds over an area of approximately in the Witwatersrand Basin. 19km by 6km and the average Continuing advanced exploration thickness of the conglomerate horizon and pre-development work has been The areal extent of gold mineralization from borehole intersection is 53cm. underway at the Burnstone Property at the Burnstone Property has since 2007 and has progressed from an historically comprised four areas: Areas In addition to the Resource Area, gold- advanced-stage exploration through to 1 and 2, the most advanced and now bearing Kimberley conglomerate has the feasibility study level, and is currently included in the mine plan; and Areas been intersected by exploratory drill in the final-stage construction phase with 1, 2, 3 and 4, known as the Resource holes in areas outside of the Resource a decline to the reef and vertical and Area, now falling within the Mining Area on the Burnstone Property. ventilation shafts and metallurgical facility Right, and continuing to be the focus of shaft nearing completion. ongoing exploration drilling.
loCatIoN of burNstoNe ProPerty
West Rand Goldfields Gold Fields East Rand Goldfields N Carletonville Harmony Johannesburg Goldfields Aurora AngloGold Harmony, DRD
Klerksdorp Goldfields Balfour Evander Goldfields AngloGold Harmony Simmer & Jack Parys
South Rand Goldfields Burnstone Mine
Over 400 boreholes completed in the Burnstone Mine area, thereby Welkom Goldfields Harmony reducing the technical risk 60km
Source: Great Basin Gold
Annual Report 2009 Idea, Implementation, Delivery 18 Review of Operations: Burnstone Property
“I am impressed by how the mine has chosen to do things differently, compared with the traditional gold mining industry. For a start, the minimum level of education for employees is Grade 10 and our language of communication is English, which is a good building block for effectiveness and productivity.
Our mining method is also hugely different to industry norms as we use mechanical, long-hole stoping which takes people away from ‘the danger zone’ (stope face), where most accidents happen, and consequently benefits both safety and productivity.”
Vusi Khumalo, Burnstone General Manager
The Burnstone Property titles included in plan at the Burnstone Property. Petroleum Resources Development Act the Mining Right are 100% held through (MPRDA) and the Mining Charter. As a subsidiary and are held royalty-free In 2007, Great Basin Gold completed a of the date of this report, Tranter owns except for an estimated 4% royalty on series of transactions whereby, in order to approximately 6% of the issued share refined gold, payable to the government achieve compliance with South Africa’s capital of Great Basin Gold. of South Africa as provided for in the Black Economic Empowerment (BEE) Mineral and Petroleum Resources Royalty legislation that required Great Basin Gold By concluding this transaction, Great Act. The Royalty Act came into force on to achieve a target of 26% ownership in Basin Gold complied with the MPRDA March 1, 2010 and provides for the the Company’s South African projects by and submitted its application for a payment of a royalty on gross sales of Historically Disadvantaged South Africans Mining Right in September 2007, gold on a bi-annual basis. The royalty (HDSAs) by 2014, Tranter Burnstone which was duly granted on October percentage is calculated on a prescribed (Proprietary) Ltd, a BEE corporation, 28, 2008, notarially executed by formula being applied to earnings became the owner of 19,938,650 new the Department of Mineral Resources before interest and tax of the Burnstone common shares in Great Basin Gold. (DMR) and the Company, effective Property. Great Basin Gold has secured, This was deemed equivalent to 26% of February 17, 2009 for a period of 18 by way of purchase agreements, the the see-through value of the Burnstone years, whereafter it can be renewed. required surface rights for the mine Project as required by the Mineral and The Environmental Management Plan
Clockwise from left to right: The Burnstone Management Team: Dana Roets, Carina Botha, Vusi Khumalo, Jim Symonds, Dane Wilson, André Lantze, Derik Botha, Rina Nagel, Jeff Mkhabela, Fredah Moatshe, Corné Lourens, Stephan Fourie, Mashilo Mokotong
19 Great Basin Gold Annual Report 2009 Responsible Delivery
for Area 1 was approved by the However, recent U-Pb isotope dates of DMR simultaneously. granites adjacent to the basin indicate that several intrusions were emplaced On March 10, 2008, Great Basin between 3,074 and 2,714 Ma and Gold announced that the DMR had that each event might have predated approved an amended Environmental sedimentation in the basin. Management Plan for the sinking of the vertical shaft at the Burnstone The Witwatersrand deposits probably Property. This development was needed represent gold concentrations, called to remain in compliance with safety placer deposits (or reefs, in local mining regulations by the establishment of terminology), hosted within coarse-grained a second outlet for the bulk sample sediments (conglomerates) deposited in project currently in development. braided-stream channels on broad river plains. Economic gold concentrations In addition, the mandatory commonly extend for several kilometers Environmental Impact Assessment down the dip, and for up to 50km (EIA) for Area 2 has commenced (30 miles) along strike of the sedimentary and is expected to be completed rock units. Gold occurs as detrital grains by September 2010, after which in nugget-like shapes and secondary the environmental management (re-crystalized) grains, ranging in size program will be amended to allow between 0.005 and 0.5mm diameter. for commencement of mining operations in Area 2. The Witwatersrand Basin has been affected by several structural events. The majority of the Burnstone Property Many studies now differentiate between area is currently under active agricultural de-formation that was taking place farming and grazing and as such has no during deposition of the Witwatersrand known existing material environmental sediments and subsequent deformation. liabilities that could impact the project. De-formation that occurred during the The South African government has deposition of the sediments played jurisdiction over activities, communities, a key role in the distribution and habitat users and other interests that may thickness of the host rocks as well as be affected by mining. In particular, the the occurrence of the gold-bearing DMR has jurisdiction over mineral rights reefs. Later faulting and buckling of the relating to the property on which the sequence determined which parts of the Burnstone Property is located. basin remained buried, and the depths to mineable horizons. Geology The Witwatersrand Basin is underlain The South Rand area is located by an Archaean (>3,1 Ga) granite- in the north-eastern part of the Idea greenstone basement and rocks of the Witwatersrand Basin. In the South Rand, 3,086 – 3,074 Ma Dominion Group, the Witwatersrand sequence is thinner Implementation and is unconformably overlain by the than in other parts of the basin. The Ventersdorp (2,7 Ga), Trans-vaal West Rand Group, comprising about Delivery (2,6 Ga) and Karoo (280 Ma) 1,500m (4,920ft) of alternating quartz Supergroups. Prior to 1990, it was arenite and shale units, unconformably widely believed that the Archean overlies the Archaean granite-greenstone granites represented the floor upon which basement rocks. The overlying Central the sediments had been deposited. Rand Group strata are approximately
Annual Report 2009 Idea, Implementation, Delivery 20 Review of Operations: Burnstone Property
Decline Shaft Metallurgical Plant Vertical Shaft
Idea Implementation Delivery
900m (2,950ft) thick and include the An 18km-long (11-mile) north-west – the main deposit trend lies between Kimberley Reef horizon, which is the south-east gold trend has been outlined 250 and 750m (820 – 2,640ft) in main gold-bearing unit on the Burnstone on the Burnstone Property that appears depth, which is relatively shallow for Property. The Johannesburg Subgroup, to be associated with a large, ancient, Witwatersrand gold deposits. The including the Bird amygdaloidal lava braided-channel system extending over average thickness of the reef is 53cm. and the Kimberley shale, is about 300m the property. Drilling has also shown (985ft) thick. The Turffontein Subgroup that two north-west – south-east trending Exploration and Mineralization is approximately 600m (1,970ft) thick sub-parallel faults, spaced 4km apart, The Company has carried out a and is made up of a sequence of quartz have uplifted the central portion of the series of drilling programs on the arenites and conglomerates that correlate gold corridor. As a result, a substantial Burnstone Property since January 2003, with the Elsburg Formation. portion of the gold-bearing horizon along as summarized below:
Drilling Conducted by Great Basin Gold Period Target Area Comments Jan 2003 to Nov 2004 1, 2, 3, and 4 Basis of initial Mineral Resource Estimate, Jan 2005 Work included surface mapping, drilling some Focused on exploring the shallow vertical and incline core holes, trenching, March 2005 to Aug 2006 other potential areas within surface and underground sampling and auger the greater option area. sampling over tailings dump areas, and looked at the Kimberley Reef, the Bird Reef and the Scattered Reef Aug 2006 to Jan 2007 1 and 2 Basis of Mineral Resource Estimate, Jan 2007 Feb 2007 to Jan 2008 1, 2 and 4 Basis of Mineral Resource Estimate, Jan 2008 Jan to Dec 2008 1, 3 and 4 Mineral Resources in Review Jan to Dec 2009 1, 3 and 4 Basis of Mineral Resource Estimate Sept 2009
Mineral Resource Estimates An updated Mineral Resource Estimate was completed during September 2009. The update is inclusive of all surface drilling up to July 2009. At a cut-off of 400 centimeter grams per tonne (cmg/t), the total Measured and Indicated Resources have increased by 8% from the previous estimate of 10,9 million ounces to 11,7 million ounces Au.
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources The Annual Report uses the terms ‘Measured Resources’ and ‘Indicated Resources’. The Company advises investors that while those terms are recognized and required by Canadian regulations, the US SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
21 Great Basin Gold Annual Report 2009 Responsible Delivery
Measured and Indicated Resources Cut-off Tonnes Au Grade Contained Au Resource Category cmg/t millions g/t oz 350 53.1 5.64 9,617,400 Measured 400 44.1 6.08 8,621,300 350 15.3 7.27 3,574,500 Indicated 400 10.3 9.23 3,055,200
Total Measured and 350 68.4 6.00 13,191,900 Indicated 400 54.4 6.68 11,676,500
NoteS: (1) Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. (2) Metallurgical recoveries are not applied to Mineral Resource values.
Cautionary Note to Investors Concerning Estimates of Inferred Resources The Annual Report uses the term ‘Inferred Resources’. The Company advises investors that while this term is recognized and required by Canadian regulations, the US SEC does not recognize it. ‘Inferred Resources’ have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of a Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of economic studies, except in rare cases. Investors are cautioned not to assume that any part or all of an Inferred Resource exists, or is economically or legally mineable.
Inferred Resources Cut-off Tonnes Au Grade Contained Au Resource Category cmg/t millions g/t oz 350 35.5 7.69 8,773,500 Total Inferred 400 11.8 12.14 4,592,100
Measured and Indicated Mineral Resources within the Mining Right, at various cut-off contents (cmg/t)
burnstone mining right only SEPT 2009 | M & I Resources tonnage grade curves 210 7.00 200 6.50 190 180 6.00 170 5.50 160 150 5.00 140 4.50 130 120 4.00 110 3.50 100 90 3.00
80 G grade (g/t) av million tonnes 2.50 70 60 2.00 50 1.50 40 30 1.00 20 0.50 10 0 0 0 200 250 300 350 400 Cut-off content (cmg/t)
Annual Report 2009 Idea, Implementation, Delivery 22 Review of Operations: Burnstone Property
Measured and Indicated Mineral Resources within the Mining Right, at various cut-off grades (Au g/t)
burnstone mining right only SEPT 2009 | M & I Resources tonnage grade curves 220 22.00 21.00 200 20.00 19.00 180 18.00 17.00 160 16.00 15.00 140 14.00 13.00 120 12.00 11.00 100 10.00 9.00 G grade (g/t) av million tonnes 80 8.00 7.00 60 6.00 5.00 40 4.00 3.00 20 2.00 1.00 0 0.00 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00
Cut-off grade (g/t)
The number of boreholes utilized in controlled by Great Basin Gold outside extended into these areas for mineral the Resource Estimate totals 296, and this boundary. rights maintenance, and as sufficient inclusive of all deflections, provides drilling has been completed within the 1,115 Kimberley Reef intersections. For continuity, the Mineral Resource mineral lease area. The resource model has benefited classification method applied in this from a full database verification and update is consistent with that applied Mineral Reserves validation exercise, which has led in previous Burnstone Mineral Resource Mineral Reserves are currently declared to information from 59 additional statements. A sensitivity analysis of at a cut-off gold content of 400cmg/t historical and 71 additional new drill the estimation kriging variances (4g/t over 100cm). The portion of the holes being incorporated. Geozones and the minimum number of informing Mineral Resources that were included in of the area of interest were updated samples has also been undertaken the mine plan were modified inclusive as part of the basis for the estimation. and assessed. The results demonstrate of mining dilution (minimum stoping These zones are delineated by a no significant or material change to width 90cm with 10cm dilution, combination of variable geological the estimated total Measured and minimum tramming width 120cm), parameters such as channel width, Indicated Resources. mining gold losses (10%), metallurgical gold grade and gold accumulation recovery (95%) and royalties (4%) to (cmg/t), footwall lithology, and In addition, the Company significantly the equivalent of Proven and Probable sedimentary facies. The Resource increased the Mineral Resources in Reserves tabulated below. The Proven Estimate covers a combination of the Inferred category in the areas and Probable Reserves have been mineral rights within the mining license adjacent to the mining licensed area. determined in terms of Canadian area granted in October 2008, as These rights are held under prospecting regulations under NI 43-101. well as mineral / prospecting rights permits. Exploration activities will be
23 Great Basin Gold Annual Report 2009 Responsible Delivery
“I oversee the production underground. We have recently started stoping, so we are slowly increasing the rate of production. It has been a four-year project. I was here from the beginning and was involved in the first blast. Now that we have intersected the orebody, we are confident that we will meet our third quarter objective to pour our first bar of gold. Everything seems to be coming together.”
Henk Eijsermans, Burnstone Mine Superintendent
BURNSTONE MINERAL RESERVES AT 4g/t gold cut-off Grade Au Content Category Tonnes (g/t) (oz) Area 1 Proven 20,674,000 4.59 3,052,000 Probable 1,860,000 4.22 252,000 Area 2 Proven 6,944,000 3.22 741,000 Probable 494,000 3.22 51,000 Total by Category Proven 27,618,000 4.27 3,793,000 Probable 2,354,000 4.01 303,000 Total Proven and Probable Reserves 29,972,000 4.25 4,096,000
Cautionary Note to Investors Concerning Reserve Calculations The Mineral Reserve Estimates contained in the Annual Report have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For US reporting purposes, SEC Industry Guide 7 (under the Exchange Act) as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. As a result, the definitions of Proven and Probable Reserves used in NI 43-101 differ from the definitions in the SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, under SEC standards, the quantity of the Mineral Reserves reported for the Burnstone Property may be different than those reported for Canadian purposes.
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 24 Review of Operations: Burnstone Property
“Being at the first blast of the vertical shaft in April 2008 and at the last blast at the end of April 2010 has been an exciting process to follow, and we are almost ready to move into production. The most important project due for completion at the end of June 2010 is the vertical shaft and the winder house, which consists of old winders which were purchased and subsequently refurbished. We are in the process of equipping the shaft.
The Eskom project, which entails bringing a separate power line onto the property, is also underway. And we are in the process of designing, commissioning and constructing the metallurgical plant where we will grind, crush and mill the rock which we transport from the mine, and remove the gold. It is a phenomenal feat to have got this mine up and working in such a short time.”
Derik Botha, Burnstone Engineering Manager
Underground Drilling cropping mineralization in four areas scheduled for the second quarter of Drilling totaled 18,427ft (5,584m) are being reviewed. 2010, in line with the completion for the year and the focus continues to of the vertical shaft project. Once be on Block C delineation and in-fill Mine Development and completed, ore and waste will be evaluation to support the mine plan. Production Build-up trucked down the decline and hoisted The first of a two-stage underground through the short 485m vertical shaft, Surface Drilling access development program began which will have a significant impact on Limited in-fill surface drilling, in in July 2006. Development and efficiencies and haulage costs because the immediate mining areas, was construction programs are ongoing of the reduced hauling distances. Ore undertaken in 2009. One drill hole and at December 31, 2009, and waste are currently hauled to intersected waste, and another approximately 8,174ft (2,477m) of surface through the decline. intersected 18.46g/t Au over 60cm the planned 9,085ft (2,753m) of for a content of 1,108cmg/t Au. decline development was completed. Since the first reef intersection, 1,528ft Work programs outside the Mining The completion of the remaining 881ft (463m) of ore development has been Right as well as investigations of sub- (267m) to reach the vertical shaft is completed in Block B up to December
Left: Burnstone Mine, May 2006 Middle: Work begins, June 2006 Right: Burnstone Mine, 2008
25 Great Basin Gold Annual Report 2009 Responsible Delivery
31, 2009, exposing in excess of will positively impact on stopes ore tons at a higher recovery grade, with 3,300ft (1,000m) of the Kimberley available for mining later on in 2010. safer and better mining efficiencies. This Reef. Initial reef exposure indicated could favorably impact the cash cost per a competent hanging wall with Establishing adequate ventilation to the ounce measures of the operation. Cash chloritoid shale in the foot wall. Stope planned production and development cost per ton should remain the same. development in Block B is underway, areas remains a key objective. The third in line with the projected production leg of the ventilation raise in the main The equipment needed for the trial build-up. The breakaway out of the decline was commissioned during the stoping is already on site, crews main decline to Block C had advanced first quarter of 2009. Development of trained and testing of the equipment to 736ft (223m) at December 31, the return airway (RAW) has advanced and its capabilities successfully 2009. This breakaway intersected to 1,620ft (491m). Adequate ventilation completed. Turgis Consulting has the reef on February 4, 2010, and is provided through the RAW and been appointed to independently ore development commenced. To completed ventilation raises for the review the results of the trial stopes to date, over 1,600 channel samples production build-up in the first half of ensure timely and accurate decision have been taken on Kimberley Reef 2010. This 1,013ft (305m), 17ft making. In order to maximize the exposures, and a more detailed (5.1m) diameter raise-bored ventilation synergies, Blocks B and C will understanding of the geological raise, which commenced in the third also be developed with mechanized controls and sedimentology of the reef quarter of 2009, will act as the main air low-profile equipment to increase the is evolving. Reef exposures indicate intake or provide adequate ventilation rate at which stoping areas can be channel widths are significantly for the Blocks B and C mining areas. opened up; this approach can add increasing towards the south-west The project completion is scheduled for flexibility and a smooth transition to (60 to 180cm) with Au content ranging the second quarter of 2010. hybrid mining should LHS not prove between 360 to 600cmg/t. to be successful. Mining Method Development of the main decline, The Company started the first tests of its The first trial stope, with an area of just the breakaway to Block C as well long-hole stoping (LHS) project; the trials over 1,000m2, has been completed as the ore development in Block C are currently planned to continue for a and the second trial stope is underway. has, in the latter half of 2009, been period of nine to 12 months. Accurate drilling and blasting controls contracted to Grinaker LTA to allow have resulted in a very smooth stable mine management to focus on the ore LHS, which involves a higher degree of hanging wall and well-controlled stoping development and mining in Block B. mechanization, could, if implemented width with a good footwall contact on Increasing the capacity of development successfully, result in the mining of fewer these initial stopes.
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 26 Review of Operations: Burnstone Property
“Our metallurgical plant follows an Australian-type design. Shift supervision levels are reduced and the operators are empowered to make decisions in their areas of responsibility. We have also increased security by keeping trucks away from the plant area and having the laydown area outside of the plant. To dispose of residue, we use cycloning for our slime dams rather than the more common method of paddocking – improving the stability of the dam and, consequently, the safety.”
Corné Lourens, Metallurgical Manager
Vertical Shaft of the permanent winders. The during the second quarter of The vertical shaft was intended change-over from the temporary 2010, with final infrastructure and primarily for rock hoisting, but will now winders is planned to coincide with underground development to be also be equipped for the movement of the commissioning of the shaft in the completed during the same period. men and equipment. The shaft will be third quarter of 2010. sunk to a depth of 1,600ft (485m) at Metallurgical Plant shaft bottom. On completion, the shaft The vertical shaft project remains within A metallurgical update to the June will have a design hoisting capacity the budget, with $36 million being 2007 Optimized Feasibility Study was of 220,000 tonnes per month with spent up to December 31, 2009. A completed in the second quarter of 175,000 tonnes of ore. further $14 million is planned to be 2009. This update included finalizing spent in 2010 to complete the shaft the Process Flow Design and Plant Construction of the winder house infrastructure, related underground Layout for a Carbon-in-Leach process commenced in November 2009 development and commissioning. as well as detailed engineering and and was completed in February 2010 The vertical shaft project is expected design. TWP Engineering (TWP) will in time to accommodate the installation to be commissioned for rock hoisting be delivering the plant as they were
27 Great Basin Gold Annual Report 2009 Responsible Delivery
contracted in July 2009 to manage Tailings Dam (TSF) Eskom and the Company to ensure an engineering, procurement and Confirmatory geotechnical work availability of the required electricity construction management contract on to support designs and environmental in the third quarter of 2010 to behalf of the Company. compliance was completed during coincide with the commissioning of 2009 and included a geophysical the vertical shaft and metallurgical The second-hand mills that have investigation to determine if there plant. Electricity requirements during been acquired were subjected to was any influence from regional the construction phase are managed non-destructive testing and technical fault structures. through a combination of Eskom inspection to determine the level of supply and diesel generators. refurbishment required. The mills were The project completion is planned to found to be in a sound condition, the coincide with the completion of the The electrical installation at the refurbishment contract was completed metallurgical plant. Burnstone Project was designed to and the mills were delivered to site comply with Eskom energy efficiency during May 2010. General Surface Infrastructure specifications as set out in the Generic • Bulk Power Supply Energy Efficiency Specification. Cold commissioning is planned Eskom, the state-owned energy Independent certification in this regard for end July 2010 with a phased company, committed to the phased will be done prior to activation of the ramp-up to 120,000 ore tonnes power demand requirements of energy supply, effecting the issuance by the end of December 2010, the Burnstone Project involving the of an Eskom Energy Efficiency which will subsequently be increased refurbishment of an existing line Compliance certificate allowing to correspond with underground and construction of new sections of Burnstone 100% power allocation. production. power lines to the mine site. In order to supplement the latter, An environmental Basic Assessment creative power-saving methods have Twenty million CAD has been spent Report was completed for the been integrated in the design, such up to December 31, 2009, consisting construction of the power line and as the use of high-efficiency motors, of purchase and shipment costs of Eskom has completed negotiating optimized electrical infrastructure, the second-hand plant, design and servitude rights with owners of alternative power technologies, and engineering costs, refurbishment of surface land that will be crossed by state-of-the-art power monitor and the mills and early construction work. the power line. control technologies. A projected $49 million will be spent during 2010 to complete and All design work for the first of two lines Construction of the 88/11kV commission the plant. Capital costs on between a proposed switching station main substation to ensure electrical the project are well controlled and in was completed and commenced in reticulation on site by Burnstone has line with the contractual budget estimate the second quarter, 2010. The power been completed. generated from the final design. supply project is jointly managed by
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 28 Review of Operations: Burnstone Property
Financial Analysis The 2009 Burnstone Report did not include an update on the financial analysis of the Burnstone Property and the table below provides a summary of the financial analysis contained in the 2008 Burnstone Report.
Financial Analysis Assumptions Assumptions 2008 Burnstone Report Au price US$800/oz US$:ZAR exchange rate ZAR9.00 30 million tons @ 4.2g/t of gold. 4.1 million oz of Au @ Proven and Probable Reserves used for the financial model 4g/t Au cut-off Percentage of Measured and Indicated Resources used in the 38% financial model Gold recovery 95%
Cash costs include direct and indirect mining costs, development costs, engineering, environmental, safety, plant and site services, geology, general and administration, workman’s compensation, insurance, royalties and milling costs.
Life of Mine (LOM) Average Cash Cost LOM Avg Cash Cost (US$/oz) 2009 Burnstone Report Mining 218 Milling 37 South African royalty 32 Social development 1 Administration 31 Total 319
The estimated inflation LOM cost for 2010 is US$392/oz.
Regarding the capital cost table below, the increase in the capital costs are being negated by the devaluation of the ZAR to the US$.
Capital Cost Estimates Project Capital Cost (US$ millions) 2009 Burnstone Report Mine development 101 Process plant 37 Vertical shaft 30 Tailings dam 7 Subtotal 175 LOM capital 49 Total Project Capital 224 Capital Spent up to December 31, 2008 55 Remaining Capital to be Spent over LOM 169
Idea Implementation Delivery
29 Great Basin Gold Annual Report 2009 Responsible Delivery
Regarding the total LOM cost table below, total costs include cash costs plus proceeds on mineral taxes, income tax payable and depreciation and amortization.
LOM Capital Cost Estimates LOM Avg Total Costs (US$/oz) 2009 Burnstone Report Total Costs 495
An after-tax cash flow schedule has been developed for the current production scenario, and the capital and operating costs disclosed above. The cash flow includes royalties and taxes payable. The results, at a cut-off of 4g/t Au cut-off, show an estimated net present value (NPV) of US$687 million at a 5% discount rate and an internal rate of return (IRR) of 36%.
Financial Analysis Financial Analysis (Post Tax) 2009 Burnstone Report IRR 35.6% NPV (0% discount rate) US$1,17 billion NPV (5% discount rate) US$687 million NPV (10% discount rate) US$414 million Payback 3.5 years (after mill start-up) Mine life 19 years (including a four-year start-up period)
“Before we built the plant, to crush, mill and leach the gold, we had to consider where we would place it so it was close enough to the shaft but away from the wetlands. Once all our concerns had been addressed, we began with the construction. The plant is due for completion by the end of July, and we will then be able to pour doré on site in the third quarter of 2010.”
