Great Basin Gold is ‘going through the motions’ necessary for a company who cannot sustain its current business model and is progressing towards insolvency.Having mothballed its South Africa-based Burnstone gold operation in September last year, and downscaled its Canada-based Hollister mine to an insignificant three year lifespan operation, it has no alternative options left to resolve its troubles. The result is it voluntary delisting from the NYSE, soon to be followed by its delisting from the JSE as well. It is not currently trading shares on the stock exchange either. According to the company, there are approximately 25 suitors for its Hollister mine located in Nevada and a number of potential companies who could look to acquire Burnstone as well, which could include Gold One International and Wits Gold – a company undoubtedly on the lookout for an operational gold mine. A more formal announcement regarding a possible acquirer is said to be made in February or March this year.
A lot of questions revolve around the brand new Burnstone gold mine and process plant, and why Great Basin Gold could not mine it profitably. There are indications that its choice to use mechanised mining could be largely to blame.Mechanised mining is a highly technological process and requires the correct skills and knowledge to implement it properly. The underground mine development also has to be developed to accommodate the machinery. The real question is whether another mining company, likely to be a junior, will be able to effectively use this methodology, or look to return to conventional mining methods. In December last year, Great Basin Gold announced that Alvarez & Marsal Canada, an affiliate of a leading international professional services and restructuring firm, had been engaged by the company. As part of this engagement Ray Dombrowski and Peter Gibson were appointed to serve as CEO and CFO of the company. Both Dombrowski and Gibson have extensive experience in managing companies which are in insolvency proceedings. In conjunction with the appointments, Lou van Vuuren resigned as interim-CEO and director of the company and continues to make himself available to assist the transition on a consulting basis.