Jeff Mkhabela, Metallurgical Plant Superintendent
Annual Report 2009 Idea, Implementation, Delivery 30 Review of Operations: Burnstone Property
Sensitivity Analysis to illustrate the impact on the IRR and demonstrating an impact on IRR The following is a sensitivity analysis NPV (discounted at 5%). Sensitivity to of 28.5% to 42.4%, and post-tax based on the 2009 Resource Estimate. gold price fluctuation is summarized NPV of US$503,6 million to The sensitivity analysis was done in the table below over a range of US$869,5 million. against the variables of gold prices gold prices of US$700 to US$900,
Gold Price Sensitivity Burnstone Post-Tax NPV (5%) Post-Tax IRR Gold Price Sensitivity US$ millions $700/oz 28.5% $503,6 $800/oz 35.6% $686,6 $900/oz 42.4% $869,5
Plans mining certain stopes. During this stage, Au oz as the metallurgical plant start-up The Company’s project development advanced stoping techniques and is planned for July 2010 and will be plan is focused on the preparation for mining technology will be evaluated. in the commissioning phase. Cash cost and entry into production, entailing of production for the year is targeted at underground development into the The Company plans to extract 80,000 US$495/Au oz. mining blocks identified for early-stage Au oz from underground during fiscal and trial mining by opening up and 2010, and expects to recover 60,000
Total Remaining Costs to Bring Mine into Production (US$ millions) Burnstone Funding Strengthening Rand Estimated Remaining Requirements as at Spent from Jan 1, (March 2009: Costs to Production Jan 1, 2009 2009 to Sept 30, Capital Cost Increases ZAR9:US$1) from Sept 30, 2009 (Estimated as of 2009 (Nov 2009: (Estimated as of Nov March 2009) ZAR8:US$1) 2009) Mine engineering, development 39 22 6 3 26 and surface infrastructure Mining equipment 23 5 --- 2 20 Vertical shaft 23 14 --- 1 10 Metallurgical plant 35 5 6 5 41 Production costs 25 9 --- 2 18 Total costs 145 55 12 13 115
“We have developed a mechanized mining system at Burnstone. Our long-hole stoping method is unique in the South African mining industry. It makes use of new technology and state-of-the-art equipment for optimal extraction of the orebody. By using this method, we are able to improve safety, minimize waste and send a better quality product to the plant. Also, our fleet of trackless underground machines does the sweat – and not our people.
We took the last blast on the ventilation shaft on May 4, 2010, and the next phase, which consists of the equipping of the shaft, is underway.”
Jimmy Symonds, Burnstone Mine Manager
31 Great Basin Gold Annual Report 2009 Responsible Delivery Review of Operations: Hollister Property – from Exploration to Production
Idea Implementation Delivery
“Hollister has moved from being just an idea to being a gold producer. Production from trial mining has begun far sooner than we expected. Rather than taking two to three years to get to planned stoping levels, we managed to get to these in 18 months.
We have had some huge successes, with the refurbishment of the Esmeralda Mill being one of the most important.
My message for this year is to look at the results. We have had a phenomenal first quarter and the second quarter will be even better. The results speak for themselves.”
Paul Huet, General Manager, Nevada Operations
Annual Report 2009 Idea, Implementation, Delivery 32 review of operations: hollister Property
nless stated otherwise, the June 2009 Update of the Mineral Pri. Sci. Nat., Johan Oelofse, Pr. Eng., information of a technical Resource Estimate for Hollister Gold FSAIMM and Philip N Bentley, Pr. Sci. Uor scientific nature related Mine dated effective June 17, 2009, Nat., filed on SEDAR on November 3, to the Hollister Property contained as amended October 30, 2009, 2009. Messrs Oelofse and Bentley are in this Annual Report is summarized prepared by Stephen J Godden, employees of Great Basin Gold, and or extracted from a technical report FIMMM, C. Eng., S Godden & Messrs Godden and van der Heever entitled: Revised Technical Report on Associates Ltd, Deon van der Heever, are independent of the Company.
All information relating to the contents of the 2009 Hollister Report, including but not limited to statements of the Hollister Development Block (HDB) project’s potential and information such as capital and operating costs, production summary and financial analysis are forward-looking statements. The 2009 Hollister Report was prepared to quantify the HDB project’s capital and operating cost parameters and to determine the project’s likelihood of feasibility and optimal production rate. The capital and operating cost estimates which were used have been developed based on detailed capital-cost-to-production-level relationships.
The following are the principal risk factors and uncertainties which, in management’s opinion, are likely to most directly affect the ultimate feasibility of the HDB project. The mineralized material at the HDB project is currently classified as a Measured and Indicated Resource, and a portion of it qualifies under Canadian mining disclosure standards as a Proven and Probable Reserve, but readers are cautioned that no part of the HDB project’s mineralization is considered to be a reserve under US mining standards, as all necessary mining permits and project financing would be required in order to classify the project’s mineralized material as an economically exploitable reserve. Although work has been done to confirm the mine design, mining methods and processing methods assumed in the 2009 Hollister Report, construction and operation of the mine and processing facilities depend on securing environmental and other permits on a timely basis. Additional permits, when required, have yet to be applied for and there can be no assurance that required permits can be secured or secured on a timely basis. Although costs, including design, procurement, construction and ongoing operating costs and metal recoveries have been established at a level of detail required for a feasibility study, these could be materially different from those contained in the 2009 Hollister Report. There can be no assurance that these infrastructure facilities can be developed on a timely and cost-effective basis. Energy risks include the potential for significant increases in the cost of fuel and electricity. The 2009 Hollister Report assumes specified, long-term price levels for gold. The price of this metal is historically volatile, and the Company has no control of or influence on its price, which is determined in international markets. There can be no assurance that the price of gold will continue at current levels or that it will not decline below the prices assumed in the 2009 Hollister Report. Prices for gold have been below the price ranges assumed in the 2009 Hollister Report at times during the past 10 years, and for extended periods of time. The Hollister Property will require additional financing. Although interest rates are at historically low levels, there can be no assurance that debt / equity financing will be available on acceptable terms. Other general risks include those ordinary to very large construction projects, including the general uncertainties inherent in engineering and construction cost, the need to comply with generally increasing environmental obligations, and accommodation of local and community concerns.
33 Great Basin Gold Annual Report 2009 Responsible Delivery
hIstory gold deposits. In the 1980s, other 3,271,954 tons (residual leaching of The Hollister District consists of operators drilled several holes for the heap was completed in 1996). widespread mid-Miocene hot springs mercury, silver / gold. None deposits with associated mercury and of these programs encountered In 1992, Newmont entered the district disseminated gold mineralization that sufficient mineralization to warrant via a 75/25 JV with Cornucopia, were discovered in the early 1900s. developing a mine. after buying Galactic’s interest in the Mining commenced in 1915 and as Hollister Property. Their land position many as 150 flasks were produced United States Steel Corporation was enlarged and more drilling was by 1917. Mining was inactive 1929 undertook comprehensive exploration of undertaken, including pursuit of high- through 1943, when more than 2,000 the district between 1980 and 1986, grade vein intersections made earlier additional flasks were produced in the employing geological, geochemical by the Touchstone JV. By this time, district, about half coming from the and geophysical techniques, along there were around 900 drill holes Butte #1 and Butte #2 mines, and the with considerable drilling. In 1987, (mainly rotary) in the Hollister Property, Velvet and Clementine Mines, near Cornucopia Resources purchased the most of them in tertiary units above the former Hollister pit. There has been property via its Touchstone Resources the unconformity with the Ordovician no mercury production since. Gold subsidiary and formed a 50/50 Joint Vanini Formation (also known as Vinini mineralization was recognized early on Venture (JV) with Galactic Resources to Formation) which is the main host for but was not considered to be economic mine the deposit as the Hollister mine, the vein mineralization. Newmont at prevailing prices and technology. an open pit / heap-leach operation. opted out of the project in 1995 and, By 1990, the Touchstone-Galactic JV in 1997, its interests were acquired by Exploration for mercury and other produced a feasibility study based on Consolidated North Coast Industries metals resumed in the early 1960s. 879 drill holes (328,000ft of diamond Ltd which subsequently merged with Auric Metals drilled 100 rotary and rotary drilling) which defined a Pacific Sentinel Gold Corp to form holes for mercury around the Velvet mainly oxide reserve. The Hollister Great Basin Gold Limited. Great Basin Mine in the late 1960s. During the openpit mine went into production in Gold acquired Touchstone’s 25% in 1970s, Apco Oil drilled a porphyry 1990 and mining continued until 1992 1999, and currently holds 100% of molybdenum play, Noranda drilled when Galactic declared bankruptcy as the Hollister Property subject to the net a uranium target, and Homestake a result of problems at the Summitville smelter royalties. intensively explored the district for mine in Colorado. Total production was McLaughlin-type (hot springs model) 115,696 ounces of gold contained in
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 34 Oregon
Midas Property Elk (Newmont) Battle Mtn Utah Nevada Midas Mine Las Vegas Carlin Trend California Arizona
Rossi Property (Barrick/Meridian) Dee Mine Dee Property Rossi Deposit (Glamis) Goldstrike Mine Meikle Mine Goldstrike Property Post/Betze Mine (Barrick) Leeville Property review5 Miles of operations: hollister Property (Newmont) Leevine Deposit Carlin Mine
DesCrIPtIoN aND loCatIoN of classic Carlin-style low sulphidation the Company has focused on The Hollister Property is located in epithermal banded veins in Ordovician permitting, additional development to Elko County, Nevada and consists sediments containing high-grade prepare for production and additional of a total of 950 unpatented, federal precious metal values. underground and surface drilling. mining claims, covering over 69km2. It is situated on Nevada’s 80km-long Initial feasibility work was completed Carlin Trend gold belt and is the host in mid-2007. Since that time,
Oregon hollIster ProPerty loCatIoN Elk Battle Mtn Utah Nevada
Las Vegas
California Arizona
Source: 2009 Hollister Report Idea Implementation Delivery
The Hollister Development Block the most thoroughly explored on the Hollister Property, known as the HDB. (HDB) is currently being accessed for Hollister Property and are the location Feasibility work in 2007 and ongoing trial mining, underground continuity of the Mineral Resources and Reserves. work through 2009 have determined drilling, and to obtain bulk samples the presence of Proven and Probable through an excavated decline that, as The Hollister Property was purchased Mineral Reserves. of December 31, 2008, was 4,524ft by the Company from a subsidiary (1,379m) in length. Gold and silver of Newmont Mining Corporation, The HDB was a JV with Hecla Mining mineralization occurs in multiple, which had previously operated a Corp from 2002 to 2007. In 2007, steeply dipping vein systems. Permitting leach recovery mine there to exploit the Company purchased Hecla’s and pre-development work are some near-surface mineralization. 50% interest for US$60 million. ongoing, and additional surface drilling Great Basin Gold’s primary focus Great Basin Gold currently owns on areas of the Hollister Property is the deeper gold-bearing system a 100% interest in the claims outside of the HDB was conducted in lying underneath an area currently comprising the Hollister Property, 2008. Vein systems within the HDB are covering approximately 5% of the subject to certain royalty interests
35 Great Basin Gold Annual Report 2009 Responsible Delivery
“The refurbishment of the Esmeralda Mill has meant that Great Basin Gold has moved from an exploration company to a junior gold producer, with the first gold pour taking place on April 14, 2010. We already have mill throughput of 300t/day and are continuing to push up our production with a target of 350t/day. We have a stockpile of ore mined at Hollister which we will be milling and crushing, and from which we will be extracting gold. From a human capital point of view, we are fully staffed, with 28 people employed.”
Butch Moore, Esmeralda Plant Manager ranging from 3% to 5% of any net Great Basin Resource Watch (GBRW) smelter returns. filed an appeal with the Nevada State Environmental Commission (NSEC) The federal government of the USA challenging the NDEP’s issuance of and the state government of Nevada the WPCP. After a number of meetings have jurisdiction over mining activities between the Company, GBRW and and communities, habitat users and NDEP, GBRW agreed to withdraw its other interests that may be affected by appeal of the WPCP in May 2009. It mining. In particular, the Bureau of Land was agreed between the parties that the Management (BLM) has jurisdiction Company will instal equipment to monitor over the land on which the Hollister the water quality in and around the Property is located. waste rock facility at the Hollister Project, and that the data from these sites will PermitTTING ultimately form an integral part of the EIS The Company has updated the following process for the Hollister Project. since the 2009 Hollister Report: On April 13, 2010, the Notice of The Environmental Impact Statement Intent (NOI) was published by the BLM. (EIS) process for the Hollister Project Parallel to the publication process, the is currently underway by the BLM. Company has embarked on a number Pending the completion of the EIS of activities to support the EIS. The process and receiving the BLM third-party contractor was appointed approval of the amended Plan and has been meeting regularly with of Operations, the underground management and the BLM EIS exploration and development activities Inter-disciplinary Team to streamline at the Hollister Property must be the EIS process. An EIS Preparation conducted within the 275,000 ore Plan has been completed along with tons per year limit set out in the Water Chapter 1 of the draft EIS. A draft Pollution Control Permit (WPCP) hydrological modeling protocol has issued by the Nevada Department of been submitted and approved by Environmental Protection (NDEP) and the BLM. A cultural literature search in a manner that aims to fully protect to review all survey information and the environment and archaeological reports that exist for the Tosawihi resources near the development and district has been initiated. In addition, that will not create any additional the Elko County Commissioners voted surface disturbance or new to be a co-operating agency on the environmental impacts. development of the EIS.
Annual Report 2009 Idea, Implementation, Delivery 36 Review of Operations: Hollister Property
Geology of Carlin-type deposits to the south-west Hollister Property has a low-sulfidation The Hollister Property is located at are in evidence at Hollister, as are the epithermal system characterized by the intersection of the Carlin Trend Miocene mineralizing events. banded quartz veins with electrum and the Northern Nevada Rift, as and silver selenides. Some of the illustrated below. The Carlin Trend is The Hollister stratigraphic section primary geological elements of the a north-west-trending, 50-mile-long includes Ordovician sedimentary rocks, sediment-hosted gold deposits of the metallogenic corridor. Mines on the intruded by mid-Eocene plutons and Carlin Trend are present at the Hollister Carlin Trend have produced in excess unconformably overlain by a veneer Property, including Eocene intrusive of 70 million ounces of gold. Carlin of Miocene volcanic and volcano- rocks and lower-plate carbonate Trend-type mineralization is Eocene sedimentary rocks. Devonian sedimentary rocks. The Hatter stock (a granodioritic in age. The Northern Nevada Rift is rocks have been intersected at depth intrusive) at the Hollister Property has a north – north-west-trending feature below the Ordovician sediments under been dated at 39 Ma and is similar made up of bimodal volcanic rocks the Roberts Mountain Thrust. to 39 Ma biotite-feldspar porphyry that host Miocene-aged bonanza dikes occurring in the Goldstrike epithermal gold deposits such as Epithermal gold mineralization at the area. The main pulse of gold Ken Snyder, Mule Canyon, Buckskin Hollister Property occurred in the early mineralization on the Carlin Trend National and Hollister. The Paleozoic Miocene and appear associated is dated at about 38 Ma and stratigraphy and Eocene magmatic with the Northern Nevada Rift where commonly thought to be associated pulse that is critical to the development it over-prints the Carlin Trend. The with late-Eocene magmatism.
Hollister Property and Carlin Trend
Oregon N
Midas Property Elk (Newmont) Battle Mtn Utah Nevada Midas Mine We hold 100% of the Hollister Property; an area of Las Vegas Carlin Trend 27 square miles California Arizona
Rossi Property (Barrick/Meridian) Dee Mine Dee Property Rossi Deposit (Glamis) Goldstrike Mine Meikle Mine Goldstrike Property Post/Betze Mine (Barrick) Leeville Property 5 Miles (Newmont) Leevine Deposit Carlin Mine
Source: Great Basin Gold Idea Implementation Delivery
37 Great Basin Gold Annual Report 2009
Oregon
Elk
Utah Nevada
Las Vegas
California Arizona Responsible Delivery
“We’ve been focused on improving performance to deliver and are now starting to implement some of our ideas. We’ve developed some designs which will reduce waste and will come into operation during the course of the year and early next year.”
Steve Konieczki, Hollister Technical Manager
Exploration and in complex grade thickness patterns. The 52,451ft of surface exploration Mineralization Gwenivere / Clementine vein system diamond drilling has been completed. Geophysical, geochemical and produces a strong Tertiary-hosted gold The underground drilling is an geological surveys have been carried out plume that is generally consistent with important phase of evaluation, over a large part of the Hollister Property the orientation of the vein system. The enabling more detailed delineation of to aid in targeting exploration drill holes. coincidence of the Clementine vein with vein mineralization. There are now 19 the north edge of the plume is striking. recognised discrete veins constituting the The most prominent surface features on Gwenivere and Clementine systems. the Hollister Property are the blanket-like Gold distribution in the Ordovician is silica replacement bodies that occur much more restricted than in the Tertiary. During 2009, a total of 10,312ft in two stratigraphic positions. Close Deeper vein exploration success was (3,125m) of underground development examination of these features reveals that enhanced by orientating vein intercepts has been completed, of which 3,346ft they have sinters with associated mercury in core frames to bedding in historic (1,014m) has been “on reef” exposing mineralization as well as replacement holes in Vinini rocks in areas where it the veins. bodies that are locally up to 200ft thick. could be demonstrated that fault and Gold values in these high-level epithermal fold complications were not present. Underground diamond drilling totaled features are uniformly low to absent. Gold Step-outs were planned using these 98,874ft (29,962m) and included mineralization in Tertiary volcanic rocks orientations and the Clementine systematic stope delineation drilling to below the silica cap coincides, in part, and Gwenivere vein sets were delineate economic areas 29,489ft with the epithermal veins in the basement. successfully delineated by the subsequent (8,936m) as well as exploration and Some of the best mineralization in Tertiary drill program. in-fill cover drilling along strike and at rocks, however, is rootless. depth totaling 69,385ft (21,026m). Since April 2007, after acquiring Gold distribution in the Tertiary at the Hecla’s 50% interest, a further Hollister Property is widespread, resulting 141,018ft of underground and
Annual Report 2009 Idea, Implementation, Delivery 38 Review of Operations: Hollister Property
The table below summarizes the drilling on the HDB during 2009, and lists whole core sampled intervals:
Summary Hollister Drilling 2009 (ft) UG Expl and Cover No. Stope Delineation No. Surface No. Q1 8,667 15 4,910 11 1,419 2 Q2 23,148 30 6,698 25 0 0 Q3 26,679 39 10,309 67 0 0 Q4 10,891 20 7,572 35 0 0 Total Feet 69,385 104 29,489 138 1,419 2 Total Meters 21,026 8,936 430
Source: 2009 Hollister Report
Gwenivere and Clementine are drilling. The structural controls of the Tertiary volcanic rock sequence and the composite, sheeted vein systems. vein development are being further underlying Ordovician-age rocks. Drilling on both the Clementine and examined, and integrated into future Study of the Velvet Target Area is Gwenivere vein systems has intercepted resource domaining and estimation. ongoing to determine structural more veins than originally anticipated relationships and local controls and correlation between historical The Hatter Graben target comprises an to mineralization. drilling and the more recent drilling east – west trending vein swarm some during 2009 has assisted in better 12,000ft (4km) east of the Gwenivere Collation of all historic surface drilling, definition of the veins. On the north / Clementine vein system, also hosted coupled with empirical understanding side of the lateral development, two by Ordovician metasediments. Twelve of the relationship of the Ordovician new veins have been defined over surface boreholes have been completed, hosted Clementine and Gwenivere the entire strike length of the known with intersections ranging from trace to a vein systems with overlying Blanket Clementine veins. On the south side high of 7.8 oz/ton Au. mineralization hosted in the Tertiary of the lateral, the Gwenivere South volcanics, has enabled targeting of veins have proven to be more The Velvet Target Area is approximately potential mineralization under the continuous than originally interpreted. 1,000ft (305m) north of the Clementine previous (1992) opencast excavations In addition, a number of interlinking vein system. Significant drill intercepts of the Touchstone open pits. veins were confirmed by in-fill have been encountered in both the
Idea Implementation Delivery
39 Great Basin Gold Annual Report 2009 Responsible Delivery
Milling Company’s metallurgical test work and (3.5ft). A total 61,770 tons were sent to During 2008 and 2009, a number processing optimization of the ore at several different treatment facilities under of bulk samples of mineralized the Hollister Property. Different stoping processing agreements. material were generated from the methods, specifically shrinkage and Hollister Property’s ongoing trial mining cut-fill methods, were under trial. The initiative and sold to third-party milling average minimum mining widths for facilities for processing, as part of the stopes under the mine plan is 42 inches
Summary of Metallurgical Recoveries from Bulk Samples (2008/9) Au (Head Ag (Head Amount Au Recovery Ag Recovery Mill Locality (Period) grade) grade) (tons) (%) (%) (oz/t) (oz/t) Newmont Midas (May 2008) 1.15 9.53 4,737 84.7 94.3 Newmont Midas (June 2008) 0.75 9.70 3,906 88.2 92.6 Newmont Midas (Sept 2008) 1.42 11.61 10,907 88.1 91.1 Newmont Midas (Nov 2008) 2.02 16.20 12,075 88.0 90.0 Newmont Midas (Jan 2009) 2.69 16.21 3,034 N/A N/A Newmont Midas (March – April 2009) 1.07 10.87 19,784 N/A N/A Newmont Midas (May 2009) 0.60 6.61 7,327 N/A N/A Kinross Republic (Nov 2008) 2.34 20.14 4,652 N/A N/A
Source: Updated from October 2009 Hollister Report
HDB Resource Estimates Resources of 1,03 million tons at a Indicated classifications. In addition, An updated estimate of the Mineral grade of 1.340oz/ton (45.95g/t) 161 additional boreholes (totaling Resources at Hollister was announced for gold and 2.72oz/ton (93g/t) 51,430ft) completed in the period during June 2009. for silver. Au Eq oz in the estimated from April 2008 to March 31, 2009, Inferred Resources increased 111% were integrated into the model. The Overall, the contained Au equivalent from June 2008. drilling program, mostly conducted ounces (Au Eq oz) have increased by from underground, has provided 27% to 2,9 million from the 2,3 million The Resource Estimate has benefited in-fill data to delineate stopes for trial in the previous estimate issued June significantly from over nine months of mining, and significantly improved 20081. At a cut-off grade of 0.25 Au trial mining, which generated data our understanding of the lateral and oz/ton (8.57g/t Au), the combined from channel sampling and delineation vertical geological continuity of the vein Measured and Indicated Mineral drilling for stope development. As a systems. The Resource Estimate reflects Resources contain 1,45 million Au Eq result of the integration of empirical depletion of material mined in 2008 oz grading 1.167oz/ton (40g/t) for data from geological observations and 2009 (up to June 30, 2009), gold and 8.59oz/ton (295g/t) for and ore control sampling into the vein totaling 103,746 Au Eq oz at an silver. A further 1,43 million Au Eq model, more stringent parameters average grade of 1.55oz/ton. oz are contained in Inferred Mineral have been applied to Measured and
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources The Annual Report uses the terms ‘Measured Resources’ and ‘Indicated Resources’. The Company advises investors that while those terms are recognized and required by Canadian regulations, the US SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Annual Report 2009 Idea, Implementation, Delivery 40 Review of Operations: Hollister Property
Results of the Resource Estimate based on all drilling and ore control channel sampling to March 31, 2009 are tabulated below:
Measured and Indicated Resources Contained Contained Resource Cut-off Tons Tonnes Au Au Ag Ag Contained Au oz(2) Ag oz(2) Category oz/ton 000s 000s oz/ton g/t oz/ton g/t Au Eq oz(1) 000s 000s Measured 0.25 199 181 1.895 64.98 378 29.02 994.8 5,783 468,100 Indicated 0.25 912 827 1.008 34.54 919 4.13 141.5 3,763 977,500 Total Measured 0.25 1,111 1,008 1.167 40.00 1,297 8.59 294.6 9,546 1,445,600 and Indicated NoteS: (1) Eq oz were calculated by using US$800/oz for Au and US$12.5/oz for Ag. (2) Metallurgical recoveries were not applied to resource values. Contained metal estimates assume 100% recoveries. Some figures may not add due to rounding.
Cautionary Note to Investors Concerning Estimates of Inferred Resources The Annual Report uses the term: ‘Inferred Resources’. The Company advises investors that while this term is recognized and required by Canadian regulations, the US SEC does not recognize it. Inferred Resources have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of a Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of economic studies, except in rare cases. Investors are cautioned not to assume that any part or all of an Inferred Resource exists, or is economically or legally mineable.
Inferred Resources Contained Contained Resource Cut-off Tons Tonnes Au Au Ag Ag Contained Au oz(2) Ag oz(2) Category oz/ton 000s 000s oz/ton g/t oz/ton g/t Au Eq oz(1) 000s 000s Inferred 0.25 1,035 939 1.340 45.95 1,388 22.72 93.28 2,815 1,431,500
NoteS: (1) eq oz were calculated by using US$800/oz for Au and US$12.5/oz for Ag. (2) metallurgical recoveries are not applied to resource values. Contained metal estimates assume 100% recoveries. Some figures may not add due to rounding.
41 Great Basin Gold Annual Report 2009 Responsible Delivery
The estimates were completed by Dale slightly over-estimated the width of Richards, Pr. Sci. Nat., the Company’s the veins, hence, tons were over- Group Mineral Resource Geologist, estimated but, at the same time, under the supervisions of Phil Bentley, grade was under-estimated. The Pr. Sci. Nat., Great Basin Gold’s Vice current estimate utilizes an improved President: Geology and Exploration, method for modeling the veins (a who is the Qualified Person as defined mathematical algorithm with a by Canadian Securities Regulations in minimum tolerance of a 6-inch vein NI 43-101 for the estimate. width) and, coupled with a partial percentage estimate, has led to a The revised technical report was higher accuracy in estimating the completed in November 2009 volume from the wire-frame model (effective date June 17, 2009) and of the veins. filed on www.sedar.com. • Grade interpolation within the vein wire-frames was done using Inverse The total estimated Measured and Distance Squared statistics in the Indicated Mineral Resources prior to current estimate (instead of Ordinary the depletion from trial mining was Kriging geo-statistics). 1,549 million Au Eq oz and is comparable with the 1,569 million Au • Search radii utilized to categorize Eq oz grading 0.87oz/ton (29.71g/t) the confidence of grades within the Au and 4.57oz/ton (156.68g/t) Ag vein wire-frames were decreased at a 0.25oz/ton cut-off announced in (100ft / 30m for Measured and June 2008. 280ft / 85m for Indicated) and the average distance of informing There are internal differences between samples was introduced, which the 2009 and 2008 estimates, which increased the stringency for the are mainly related to modifications to Measured and Indicated categories. resource estimation procedures • The minimum number of samples to described below: inform a given block was increased • Empirical geological measurements to three (compared to two in the have confirmed the previous model previous estimate).
Total Vein Drill Intercepts Vein Widths % Distribution 0 – 2.5ft 43% 2.6 – 5.0ft 26% > – 5.0ft 31% Idea
The outcome of these changes is but grade has increased. Tonnage in Implementation a more conservative approach to the Indicated category has increased resource classification that more closely because of re-classification and tonnage Delivery reflects what is observed empirically in the Inferred category has increased as underground. Consequently, the tonnage a result of re-classification and additional in the Measured category has decreased drilling testing the extent of mineralization.
Annual Report 2009 Idea, Implementation, Delivery 42 Review of Operations: Hollister Property
As the mine development progresses, to be conservative, Inferred Resources and -sampled high-grade shoots, as evaluation and upgrade of the Mineral have been constrained to a depth of opposed to lesser borehole data in Resources from the Inferred and approximately 1,200ft (380m) below the Inferred zones. The lack of sample Indicated categories to a Measured surface. Certain areas of previous density in the Inferred material underpins category will provide data to assess the Indicated Resources have also been the lower confidence in the resources in potential for reducing the cut-off grade. re-categorized into Inferred because this category. Also, the current testing of various of lesser density of sampling data. mining technologies may reduce stoping Inferred Resource grades have increased Mineral Reserves costs and expand the opportunity to from 0.510oz/ton to 1.34oz/ton Au Mineral Reserves are determined using exploit certain narrow veins that would and 1.43oz/ton to 2.72oz/ton Ag a cut-off grade of 0.33oz/ton Au otherwise not be considered in the mine because of the localized extrapolation (11.3g/t). The portion of the Mineral plan. Employing a lower cut-off grade of well-defined areas of higher-grade Resources that were included in the mine would allow lower-grade material in the material in the Measured and plan were modified based on mining Indicated category to be included in Indicated categories. There is a dilution (minimum mining width 42”), the resource. noticeable decrease in Ag grades mining gold losses (6%), metallurgical from Measured to Inferred categories, recovery (90%) and royalties (2.5%) to The depth extent of the vein system is which reflects the occurrence of the the equivalent of Proven and Probable yet to be fully established. Therefore, Ag-selenide naumanite in the well-drilled reserves disclosed in the table below:
Proven and Probable Reserves as of February 2009 Reserve Cut-off(1) Tons Au Grade Ag Grade Au Ag Au Eq(2) Category oz/ton 000s (oz/ton) (oz/ton) (000s oz) (000s oz) (000s oz) Proven 0.33 109 1.107 7.77 121 852 134 Probable 0.33 1,125 0.818 3.98 921 4,480 988 Total Proven and 0.33 1,234 0.844 4.32 1,042 5,332 1,122 Probable
NoteS: (1) The cut-off grade for Proven and Probable Reserves was calculated using the direct operating cost achieved during steady state production, excluding taxes and contingencies. (2) Gold equivalent was calculated using US$800/oz for Au and US$12/oz for Ag. (3) Metallurgical recoveries were not applied to contained metal values.
The Mineral Reserves were compiled Reserves were classified according to as Probable Reserves, and according by Johan Oelofse, Pr. Eng., FSAIMM, mine infrastructure and current access to the mine plan are expected to be COO of Great Basin Gold, and as the economically mineable part extracted over the next eight years. reviewed by Stephen Godden, of the Measured Resources that were The Proven and Probable Reserves CEng, MIMMM, of S Godden expected to be mined during 2009. have been determined in accordance and Associates, both of whom are The remainder of the economically with Canadian regulations under Qualified Persons. Mr Godden is mineable part of the Measured and NI 43-101. independent of the Company. Proven Indicated Resources were classified
Cautionary Note to US Investors Concerning Reserve Calculations The Mineral Reserve Estimates contained in the Annual Report have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For US reporting purposes, SEC Industry Guide 7 (under the US Securities Exchange Act of 1934 (the Exchange Act)), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. As a result, the definitions of Proven and Probable Reserves used in NI 43-101 differ from the definitions in the SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, Mineral Reserve Estimates contained herein do not qualify as reserves under SEC standards.
43 Great Basin Gold Annual Report 2009 Responsible Delivery
Idea Implementation Delivery
“Once our geologists discover the veins, we get involved in designing equipment and prepare the drill platforms. We have made improvements on filling the stopes after mining and are actively pursuing cost savings so we can deliver at a good cost per ton. We work on weekly plans to ensure we meet our monthly targets and are doing quite well in keeping to them. In the first quarter of 2010, we produced between 27,000 and 28,000 ounces of ore.”
Doug Crawford, Hollister Mining Operations Manager
The disclosure to the end of the Hollister phase of evaluation, enabling package. Both systems are open at and Esmeralda sections has been more detailed delineation of vein depth and to the east and west. updated by the Company to year-end mineralization. The updated vein and post-dates the technical report: model recognizes 19 discrete veins Underground diamond drilling during constituting the Gwenivere and 2009 totaled 99,143ft (30,043m) The lower-than-planned extraction Clementine systems. Drilling on both and included systematic cover drilling of ounces during 2009 was a result the Clementine and the Gwenivere to delineate economic areas of the slower tonnage build-up veins has revealed complex structural (29,488ft; 8,934m) as well as during the year as well as the loss in controls to the mineralization. The exploration and in-fill drilling along production during November 2009 geological continuity of the Clementine strike and at depth totaling 69,655ft as a result of an accident. The estimate vein system has now been extended (21,108m). made of Proven Resources therefore to nearly 2,800ft (854m) from the remains appropriate. previous drill-outlined strike, and the Surface Exploration Gwenivere system has been found to Limited surface exploration was Underground Drilling coalesce with the Clementine system conducted during 2009, in line with Underground drilling is an important with a noticeable thickening of the vein the Company’s strategy to allocate
Annual Report 2009 Idea, Implementation, Delivery 44 Review of Operations: Hollister Property
“I’ve been working in the area for 15 years now and recognize that, in this part of Nevada, there is something big here. Before joining Hollister, I worked at another mine 80 miles away, where the orebody was identical. I knew that Hollister would be an exciting mine to work on. The vein system is large and robust, with the highest gold grades I have ever witnessed. And this is only the tip of the iceberg; we are on the path to new discoveries. The mine property covers 33 square miles and we are exploring only 10% of it. When I first arrived here in June 2007, we had no team or infrastructure but we are now at the point where we have good, experienced staff and good infrastructure. We already have five exploration staff and four geologists.
As well as our current mining operations, we have recently discovered a completely new vein on the property. Though it is very deep, we hit it at our first attempt and every hole has gone into additional veins. We’re also working on the Gloria vein, which is getting wider and is even better than we first thought. It has the potential for a very long stope. I have also had the opportunity to look for mining opportunities on the Esmeralda Property. Though it is more important as a mill at the moment, there is awesome exploration potential.”
Brian Morris, Exploration and Business Development Manager, Nevada Operations
45 Great Basin Gold Annual Report 2009 Responsible Delivery
available cash resources to the Cash production costs per ton completion of its development (excluding haulage and milling) for the projects. A geotechnical borehole year decreased by 13% from US$480 (1,779ft / 545m) was completed in 2008 to US$423 in 2009. On during the year for rock strength testing an Au Eq basis, cash production for the planned west Alimak raise. costs (excluding haulage and milling) increased by 22% from US$300 in During 2009, all available 2008 to US$367 in 2009. The 2008 geophysical and geological cost per ounce was influenced by the exploration data was collated, extraction grade of 1.6 Au Eq oz for reviewed and is still in the process of the year while the lower than planned being re-interpreted. Further detailed production from trial mining in 2009 (600ft centers) ground gravity surveying had a negative impact on the per was completed, and a re-assessment ounce unit costs. Volume of production of basement structures completed. has a significant impact on the unit Multi-element geochemistry data is costs for the Hollister operation due to being integrated with the structural and the relative size of the operation. Fixed geophysical interpretations. This work costs represent in excess of 55% of has improved the understanding of the total costs. plumbing system that hosts the Hollister gold mineralization, and increasing At December 31, 2009, a total of the prospectivity of the HDB and 41,683 tons, containing an estimated surrounding mineral targets. 41,446 Au Eq oz, had been accumulated in a surface stockpile. MINe development and At capacity, the Esmeralda Mill will production build-up be able to treat all production from Trial Stoping and Milling the trial mining activities at Hollister. Although the results from the continued Management is, however, investigating trial mining remain positive and provide alternative milling options to reduce the invaluable information as to optimizing size of the stockpile as at December the extraction of the narrow veins, 31, 2009, and unlock the working the lower-than-planned extraction capital invested by extracting the ore. of ore tons for the year (70,562 actual vs 109,645 planned) was a Development disappointment. Development of the A total of 10,312ft (3,125m) trial stopes took longer than originally development has been completed planned, with the resulting impact during the year. Waste development on the extraction of ore tons. During of 6,966ft (2,111m) was directed at November 2009, a safety incident accessing the different veins at different (which fortunately did not result in levels, of which 3,346ft (1,014m) was serious injury) saw the closure of the on-vein development. Idea mine for three weeks while the safety inspection was conducted by the Implementation Department of Mine Safety and Health Administration (MSHA). Delivery
Annual Report 2009 Idea, Implementation, Delivery 46 Review of Operations: Hollister Property
Financial Analysis The tables below provide a summary of the key parameters and results of the financial analysis. The Proven and Probable Reserves that form the basis of the financial analysis have been determined in accordance with Canadian regulations under NI 43-101, which differ from the Securities and Exchange Commission’s (SEC’s) standards for such classification.
Financial Analysis Assumptions Assumptions 2009 Hollister Report Au price US$800/oz Ag price US$12/oz Proven and Probable Reserves 1,284,503(1) tons @ 0.87oz/ton Au @ 4.58oz/ton Ag @ 0.33oz/ton cut-off 1,1 million oz Au 5,9 million oz Ag 1,2 million oz Au Eq Percentage of Measured and Indicated Resources used in the financial model 80% Gold recovery 90% Silver recovery 90% Note: (1) Total includes 50,161 tons of production in 2008.
Regarding the mining capital cost table below, the trial mining conducted by the Company up to December 31, 2009 indicates additional development required to maximize the extraction of the high-grade veins. Improving the safety and ventilation of the underground workings necessitates additional development capital to be spent on LOM raises and sill pillars.
The LOM capital costs include underground development for a 10-year mine life and acquisition and refurbishment costs of the Esmeralda Mill.
Capital Cost Estimates Capital Costs (US$ millions) 2009 Hollister Report Underground exploration and development 53 Esmeralda Mill (Acquisition and Refurbishment) 10 Infrastructure 17 Surface equipment 3 Subtotal 83 LOM (sustaining) capital 27 Total Project Capital 110 Capital Spent up to Dec 31, 2008 53 Remaining Capital Cost (from Jan 1, 2009) 57
47 Great Basin Gold Annual Report 2009 Responsible Delivery
Regarding the cash cost table below, cash costs include direct and indirect development costs, engineering, environmental, safety, plant and site services, geology, general and administration, workman’s compensation, insurance, property tax, royalties, ore haulage, milling costs and contingencies in each section. The cash costs also include haulage cost to the Esmeralda Mill.
Cash Cost Estimates LOM Avg Cash Costs (US$/oz Au Eq) 2009 Hollister Report Mine costs 222 Development 60 Ore transport 61 Milling 50 Administration 33 Total 426
Regarding the total LOM cost table below, the total costs per Au Eq oz include cash costs plus proceeds on mineral taxes, federal income tax, contingencies and depreciation and amortization.
Total Cost Estimates LOM Avg Total Costs (US$/oz Au Eq) 2009 Hollister Report Total costs 559
An after-tax cash flow schedule has been developed for the current production scenario and the capital and operating costs disclosed herein. The cash flow includes royalties and taxes payable. The results, at a cut-off of 0.30oz/ton, show an estimated NPV of US$129,6 million at a 5% discount rate and an IRR of 41%.
Financial Analysis Financial Analysis (Post Tax) 2009 Hollister Report IRR 41.0% NPV (5% discount rate) US$129,6 million NPV (10% discount rate) US$93,8 million Payback 5 years Mine Life 10 years, including one-year start-up
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 48 Review of Operations: Hollister Property
Sensitivity Analysis (discounted at 10%). The table below incorporates input variables for A sensitivity analysis was done against illustrates the impact for cut-off grades gold price, operating costs, the variables of cut-off grade to illustrate of 0.25oz/ton, 0.30oz/ton and metallurgical recoveries, mining the impact on Au Eq oz, IRR and NPV 0.35oz/ton of gold. The cut-off grade dilution and gold losses.
Sensitivity Analysis Using Different Au Cut-Off Grades Cut-off Tons Au oz Ag oz Au Eq oz Post-Tax Post-Tax NPV (10%) Grade Au (000s) (000s oz) (000s oz) (000s oz) IRR US$ millions oz/t 0.25 1,398 1,186 5,943 1,257 47.2 106,4 0.30 1,285 1,114 5,883 1,184 41.2 93,8 0.35 998 916 4,365 968 44.1 73,6
NOTES: (1) Gold equivalent calculation uses prices of US$ 800/oz for Au and US$ 12/oz for Ag. (2) Metallurgical recoveries were not applied to contained metal values.
A sensitivity analysis was completed against the variables of gold price to illustrate the impact on IRR and NPV (discounted at 5%).
Sensitivity Analysis Using Different Gold Prices Post-Tax NPV (5%) Gold Price Sensitivity Post-Tax IRR US$ millions US$700/oz 25.0% 73,2 US$800/oz 41.2% 129,6 US$900/oz 59.3% 185,3
Idea Implementation Delivery
49 Great Basin Gold Annual Report 2009 Responsible Delivery
Plans ore currently stockpiled as well as Current interpretation of the base of The Company plans to continue its the ore to be extracted during 2010. the Clementine vein system on the trial mining (ore removal and test The stockpile contains an estimated Hollister Property is approximately processing) activities at the HDB 41,446 Au Eq oz and applying a 4,900ft. The Gwenivere system is within the allowable ore tonnage recovery factor of 88% will result in still open at depth. During 2009, a authorizations of its existing permits. an estimated 36,500 Au Eq oz to new vein system called Gloria was Using the existing infrastructure, the be recovered from processing the discovered north-west of the Clementine planned 2010 underground bulk stockpile. The Company expects to vein system. This target and others sampling program will develop recover an estimated 135,000 Au Eq to the north of the current workings approximately 233,000 tons of oz in 2010. will be further tested during 2010 as rock (both waste and ore), similar development providing appropriate drill to the volume of rock developed A key objective of the trial mining and platforms is completed. and removed from the underground processing activities during 2010 will workings in 2009. Management be to reduce the cost of these activities. The Company will also continue anticipates that the planned 2010 Management has targeted cash costs working on preparation of the required activities could result in the extraction (inclusive of milling and haulage) of EIS for the Hollister Project and will of approximately 103,000 tons of US$470 per Au Eq oz for the year. continue to refine its Resource Estimates. ore containing an estimated 120,000 The current Resource Estimates will Au Eq oz. This ore will be processed Underground exploration drilling in be reviewed in the next few months, off site in accordance with the 2010 will primarily focus on testing the incorporating additional borehole and WPCP to determine its metallurgical depth, west and northern extensions of underground sampling as well as using characteristics. The Company intends the vein systems. Cross-cuts to the north a variety of estimation techniques. The to make use of the recently refurbished are planned to provide systematic drill base of the mineral system remains Esmeralda Mill as well as other platforms which will enable testing the geologically unconstrained and is an metallurgical facilities to process the system at depth. important exploration target.
Back row: Brian Morris, Paul Wheelwright, Steve Konieczki, André Goedhals, Lee Morrison, Butch Moore Front row: Doug Crawford, Teresa Conner, Robert Thomason, Jennifer Tolbert, Paul Huet
Annual Report 2009 Idea, Implementation, Delivery 50 Review of Operations: Other Projects
“I oversee the applied geology on our operations, sign off on all the Mineral Resource Estimates for the Company, manage Great Basin Gold’s exploration programs, as well as front the New Business part of our growth strategy. Great Basin Gold is well positioned to grow organically around our operations and through leverage of our mineral rights as well as through acquisition of suitable mining and exploration projects that fit our production profile. The next few years will be a very exciting consolidation and growth phase for the Company.
Phil Bentley, Vice President: Geology and Exploration
Idea Implementation Delivery
51 Great Basin Gold Annual Report 2009 Responsible Delivery
esmeralDa ProPerty: discharge of water to surface waters. time during the year, once the mill New oPPortuNItIes is operating at steady state and an The Company purchased the The application for the transfer of water accurate determination of excess Esmeralda Property on November 30, rights from Metallic Ventures US Inc, capacity in the mill canbe made. 2008 for an aggregate consideration the previous operator of the mill, to of $2,403,600 (US$2,000,000). Great Basin Gold was submitted, and geology approval remains pending. Structural control is the most important The Esmeralda Mine and Property factor in the localization of deposits consist of patented and unpatented On September 1, 2009, the in the Esmeralda district. There is a mining claims, fee lands, water rights NDEP approved the commencement close spatial relationship between and a mill. Other features of the of milling operations and the deposits (veins) and the north-south Esmeralda Property include crushing processing of Hollister ore. Approval faults. Nearly all production of facilities, stockpile areas, waste rock for other thermal units requires a gold-rich ores came from mines located facilities and roads. Nevada Mercury Control Permit, the within 500ft (152m) of faults of this application for which is pending. system. A property-wide geological Esmeralda is approximately 220 assessment has indicated the presence miles (354km) from Winnemucca and mining of significant untested down-faulted approximately 290 miles (467km) A desk-top study to evaluate the epithermal vein targets immediately from the Hollister Property, with 80% exploration and mining potential of east of previous opencast and of that distance over paved roads. the Esmeralda Property has been underground operations. completed. The study involved the Permitting collection and review of the historical Significant drill targets occur in the An application package to renew database, review of the permits and covered / undrilled area between the the Esmeralda National Pollutant on-site rehabilitation of one of the Humboldt and Ann Pits and east of Discharge Elimination System (NPDES) declines to gain underground access the Martinez area. permit was prepared and submitted to some of the historical stopes. It is on June 10, 2009. The renewal expected that a recommendation to the mill refurbishment permit would allow a conditional Board will be made at the appropriate Phase 1 of the mill refurbishment Delivery
Annual Report 2009 Idea, Implementation, Delivery 52 Review of Operations: Other Projects
has been completed. The mill was The carbon from the mill was only Plans for Fiscal 2010 commissioned on September 9, 2009 sent to a refinery in January 2010 The refurbished milling circuit will be and the facility commenced processing and, therefore, the Company did not optimized to enable mill throughput of ore from the Hollister Project. account for any revenue in Q4 2009. 350 tons per day at an average grade Processing costs for the fourth quarter in excess of 1.1 Au Eq/ton. Higher-grade ore was fed into the of 2009 amounted to US$142/ton Esmeralda Mill during the fourth because the mill was in the ramp-up Pending approval by the Board of quarter of 2009, when 8,070 ore phase, with low production throughput. Directors of the results of a review of tons were processed through the mill. Fixed overheads once again impacted the Esmeralda Property, an exploration Improvements to the circuit impacted on the unit cost of the mill due to and mining plan for the property will on the throughput in the mill. The its capacity. Cost for haulage from be developed. mill continues to show an increase Hollister to Esmeralda amounted to in throughput and 5,134 tons were US$60/ton. GBG Rusaf Gold Ltd: processed in January 2010. An Au Eq Exploration recovery factor of 81% was achieved The Esmeralda Mill has subsequently Final results from the drill programs in in the fourth quarter of 2009, with been optimized to achieve a consistent Tanzania and Russia were obtained 5,296 Au Eq oz contained in the mill throughput of 350 tons/day for ore during 2009 and all data was process as at December 31, 2009. containing metal in excess of 1 Au Eq oz/ton. validated. Technical reports on the
“We are taking ownership of our orebodies by forming our own teams of geologists rather than relying on consultants. Both the Hollister and Burnstone teams are being trained so they can model the orebodies. Soon, we will be able to plot and view our geology on a day-to-day and month-to-month basis, which will tell us where to mine and where to direct our operations. Though we have been quiet on the exploration side, in July we will start drilling again in Tanzania and do some groundwork in Mozambique. ”
Phil Bentley, Vice President: Geology and Exploration
Idea Implementation Delivery
53 Great Basin Gold Annual Report 2009 Responsible Delivery
drilling and Mineral Resource Estimates have been compiled for Tanzania were received from an independent and Russia exploration during 2010. technical expert during November The work programs in Tanzania 2009. Mineral Resources for these drill will advance a number of priority programs were reported in the exploration targets in the Lake Victoria Q4 2009 MD & A. and Lupa Goldfields to drilling stage, as well as effect follow-up In Tanzania it was concluded that there drilling investigations on a number is a considerable amount of preliminary of advanced targets. Structural exploration work still to be completed studies will provide a basis for further on the GBG Rusaf (GBGR) Tanzanian target prioritization. properties. A number of permits overlie significant strike extents of prospective Work in Russia involves keeping structures that still require systematic the property in good standing and exploration and potentially drilling. This assessing disposal options. process will ultimately allow a sizeable reduction and focusing of the portfolio. Tanzania Work undertaken on the Tanzanian An initial target prioritization exercise properties in 2009 comprised has been completed, and this work geological modeling and Mineral is currently being augmented and Resource estimations for the Tanzania reviewed with desk-top structural Lubando (Geita East), Imweru (Geita studies of airborne magnetic data and West) and N’kuluwisi (Lupa) targets, integration of gravity, geochemical revised target classification and and drilling data. The Imweru prospect maintenance on the other permits. (Geita West) remains a key follow-up drilling target, with extensive drilling still Initial Resource Estimates have required to fully evaluate the 9km shear been received for the Imweru and corridor. Subject to orientation studies, Lubando prospects, which are Mobile Metal Ions (MMI) geochemical located in the Lake Victoria Goldfields surveys are planned on a number of along strike of Anglogold Ashanti’s covered structural targets. The Lupa Geita Mine operations, and are Goldfield provides a mass of follow-up part of a JV agreement with Barrick targets, and work is progressing to seek Exploration Africa Ltd (BEAL), listed a balanced prioritization, with drilling as African Barrick Gold in March and trench programs augmenting in-fill 2010. The N’kuluwisi Prospect is geochemical surveys. part of an extensive Mineral Right portfolio that GBGR administers in the The Kurils Project in Russia still Lupa Goldfields. requires a significant level of phased exploration to generate a significant • BEAL JV Mineral Resource base. During the GBGR has entered into a JV year, the permit was renewed for a agreement with BEAL to explore further three-year period. The work certain properties east and west program and budget is under care and of the Geita Mine operations (a maintenance, subject to review. producing mine that has established gold resources totaling 109 million Exploration programs and budgets tons @ 3.67g/t Au for 12,9 million
Annual Report 2009 Idea, Implementation, Delivery 54 review of operations: other Projects
Idea Implementation Delivery
oz Au (2008 Anglogold Ashanti which BEAL can buy GBGR’s 80% roads. The property consists of three Annual Report)). The Imweru and interest of the property at an agreed concessions Prospecting Licenses (PLs) Lubando are two properties that have value after completion of a Bankable with a total nominal area of 251km2. been drill tested to date. Under the Feasibility Study. The property is hosted in metabasalts terms of the JV agreement, GBGR of the Archean Lower Nyanzian has the right to acquire 100% interest • Imweru (Geita West) Group of the Tanzanian Craton. in the Imweru Property. BEAL has a The Imweru Property is located 20% carried interest up to a decision approximately 80km east of the Mineralization is characteristic of to mine, at which point they have city of Mwanza, northern Tanzania, orogenic gold deposits, consisting of to contribute or dilute to a 2% net within the western Geita greenstone disseminated sulphide replacement smelter return (NSR). BEAL also has belt, Lake Victoria Goldfields. Access associated with silicification. a first right of refusal in terms of is year-round, via improved dirt
Above: Exploration in Tanzania and Mozambique
55 Great Basin Gold Annual Report 2009 Responsible Delivery
Exploration on Imweru began in This drilling was completed by Ltd). A total of 18.6 tons of gold 2001 with surface sampling and Major Drilling Tanzania using a have been reported (unverified) from geological mapping. A ground combination of both RC and core the Lupa area, but it is estimated that geophysical survey in May 2003 (Longyear 44). Core size was NQ production has actually exceeded identified anomalies for exploration with high recoveries. 30 tons. drilling. Drilling consisted of rotary air blast (RAB), reverse circulation (RC) • Lupa / Chunya Goldfield A total of 111 holes totaling and diamond drilling totaling The Company administers 13,440m were drilled and sampled, 65,989m in 1,322 holes. 127 mineral properties in the and 49 surface samples were taken Discontinuous mineralization in Lupa / Chunya goldfields in southern along an approximately 1km-long multiple zones has been identified Tanzania through subsidiaries strike length through an approximate over approximately 10km strike to GBGR (Shield Resources and 50m-wide corridor; holes were drilled length to approximately 200m depth. Premier Mining). The Lupa Goldfield to a depth of 100m. Of these, 41 occupies a triangular area of drill holes and 18 surface samples are • Lubando (Geita East) about 2,600km2, approximately within the block model area which The Lubando gold property is located 850km from Dar es Salaam and was used to evaluate the Mineral approximately 100km south-west 80km north-west of the commercial Resource. Section-line spacing along of the city of Mwanza, northern center, Mbeya. the identified mineralized zone is Tanzania, within the eastern Geita approximately 125m. There were greenstone belt, Lake Victoria • N’kuluwisi (Lupa Goldfield) also several holes drilled outside of Goldfields. Access is year-round, The N’kuluwisi gold prospect the main target zone, approximately via improved dirt roads. The is located approximately 15km along strike of the shear structure, and property consists of three concessions north-west of the village of Saza, an additional 500m east and west of (PLs) with a total nominal area of within the Lupa Goldfield in south- the main target area. 74.7km2. The property is hosted western Tanzania. N’kuluwisi gold in metabasalts of the Archean mineralization is hosted within a • Mineral Resources Lower Nyanzian Group of the felsic and mafic intrusive complex All the Tanzanian Resource Tanzanian Craton. and occurs in one of two structural Estimates were carried out using corridors (the second termed Rukwa), block models constructed in Mineralization is similar to Imweru, which are defined by elongate GEMS (Gemcom). The block models consisting of structurally controlled magnetic susceptibility lows. The consist of blocks measuring 5m3. disseminated sulphide replacement N’kuluwisi zone is a zone of major No rotation was applied to the associated with silicification. displacement, 20km long and up to model. Grade for gold was Exploration on Lubando began 1.8km wide. It is known to contain interpolated into blocks using in November 2000 with surface about a thousand auriferous quartz Inverse Distance to the fifth power sampling and geological mapping. veins. Historical production from the (ID5). In all cases, a cut-off grade A ground geophysical survey in Lupa Goldfields is estimated to be of 0.5g/t gold was based on a May 2001 identified anomalies over 23 tons of gold produced from gold price of US$850/oz and for exploration drilling. Drilling about 80 sites in placers, rubble assumed 100% metallurgical consisted of RAB, RC and diamond zones and lodes. Lode mining began recovery. Mr Eric Fier, an drilling totaling 27,770m in 670 in 1934 at Ntumbi and in 1939 independent consulting geologist, holes. Continuous mineralization at New Saza. The New Saza was the Qualified Person in respect in four zones has been tested over mine (1939-65) produced 8.4 tons of the Mineral Resource Estimates. approximately 1.3km strike length of gold grading 7.5g/t, and the to approximately 200m depth. In Ntumbi mine (1937-65) produced 2008, GBGR completed 24 drill 1.7 tons of gold grading 12.1g/t holes for a total of 3,199m drilled. (unverified from Taiga Consultants
Annual Report 2009 Idea, Implementation, Delivery 56 Review of Operations: Other Projects
Tabulations of the consolidated Tanzanian Mineral Resources and at a 1g/t Au cut-off for the various prospects is shown below:
Tanzania Consolidated Mineral Resources Cut-off Resource Au Au Au Au Grade Tonnes Tons Category g/t g oz/t Oz g/t Measured 1.5 153,430 2.68 411,770 169,134 0.078 13,200
1.0 268,015 2.06 552,430 295,420 0.060 17,710
0.5 737,650 1.19 874,690 813,100 0.034 28,040 Indicated 1.5 489,300 2.46 1,205,820 539,360 0.071 38,480
1.0 852,360 1.95 1,664,380 939,550 0.057 53,810
0.5 2,657,270 1.08 2,881,240 2,929,130 0.031 91,750 Total 1.5 642,730 2.52 1,617,590 708,494 0.073 51,680 Measured 1.0 1,120,375 1.98 2,216,810 1,234,970 0.058 71,520 and Indicated 0.5 3,394,920 1.11 3,755,930 3,742,230 0.032 119,790 Inferred 1.5 4,030,807 2.86 11,541,932 4,443,155 0.084 371,154
1.0 7,430,170 2.04 15,167,133 8,190,280 0.059 486,060
0.5 24,132,638 1.15 27,637,395 26,601,382 0.033 884,485
Tanzania Consolidated Mineral Resources Resource Au Au Au Au Prospect Tonnes Tons Category g/t g oz/t Oz Measured Imweru 0 0.00 0 0 0.000 0
Lubando 120,190 2.59 311,500 132,480 0.076 10,060
N’kuluwisi 147,825 1.63 240,930 162,940 0.047 7,650 Subtotal 268,015 2.06 552,430 295,420 0.060 17,710 Indicated Imweru 0 0.00 0 0 0.000 0
Lubando 360,960 2.52 909,730 397,880 0.074 29,440
N’kuluwisi 491,400 1.54 754,650 541,670 0.045 24,370 Subtotal 852,360 1.95 1,664,380 939,550 0.057 53,810 Measured Imweru 0 0.00 0 0 0.000 0 and Indicated Lubando 481,150 2.54 1,221,230 530,360 0.074 39,500 N’kuluwisi 639,225 1.56 995,580 704,610 0.045 32,020
Total 1,120,375 1.98 2,216,810 1,234,970 0.058 71,520 Inferred Imweru 4,715,440 2.05 9,666,653 5,197,830 0.054 310,790
Lubando 1,255,380 2.72 3,419,300 1,383,810 0.079 109,320
N’kuluwisi 1,255,380 2.72 3,419,300 1,383,810 0.079 109,320 Total 7,226,200 2.28 16,505,253 7,965,450 0.066 529,430
57 Great Basin Gold Annual Report 2009 Responsible Delivery
• Current Synopsis • Mineralization was intersected on all targets, and there is upside along strike, sub-parallel and at depth on all targets.
• The Imweru target drilling was not fully completed due to a cash preservation decision, and still requires more work.
• The N’kuluwisi target is part of a more extensive shear corridor stretching 10km from Rukwa Mine to Mapalala.
• Likewise, the Lubando target is part of a more extensive shear corridor with potential for sub-parallel and along strike mineralization under cover.
• The Tanzanian targets drilled were, in the writer’s opinion, not necessarily “the pick of the crop”, as there are in the order of 27 other follow-up targets in those areas that also need drill testing.
• The further understanding of structural controls in all areas of mineralization will be a critical step to successful targeting and resource delineation.
• There is still a considerable resource potential in the areas drilled, as well in the surrounding areas.
• Cognisance should be taken that future resource delineation and potential turning to account will involve “clusters” of mineralized zones on a given structure or proximal sub-parallel splays.
Idea
Implementation
Delivery
Annual Report 2009 Idea, Implementation, Delivery 58 Review of Operations: Other Projects
It can be concluded that there is a property is approximately 50km north GBGR has completed an exploration considerable amount of preliminary of the city of Kurilsk, Kuril Islands, program consisting of sampling and exploration work still to be completed Russia. The license area is considered drilling sufficient to complete a Mineral on the GBGR properties. A number remote and is currently accessed all Resource Estimate on one prospect of permits overlie significant strike year round by air, water and road, within the (Peres) deposit. The initial extents of prospective structures that which require one to two days to drilling program was completed during still require systematic exploration and travel from Yuzhno Sakhalinsk. The 2008 at Kurils on the Peres target, and potentially drilling. This process will license is registered with the Territorial comprised 33 diamond boreholes. ultimately allow a sizeable reduction Fund of Information on Natural The initial GBGR objectives were to and focusing of the portfolio. Resources for Sakhalin Oblast prove the existence of a minimum of No. 27-06-56/1 in the name of 500,000 ounces of Au Eq at a grade East Russia (Kurils): Kurils Resources LLC. Under the terms of greater than or equal to 1.5g/t Exploration of a license dated November 16, Au. This target size was not achieved The Kurils Project is located in eastern 2005, Kurils Resources has a 100% during the 2008 drill program. Russia, on Iturup Island in the Kurils interest in the North Iturup property Island chain, north-east of Japan. and will maintain such a 100% The mineralized zone at Peres is GBGR, through Kurils Resources LLC, interest by completing predetermined up to 300m wide with a majority manages a 13,800 hectare mineral staged exploration work and minimal of the current resource considered exploration concession in the northern annual payments. The permit has been potentially open-pittable, making it area of the island of Iturup, Kuril renewed for a further three years possibly attractive at lower (1g/t Au Islands, Russia. The Northern Iturup from April 2010. Eq) grades. The east and to depth
Idea Implementation Delivery
59 Great Basin Gold Annual Report 2009 Responsible Delivery
extension of the Peres mineralization veins and stockwork with associated consistent with a “Kuroko-style” is considered to have the highest alunite, limonite and minor sulphides. high sulfidation epithermal system exploration potential and further drilling Gold grades (> 20g/t) are present with anomalous copper-lead-zinc would be targeted along trend and to and associated with near-vertical (basically a volcanic exhalative on depth. The mineralization in the main vuggy quartz veins from 0.1m to 2m the flanks of a rhyolite or rhyodacite zone is associated with quartz veining wide, predominantly of low and high dome, proximal to a sub-aerial in Miocene tuffs which are exposed on sulfidation epithermal systems. volcanic edifice). Preliminary resources the surface for approximately 350m Multi-element Induced Coupled delineated from the drilling program with an unknown true width and depth. Plasma (ICP) analysis suggests that are shown below: The tuff units consist of multiple quartz the geochemistry of the prospect is
Kurils Mineral Resources Cut-off Resource Au Au Au Au Grade Tonnes Tons Category g/t g oz/t Oz g/t Measured 1.5 398,230 2.90 1,154,867 438,970 0.085 37,312
1.0 655,710 2.24 1,468,790 722,790 0.065 46,981
0.5 1,238,620 1.52 1,882,702 1,365,330 0.044 60,075 Indicated 1.5 544,100 2.91 1,583,331 599,760 0.085 50,980
1.0 899,790 2.24 2,015,530 991,840 0.065 64,470
0.5 1,947,270 1.42 2,765,123 2,146,880 0.041 88,022 Total 1.5 942,330 2.91 2,738,198 1,038,730 0.085 88,292 Measured 1.0 1,555,500 2.24 3,484,320 1,714,630 0.065 111,451 and Indicated 0.5 3,185,890 1.46 4,647,826 3,512,210 0.042 148,097 Inferred 1.5 178,060 2.20 391,732 196,280 0.064 12,562
1.0 374,740 1.64 614,574 413,080 0.048 19,828
0.5 805,470 1.13 910,181 887,870 0.033 29,300
The Resource Estimate was carried out Mozambique on August 20, 2007 properties over which GSR holds using a block model constructed in (the JV). The purpose of the JV is to mineral rights. GEMS. The block model consisted of establish a gold exploration and mining blocks measuring 5m3. No rotation was business in Mozambique, whereby An initial soil sampling and ground applied to the model. Grade for gold the Company will have the exclusive geophysics program was completed on was interpolated into blocks using ID5. right to explore all GSR’s properties. the property during 2008. Four follow- The Company has the right to earn up exploration targets were delineated Tsetsera Property: in an 80% interest in the JV, and has from this work and have been Exploration committed to exploration expenditures incorporated into a follow-up surface The Company concluded a of approximately US$2 million over exploration program in 2010. The JV agreement to enter into an a three-year period on the Tsetsera Company does not consider the Tsetsera unincorporated JV with G S Property, which is located 80km south Property to be material at this time. Minase Refnaria Limitade (GSR) in of Manica in Mozambique, and other
Annual Report 2009 Idea, Implementation, Delivery 60 Leadership Development and People
Idea Implementation Delivery
“We do not have a seasoned workforce like some other mines, so we are working on introducing a number of development initiatives and courses for our staff.
We are continually growing as a company but have now started delivering. We’ve identified that, too often, the mining industry discovers great miners and makes them supervisors. The result is often inexperienced supervisors. Consequently, we have created a supervisor class, which is very specific to Great Basin Gold. The course is also for people who might need to stand in for supervisors. We will also be sending our three foremen on a course to allow them to learn more about themselves and their jobs.”
Lee Morrison, Human Capital Manager, Nevada Operations
61 Great Basin Gold Annual Report 2009 Responsible Delivery
“Our biggest challenge in terms of delivery is attracting and retaining the right people. We have been successful in attracting good senior managers who will help take the business forward and are focusing on getting the local community around the Burnstone Property ready for employment by engaging with schools and universities. We have also integrated safety with human capital as we have the view that safety is about human behavior. And we have introduced a talent engagement project and a wellness strategy.”
Dawie Mostert, Vice President: Human Capital
Leading the Way about influential impact, relationship Leadership at Great Basin Gold is an building, execution and strategic evolving practice, a journey constructed alignment, and how what we need around key behaviors, values and reality. to do will impact on our colleagues, As this young company is transforming communities and the teams we into a gold producer, we find that our work with, before we speak or act. leadership principles are continually Our leadership development being assessed against real-time programs therefore integrate performance. Leadership, and the individual development, team function, development of this key organisational strategic execution per operating competence, is a prerequisite to level, and being executive business establish and grow any organization. management, technical professionals We have identified and embraced this and front-line executers. concept as a company from inception. Leadership development forms The development of our leadership part of an integrated learning bench focuses on three corporate approach, based on design, delivery goals, namely: and feedback, effected through performance reviews, 360° employee • talent identification and engagement; feedback surveys, and market and • succession management; and business analyst representations. • organizational growth and performance. Our intention remains to engage and develop leadership practises These focus areas will ensure a focused on establishing an operating sustained management and a environment which will strengthen leadership approach that allows employee engagement levels, for individuals who possess vast facilitate initiatives and deliver differences and natural strengths to sustained performance. build and develop their own strengths and the strengths of people around A key strategic initiative at Great them – their teams! Basin Gold has been to deliver and develop operating businesses on Leadership starts with the mind; the different continents that will excel as thinking process. We must first think sustainable entities within their contextual
Annual Report 2009 Idea, Implementation, Delivery 62 Leadership Development and People
environments. Success therefore requires which reflect in sustained performances. “We are trying to attract the best leaders who understand this and skills and retain them, while also embrace the difference and diversity Hollister is ready to venture into the looking for local novice talent. these different operating environments arena of business improvement. challenge us with. Leaders then must Burnstone, on the other hand, has We’ve been successful in engaging sensibly and actively inspire our been a beehive of activity with three the local community by recruiting management teams to support and core drivers: capital construction, mine local talent and then developing skills by introducing mining and develop a purpose and identity. and infrastructure development and engineering programs. We’ve also early-stage establishment of an introduced the Exchange Concept We work relentlessly at developing operating environment. Different which encourages self-sufficient and embedding this dynamic style of deliverables, time frames and working teams by connecting them leadership. It is a process; a journey methodologies, however, are all critical to the performance and results of which makes a difference. to ensure seamless transformation the business. We have exchange from a capital project to an operating rooms where the front-line miners Our Hollister operation, which gold mine. Serious investments in can get together to exchange includes the Esmeralda metallurgical terms of people, processes and underground information.” process plant, has progressed on the systems development have been made Dane Wilson management maturity curve during to ensure that Burnstone develops Burnstone Acting Human 2009. Evident from that operation are an operating culture focused on Capital Manager consistency in management practises Responsible Delivery, supported by our and good levels of people retention, partners, suppliers and community.
“By educating and training our staff we are continually developing a workforce with skills in all areas which are required on a mine such as ours, but particularly those of mining engineering and metallurgy.
As well as offering a number of courses, one of the ways in which we train our staff is with the use of a simulator we have bought. It can simulate working conditions underground as well as specific events such as runaways. The simulator is especially useful for those who have never experienced mining before, but also for those who need refresher courses.”
Lenn van Niekerk, Burnstone Technical Development Manager
63 Great Basin Gold Annual Report 2009 Responsible Delivery Environmental Management
“We have implemented a tree planting project for the local community where we have assisted with the development of a nursery. We help the community source trees and then buy them for the mine. So far, 590 trees have been planted on the mine.
We also have a waste recycling project where the mine gives its waste, such as plastic bottles and aluminium, to the communities who then sell it to a private buyer. Only non-recyclable waste goes into our landfill.
We are also educating the local community about the use of cleaner sources of energy such as gas. And for those who continue to use coal, we teach them to use it in a way where less coal is consumed but more heat is produced.”
Fredah Moatshe, Burnstone Environmental Manager
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 64 Environmental Management
Corporate Environmental Unpacking the Corporate example. Short-term operational gains Statement Environmental Statement are never acceptable at the expense of We are committed to standards We rolled out our corporate the environment. of excellence in our environmental environmental statement because the practises. We will meet all legal protection of the environment is the Burnstone requirements applicable to our right thing to do and ensures The Burnstone Project has evolved from a activity. Where feasible, we will Responsible Delivery and sustainable so-called greenfields project into a near- exceed the legal requirements. operations. The protection of the production project in the past three years. Where there are no applicable legal environment relates directly to the New infrastructure, such as a decline standards, we will apply responsible Company’s right to operate, and shaft, waste rock dump, change houses practises. To this end, we expect our non-compliance to environmental and temporary administration offices employees to: regulations may cause that right to are being developed. The development be inhibited or even withdrawn. footprint is limited to a bare minimum, (i) comply with applicable clearing vegetation in areas necessary environmental requirements; Our aim is to embed an “environmental for construction purposes, leaving the (ii) seek guidance when they are unsure culture” in Great Basin Gold; a culture rest of the site in its natural state. The of the standards; that will ensure that the protection of the infrastructure is made up of makeshift (iii) consider what extra steps we may environment is always actively considered material which is easy to remove without follow to enhance our environmental in whatever we “Think, Say and Do” in major breakdowns and rehabilitation, performance; and our daily activities, notwithstanding the thus reducing environmental liabilities at level or function one might have within the end of the project. (iv) report violations or suspected the Company. Our plans must expressly violations to the appropriate incorporate environmental considerations The waste rock material is crushed persons. and our leaders at all levels must lead by into aggregates which are used in the
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development of infrastructure within the incumbent on the operations to measures are in place to prevent and mine environs and is also sold to the anticipate, prevent and, as far as minimize air pollution in all internal roads. community. This reduces the footprint possible, mitigate the effects of its This includes the deployment of a water of the waste rock dump as well as the actions. Water management initiatives truck and the installation of sprinklers rehabilitation costs required to finally close are in place to conserve water by around the operational areas. Continuous the operations at the ends of their lives. recycling, treating and re-using waste consultation with provincial and national water for both underground mining authorities bore fruit as the mine was The Company is acutely aware that and surface activities. We have allowed to extend the dust suppression mining activities may impact the natural established water sampling points program to include the provincial road environment; however, we believe that which we monitor on a monthly basis. running north of the site. This has improved, mining can co-exist with the environment We have even extended the water and will continue to improve, the air if mining activities are conducted in a sampling program to adjacent farms quality for the benefit of our employees safe and environmentally responsible and we provide potable water to the and the surrounding communities. manner. To this end, we have identified school and the adjacent community. all activities that could have a negative The protection and conservation of the Part and parcel of our environmental impact on the environmental media water resource is our priority, for the culture is to invest in the environment. such as air, water and land, and have benefit of not only our employees but To this end, we have developed the developed environmental management also the community at large. tradition that all employees and first- programs to monitor and effectively time visitors to the Burnstone Project manage them. The development of the mine in a farming plant an indigenous tree. To date, environment as well as the increase 590 indigenous trees have been As a developing mine, we are currently in traffic levels on the gravel road that planted in the environment surrounding relying entirely on borehole water runs north of the mine may lead to high the Burnstone Project. This not only for potable use and it is therefore dust levels in the area. Dust suppression contributes to the reduction of our
Above: Rock Creek, Nevada
Annual Report 2009 Idea, Implementation, Delivery 66 Environmental Management
Idea Implementation Delivery
carbon footprint and global warming, but community in a waste management has required the Company to prepare also creates individual awareness and program. This involves the cleaning of an EIS. The Company is currently in the responsibility towards the environment. waste heaps into open spaces and play process of working with a third-party We have formed an effective partnership parks as well as the recycling of paper, EIS contractor and the BLM to complete with the municipality and the Department plastic and glass. There are 15 direct an EIS. A key milestone was reached of Water and Environmental Affairs. We beneficiaries involved in our waste when the NOI to prepare an EIS was have, together, contributed towards the minimization and recycling initiative who published in the Federal Register on development of a nursery which is run by are also involved in the running of a April 19, 2010, thereby kicking off the the community development co-operative. buy-back center which is co-funded by official public scoping period. The co-operative also provides garden the municipality and the mine. services and the indigenous trees planted Cultural sensitivity is one of the key at the mine. There are, in all, 13 direct Consultation meetings with the factors driving the EIS, as the Hollister beneficiaries in this project. municipality culminated in a public Mine is located within the boundary of meeting at which agreement was the Tosawihi Quarries Archaeological Protected animals such as black reached with the beneficiaries of the District, which is considered eligible for the wildebeest, grass owls and the Giant graves to allow the mine to clean National Register of Historic Places. There Bullfrog frequent the Burnstone Property and fence the graves at no cost to the are also two Traditional Cultural Properties and we are taking special precautions beneficiaries. Should other heritage sites located within the larger Archaeological to ensure that their habitat is protected. be identified in future, measures will be District. The continued protection of Our specific priorities relating to the taken to protect and conserve those sites. these resources is ongoing and will play management of waste include the significantly into the EIS analysis. development of a Waste Information Hollister System (WIS) which involves: the The Hollister Project entails the Known for an abundance of artefacts identification and quantification of types development of an underground mine supporting human occupation for of waste; separation of waste at source; that is located in a remote part of north- approximately ten to eleven thousand and maximizing the re-use and recycling east Nevada. Most of the existing and years, the Tosawihi Quarry area is one of waste materials, thereby minimizing proposed surface facilities are located of the most unique and well-documented the disposal of waste by landfill. in areas disturbed by previous surface traditional / cultural / spiritual use mining activities. To move this project sites on lands administered by the We have partnered with the local from a bulk sampling / trial mining BLM Elko Field Office and, according municipality and the surrounding phase to the production phase, the BLM to the BLM, an important traditional,
67 Great Basin Gold Annual Report 2009 Responsible Delivery
“Last year’s purchase of the Rock Creek lands has become a model for Corporate Social Investment (CSI) initiatives in the USA. We purchased five sections of this sacred land which we have put aside for use by the local tribes and no mining will take place on this land. The other big environmental project which we are doing is to analyse the Environmental Impact process for the Hollister Property.
We have started the public scoping of the EIS and have drafted parts of the document. Our day-to-day work entails handling routine permits and ensuring that compliance is ongoing.”
Teresa Conner, Environmental Manager, Nevada Operations
cultural and spiritual use site in Nevada. combination ventilation borehole and Renowned for the quality of white chert secondary escapeway) located to used in ceremonies and tool-making, the north – north-east of the East Pit the Tosawihi Quarry supports ongoing as well as pipelines connecting the traditional practises of contemporary Rapid Infiltration Basins (RIBs) in the native people, mostly members of the Little Antelope Creek drainage. The Western Shoshone tribes. BLM has designated a minimum 100ft (approximately 30m) buffer zone around The majority of surface facilities cultural resource sites, to which all contemplated under the Hollister EIS facilities at the Hollister Mine adhere. will be constructed within the East Pit or in areas that have been disturbed The Company continues to adhere by previous surface mining activities. to zero-discharge drilling in sensitive Although the East Pit is located within settings. Portable sumps are deployed the Tosawihi Quarries Archaeological with all drill rigs to prevent any District, the Company has worked potential discharge to the environment. diligently to locate new or proposed All drilling fluids are contained and facilities within areas previously recycled and all drill cuttings are disturbed, to minimize or eliminate removed from site. The Company potential effects to cultural sites within the developed the “Playpen Concept” district. Cultural resource surveys, which to confine drilling activities to the are a regulatory requirement, will also approved drilling areas. This entails be conducted in those areas where new liaison with the BLM archaeologist and activities are planned and no survey other BLM officials to mark drill site work has previously been completed. boundaries to avoid damage to cultural resources related to the Tosawihi The Company has put into place a Quarry and environmentally-sensitive number of measures, processes and areas. The Company then places procedures to prevent disturbance orange plastic fencing around the site to cultural resources. This includes to delineate drill pad boundaries and construction of the East Raise (a to prevent off-road travel.
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“Our vision is to join hands with the community and make them part of our project; we need to develop the community as well as the mine.
We are doing this by creating job opportunities while introducing education and training, as well as poverty alleviation and enterprise development projects. We have implemented a housing project where we work with the government to project manage and build new houses, and we have become involved in infrastructural development, too. We are also working with the municipality to help develop their skills.”
Mashilo Mokotong, Burnstone Corporate Social Responsibility Manager
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69 Great Basin Gold Annual Report 2009 Responsible Delivery
“I am one of the first people in this project to have a house built for me. I bought the land from the municipality, and already own a shack on it. My new house is in the process of being built on my land. I am so grateful that I was chosen to own a new house.”
Letta Tshabalala, New Home Owner
orporate Social Responsibility as a conscious decision taken to (CSR) is a key strategic periodically engage with the Ccomponent of our development community as part of the social and operational business practise, dialogue and management of the goal being to align and integrate community expectations. Our CSR our operations with the needs of the strategy and program are therefore communities hosting our operations, aligned to government and local and to make meaningful investments in committees’ program priorities, the communities where we operate. focused on establishing global and country-based partnerships. Burnstone At Burnstone, our commitment is to Key CSR Focus Areas contribute and be part of building To accomplish strategic CSR objectives, a sustainable economy while being the Company has identified and mindful of the health and wellbeing of adopted a number of key focus our employees, the community and the areas: education and training; natural environment. entrepreneurship and enterprise development; community engagement; Our CSR objective is to facilitate community health and wellness; local and be party to meaningful, economic development; and supply life-changing programs aligned to chain management. the needs of our communities. • Education and Training Many of our implemented programs South Africa has struggled to improve revolve around establishing social the standard of education and infrastructure focused on community learner performance, specifically health, poverty alleviation, skills in mathematics and science. Poor development, job creation and performance in these areas not only small business enterprise has the potential to exclude South development – all being the glue Africans from participating in the new needed for social cohesion. economy and earning good salaries, but could also have a detrimental At strategic level, from inception stage effect on the economic growth at Burnstone, we realised and therefore potential of the country in relation to initiated a comprehensive CSR program, the rest of the world. which resulted not purely from our need to comply with the Social and The Company’s attempt to address Labor Plan (SLP) for the purpose of this problem is done through investing acquiring a Mining Right, but rather in mathematics and science teachers
Annual Report 2009 Idea, Implementation, Delivery 70 Corporate Social Responsibility
“We have created employment outside the mine by supporting small businesses such as a bus shuttle service, a recycling business and canteen services. We’ve also helped establish and support a car wash, a gym and a mushroom farm in the area, and have trained about 20 people in computer literacy.”
Prudence Moeketsi, Burnstone Enterprise Development Co-ordinator
by means of upgrading their skills, and skills upgrade program. In 2009 the training programs, or have become supporting learners by providing them project accommodated 287 learners beneficiaries of our bursary scheme. with extra tuition. This project is known and 48 educators. We realized the to the community, educators and need for career guidance for these • Entrepreneurship and Enterprise government as the Thuthuka program. young learners and new workplace Development entrants, and therefore facilitated a Our enterprise development program In the delivery of the program, “Career Expo”. seeks to integrate the local community the Company has partnered with the mainstream economy – a with the South African Institute of Over 1,016 learners and community transformation which, we believe, Chartered Accountants (SAICA) members and over 14 companies will not only improve the quality and the Mpumalanga Department from different industries, government of life of the community around of Education in initiating Thuthuka departments and tertiary institutions Burnstone Mine, but will also grow supplementary classes in Dipaleseng. participated in the 2010 Career and increase the local economy’s The project offers extra tutorial classes Expo, which is now running for the overall sustainability. for the local learners in mathematics, third year in a row. Key to this is physical science, English and the integration between improving A demand-driven approach to local accounting, with the added bonus knowledge and skills, making more enterprise development was adopted, of upgrading the skills of the local informed career choice decisions and targeting opportunities within the educators. In 2008, 557 learners our own need to focus on recruitment Company’s business, inclusive participated in the mathematics, and employee skills development. As of its supply chain, but with the science, accounting and English such, since 2008, Thuthuka program ultimate goal of creating sustainable supplementary classes and 27 learners who were interested in mining enterprises. In order to mentor and educators attended the educator careers have been recruited into skills coach the established enterprises,
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the Company, in partnership with the services for the Company’s functions issues on sustainable development Small Enterprise Development Agency and events. projects in the area and contribute (SEDA), established Imvuselelo suggestions as to how Great Basin A group of emerging farmers has been Business Development and Resource Gold can assist with maintaining assisted with land and mentorship to Center at the heart of Siyathemba. and enhancing the quality of life of grow sunflowers. The project comprises Some of the enterprises supported surrounding communities. six adults and six youths. through the center are: • Community Health and Wellness • the laundry and cleaning services • Community Engagement The prevalence of HIV / AIDS in the which have created 21 jobs for Since the construction phase of surrounding community is a source of previously unemployed locals; Burnstone Mine, the Company has concern. We have recently upgraded taken a conscious decision to invest • a gardening co-operative which three Multi-Purpose Centers that form in the surrounding community, and currently employs 12 local people; part of an orphan feeding scheme in will continue to do so during the life the Dipaleseng area. • an employee shuttle service which of the mine. Every six months, at the has created two full-time jobs; and mine itself, the Company gives the • Local Economic Development community the opportunity to raise • a canteen service and catering The Company has made a significant
“We became involved in a government housing project with the aim of project managing the building of an initial 100 low-cost houses for the local community, and are negotiating with the government to help with more. By doing this, Burnstone is helping with job creation, improving skills and uplifting the standard of accommodation in the area.
We have selected five local contractors to build the houses. Our input includes training the contractors, sourcing the materials for them, helping them with project management and pricing, and assisting with quality control.
We expect 10 houses to be built by the middle of 2010.”
Wayne van Nikkelen-Kuyper and Carl van Schie, Burnstone Housing Project Managers
Annual Report 2009 Idea, Implementation, Delivery 72 Corporate Social Responsibility
contribution to Dipaleseng’s with the Mpumalanga Economic when the mine is in full production. Integrated Development Planning Growth Agency (MEGA) to assist with In acknowledgement of the need by providing project management local economic development in the to develop local suppliers to build capacity to the municipality. Dipaleseng area. their capacity in order to satisfy the mine’s goods and services needs This has made it possible for the • Supply Chain Management and enable harnessed used of local municipality to access infrastructure The Company’s procurement strategy resources, the Company championed development grants from National caters for measures to attract outside the establishment of a local Chamber Government and also resulted in suppliers into the area for possible of Commerce. the signing of a Land Availability franchises / partnerships and JVs with Agreement between the Dipaleseng local suppliers. • Supporting Local Businesses Municipality and the Mpumalanga The Company’s procurement policy is Housing Development Finance Local and provincial suppliers form aligned to the Preferential Procurement Company for the construction of 188 an integral part of a very flexible Framework Act as well as the affordable housing units in the area. procurement strategy for the next 20 provisions of Regulation 46 of the years, and we are confident that a MPRDA. As per the recommendations In addition, we have signed a large number of mining consumables from both the Dipaleseng Business Memorandum of Understanding will be purchased from these suppliers Chamber and the Small, Medium and
“I am seconded to the local municipality by Burnstone and help manage their infrastructural projects. I am helping with housing developments so our employees are able to become home owners rather than live in shacks. I also try to make sure that the things such as water and power supplies work, and try to get badly maintained roads repaired. I am also involved in pavement and stormwater management plans.”
Emmie Oelofse, Burnstone Project Manager
73 Great Basin Gold Annual Report 2009 Responsible Delivery
Micro Enterprises (SMME) Forum, the Since August 2006, ZAR152,6 • cleaning and garden services Company’s supply chain department million has been spent in • transportation services ensures that tenders from the mine are Mpumalanga (of which ZAR51,6 currently advertised on the municipal million in Dipaleseng) to source • small engineering services notice board. supplies for the mine. Not being • agriculture and hardware supplies a mining community has made it The capital investment for the Burnstone difficult for the mine to match the • tyre supplies and repairs. Project is in excess of ZAR2 billion. demands emanating from supply However, the bulk of the capital will be chain opportunities to the local The mine makes use of most of the spent on the sinking of the vertical shaft small businesses, because the bulk above suppliers. (ZAR270 million), the development of of SMMEs provide the following the access decline (ZAR300 million), products and services: The Company also now rewards the construction and commissioning employees for outstanding • general consumables of the metallurgical plant facility performance by obtaining vouchers (ZAR700 million) with the remainder on • emerging / small construction from various businesses in the heavy-duty equipment (ZAR300 million) companies area and therefore encouraging employees to utilize the relevant and earthworks for civil work at the • catering services mine (ZAR250 million). facilities (retail outlets).
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 74 Corporate Social Responsibility
“I am one of the contractors selected by Burnstone to build the first low-cost houses in the area. We are busy on the foundations of the first one. Burnstone is working with us to project manage the building of the house by supplying our materials, inspecting the building and making sure our sub-contractors have sufficient skills to do the job.”
Mavis Matlou, Matsale Projects
In addition, we have established a Contribution Towards Local We continue working with the BLM and number of small businesses in town. Supplier Development the natives to preserve the lands. A good example would be the In our endeavors to improve local “Tsemoloho Ya Katleho Laundry and content through local supplier Our employees reside and operate Cleaning Services” which handles development, the Company assists from a well-developed community, all of the mine’s laundry needs. local suppliers with specific payment where the town service infrastructure is Typically this would be done on terms at the commencement of effective and efficient. Hollister Mine is the mine, using mine employees. contracts. The payment cycle for these situated approximately 80 miles from This independent business has suppliers has been reduced from 30 the small town of Winnemucca, in an been operating successfully for days to between seven and14 days. archaeologically sensitive area, and approximately three years and we pro-actively address environmental employs a total of 17 people. Supplier Performance Management risks by engaging the BLM Tuscarora, Great Basin Gold has initiated which is currently preparing an EIS. With the type of supply shifting from a supplier management process The scoping process to solicit public construction to mining, initiatives to ensure that all suppliers are comments and identify potential issues are underway to encourage larger reviewed against agreed criteria, to be dealt with has begun. manufacturers and distributors and to promote a healthy business to consider offering franchise relationship. Finalization of the EIS would expand opportunities to local entrepreneurs Rodeo Creek Gold Inc’s existing or opening a local branch of Hollister underground exploration activities their business to supply mining In 2009, Great Basin Gold purchased into a full-scale underground mining consumables. The possibility of JVs the Rock Creek lands in northern operation. Most of the necessary between small local suppliers and Nevada close to the Hollister infrastructure to support full-scale mining these suppliers are a real opportunity operations area. Currently the lands are was authorized and built in conjunction in the region that will be properly owned by GBG, with the intention of with the underground exploration investigated and explored. protecting the lands from any mining. activities. The proposed action consists
75 Great Basin Gold Annual Report 2009 Responsible Delivery
of: constructing a new production shaft; mutually beneficial outcomes. improving existing roads; building a power transmission line to the mine On May 7, 2010, the tribal members site; upgrading ancillary facilities of the Shoshone Tribe of the Duck including storage areas, office, Valley Reservation of Owyhee, Nevada shop and warehouse buildings; visited the Hollister Mine operations to and continuing both surface and discuss the cultural significance of this underground exploration. area as well as the purchase of the Rock Creek lands and the creation of The project is located in and the Rock Creek Conservancy. Hollister adjacent to the Tosawihi Quarries management provided an underground Archaeological District and near the tour of the mine and were also shown Tosawihi Quarries Traditional Cultural the East Alimak raise and the Tosawihi Properties (TCP), 47 miles north-west Quarries area. of Elko, Nevada, in Elko County. The purpose of the public scoping Great Basin Gold believes that it has process is to determine relevant issues gone the extra mile to develop the that will influence the scope of the Hollister Project in a manner that will environmental analysis, including have the least possible impact upon the alternatives, and guide the process Quarry. We also hope that our decision for developing the EIS. At present, to forego surface mining and on-site the BLM has identified the following mineral processing, to build an Alimak preliminary issues: cultural resources, raise, and to take other measures to Native American religious concerns, minimize impacts to cultural resources hydrology and noise. Native American and other environmentally sensitive tribal consultations will be conducted resources clearly demonstrates the and tribal concerns will be given due sincerity of our commitment to protect consideration, including impacts on and respect the land. Indian trust assets, if any. Federal, State and local agencies, along Other CSI initiatives that the Hollister with other stakeholders that may be Project has been involved in include interested or affected by the BLM’s sponsorship of several basketball decision on this project, are invited teams from the town of Owyhee, to participate in the scoping process. north of the Hollister Project area. This If eligible, they may request or be includes assistance with the purchase requested by the BLM to participate as of basketball uniforms and donation a co-operating agency. of hotel rooms to allow participation in tournaments. Great Basin Gold Currently, Hollister management has received a trophy from the Shoshone been engaging with local Western Basketball team for being placed Shoshone Tribes and councils. There second in the league. GBG / have been several tours of the Rock Rodeo Creek Gold Inc (RCG) has Idea Creek and Tosawihi Quarries, as also provided monetary assistance to the Company wants to continue local community organizations such Implementation developing relationships with local as Nevada Health Centers, Special communities and tribal groups in Olympics, People to People and Delivery order to gain more insights into how the Northern Nevada Mine Rescue we can work together to achieve Association, among others.
Annual Report 2009 Idea, Implementation, Delivery 76 Directors and Executives
Idea Implementation Delivery
The names and municipalities of residence of the Directors and Officers of the Company, their principal occupations during the past five years, and the period of time they have served as Directors or Officers of Great Basin Gold are as follows. Except where indicated, each Director and senior Officer of Great Basin Gold has held the same or similar principal occupation with the organization indicated or a predecessor thereof for the last five years.
Directors Province or State and Period as a Director Name Position in the Company Country of Residence of the Company Ronald W Thiessen Chairman of the Board and Director British Columbia, Canada Since Oct 1993 Patrick R Cooke Director Gauteng, RSA Since April 2006 T Barry Coughlan Director British Columbia, Canada Since Feb 1998 Ferdi Dippenaar President, CEO and Director Gauteng, RSA Since Dec 2005 David M S Elliott Director British Columbia, Canada Since July 2004 Wayne Kirk Director Washington, USA Since July 2004 Joshua C Ngoma Director Gauteng, RSA Since July 2009 Gert J Robbertze Director Gauteng, RSA Since March 2010 Walter T Segsworth Director British Columbia, Canada Since Jan 2003
The following information as to principal occupation, business or employment, within the past five years is not within the knowledge of the Company’s management and has been furnished by the respective individuals.
77 Great Basin Gold Annual Report 2009 Responsible Delivery
Ronald W Thiessen, CA – Chairman of the Board and Director
Ronald Thiessen is a Chartered Hunter Dickinson Inc), a company Accountant with professional providing management and experience in finance, taxation, administrative services to several mergers, acquisitions and publicly-traded companies. He re-organizations. Since 1986, focuses on directing corporate Mr Thiessen has been involved development and financing activities in the acquisition and financing and is also a Director of Hunter of mining and mineral exploration Dickinson Services Inc. companies. Mr Thiessen is, or was within the past Mr Thiessen is employed by Hunter five years, an officer and/or Director Dickinson Services Inc (formerly of the following public companies:
Company Positions Held From To Director Sept 1995 Present Amarc Resources Ltd President and CEO Sept 2000 Present Director April 1996 Present Anooraq Resources Corporation President and CEO Sept 2000 Aug 2007 Director Nov 1995 Present Continental Minerals Corporation President and CEO Sept 2000 Jan 2006 Co-Chairman Jan 2006 Present Director July 2006 Present Detour Gold Corporation Chairman July 2006 March 2009 Director Aug 1994 Present Farallon Mining Ltd Co-Chairman Sept 2004 Dec 2005 Chairman Dec 2005 Present Director Oct 1993 Present President and CEO Sept 2000 Dec 2005 Great Basin Gold Limited Co-Chairman Dec 2005 Nov 2006 Chairman Nov 2006 Present Director Nov 1995 Present Northern Dynasty Minerals Ltd President and CEO Nov 2001 Present Director Nov 2000 Sept 2007 Rockwell Diamonds Inc President and CEO Nov 2000 Sept 2006 Chairman Sept 2006 Sept 2007 Director Oct 1993 Present President and CEO Sept 2000 July 2005 Taseko Mines Limited Co-Chairman July 2005 May 2006 Chairman May 2006 Present Quadro Resources Ltd Director July 1992 Dec 2006 (formerly Tri-Gold Resources Corp)
Annual Report 2009 Idea, Implementation, Delivery 78 Directors and Executives
Patrick R Cooke, B.Com (Wits), CA (SA) – Director
Patrick Cooke is a native of South Africa involved in mineral information and received his Chartered Accountant technology, wholesale fast moving designation in South Africa in 1981. consumer goods, financial services and As a Chartered Accountant, he worked professional services companies. He as a management consultant with one of was appointed a non-executive Director the large accounting companies as well of Sallies Limited in October 2009 and, as working for a merchant bank. with effect from February 1, 2010, was Mr Cooke was responsible for listing appointed Financial Director and COO. two companies on the main board of the Johannesburg Stock Exchange (JSE) Mr Cooke is, or was within the past and was the Financial Director of a third five years, a Director of the following JSE-listed company. His industry reporting issuers in Canada or a experience is wide, having been foreign jurisdiction:
Company Positions Held From To Pangea DiamondFields PLC Director Aug 2006 December 2008 Great Basin Gold Limited Director April 2006 Present Director Oct 2009 Present Sallies Ltd Financial Director and COO Feb 2010 Present
T Barry Coughlan, B.A. – Director
T Barry Coughlan is a self-employed reporting issuers in Canada or a businessman and financier who, over foreign jurisdiction: the past 24 years, has been involved in the acquisition and financing of publicly traded mining companies. His principal occupation is President and Director of TBC Ventures Ltd, a private investment company which has developed resource projects in Canada, the USA, Africa and Mexico.
Mr Coughlan is, or was within the past five years, a Director of the following
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Company Positions Held From To Continental Minerals Corporation Director May 2006 Dec 2006 Farallon Resources Ltd Director March 1998 Present Great Basin Gold Limited Director Feb 1998 Present Icon Industries Ltd President, CEO and Director Sept 1991 Feb 2010 Quartz Mountain Resources Ltd Director Jan 2005 Present Taseko Mines Limited Director Feb 2001 Present Quadro Resources Ltd President and Director June 1986 Present (formerly Tri-Gold Resources Corp) Amarc Resources Ltd Director Feb 2009 Present
Ferdi Dippenaar, B.Proc, MBA – President, CEO and Director
Ferdi Dippenaar is a resident of South Harmony Gold’s acquisition of Grootvlei Africa and is a well-known member and Cons Modder, he was appointed of the country’s gold mining industry. Marketing Director of Harmony in He holds Bachelors of Commerce and 1997, overseeing Harmony’s service Procuration degrees and an MBA from delivery departments, corporate affairs North West University in South Africa. and the company’s investor relations. Mr Dippenaar was appointed Director, Mr Dippenaar started his career at President and CEO of Great Basin Gold the Buffelsfontein gold mine in 1982 Limited in December 2005. and was employed in various financial and administrative capacities at the Mr Dippenaar is, or was within the Gengold mines. In 1996, he became past five years, a Director of the Managing Director of Grootvlei and of following reporting issuers in Canada East Rand Proprietary Mines. Following or a foreign jurisdiction:
Company Positions Held From To Village Main Reef Gold Mining Director July 2008 Present Company (1934) Ltd Kryso Resources Inc Director April 2007 Present Great Basin Gold Limited Director, President and CEO Dec 2005 Present Harmony Gold Mining Co Ltd Executive Director 1997 Nov 2005
Annual Report 2009 Idea, Implementation, Delivery 80 Directors and Executives
David M S Elliott, B.Com, ICD.D, FO – Director
David Elliott graduated from the University served as Chairman of the Canadian of British Columbia with a Bachelor of Sugar Institute. He became President and Commerce degree and then acquired COO of the International Group based a Chartered Accountant designation in St Louis, Missouri in 1999, a company with KPMG LLP. In 2006, he became involved with food distribution as well a certified Director with the Institute of as the manufacture and distribution of Corporate Directors. Mr Elliott joined pet and animal feed. For several years, BC Sugar Company in 1976, working he worked with companies developing in a number of senior positions before e-mail and data management services. becoming President and COO of the operating subsidiary, Rogers Sugar. In Mr Elliott is, or was within the past five 1997, he joined Lantic Sugar in Toronto years, a Director of the following reporting as Executive Vice President. He also issuers in Canada or a foreign jurisdiction:
Company Positions Held From To Anooraq Resources Corporation Director April 2005 June 2009 Great Basin Gold Limited Director July 2004 Present Northern Dynasty Minerals Ltd Director July 2004 Present Taseko Mines Limited Director July 2004 Present
Wayne Kirk, LLB – Director
Wayne Kirk is a retired attorney General Counsel and Corporate and professional consultant. With Secretary of Homestake Mining over 40 years’ professional experience Company. Prior to his retirement Mr Kirk also has over nine years’ in June 2004, he spent two senior executive experience in the years as Special Counsel for mining industry. the law firm, Thelen Reid & Priest, in San Francisco. Mr Kirk is a citizen of the United States and is a resident of Mr Kirk is, or was within the past Washington. A Harvard University five years, a Director of the graduate, Mr Kirk received his law following reporting issuers in degree in 1968. From 1992 to Canada or a foreign jurisdiction: 2001 Mr Kirk was the Vice President,
Company Positions Held From To Gabriel Resources Ltd Director June 2008 Present Anooraq Resources Corporation Director July 2005 Present Great Basin Gold Limited Director July 2004 Present Northern Dynasty Minerals Ltd Director July 2004 Present Taseko Mines Limited Director July 2004 Present
81 Great Basin Gold Annual Report 2009 Responsible Delivery
Joshua C Ngoma, M.Eng – Director
Joshua Ngoma, a founding member and De Beers and Sasol Mining before joining the current CEO of Tranter Holdings (Pty) Eyesizwe Coal, where he served from Ltd, was elected to the Board of Great Group Technical Manager to General Basin Gold, effective July 15, 2009. He Manager of the Matla Colliery. He later holds a Bachelor of Engineering degree joined Anglo Platinum as the Group with Honours in Mining Engineering from Manager: New Mining Technologies, Camborne School of Mines in the UK where he was responsible for the and a Master of Engineering in Project development and implementation of the Management from the University of Pretoria Group’s new mining technologies. in South Africa, and has spent most of his career in the mining industry. He served Mr Ngoma is, or was within the past five with ZCCM (Zambia Consolidated years, a Director of the following reporting Copper Mines Ltd), Cementation Mining, issuers in Canada or a foreign jurisdiction:
Company Positions Held From To Great Basin Gold Limited Director July 2009 Present
Gert (Gerry) J Robbertze, P.Eng – Director
Gert Robbertze is an Associate of Metal Limited, and Anglovaal Mining Camborne School of Mines (ACSM), Limited. He is currently a Director of the a Fellow of the South African Institute Mineral Corporation Consultancy (Pty) of Mining and Metallurgy (FSAIMM), Limited. Mr Robbertze was appointed a Member of the South African Mine Director of the Company in March Managers Association (MSAMMA) 2010. and a Member of the South African Council for Professional Engineers Mr Robbertze is, or was within the past (Pr. Eng). He has served with Anglo five years, a Director of the following American Corporation Limited, reporting issuers in Canada or a Kuruman Cape Blue Asbestos, Tsumeb foreign jurisdiction: Corporation Limited, Gold Fields of South Africa, Associated Ore and
Company Positions Held From To Great Basin Gold Limited Director March 2010 Present
Idea Implementation Delivery
Annual Report 2009 Idea, Implementation, Delivery 82 Directors and Executives
Walter T Segsworth, P.Eng – Director
Walter Segsworth has been an active Canada and British Columbia, and was and respected member of the international voted British Columbia Mining Industry mining industry for over 30 years. He Person in the past. He is a member of the has an excellent track record in employee Canadian Institute of Mining, Metallurgy safety, environmental excellence and and Petroleum and until recently, was part turnaround production situations. During of the Mining Curriculum Advisory Board Mr Segsworth’s tenure as President, of the Michigan Technological University, COO and Director at Homestake from which he earned his degree in Mining Company, the Company set a Mining Engineering. 125-year gold production record and its operating costs reached 25-year lows. Mr Segsworth is, or was within the past five Mr Segsworth is a past Director and years, a Director of the following reporting Chairman of the Mining Associations of issuers in Canada or a foreign jurisdiction:
Company Positions Held From To Northern Dynasty Minerals Ltd Director Sept 2004 June 2008 Great Basin Gold Limited Director Jan 2003 Present Cumberland Resources Ltd Director May 2002 April 2007 Yukon Zinc Corp Director Feb 2001 July 2008 UEX Corporation Director March 2002 June 2008 Plutonic Power Corp Director Oct 2003 Present Centenario Copper Corporation Director March 2004 April 2009 Pan American Silver Corp Director May 2009 Present
Cease Trade Orders, ceasing to act as a Director or Officer. opportunity”. In that event, a financially Bankruptcies, Penalties or interested Director would not be entitled Sanctions Potential Conflicts of Interest to vote at meetings of Directors in respect No Director or Officer of Great Basin Several Directors of Great Basin of a transaction involving the Company if Gold is, as of the date of this Annual Gold also serve as Directors of other it evokes any such conflict. Report, or has been within the 10 years similar companies involved in natural before the date of this Annual Report, resource development. Accordingly, it The Directors will attempt to avoid a Director or Officer of any company may occur that properties will be offered dealing with other such companies in that, while that person was acting in that to both Great Basin Gold and other such situations where conflicts or corporate capacity, was the subject of a cease companies. opportunity issues might arise and will at trade order, penalties, sanctions or all times use their best efforts to act in the bankruptcy, during the time the individual Furthermore, those other companies best interests of Great Basin Gold. One was a Director or within a one-year may participate in the same properties Director, Joshua Ngoma, is a Director period thereafter, or was a Director or as those in which Great Basin Gold of our BEE partner Tranter Gold (Pty) Ltd Officer of a company during the time in has an interest. As a result, there may and so has potential conflicts of interest in which an event occurred which led to a be situations which involve a potential connection with serving on the Board of cease trade order, penalties, sanctions or conflict of interest or issues in connection a major shareholder at the same time he bankruptcy subsequent to the individual with the doctrine of “corporate serves on the Company’s Board.
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83 Great Basin Gold Annual Report 2009 Responsible Delivery
Corporate Management Name Position in the Company From To Ferdi Dippenaar CEO Dec 2005 Present Lou van Vuuren Chief Financial Officer (CFO) March 2008 Present Johan Oelofse COO March 2006 Present Willie Beckmann Vice President: Legal and Compliance March 2006 Present Dawie Mostert Vice President: Human Capital March 2006 Present Phil Bentley Vice President: Geology and Exploration Sept 2008 Present Dana Roets Vice President: Corporate Development Feb 2010 Present Louis Scheepers Project Management Executive April 2007 Present
Back row: Johan Oelofse, Dawie Mostert, Willie Beckmann, Lou van Vuuren, Louis Scheepers, Ferdi Dippenaar Front row: Dana Roets, Phil Bentley
Ferdi Dippenaar, CEO in multi-national companies listed on Johan Oelofse, COO See Mr Dippenaar’s biography under various world markets and the required Mr Oelofse is a qualified mining engineer “Directors” on page 81. regulatory requirements posed to such with 28 years’ experience, including companies. He has been involved in working on projects in South Africa, Lou van Vuuren, CFO the international gold mining sector for Uganda, Mozambique, Argentina, Mr van Vuuren is a qualified Chartered a number of years and gained valuable Kentucky in the USA, Kazakhstan, Accountant and joined the Company exposure during his involvement in Uzbekistan, Tajikistan, China, Malaysia, from PricewaterhouseCoopers. He various capital-raising transactions as Indonesia and the Democratic Republic brings along a wealth of experience well as mergers and acquisitions. of the Congo. Mr Oelofse began his
Annual Report 2009 Idea, Implementation, Delivery 84 Directors and Executives
career in the South African Gold Mining Human Resources and Executive New Free State, and then spent two years environment and gained a working Mines. Mr Mostert was appointed as Manager of Mining and General knowledge of all aspects of the industry. to the executive of Harmony Gold Manager at Oryx Gold Mine. He Mr Oelofse has a B. Eng degree from Mining Company in April 2002. As a was Managing Director of Kloof the University of Pretoria in South Africa Harmony executive, Mr Mostert served Mines before spending four years as and an MSc Mining Engineering from on the Boards of The South African Managing Director of Gold Fields’ Camborne School of Mines. Mr Oelofse Mathematics Foundation and the Mining Free State Mines and Vice President joined Great Basin Gold as COO in Qualifications Authority (Mining SETA). and Head of Operations at Beatrix March 2006. Gold Mine. Subsequently, he spent a Phil Bentley, Vice President: further three years as the Vice President: Willie Beckmann, Vice President: Geology and Exploration Technical Services and a year as Vice Legal and Compliance Phil Bentley, a New Zealander by birth, President and Head of Operations at Mr Beckmann is an accredited attorney, has been operating from South Africa Kloof Gold Mine. Dana’s immediate notary and conveyancer. He obtained a since 1984. His qualifications include focus is overseeing Burnstone’s transition B. Juris LLB (1983) from the North West MScs in Economic Geology and Mineral from a capital development project to a University. Mr Beckmann started his Exploration. He has more than 27 years’ fully operational producing mine. career as an officer in the South African experience in the mineral exploration and Defence Force, where he gained mining sector, much of it gained in Louis Scheepers, Project extensive experience in administrative sub-Saharan Africa and Australasia. Management Executive law, the drafting of legislation and Prior to teaming with the Company investigatory review techniques. He Over and above core exploration as Executive: Project Development joined the gold mining industry in management and orebody evaluation in March 2007, Louis acted as a 2002 as the group security manager skills, Phil has an ongoing passion for consultant to an international mining of Harmony Gold Mining Company. unravelling the geotectonic setting of conglomerate and later as General Mr Beckmann successfully founded the mineral provinces endowed with gold Manager of an international Project Legal and Compliance Department, mineralization. This specialization in Management company. overseeing the security, legal and gold mineralization and metallogeny enterprise-wide risk management will add value in Great Basin Gold’s He specializes in the field of Project functions of Harmony. He joined Great exploration strategy. Management. He has gained valuable Basin Gold in March 2006, responsible experience in feasibility study and for the Legal and Compliance functions. His recent employment has included greenfields mining projects, spending Central African Gold plc, Metallon much time in south, central and east Dawie Mostert, Vice President: Gold Ltd, Randgold Resources Ltd and Africa, as well as the Middle East. Human Capital Randgold Exploration. Mr Mostert has a diploma in Labor The Great Basin Gold Capital Projects, Relations (DPLR) (Advanced Labor Dana Roets, Vice President: especially the Burnstone Project, has Law) and an MBA degree from Wits Corporate Development added enormous experience to his University in South Africa. He has Dana Roets is a qualified Mining portfolio, enabling him to deliberate approximately 17 years’ experience in Engineer and an alumnus of the modern capital projects with authority. the mining industry, during which time University of Pretoria (1986), and also he has functioned in many positions, holds an MBA through the University of He is responsible for the establishment including Human Resources Manager; Cape Town (1995). and maintenance of Great Basin Gold’s Mine Manager, Elandsrand; Executive delivery processes. Training and People Development; He started his mining career at Gold Executive Employee Relations; Executive Fields’ St Helena Gold Mine in the
Idea Implementation Delivery
85 Great Basin Gold Annual Report 2009 Responsible Delivery Corporate Governance
“The Board believes that good corporate governance improves corporate performance and benefits all shareholders.”
Annual Report 2009 Idea, Implementation, Delivery 86 Corporate Governance
Delivering Effective approach to corporate governance Constitution and Governance and addresses the Company’s Independence of the Board The Board believes that good compliance with NI 58-101F1. A majority of the members of the corporate governance improves Board of Directors are independent corporate performance and benefits Posted Descriptions for Directors and thus the Board is all shareholders. The Canadian Positions able to act independently from Securities Administrators (CSA) have On May 6, 2010, the Board management. The Board of adopted National Policy 58-201 adopted and approved descriptions Directors is currently comprised Corporate Governance Guidelines, for the positions of Board Chairman, of nine persons, of whom six are which provides non-prescriptive and the Chairman for each of independent Directors. Directors guidelines on corporate governance the Nominating and Governance are considered to be independent practises for reporting issuers such Committee, the Audit Committee, if they have no direct or indirect as the Company. In addition, the the Compensation Committee, the material relationship with the CSA have implemented NI 58-101F1 Investment Committee, the Executive Company. A “material relationship” Disclosure of Corporate Governance Committee and the Environmental is a relationship which could, Practises, which prescribes certain Health and Safety Committee. The in the opinion of the Board, disclosure by the Company of its CEO’s role and responsibilities reasonably be expected to interfere corporate governance practises. are set out in his employment with the exercise of a Director’s This section sets out the Company’s contract with the Company. independent judgement.
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The following table outlines the Company’s current independent and non-independent Directors and the basis for a determination that a Director is non-independent:
Name Independent / Non-Independent Non-Independent – basis for determination: formerly-compensated Executive Officer within the Ronald W Thiessen previous three years and an employee of a company (Hunter Dickinson Services Inc) that provided significant services to the Company Ferdi Dippenaar Non-Independent – basis for determination: serves as President and CEO of the Company Non-Independent – basis for determination: serves as a Director of Tranter Gold (Pty) Ltd, the BEE Joshua C Ngoma partner of the Company, which is a party to a material agreement with the Company Patrick R Cooke Independent T Barry Coughlan Independent David M S Elliott Independent Wayne Kirk Independent Gert J Robbertze Independent Walter T Segsworth Independent
Meetings of Independent independent members as chairmen for of the Company, which is a party Directors four of the six Board Committees. to a material agreement with the The Board continues to focus on Company. Mr Ngoma was a member developing its independence from Independent Directors may, at of the Nominating and Governance management. The non-management reasonable times, and with reasonable Committee and a member of the Directors regularly meet without the notice, have full access to employees Compensation Committee until he President and CEO and other members and officers of the Company. resigned from those committees on of management being present. In Furthermore, the charters of the May 6, 2010. He was appointed addition, the independent members of Board Committees provide that those as a member of the Environmental, the Board meet without Non-Independent committees may engage outside Health and Safety Committee on Directors and management at least once advisors at the expense of the Company May 6, 2010. a year. During the 2008 fiscal year, the in appropriate circumstances, and the Independent Directors met once and, Board Committees have secured Mr Robbertze was appointed to the during the period January 2009 to independent advice on occasion. Environmental, Health and Safety May 2010, the independent members Committee on his election as a Director met once. The Board encourages The Chairman of the Board, Mr Thiessen, in March 2010, and was appointed open and candid discussions among is not an Independent Director as he to the Nominating and Governance its Independent Directors and, in terms was a compensated Executive Officer Committee and the Compensation of the Board’s mandate, Directors, in of the Company during the last three Committee on May 6, 2010. discharging their fiduciary duties of years and he is also a Director, care, loyalty and candor, are expected Officer and employee of Hunter to exercise their business judgment to act Dickinson Services Inc, as stated above. in what they reasonably and honestly believe to be in the best interests of The Board concluded that Mr Ngoma the Company and its shareholders. To was not an Independent Director by enhance leadership of its Independent virtue of his serving as a Director of Directors, the Board has appointed Tranter Gold (Pty) Ltd, the BEE partner
Annual Report 2009 Idea, Implementation, Delivery 88 Corporate Governance
Meetings of Directors The attendance record of Directors at the Board meetings from January 1, 2009 to May 12, 2010 is as follows:
Director Board Meetings Ronald W Thiessen 7 of 7 Patrick R Cooke 7 of 7 T Barry Coughlan 7 of 7 David M S Elliott 6 of 7 Ferdi Dippenaar 7 of 7 Wayne Kirk 7 of 7 Joshua C Ngoma(1) 4 of 5 Sipho Nkosi(1) 1 of 2 Gert J Robbertze 1 of 1 Walter T Segsworth 7 of 7
Note: (1) Mr Nkosi resigned as Director on July 17, 2009 and Mr Ngoma was appointed Director on the same date.
Board Mandate Long-term strategies and annual The Board mandate is set out in operating and capital plans with respect Appendix 1 to the Company’s to the Company’s operations are Corporate Governance Policies and developed by senior management and Procedures Manual that has been reviewed and approved by the Board. published on the Company’s website. The CEO has appointed a Governance Stewardship of the Company and Risk Committee, comprising The Company’s Board is empowered members of management, with the by governing corporate law, the responsibility to identify the principal, Company’s Articles and the Corporate enterprise-wide strategic risks to the Governance Policies and Procedures Company’s business. The committee Manual to supervise management of works to implement an enterprise- the Company’s business and affairs. wide risk management program to identify risks and establish systems The Board performs its functions through and procedures to ensure that these quarterly and special meetings and risks are monitored, mitigated and delegates certain of its responsibilities managed. The Governance and Risk to those committees described below. Committee comprises the President and In addition, the Board has established CEO, the CFO and the Vice President, Idea policies and procedures limiting Legal and Compliance, and reports management’s ability to carry out to the Board on a quarterly basis. Implementation certain specific activities without prior The Audit Committee oversees the risk approval of the Board. management functions of the Company. Delivery All appointments of Executive Officers As a part of its ethics policy, the must be approved by the Board. Company has adopted a disclosure policy to ensure effective communication
89 Great Basin Gold Annual Report 2009 Responsible Delivery
between the Company and its management information systems. The Ethical Business Conduct shareholders and the public. The external auditor meets with the Audit The Company has adopted a Code Board delegates responsibility for Committee without management’s of Ethics governing the behaviour of its communication with the public and the presence on a regular basis. Directors, Officers and employees. Company’s shareholders to its President The standards are available at and CEO. Shareholder inquiries are Orientation and Continuing www.sedar.com. The Code of Ethics directed to, and dealt with by, the Education and Trading Restrictions are set out President and CEO as well as certain The Board is developing a Director’s as Appendix 4 of the Company’s designated senior managers. The Orientation Policy for new Directors. Corporate Governance Policies and Company also has Disclosure Policies New Directors, as part of the proposed Procedures Manual. The chairmen and Procedures in place, administered orientation program, will meet with of the Audit Committee and the by a Disclosure Committee comprising senior management to discuss the Nominating and Governance management members, to ensure proper Company’s business and affairs and Committee are responsible for recording, collection and dissemination receive a binder of relevant corporate monitoring compliance with the Code. of information in a timely manner. information, Board policies and historical and current operating and The Board has a number of policies in The Board delegates responsibility for financial information. They may also place designed to ensure that Directors the integrity of internal controls and tour selected facilities of the Company. exercise independent judgement in management information systems to matters where a Director or Officer has its Audit Committee. The Company’s Directors are encouraged to participate a material interest. The articles of the external and internal auditors report in continuing education and other Company contain similar provisions. directly to the Audit Committee. In its programs intended to enhance their In those circumstances, the relevant regular meetings with the external and knowledge and understanding of Director and Officer must declare his internal auditors, the Audit Committee the Company, the mining industry / her interest and, in the case of a discusses, among other things, the and specialized fields of knowledge Director, refrain from voting. The Audit Company’s financial statements and that they bring to their positions as Committee considers any interested the adequacy and effectiveness of Directors, for which the Company pays party transactions in advance of their the Company’s internal controls and the costs. consideration by the Board.
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As at December 31, 2009, the Company had six Board Committees, as set out below, and a Disclosure Committee, which is not a Board Committee. The mandate of each of these committees is more particularly described in Great Basin Gold’s management information circular filed on www.sedar.com on June 1, 2010, and on the Company’s website at www.grtbasin.com.
Board Committees – December 31, 2009 Audit Committee Compensation Committee Nominating and Governance Committee David M S Elliott, Chair T Barry Coughlan, Chair Wayne Kirk, Chair Patrick R Cooke Patrick R Cooke Patrick R Cooke Wayne Kirk David M S Elliott T Barry Coughlan Joshua C Ngoma Joshua C Ngoma
Investment Committee Executive Committee Environmental, Health and Safety Committee Ferdi Dippenaar, Chair Ronald W Thiessen, Chair Walter T Segsworth, Chair David M S Elliott Patrick R Cooke Walter T Segsworth Ferdi Dippenaar Ronald W Thiessen
The Board reconstituted the membership of the following committees on May 6, 2010 and intends that their committee memberships continue after the shareholders’ meeting on the assumption they are re-elected as Directors:
Board Committees – Effective May 6, 2010 Audit Committee Compensation Committee Nominating and Governance Committee Patrick R Cooke, Chair T Barry Coughlan, Chair Wayne Kirk, Chair David M S Elliott Patrick R Cooke T Barry Coughlan Wayne Kirk Gert J Robbertze Gert J Robbertze
Investment Committee Executive Committee Environmental, Health and Safety Committee Ferdi Dippenaar, Chair Ronald W Thiessen, Chair Walter T Segsworth, Chair Patrick R Cooke Patrick R Cooke Joshua C Ngoma Walter T Segsworth Ferdi Dippenaar Gert J Robbertze Ronald W Thiessen T Barry Coughlan
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The reconstitution was consequent upon (b) overseeing the annual evaluation of the Idea a Board decision that membership in effectiveness of the Board and Board the Compensation and Nominating and Committees. (The process used for Implementation Governance Committees should include these assessments is described under only Independent Directors. the heading Assessments below); Delivery (c) recommending to the Board Nomination of Directors corporate governance and ethics The Board considers its size each year principles and policies that should when it considers the number of Directors be applicable to the Company, and to recommend to the shareholders overseeing the investigation of matters for election at the annual meeting of arising under the Code of Ethics that shareholders, taking into account the are not within the responsibility of the number required to carry out the Board’s Audit Committee; duties effectively and to maintain a diversity of views and experience. (d) seeking out and recommending to the Board the nominees for election Nominating and Governance or re-election to the Board and for Committee appointment to Board Committees; The Nominating and Governance (e) developing succession planning Committee comprises three independent strategies for the Board and its Directors, Messrs Kirk (Chair), Coughlan committees; and and Robbertze. (f) recommending to the Board the size of the Board and criteria for Directors The Nominating and Governance in terms of experience, expertise, Committee monitors corporate and such other areas deemed governance issues, including governance relevant to the current and future of the Board and Board Committees. needs of the Company. This committee’s mandate includes:
(a) developing and recommending to the The attendance record of Directors Board the standards to be applied at the Nominating and Governance in assessing whether the Company’s Committee meetings from January 1, Directors are independent; 2009 to May 12, 2010 is as follows:
Director Nominating and Governance Committee Wayne Kirk, Chair 4 of 4 Patrick Cooke(1) 3 of 3 T Barry Coughlan 4 of 4 Gert J Robbertze(2) 0 of 0 Sipho Nkosi(3) 0 of 1 Joshua C Ngoma(3) 2 of 3
NoteS: (1) Mr Cooke was a member of the Committee from January 1, 2009 to February 10, 2010. (2) Mr Robbertze was appointed to the Committee on May 6, 2010. (3) Mr Nkosi resigned as a Director and member of the Committee on July 17, 2009, and Mr Ngoma was appointed as a Director and member of the Committee on the same date. Mr Ngoma resigned from the Committee on May 6, 2010.
Annual Report 2009 Idea, Implementation, Delivery 92 Corporate Governance
Audit Committee Company publicly discloses this The Audit Committee comprises three information; and independent Directors, Messrs Cooke (f) overseeing the work of the (Chair), Elliott and Kirk. All of the Company’s internal auditor. members of the Audit Committee are financially literate. The Audit Committee is also responsible for seeing to the independence and The Audit Committee’s mandate and qualifications of the external auditor. responsibilities are detailed in its charter, and include: Through its Audit Committee, the (a) assisting in identification of the Board is responsible for the integrity of principal risks of the Company’s the internal control and management business and, with the assistance information systems of the Company. of management, establishing The Audit Committee meets at least procedures to ensure that these risks quarterly to review financial statements are monitored; and management’s discussion and analysis and meets, at least twice (b) overseeing the work of the external annually, with the Company’s external auditor engaged for the purpose of auditor. The Audit Committee discusses, preparing or issuing an audit report among other things, the annual audit or related work; and the adequacy and effectiveness (c) recommending to shareholders the of the Company’s internal control and appointment of the external auditor; management information systems. The (d) approving all audit and non- Audit Committee also discusses the audit services to be provided annual financial statements and related by the external auditor and the management’s discussion and analysis compensation of the external with the external auditor. auditor; The attendance record of Directors at (e) reviewing the Company’s financial the Audit Committee meetings from statements, management discussion January 1, 2009 to May 12, 2010 and analysis, Annual Reports and is as follows: earnings press releases before the
Director Audit Committee Patrick R Cooke, Chair 6 of 6 David M S Elliott 6 of 6 Wayne Kirk 6 of 6
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Compensation Committee Company’s Executive Officers and The Compensation Committee appropriate management continuity, recommends compensation including a succession plan for the for the Directors and the Executive CEO and other Executive Officers. Officers and administers the The Compensation Committee Company’s stock option plan. formally evaluates the performance of the CEO and recommends to the The Compensation Committee Board the CEO’s compensation. The comprises three Independent Directors, CEO is not present during any vote Messrs Coughlan (Chair), Cooke or deliberation of the Committee and Robbertze. regarding the performance or compensation of the CEO. This committee’s mandate includes: The Compensation Committee (a) assisting the Board in discharging also ensures the reasonableness the Board’s responsibilities relating and appropriateness of the to Executive Officer and Director compensation arrangements and compensation; compensation level for all of the (b) providing oversight with respect to Company’s Executive Officers. The the evaluation of management; Compensation Committee monitors (c) providing oversight with respect the overall soundness and to the Company’s compensation effectiveness of Director, Executive strategies, practises and incentive Officer and employee compensation compensation plans; and and benefit programs.
(d) administering the Company’s stock The attendance record of option and other equity-based Directors at the Compensation compensation plans. Committee meetings from January 1, 2009 to May 12, 2010 is This committee is empowered to as follows: ensure the effectiveness of the
Director Compensation Committee T Barry Coughlan, Chair 6 of 6 Patrick R Cooke 6 of 6 Sipho A Nkosi(1) 0 of 2 Joshua C Ngoma(1) 2 of 4 Gert J Robbertze(2) 0 of 0
NoteS: (1) Mr Nkosi resigned as a Director and member of the Committee on July 17, 2009, and Mr Ngoma was appointed as a Director and a member of the Committee on the same date. Mr Ngoma resigned from the Committee on May 6, 2010. (2) Mr Robbertze was appointed to the Committee on May 6, 2010.
Annual Report 2009 Idea, Implementation, Delivery 94 Corporate Governance
Environmental, Health and (b) the policies and activities of the Safety Committee Company as they relate to the The Environmental, Health and health and safety of the Company’s Safety Committee comprises Messrs employees in the workplace. Segsworth (Chair), Robbertze (both Independent Directors) and Mr Ngoma The Environmental, Health & Safety (Non-Independent Director). Mr Robbertze Committee visits the Company’s was appointed to this Committee in two principal projects at least twice per March 2010 and Mr Ngoma was annum and, since appointment of the appointed in May 2010. Committee, it has delivered a report to the Board during each Board meeting. The overall purpose of the Environmental, Health and Safety Committee is to review The attendance record of Directors and monitor on behalf of the Board: at the Environmental, Health and Safety Committee meetings from January 1, (a) the environmental policies and activities of the Company; and 2009 to May 12, 2010 is as follows:
Director Environmental, Health and Safety Committee Walter T Segsworth, Chair 5 of 5 Gert J Robbertze(1) 1 of 1 Joshua C Ngoma(2) 0 of 0
NoteS: (1) Mr Robbertze was appointed to the Committee on March 18, 2010. (2) Mr Ngoma was appointed to the Committee on May 6, 2010.
Investment Committee component of its corporate governance The Investment Committee comprises responsibilities in respect of the Messrs Dippenaar (Chair) and Thiessen Company’s non-core mining investments, (both Non-Independent Directors), and being any investments other than in its Messrs Cooke and Segsworth (both two material mining projects. Independent Directors). The attendance record of Directors at The Committee is responsible for the Investment Committee meetings from assisting the Board in fulfilling the January 1, 2009 to May 12, 2010 is investment strategy and performance as follows:
Director Investment Committee Ferdi Dippenaar, Chair 8 of 8 Patrick R Cooke 8 of 8 Walter T Segsworth 8 of 8 Ronald W Thiessen 8 of 8
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Executive Committee and responsibilities are detailed in to the Board for comments prior to the The Executive Committee comprises its charter, and include: release thereof. All press releases are Messrs Thiessen (Chair) and Dippenaar required to be approved by at least two (a) determining whether information (CEO), (both Non-Independent independent Directors, one of whom must is material and ensuring the timely Directors), and Messrs Cooke and be a member of the Audit Committee. disclosure of material information in Coughlan (both Independent Directors). accordance with securities laws; Assessments The Executive Committee has the (b) reviewing the Company’s disclosure The Board and the Board Committees authority to exercise Board-specific policy to ensure that it addresses are required to self-assess annually delegated authority. The Executive the Company’s principal business in respect of their effectiveness and Committee did not meet from January risks and changes in operations or contribution. The Board completed 1, 2009 to May 12, 2010. structure, and facilitates compliance an assessment on May 6, 2010 with applicable legislative and in respect of the 2009 fiscal year. In terms of the Company’s Articles regulatory reporting requirements; The assessment was conducted by of Association, none of the Board (c) designing disclosure controls and way of a questionnaire forwarded Committees has the power to fill procedures and directing and to the Directors by the Chairman of vacancies in the Board of Directors, supervising an annual evaluation of the Nominating and Governance remove a Director, or change the the effectiveness of the Company’s Committee, followed by discussion of membership or fill vacancies in any of disclosure controls and procedures, the results of the survey by members of the Board Committees. and presenting the results of the the committees at committee meetings, evaluations to the Audit Committee; with a report thereon at the following Disclosure Committee and Board meeting, and by the members of The Disclosure Committee, which is the Board at a Board meeting. a non-Board Committee, comprises (d) ensuring that policies and guidance the CEO, CFO, Vice President, Legal related to corporate disclosure and The Board is satisfied that the Board and and Compliance and senior members financial reporting are developed its committees function effectively and of management. and effected. that all of the Directors contribute towards the effective and efficient oversight of The Disclosure Committee’s mandate All material disclosures are forwarded management of the Company.
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General Risks in Mining risks, associated with any form of business and the present stage of its There are a number of risks that may business, and specific risks associated development. A prospective investor have a material and adverse impact with Great Basin Gold’s business and should carefully consider the risk factors on the future operating and financial its involvement in the gold exploration set out below along with the other performance of the Company and and development industry. matters set out or incorporated by could cause its operating and financial reference in this Annual Report. performance to differ materially from An investment in the securities of Great the estimates described in forward- Basin Gold is considered speculative The operations of the Company are looking statements relating to the and involves a high degree of risk due, speculative due to the high-risk nature of Company. These include widespread among other things, to the nature of its its business: the operation, exploration
97 Great Basin Gold Annual Report 2009 Responsible Delivery
and development of mineral properties. determination is made. The Company has identified the following non-exhaustive list of inherent The exploration for and risks and uncertainties that it considers development of mineral deposits to be relevant to its operations involves significant risks. and business plans. In addition to Mineral Resource exploration is a information set out elsewhere in this speculative business and involves Annual Report and contained in a high degree of risk. We have the Company’s annual information completed feasibility study work form dated March 27, 2010, for which outlines Mineral Reserves at the financial year ended December both the Burnstone and Hollister 2006 31, 2009, which is incorporated Properties under NI 43-101. The by reference into this Annual Report, exploration for and development of investors should carefully consider the mineral deposits involves significant following risk factors. Such risk factors risks, which even a combination of could materially affect the Company’s careful evaluation, experience and future operating results and could cause knowledge may not eliminate. actual events to differ materially from Although the discovery of an orebody those described in forward-looking may result in substantial rewards, few statements relating to the Company. explored properties are ultimately developed into producing mines. There is no assurance that our Significant expenditures may be Mineral Resources will ever be required to locate and establish ore classified as Reserves under the reserves, to develop metallurgical disclosure standards of the SEC. processes and to construct mining and The mineralized material at the Burnstone processing facilities at a particular site. Property is currently classified as a It is impossible to ensure that the current Measured and Indicated Resource, and exploration programs planned by a portion of it qualifies under Canadian the Company will result in a profitable and US mining disclosure standards as a commercial mining operation. Proven and Probable Reserve. Significant capital investment is required to achieve commercial production from The Company advises investors successful exploration efforts. that while the terms ‘Measured’ and ‘Indicated’ Resources are The commercial viability of a mineral recognized and required by deposit is dependent upon a number of 2010 Canadian regulations, the US SEC factors. These include deposit attributes does not recognize them. Investors such as size, grade and proximity to are cautioned not to assume that infrastructure, current and future metal all mineral deposits in the Measured prices (which can be cyclical), and and Indicated categories will ever government regulations, including those be converted into reserves. relating to prices, taxes, royalties, Idea Under SEC standards, mineralization land tenure, land use, importing and may not be classified as a “reserve” exporting of minerals and necessary Implementation unless the determination has been supplies, and environmental protection. made that the mineralization could be The complete effect of these factors, Delivery economically and legally produced either alone or in combination, cannot or extracted at the time the reserve be predicted, and their impact may
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result in an inadequate return on The Company intends to review and • the availability and costs of invested capital. optimize the estimation methodology appropriate smelting / refining used to estimate grade and tonnage at arrangements; The figures for Mineral Reserves the Hollister Property in order to assist • the need to obtain necessary and Resources included herein are in the application of the resource model environmental and other governmental estimates, and no assurance can be to mine planning. The Company’s approvals and permits, and the timing given that the anticipated tonnages ongoing drilling at the Hollister Property of those approvals and permits; and and grades will be achieved or that will impact the results of this review. The the indicated level of recovery will be Company is unable to predict whether • the availability of funds to finance realized. Market fluctuations and the this review and optimization process will construction and development activities. prices of metals may render resources result in a significant change to the size uneconomic. Moreover, short-term or grade of the estimates contained in It is common in new mining operations operating factors relating to the mineral the 2009 Hollister Report. to experience unexpected problems and deposits, such as the need for orderly delays during construction, development development of the deposits or the No history of mining operations or and mine start-up. Such operations processing of new or different grades profitability. are subject to all the hazards and risks of ore, may cause a mining operation The Company’s properties are in the normally encountered in the exploration to be unprofitable in any particular exploration and development stages. for, and development and production accounting period. In addition, we The future development of any properties of, gold and other precious or base may not be able to secure drilling found to be economically feasible will metals, including unusual and unexpected contractors, rigs and personnel during require Board approval, the construction geological formations, seismic activity, our desired time periods and at our and operation of mines, processing rock bursts, fires, cave-ins, flooding expected costs. plants and related infrastructure. As a and other conditions involved in the result, Great Basin Gold is subject to all drilling and removal of material as The estimates of Mineral Resources of the risks associated with establishing well as industrial accidents, labor force is a subjective process, the accuracy new mining operations and business disruptions, fall of ground accidents of which is a function of the quantity enterprises, including: in underground operations, and force and quality of available data and the majeure factors, any of which could • the timing and cost, which can be assumptions made and judgement result in damage to, or destruction of, considerable, of the construction of used in the engineering and geological mines and other producing facilities, mining and processing facilities; interpretation, which may prove injury to person and damage to unreliable, and may be subject to • the availability and costs of skilled property, environmental damage, delays, revision based on various factors. labor and mining equipment; increased production costs, monetary
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losses and possible legal liability. unusual or unexpected geological that the Company will successfully formations and work interruptions. Material acquire additional commercially Milling operations are subject to changes in ore reserves, grades, stripping mineable (or viable) mineral rights. hazards such as equipment failure or ratios or recovery rates may affect the failure of retaining dams around tailings economic viability of any project. Government regulation. disposal areas, which may result in Great Basin Gold’s mineral exploration environmental pollution and consequent The Company’s future growth and and planned development activities liability. In addition, delays in the productivity will depend, in part, on its are subject to various laws governing commencement of mineral production ability to identify and acquire additional prospecting, mining, development, often occur. Accordingly, there are no commercially mineable mineral rights, production, taxes, labor standards and assurances that the Company’s activities and on the costs and results of continued occupational health, mine, safety, toxic will result in profitable mining operations exploration and development programs. substances, land use, water use, land or that the Company will successfully claims of local people and other matters. establish mining operations or profitably Mineral exploration is highly speculative produce metals at any of its properties. in nature and is frequently non-productive. Although Great Basin Gold’s exploration Substantial expenditures are required to: and development activities are currently Uncertainty of acquiring additional carried out in accordance with all • establish ore reserves through drilling commercially mineable mineral rights. applicable rules and regulations, no and metallurgical and other testing Most exploration projects do not result in assurance can be given that new rules techniques; the discovery of commercially mineable and regulations will not be enacted or ore deposits and no assurance can • determine metal content and that existing rules and regulations will be given that any anticipated level of metallurgical recovery processes not be applied in a manner which could recovery of ore reserves will be realized to extract metal from the ore; and limit or curtail development. or that any identified mineral deposit construct, renovate or expand mining will ever qualify as a commercially and processing facilities. Many of Great Basin Gold’s mineral mineable (or viable) orebody which can rights and interests are subject to be legally and economically exploited. In addition, if the Company discovers government approvals, licenses and Estimates of reserves, resources, mineral ore, it would take several years from permits. Such approvals, licenses and deposits and production costs can the initial phases of exploration until permits for the Burnstone Property also be affected by factors such as production is possible. During this time, are, as a practical matter, subject to environmental permitting regulations and the economic feasibility of production the discretion of the South African requirements, weather, environmental may change. As a result of these government. No assurance can be factors, unforeseen technical difficulties, uncertainties, there can be no assurance given that Great Basin Gold will be
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successful in maintaining any or all tending to put downward pressure on of the various approvals, licenses the price of gold include: and permits in full force and effect • sales or leasing of gold by without modification or revocation. governments and central banks; To the extent such approvals are not maintained, Great Basin Gold may • strengthening of the US$; be delayed, curtailed or prohibited • global or regional recession or from continuing or proceeding with reduced economic activity; planned exploration or development of mineral properties. • speculative trading; • decreased demand for industrial uses, Failure to comply with applicable laws, use in jewellery or investment; regulations and permitting requirements • high supply of gold from production, may result in enforcement actions disinvestment and scrap; thereunder, including orders issued by regulatory or judicial authorities causing • interest rates; operations to cease or be delayed or • sales by gold producers in forward curtailed, and may include corrective transactions and other hedging; measures requiring capital expenditures, installation of additional equipment, • the production and cost levels for gold or remedial actions. Parties engaged in major gold-producing nations; and in the exploration or development of • the cost level (in local currencies) for mineral properties may be required gold in major consuming nations. to compensate those suffering loss or damage by reason of the activities Any drop in the price of gold would and may have civil or criminal fines adversely impact our future revenues, or penalties imposed for violations of profits and cash flows. In addition, applicable laws or regulations. sustained low gold prices can:
New laws and regulations or • reduce revenues further by production amendments to current laws and cut-backs due to cessation of the regulations governing operations mining of deposits or portions or more stringent implementation of deposits that have become thereof could have a substantial uneconomic at the then-prevailing adverse impact on Great Basin Gold gold price; and cause increases in exploration • halt or delay the development of new expenses, capital expenditures or projects; and require abandonment or delays in the development of mineral interests. • reduce funds available for exploration, with the result that depleted minerals A substantial or extended decline in are not replaced. gold prices would have a material adverse effect on our business. If gold prices were to decline Our business is dependent on the price significantly for an extended period of of gold, which is affected by numerous time, we might be unable to continue factors beyond our control. Factors with the exploration and development
Idea Implementation Delivery
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of our properties or fulfil our obligations We are not able to obtain insurance risks to determine if it would be under our agreements or under our for many of the risks that we face. appropriate to obtain such insurance. permits or licenses. As a result, we could In the course of exploration, lose our interest in or be forced to sell development and production of mineral Without such insurance, and if we some of our properties. properties, a variety of risks (and in become subject to environmental particular, unexpected or unusual liabilities, the payment of such liabilities Although we have no reason to geological or operating conditions) may could reduce or eliminate our available believe that the existence and occur. It is not possible to fully insure funds or could exceed the funds we extent of any of our properties is in against many of the risks, and we may have to pay such liabilities, and result in doubt, title to mining properties is decide not to take out insurance against bankruptcy. Should we be unable to fund often subject to potential claims by such risks as a result of high premiums fully the remedial cost of an environmental third parties. or other reasons. Should such liabilities problem, we might be required to enter Our mineral properties may be subject arise, they could reduce or eliminate into interim compliance measures pending to previous unregistered agreements or any future profitability and result in an completion of the required remedy. transfers, and title may be affected by increase in costs and a decline in the undetected defects or changes in mineral value of our securities. Burnstone-Specific Risks tenure laws. Our mineral interests consist of mineral claims and new order mining We are not insured against A substantial part of our properties rights, which have not been surveyed, environmental risks. Insurance against and operations are located in South and therefore the precise area and environmental risks (including potential Africa and are exposed to the political location of such claims or rights may liability for pollution or other hazards and economic risks relating to South be in doubt. The failure to comply with as a result of the disposal of waste Africa. These risks may include political all applicable laws and regulations, products resulting from exploration and and economic uncertainty and related including the failure to pay taxes, production) is not generally available currency fluctuations. complete filings and other necessary to companies in the mineral exploration applications or to carry out and file and mining industry. Management We are subject to exchange control assessment work, may invalidate title periodically evaluates the cost and regulations that may affect our ability to portions of the properties where our coverage of the insurance that is to borrow funds and guarantee mineral rights are held. available against certain environmental obligations of our subsidiary.
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2006 2010
South African law provides for exchange directly affect the ultimate feasibility of financing. There can be no assurance control regulations which restrict the the Burnstone Property. that debt / equity financing will be export of capital by residents from the available on acceptable terms. common monetary area, which includes Although costs, including design, South Africa. These regulations apply procurement, construction and ongoing Other general risks include those typical to transactions involving South African operating costs and metal recoveries of very large construction projects, residents, including both natural persons have been established at a level of including the general uncertainties and legal entities. These regulations also detail required for a feasibility study, inherent in engineering and construction affect our ability to borrow funds from final costs could be materially different cost, the need to comply with generally non-South African sources for use in South from those contained in the 2009 increasing environmental obligations, Africa and to repay these borrowings Burnstone Report. There can be no and accommodation of local and from South Africa and, in some cases, assurance that infrastructure facilities can community concerns. The economics our ability to guarantee the obligations be developed on a timely and cost- of the Burnstone Property are sensitive of subsidiaries with regard to these effective basis. Energy risks include the to the US$ and ZAR exchange rate, borrowings. Although the government potential for significant increases in the and this rate has been subject to large has expressed an intention to gradually cost of fuel and electricity. fluctuations in the last several years. relax exchange control regulations with a view to ultimately eliminating The 2009 Burnstone Report assumes Changes in mining legislation could exchange controls, there is no certainty specified, long-term price levels for gold adversely affect our operations. that exchange control regulations will be of US$800/oz. The price of this metal Our business could be adversely affected reduced or eliminated. has historically been volatile, and the by changes in government regulations Company has no control of or influence relating to exploration, mining and the Risks Associated with the 2009 on its price, which is determined in environment. In South Africa, in order to Burnstone Report international markets. There can be no maintain security of tenure of our mineral The 2009 Burnstone Report prepared assurance that the price of gold will properties, we are obliged to comply with on the Burnstone Property was prepared remain at current levels or that it will not the MPRDA, the associated regulations to support technical disclosure in a new decline below the prices assumed in and the socio-economic scorecard. As release issued by the Company on the 2009 Burnstone Report. Prices for a result of this new legislation, the South February 10, 2009 and for a short-form gold have been below the price ranges African government exercises control over prospectus dated March 4, 2009. assumed in 2009 Burnstone Report at the granting of prospecting and mining times during the past 10 years, and for rights, beneficiation, mineral exports and The following are the principal risk extended periods of time. The project taxation. Applications for prospecting and factors and uncertainties which, in will require major financing, including mining rights are required to demonstrate management’s opinion, are likely to most a combination of debt and equity their eligibility based on their compliance
103 Great Basin Gold Annual Report 2009 Responsible Delivery
with a number of BEE criteria. These and we recognize the risks of not include factors such as ownership, pursuing them vigorously, or of them not employment equity, human resources succeeding. development and procurement policy. In October 2002, the government Retention of prospecting and mining and representatives of South African rights cannot be guaranteed. mining companies and mineworkers’ In South Africa, although we have unions reached broad agreement successfully converted all of our on the Mining Charter, designed to old prospecting rights to new order facilitate the participation of HDSAs prospecting rights, and obtained our in the country’s mining industry. Non- Mining Right (effective February 2009), compliance with the provisions of the new order prospecting or mining Mining Charter could lead to loss of rights may be suspended or cancelled mining and related rights. where the DMR, having followed the requisite procedures under the MPRDA, The Mining Charter’s stated objectives determines that the holder is in breach of include: the provisions of the MPRDA or the terms • the expansion of opportunities for under which such new order prospecting persons disadvantaged by unfair or mining rights were granted. discrimination under the previous political dispensation; Similarly, rights could be suspended under related legislation in respect of • the expansion of the skills base of health and safety and the environment, such persons; including where the mineral is not • the promotion of employment mined optimally in accordance with and advancement of the social the relevant work program. The MPRDA and economic welfare of mining has also significantly increased the communities; and potential penalties and restrictive provisions relating to environmental • the promotion of beneficiation within management, environmental damage South Africa. or pollution resulting from prospecting or mining activities. The Mining Charter requires mining companies to ensure that HDSAs hold at Non-compliance with BEE initiatives least 15% ownership of mining assets or could affect our ability to secure equity in South Africa within five years mining rights. and 26% ownership within 10 years In South Africa, we are required of the effective date of the MPRDA. to comply with local procurement, The Mining Charter further specifies employment equity, ownership and that the mining industry is required to other regulations which are designed to assist HDSAs in securing financing to redress historical social and economic fund their equity participation up to an Idea inequalities and ensure socio-economic amount of ZAR100 billion within the first five years after the implementation of the stability. We embrace and will Implementation participate in initiatives intended to MPRDA. Beyond this ZAR100 billion redress historical social and economic commitment, the Mining Charter requires Delivery inequalities. We consider these that participation of HDSAs should be initiatives to be a strategic imperative increased towards the 26% target on a
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willing-buyer-willing-seller basis. Section 28 thereof, which states that the owner of land and controllers or every person who causes, has caused occupiers of land on which any activity We are presently in compliance with or may cause significant pollution or or process is or was performed or BEE requirements, but we cannot be degradation of the environment must undertaken or on which any situation certain that we will continue to be in take reasonable steps to prevent such exists that causes, has caused or is compliance with the BEE requirements, pollution or degradation from occurring, likely to cause the pollution of a water which theoretically can be changed continuing or recurring, or, in so far resource, must take all reasonable by legislative acts of the South African as such harm to the environment is measures to prevent such pollution from government at any time. Other future authorized by law or cannot reasonably occurring, continuing or recurring. events or circumstances could arguably be avoided or stopped, to minimize and result in our non-compliance if, for rectify such pollution or degradation of The Department of Environmental Affairs example, our BEE partner disposes of a the environment. Some have speculated and Tourism and the Department of sufficient number of the approximately that Section 28 of NEMA may have Water Affairs and Forestry may issue 19,94 million of our shares purchased introduced the principle of strict administrative directives to enforce the by it with borrowed funds, or if our BEE liability with respect to the causation of provisions of NEMA and the National partner is diluted out of or otherwise environmental impacts. The reach of the Water Act to take specific anti-pollution loses its interest in such shares. relevant provisions of NEMA, however, measures, and continue with those South African courts have not yet tested are still to be interpreted by the South measures / to complete those measures. the basic legal precept of “once African courts. BEE-compliant, always BEE-compliant”. Operations in South Africa are subject Under the MPRDA, companies that to risks including higher HIV / AIDS We could incur substantial costs due undertake mining activities must make rates than those prevailing in North to the environmental impact of our financial provision for rehabilitation American and European jurisdictions. mining operations. liabilities to the satisfaction of the DMR, We are subject to the risks normally Our operations are subject to South and Directors of companies may be associated with the conduct of business African environmental legislation and held jointly and severally liable for any in foreign countries. The occurrence regulations, specifically the MPRDA unacceptable negative impact on the of one or more of these risks could and the National Environmental environment, including damages caused have a material and adverse effect Management Act, 1998 (NEMA). by the company which they represent. on the viability of our affected foreign Of these, the provisions of NEMA are operations, which in turn could have particularly far-reaching, especially Under the National Water Act, 1998, a material and adverse affect on our
105 Great Basin Gold Annual Report 2009 Responsible Delivery
future cash flows, earnings, results of 2009 Burnstone Report. operations and financial condition. Although costs, including design, procurement, construction and ongoing Risks may include, among others, operating costs and metal recoveries, labor disputes, delays or invalidation have been established at a level of detail of governmental orders and permits, required for a feasibility study, actual corruption, uncertain political costs could be materially different from and economic environments, civil those contained in the 2009 Burnstone disturbances and terrorist actions, Report. There can be no assurance arbitrary changes in laws or policies, that these infrastructure facilities can be foreign taxation and exchange controls, developed on a timely and cost-effective opposition to mining from environmental basis. Energy risks include the potential or other non-governmental organizations for significant increases in the cost of fuel or changes in the political attitude and electricity. towards mining, limitations of foreign ownership, limitations on the repatriation Hollister-Specific Risks of earnings, infrastructure limitations and Risks Associated with the 2009 increased financing costs. Hollister Report The 2009 Hollister Report prepared HIV / AIDS is also prevalent in South on the Hollister Property was prepared Africa. Some of our employees may to document the results of a resource have or could contract this potentially update reported in a news release deadly virus. The prevalence of HIV dated June 18, 2008, to update the / AIDS could cause lost employee current status of the HDB Project and man-hours and may make finding to support disclosure in a short-form skilled labor more difficult. These risks prospectus dated March 4, 2009. may limit or disrupt our exploration activities or development of future mining The following are the principal risk operations, restrict the movement of factors and uncertainties which, in funds, or result in expropriation without management’s opinion, are likely to most fair compensation. directly affect the ultimate feasibility of the Hollister Property. The impact of the South African Royalty Act. The mineralized material at the Hollister The Royalty Act, which provides that Property is currently classified as a a royalty will be payable to the South Measured and Indicated Resource African government for gold production and a portion qualifies as Proven and at a percentage of revenues from the Probable Reserves under NI 43-101. gross sale of refined gold, came into Although final feasibility work has been operation on March 1, 2010. done to confirm the mine design, mining Although management has estimated methods and processing methods, the royalty payable on the Burnstone construction and operation of the Property to be 4% of gross sales of mine and processing facilities depend refined gold, there is no certainty that it on securing environmental and other would not be higher. permits on a timely basis. Although costs including design, procurement, Actual infrastructure costs may construction and ongoing operating increase from those reported in the costs and metal recoveries have
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been established at a level of detail dependent upon generating adequate 2008. The permitted production and required for a feasibility study, final cash flow to sustain the capital off-site processing of ore at the Hollister costs could be materially different from requirements. Property is currently limited to 275,000 those contained in the 2009 Hollister tons of ore per year in accordance Report. There can be no assurance that Other general risks include those typical with recent permitting received infrastructure facilities can be developed of very large construction projects, December 24, 2008. on a timely and cost-effective basis. including the general uncertainties Energy risks include the potential for inherent in engineering and construction In 2008, the Company recovered significant increases in the cost of fuel costs, the need to comply with generally 80,305 Au Eq oz from approximately and electricity. Operating costs of the increasing environmental obligations, 50,161 tons of ore generated at the Esmeralda Mill are estimated not to and accommodation of local and Hollister Property. If the Company fails exceed US$50 per ton, based on the community concerns. to obtain / maintain in good standing advice of its previous owners, which the the necessary permits to full production, Company believes to be a reasonable Risks Associated with the EIS or exceeds the production restrictions on number. However, this figure cannot be The Company sought to have the its current permitting, its trial mining and relied upon until test work is done. EIA serve as the basis for its mining planned development activities could permitting application at the Hollister cease or be delayed. The 2009 Hollister Report assumes Property. However, in December, specified, long-term price levels for gold 2008, the Company was advised that We could incur substantial costs due of US$800/oz. The price of this metal it would have to prepare an EIS on the to the environmental impact of our has historically been volatile, and the Hollister Property. Preparing the EIS is mining operations. Company has no control of, or influence a more in-depth and involved process The Company’s activities at the Hollister on, its price, which is determined in and, as a consequence, there is greater Property are subject to extensive federal, international markets. There can be no uncertainty in respect of timing and state and local laws and regulations assurance that the price of gold will requirements to successfully complete an governing environmental protection. remain at current levels or that it will EIS. Failure or delay to get an EIS could We must obtain governmental permits not decline below the prices assumed materially hinder, delay or preclude the and provide associated financial in the 2009 Hollister Report. Prices for Company moving into production at the assurances to carry on certain activities. gold have been below the price ranges Hollister Property. We are also subject to various assumed in 2009 Hollister Report at reclamation-related conditions imposed times during the past 10 years, and Permit Restriction on Production under federal or state air, water quality for extended periods of time. The At the Hollister Property, trial mining and mine reclamation rules and permits. development of the Hollister Property is and bulk sampling commenced during
107 Great Basin Gold Annual Report 2009 Responsible Delivery
Failure to comply with the appropriate will have sufficient cash available to and volume volatility, and the market environmental laws can lead to make interest and principal payments price of securities of many companies injunctions, damages, suspension or on the debentures on a timely basis or has experienced wide fluctuations, revocation of permits and the imposition at all. The likelihood that purchasers will which have not necessarily been of penalties. There can be no assurance receive the payments owing to them in related to the operating performance, that the Company has been or will at connection with the debentures will be underlying asset values or prospects all times be in complete compliance dependent upon the financial health of such companies. There can be no with such laws or permits, or that the and credit-worthiness of the Company, assurance that such fluctuations will cost of complying with current and future and the ability of the Company to not affect the price of our securities, environmental laws and permits will not earn revenues. The debentures may be and the price may decline below their materially adversely affect our future subordinate to other indebtedness of acquisition cost. cash flow and results of operations. the Company. This subordination may significantly reduce the possibilities for Securities of mining companies have Changes in mining legislation could purchasers of obtaining payment of the experienced substantial volatility in the adversely affect our operations. amounts owed under the debentures. past, often based on factors unrelated to The Bumpers-Rahall Bill, which aims to the financial performance or prospects overhaul the General Mining Law of Further equity financing may of the companies involved. These factors 1872, is currently being considered substantially dilute the interests of our include macro-economic developments in by the US Congress. This Bill relates to shareholders. the countries where we carry on business hard-rock mining on public lands. This We may require additional funds to and globally, and market perceptions of Bill may include a royalty on hard-rock fund our exploration and development the attractiveness of particular industries. mining on public lands. Should this programs and potential acquisitions. If The price of securities of the Company Bill be enacted into law, the royalty we raise additional funding by issuing is also likely to be significantly affected provisions, whether applicable to gross additional equity securities, such by short-term changes in commodity or net profits, could adversely affect financing may substantially dilute the prices, other precious metal prices or continued mineral production at the interests of our shareholders. other mineral prices, currency exchange Hollister Property. fluctuation and the political environment Our common shares may experience in the countries in which we do business Risks Regarding Financial Matters price and volume volatility, and the and globally. The Company may not be able to market price for our common shares satisfy payments of interest and may drop. The Company undertook a Note principal on the debentures. In recent years, the securities markets financing in December 2008, which There is no guarantee that the Company have experienced a high level of price was subsequently restructured in May
Annual Report 2009 Idea, Implementation, Delivery 108 Strategic Risks
2010. The Notes are secured against A number of existing agreements the Company’s Nevada assets, provide for additional issuances of including the Hollister Property. Should shares that would result in dilution to the Company be unable to repay the shareholders. Notes when due, the Company could We may issue additional common shares face legal action by the Note holders, or securities convertible into common or the Note holders could realize on shares in the future, pursuant to a number the secured Nevada assets, resulting in of existing agreements. These include a seizure of some of the assets on the further issuances of up to 50,9 million Hollister Property. common shares to Rusaf Gold Ltd that are contingent on exploration success on In the past, following periods of Rusaf properties over the next two years volatility in the market price of a and further issuances due to anti-dilution company’s securities, shareholders have provisions in existing agreements. often instituted class action securities litigation against those companies. Sales of substantial amounts of our Such litigation, if instituted, could result securities may have an adverse effect in substantial costs and diversion of on the market price of our securities. management attention and resources, Sales of substantial amounts of our which could significantly harm our securities, or the availability of such profitability and reputation. securities for sale, could adversely affect the prevailing market prices for our We have a history of losses. securities. A decline in the market prices We and our predecessor companies of our securities could impair our ability to have a history of losses, and there can raise additional capital through the sale be no assurance that we will ever be of securities, should we desire to do so. profitable, although we have generated Idea some income in 2009, as set out We follow corporate governance Implementation below. We anticipate that we will requirements of Canadian corporate retain future earnings and other cash and securities laws. Delivery resources for the future operation and Non-Canadian residents holding our development of our business. We have common shares should be aware that not paid dividends since incorporation, we follow the corporate governance and we do not anticipate paying requirements of applicable Canadian dividends in the foreseeable future. corporate and securities laws, which Payment of any future dividends is at may differ from corporate governance the discretion of our Board of requirements under laws applicable in Directors, after taking into account their place of residence. Accordingly, many factors including our operating we do not comply with NYSE Amex results, financial condition and corporate governance requirements, under anticipated cash needs. As stated an exemption in the NYSE Amex rules above, we have generated revenue in that permits us to follow Canadian 2009 by way of processing ore that governance requirements, except for was recovered during development and the US requirements relating to the trial mining. The total gross revenue for independence of the Audit Committee. 2009 was US$43,6 million.
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We believe that we are a PFIC for US shares and the exercise, disposition consumer confidence. These conditions federal income tax purposes. and lapse of warrants, as may apply to worsened in 2008 and continue We believe that we are a passive your particular circumstances. in 2009, contributing to reduced foreign investment company (a PFIC), confidence in credit and financial for US federal income tax purposes. Risks Relating to the Global markets around the world and the This could result in material adverse Economy collapse of, and government intervention US federal income tax consequences Recent market events and conditions, in, major financial institutions. Asset for you if you are a US holder of including disruptions in the international price volatility and solvency concerns common shares or warrants, including credit markets and other financial have increased, and there has been having gains realized on the sale of the systems and the deterioration of global less liquidity, a widening of credit common shares and warrants treated economic conditions, could impede the spreads, a lack of price transparency, as ordinary income rather than as Company’s access to capital or increase increased credit losses and tighter credit capital gains, and having potentially its cost of capital. The US credit markets conditions. Notwithstanding various punitive interest charges apply to have experienced serious disruption due government actions, concerns about the those gains as well as certain other to a deterioration in residential property general condition of the capital markets, distributions by us. Further, certain values, defaults and delinquencies in financial instruments and financial non-corporate US holders will not be the residential mortgage market and a institutions persist, and stock markets eligible for the preferential tax rates on decline in the value and credit quality of have declined substantially. dividends paid by us. We urge you to mortgage-backed securities. consult your tax advisor with respect to These market disruptions have had a the US federal, state, local and non-US Other adverse events include significant material adverse impact tax consequences of the acquisition, delinquencies in non-mortgage consumer on companies in many sectors of ownership and disposition of common credit and a general decline in the economy and have limited their
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access to capital and credit. These market turmoil continue, the Company’s certainty that these approvals will be disruptions could, among other things, operations could be adversely impacted granted to us in a timely manner, or at all. make it more difficult for the Company and the trading price of the common to obtain, or increase the Company’s shares could be adversely affected. Exploration and development projects cost of obtaining, financing for its are uncertain and consequently it is operations. Failure to raise capital when Risks Relating to our Business possible that actual cash operating needed or on reasonable terms may and Operations costs and economic return will differ have a material adverse effect on the We cannot provide any assurances significantly from those estimated for a Company’s business, financial condition that we will be issued the necessary project prior to production. and results of operations. exploration and mining permits and Mineral Resource exploration and licenses or, if issued, that they will be development is a highly speculative Additionally, these factors, as well renewed, or that we can comply with business, characterized by a number as other related factors, may cause the conditions imposed. of significant risks including, among decreases in asset values that are Mineral Resources are often owned other things, unprofitable efforts resulting deemed to be other than temporary, by their respective governments, and not only from the failure to discover which may result in impairment losses. in such cases mineral exploration and mineral deposits but also from finding If these factors continue, the Company’s mining activities may only be conducted mineral deposits that, though present, operations could be adversely impacted by entities that have obtained or are insufficient in quantity and quality to and the trading price of the common renewed exploration or mining permits return a profit from production. shares may be adversely affected. and licenses in accordance with the relevant mining laws and regulations. Development projects are subject to the The Company is also exposed to No guarantee can be given that the completion of successful feasibility studies liquidity risks in meeting its operating necessary exploration and mining and environmental assessments, issuance and capital expenditure requirements permits and licenses will be issued to of necessary governmental permits and in instances where cash positions are us or, if they are issued, that they will receipt of adequate financing. They unable to be maintained or appropriate be renewed, or that we will be in a typically require a number of years financing is unavailable. These factors position to comply with all conditions and significant expenditures during the may impact the ability of the Company that are imposed. development phase before production to obtain loans and other credit facilities is possible. The economic feasibility of in the future, and on favorable terms. Nearly all mining projects require development projects is based on many If these increased levels of volatility and government approval. There can be no factors, such as:
111 Great Basin Gold Annual Report 2009 Responsible Delivery
• estimation of reserves; • adequacy of water supply; Failure to comply with applicable environmental, health and safety laws • anticipated metallurgical recoveries; • adequate access to the site, including can result in injunctions, damages, competing land uses (such as • environmental considerations and suspension or revocation of permits and agriculture); permitting; imposition of penalties. There can be no • unanticipated transportation costs; • future gold prices; and assurance that we have been or will be • government regulations (including at all times in complete compliance with • anticipated capital and operating costs. regulations regarding prices, royalties, such laws or permits or that the costs duties, taxes, permitting, restrictions of complying with current and future Our projects have no operating history on production, quotas on exportation environmental, health and safety laws upon which to base estimates of future of minerals, as well as the costs of and permits will not materially adversely cash operating costs. Estimates of protection of the environment and affect our future cash flow, results of Mineral Resources and Reserves and agricultural lands); operations and financial condition. cash operating costs are, to a large extent, based upon the interpretation • title claims, including aboriginal We compete with companies with of geologic data obtained from drill land claims; greater financial resources. holes and other sampling techniques, • fluctuations in prices of precious We operate in a competitive industry and and on feasibility studies which derive metals; and compete with other more well-established estimates of cash operating costs based companies which have greater financial • accidents, labor actions and force upon anticipated tonnage and grades resources than we do. We face strong majeure events. of ore to be mined and processed, the competition from other mining companies configuration of the orebody, expected in connection with exploration and the It is not unusual in new mining recovery rates of metals from the ore, acquisition of properties producing, operations to experience unexpected estimated operating costs, anticipated or capable of producing, base and problems during the start-up phase, and climatic conditions and other factors. As precious metals. Many of these delays often occur in the commencement a result, it is possible that actual cash companies have greater financial of production. operating costs and economic returns resources, operational experience and will differ significantly from those currently technical capabilities than we do. We cannot provide assurance estimated for a project prior to production. As a result of this competition, we that we have been or will be at all may be unable to maintain or acquire times in complete compliance with Any of the following events, among attractive mining properties on terms environmental, health and safety laws others, could affect the profitability or we consider acceptable or at all. or that the cost of complying with economic feasibility of a project: Consequently, our revenues, operations current and future environmental, • unanticipated changes in grade and and financial condition could be health and safety laws, will not tonnage of ore to be mined and materially adversely affected. materially adversely affect our future processed; cash flow, results of operations and We are subject to litigation risks. • unanticipated adverse geotechnical financial condition. All industries, including the mining conditions; Our activities are subject to extensive industry, are subject to legal claims, with federal, state and local laws and • incorrect data on which engineering and without merit. We have, in the past, regulations governing environmental assumptions are made; and may, from time to time, be involved protection and employee health and in various routine legal proceedings, • costs of constructing and operating a safety. We must obtain governmental although no such proceedings are mine in a specific environment; permits and provide associated currently ongoing. Further, defense and financial assurance to carry on certain • availability and costs of processing settlement costs can be substantial, activities. We are also subject to various and refining facilities; even with respect to claims that have reclamation-related conditions imposed no merit. Due to the inherent uncertainty • availability of economic sources under federal or state air, water quality of the litigation process, there can of power; and mine reclamation rules and permits.
Annual Report 2009 Idea, Implementation, Delivery 112 Strategic Risks
be no assurance that the resolution other than CAD. We maintain most of enforcing judgements. of any particular legal matter will not our working capital in CAD or CAD- The Company is organized under have material adverse effects on the denominated securities and convert our the laws of British Columbia and its Company’s future cash flow, results of Canadian funds to foreign currencies, principal executive office is located in operations or financial condition. predominantly US$ and ZAR, as the RSA. All of the Company’s Officers, certain payment obligations become all but one of its Directors, and all In recent years, communities and non- due. Accordingly, we are subject to of the experts named herein, reside governmental organizations (NGOs) fluctuations in the rates of currency outside of the United States, and all or have become more vocal and active exchange between the CAD and these a substantial portion of their assets, and with respect to mining activities at foreign currencies, and these fluctuations a portion of the Company’s assets, are or near their communities. These could materially affect our financial located outside of the USA. As a result, parties may take actions such as road position and results of operations. it may be difficult for investors in the USA blockades, applications for injunctions or otherwise outside of Canada to bring seeking work stoppage and lawsuits for Our future revenues derived from an action against Directors, Officers or damages. These actions can relate not gold sales will be in US$. Of experts who are not resident in the USA, only to current activities but also in respect particular significance is the fact or in other jurisdictions outside Canada. of decades-old mining activities by prior that our operations in South Africa, It may also be difficult for an investor to owners of subject mining properties. including costs relating to construction, enforce a judgement obtained in a US services and materials, are almost court or a court of another jurisdiction GBRW, a non-profit NGO, has filed entirely paid for in ZAR. The ZAR has of residence predicated upon the civil an appeal with NSEC, challenging historically devalued against the US$. liability provisions of federal securities the NDEP issuance of a water pollution Strength in the ZAR against the US$, laws or other laws of the USA or any control permit relating to the Hollister however, will negatively impact the state thereof, or the equivalent laws Property. An informational meeting potential profitability of our mining of other jurisdictions outside Canada took place with GBRW and NDEP on operations in South Africa. The ZAR against those persons or the Company. February 24, 2009, and as of the and US$ exchange rate has fluctuated date of this Annual Report the GBRW significantly over the last few years. The Company may fail to achieve has not indicated whether it has and maintain the adequacy of decided to continue or discontinue the If we fail to hire and retain our key internal control over financial appeal. A hearing with NSEC will be personnel, it may have an adverse reporting as per the requirements scheduled, should GBRW choose to effect on our operations. of the Sarbanes-Oxley Act. continue with the appeal. There can be We depend on a number of key The Company documented and tested, no assurance that the challenge by the personnel, the loss of any one of whom during its most recent fiscal year, its GBRW or other NGOs to this permit could have an adverse effect on our internal control procedures in order or other permits relating to our projects operations. to satisfy the requirements of Section will not result in cancellation of such 404 of the Sarbanes-Oxley Act (SOX). permits, and any such cancellation Our ability to manage growth effectively SOX requires an annual assessment could have a material adverse impact will require us to continue to implement by management and an independent on our future cash flow, results of and improve our management systems assessment by the Company’s operations and financial condition. and to recruit and train new employees. independent auditors of the effectiveness We cannot ensure that we will be of the Company’s internal control over We are subject to fluctuations in successful in attracting and retaining financial reporting. The Company currency exchange rates which could skilled and experienced personnel. may fail to achieve and maintain the adversely affect our financial position adequacy of its internal control over and the results of our operations. Difficulties for investors in foreign financial reporting as such standards are We conduct business in currencies jurisdictions in bringing actions and modified, supplemented or amended
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from time to time, and the Company personnel, especially in light of the require that the Company continues to may not be able to ensure that it can increased demand for such personnel improve its internal controls over financial conclude on an ongoing basis that among publicly-traded companies. reporting. Although the Company intends it has effective internal control over Future acquisitions of companies may to devote substantial time and incur financial reporting in accordance with provide the Company with challenges costs, as necessary, to ensure ongoing Section 404 of SOX. The Company’s in implementing the required processes, compliance, the Company cannot failure to satisfy the requirements of procedures and controls in its acquired be certain that it will be successful in Section 404 of SOX on an ongoing, operations. Acquired companies complying with Section 404. timely basis could result in the loss of may not have disclosure controls and investor confidence in the reliability of procedures or internal control over If any of the foregoing events or its financial statements, which in turn financial reporting that are as thorough other risk factor events not described could harm the Company’s business or effective as those required by herein occur, our business, financial and negatively impact the trading securities laws currently applicable to condition or results of operations price of its common shares or market the Company. could suffer. In that event, the market value of its other securities. In addition, price of our securities could decline any failure to implement required new No evaluation can provide complete and investors could lose all or part of or improved controls, or difficulties assurance that the Company’s internal their investment. encountered in their implementation, control over financial reporting will There have been no changes in the could harm the Company’s operating detect or uncover all failures of persons classification of common shares results or cause it to fail to meet its within the Company to disclose material (re-classifications, consolidations, reporting obligations. There can information otherwise required to reverse splits or the like) within the be no assurance that the Company be reported. The effectiveness of the previous five years. All common shares will be able to remediate material Company’s controls and procedures of Great Basin Gold rank pari passu weaknesses, if any, identified in future could also be limited by simple errors (i.e. equally) for the payment of any periods, or maintain all of the controls or faulty judgements. In addition, as dividends and distributions in the event necessary for continued compliance, the Company continues to expand, the of a wind-up. Great Basin Gold’s and there can be no assurance that challenges involved in implementing securities have not received any ratings the Company will be able to retain appropriate internal controls over from any rating organization. sufficient skilled finance and accounting financial reporting will increase and will
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Annual Report 2009 Idea, Implementation, Delivery 114 Glossary
In this Annual Report the following terms have the meanings set forth herein:
2009 Burnstone Report a technical report entitled “Revised Technical Report Update on the September 2009 Mineral Resource Estimate for the Burnstone Gold Project” dated effective October 21, 2009, as amended November 9, 2009, prepared by Deon van der Heever, Pr. Sci. Nat., GeoLogix Mineral Resource Consultants (Pty) Ltd, Johan G Oelofse, Pr. Eng., FSAIMM and Philip N Bentley, Pr. Sci. Nat., filed on SEDAR on November 10, 2009 2009 Hollister Report a technical report entitled “Revised Technical Report on the June 2009 Update of the Mineral Resource Estimate for Hollister Gold Mine” dated effective June 17, 2009, as amended October 30, 2009, prepared by Stephen J Godden, FIMMM, C. Eng., S Godden & Associates Ltd, Gideon Johannes (Deon) van der Heever, Pri. Sci. Nat., Johannes G Oelofse, Pr. Eng., FSAIMM and Philip N Bentley, Pr. Sci. Nat., filed on SEDAR on November 3, 2009 ASC Accounting Standard Codification ASCM Associate of Camborne School of Mines Au Eq the combined grade of gold, silver and other metals expressed as a gold equivalent. BC Business Corporations Act BEAL Barrick Exploration Africa Ltd BEE Black Economic Empowerment, a reference to South African legislative initiatives designed to help redress past injustices to historically disadvantaged persons BLM Bureau of Land Management BVI British Virgin Islands CAD Canadian Dollar CEO Chief Executive Officer CFO Chief Financial Officer CICA Canadian Institute of Chartered Accountants cmg/t centimeter grams per tonne (this is a measure of gold content) COO Chief Operating Officer COSO Committee of Sponsoring Organizations (Treadway Commission) CSA Canadian Securities Administrators CSI Corporate Social Investment CSR Corporate Social Responsibility DMR Department of Mineral Resources (previously the Department of Minerals and Energy) of the RSA EIA Environmental Impact Assessment EIS Environmental Impact Statement FASB Financial Accounting Standards Board FSAIMM Fellow of the South African Institute of Mining and Metallergy Ga billion years GAAP Generally Accepted Accounting Principles (Canadian or US) GBGR GBG Rusaf GBRW Great Basin Resource Watch GEMS Gemcom GSR G S Minase Refnaria Limitade g/t grams per tonne HDB Hollister Development Block, a portion of the Hollister Property in Nevada
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HDSA Historically Disadvantaged South African, a category of person intended to benefit from BEE laws ICP Induced Coupled Plasma ID Inverse Distance IFRS International Financial Reporting Standards IRR internal rate of return, the discount rate that would have to be applied to the projected future cash flows from an asset to make the NPV of the asset worth zero JIBAR Johannesburg Inter-Banking Borrowing Rate JSE Johannesburg Stock Exchange or JSE Ltd, one of the three stock exchanges on which our common shares are listed JV Joint Venture kg kilogram km kilometer LHS long-hole stoping LTIFR Lost Time Injury Frequency Rate LOM life of mine Ma million years MEGA Mpumalanga Economic Growth Agency Mineral Symbols mineral symbols which may be used herein are: Au – Gold; Cu – Copper; Pb – Lead; Ag – Silver; Zn – Zinc; Mo – Molybdenum; Sb – Antimony; Se – Selenium; As – Arsenic; Hg – Mercury mm millimeter MMI Mobile Metal Ions MPRDA Mineral and Petroleum Resources Development Act, 2002 (RSA) MSAMMA Member of the South African Mine Managers’ Association MSHA (Department of) Mine Safety and Health Administration NDEP Nevada Department of Environmental Protection NEMA National Environmental Management Act NGO non-governmental organization NI 43-101 National Instrument 43-101, the national securities law instrument in Canada respecting standards of disclosure for mineral projects NI 58-101F1 National Instrument 58-101F1 NOI Notice of Intent NPDES National Pollutant Discharge Elimination System net present value, the current value of the discounted projected future cash flows from an asset at an NPV assumed % discount rate and a form of proxy value for the asset NSEC Nevada State Environmental Commission NSR net smelter return NYSE Amex New York Stock Exchange Amex (formerly American Stock Exchange), one of the three stock exchanges on which our common shares are listed OHSAS 18000 Occupational Health and Safety Assessment Series
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oz/ton troy ounces per ton Paleoplacer or an ancient surficial deposit that was formed by mechanical concentration of heavy mineral particles, such Witwatersrand Gold as gold, from weathered debris which has since been covered by younger rocks and is no longer visible on Deposit surface. The Witwatersrand Basin in South Africa hosts the most well-known examples of this type of gold deposit PFIC passive foreign investment company PL Prospecting License RAB rotary air blast RAW return airway RC reverse circulation RCG Rodeo Creek Gold RIB rapid infiltration basin RSA Republic of South Africa (also: South Africa) SAICA South African Institute of Chartered Accountants SEC Securities and Exchange Commission of the United States SEDA Small Enterprise Development Agency SEDAR System for Electronic Document Analysis and Retrieval SLP Social and Labor Plan SMME Small, Medium and Micro Enterprises SOP Standard Operating Procedure SOX Sarbanes-Oxley Act Sulphide a compound of sulphur with another element, typically a metallic element or compound TCP Traditional Cultural Properties ton (imperial) 2,000 pounds tonne (metric) 1.102 tons TSF Tailings Storage Facility TSX Toronto Stock Exchange, one of the three stock exchanges on which our common shares are listed US$ United States Dollar US United States USA United States of America WIS Waste Information System WPCP Water Pollution Control Permit ZAR South African Rand ZCCM Zambia Consolidated Copper Mines Ltd
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Resource Category grade, geological characteristics (Classification) Definitions and continuity of a Mineral The discussion of mineral deposit Resource are known, estimated or classifications in this Annual Report interpreted from specific geological adheres to the Mineral Resource evidence and knowledge. and Mineral Reserve definitions and • An “Inferred Mineral Resource” classification criteria published by is that part of a Mineral Resource the Canadian Institute of Mining for which quantity and grade or and Metallurgy in 2005. Estimated quality can be estimated on the Mineral Resources fall into two broad basis of geological evidence and categories dependent on whether limited sampling, and reasonably their economic viability has been assumed, but not verified, established, and these are namely geological and grade continuity. Mineral Resources (economic The estimate is based on limited viability not established) and Mineral information and sampling Reserves (viable economic production gathered through appropriate is feasible). techniques from locations such as outcrops, trenches, pits, workings Resources are sub-divided into and drill holes. categories depending on the confidence level of the estimate, • An “Indicated Mineral Resource” based on level of detail of sampling is that part of a Mineral Resource and geological understanding of the for which quantity, grade or deposit. The categories, from lowest quality, densities, shape and to highest confidence, are Inferred physical characteristics can be Resource, Indicated Resource and estimated with a level of confidence Measured Resource. Reserves are sufficient to allow the appropriate similarly sub-divided by order of application of technical and confidence into Probable (lowest) and economic parameters, to support Proven (highest). mine planning and evaluation of the economic viability of the These classifications can be more deposit. The estimate is based on particularly described as follows: detailed and reliable exploration and testing information gathered • A “Mineral Resource” is a through appropriate techniques concentration or occurrence of from locations such as outcrops, diamonds, natural solid inorganic trenches, pits, workings and material, or natural solid fossilized drill holes that are spaced organic material including base and closely enough for geological precious metals, coal and industrial and grade continuity to be minerals in or on the Earth’s crust reasonably assumed. in such form and quantity and of such a grade or quality that it has • A “Measured Mineral Resource” reasonable prospects for economic is that part of a Mineral Resource extraction. The location, quantity, for which quantity, grade or quality,
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densities, shape and physical Resource demonstrated by at least the time of reporting, that economic characteristics are so a Preliminary Feasibility Study. extraction can be justified. The US well established that they can This study must include adequate SEC requires permits to be in hand be estimated with confidence information on mining, processing, or imminent to classify mineralized sufficient to allow the appropriate metallurgical, economic and other material as Reserves. application of technical and relevant factors that demonstrate, economic parameters, to support at the time of reporting, that • A “Proven Mineral Reserve” production planning and evaluation economic extraction can be is the economically mineable of the economic viability of the justified. A Mineral Reserve includes part of a Measured Mineral deposit. The estimate is based diluting materials and allowances Resource demonstrated by at least on detailed and reliable for losses that may occur when the a Preliminary Feasibility Study. exploration, sampling and material is mined. This study must include adequate testing information gathered information on mining, processing, through appropriate techniques • A “Probable Mineral Reserve” metallurgical, economic and other from locations such as outcrops, is the economically mineable part relevant factors that demonstrate, at trenches, pits, workings and drill of an Indicated and, in some the time of reporting, that economic holes that are spaced closely circumstances, Measured Mineral extraction is justified. The US SEC enough to confirm both geological Resource demonstrated by at least requires permits to be in hand or and grade continuity. a Preliminary Feasibility Study. imminent to classify mineralized This study must include adequate material as (ore) Reserves. • A “Mineral Reserve” is the information on mining, processing, economically mineable part of a metallurgical, economic and other Measured or Indicated Mineral relevant factors that demonstrate, at
Idea Implementation Delivery
119 Great Basin Gold Annual Report 2009 Contacts:
Great Basin Gold Limited, Breakstone Group US Investor Incorporated in Canada and Media Relations Reg No: 436691 Barbara Cano Telephone: +1 (646) 452 2334 Vancouver Office Email: [email protected] 1108-1030 West Georgia Street Vancouver BC, Canada , V6E 2Y3 Telephone: +1 (604) 633 9113 Analyst Coverage Fax: +1 (604) 633 0190 Barnard Jacobs Mellet Imaru Casanova GREAT BASIN GOLD Limited Ground Floor, 138 West Street BMO Capital Markets Sandton, South Africa Andrew Breichmanas PO Box 78182, Sandton, 2146 Telephone: +27 (0) 11 301 1800 Dahlman Rose & Co Fax: +27 (0) 11 301 1840 Adam Graf
Investor Relations Nedcor Securities North America Christian Siebert Michael Curlook Mgr of IR & Corp Development Raymond James Telephone: +1 (888) 633 9332 Brad Humphrey Email: [email protected] RBC Capital Markets South Africa Leon Esterhuizen Tsholo Serunye Investor Relations Officer Stifel, Nicolaus & Co Telephone: +27 (0) 11 301 1800 Heather Douglas Email: [email protected]
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