Great Basin Gold to Obtain $35 Million Loan Consequent upon CCAA Court Order

    




 JOHANNESBURG, SA, Sept. 20, 2012 /CNW/ - Great Basin Gold Ltd. ("Great  Basin Gold"),   announces that it has agreed to a comprehensive term sheet from its  existing bank lenders for a $35 million working capital loan which was  approved as a debtor-in-possession ("DIP") loan by order of the British  Columbia Supreme Court pursuant to a Companies Creditors Arrangement  Act ("CCAA") filing made on September 19(th), 2012 (Vancouver Registry 126583) . The DIP Loan will be a  post-commencement financing under the previously announced business  rescue ("BR") provisions of the South African Companies Act which were  commenced September 14, 2012. CCAA is a Canadian insolvency statute  which will allow the Company a period of time to seek buyers and  partners for its two gold mining projects and/or corporate level  financiers in an effort to return Great Basin Gold to solvency. 

 The DIP Loan has a term of 6 months, extendable for up to 3 months, and  is subject to certain fees, interest and costs.  It contemplates that  the Company will dispose or sell down its interest in its two gold  projects or otherwise refinance or recapitalize over certain periods  within the term of the DIP Loan. The DIP loan will be subject to a  super-priority lien on the assets of Great Basin Gold, and will also  have the benefit of liens and claims over the assets of its Nevada and  South African subsidiaries.  As part of their security package for the  DIP loan, the DIP lenders will also receive from Great Basin Gold's  U.S. holding company a guarantee of the obligations of its South  African subsidiaries' obligations under an existing South African  credit facility. The DIP Loan has received lenders' credit committee  approval and it is now principally subject to negotiation and execution  of definitive documentation and other customary closing conditions. The  DIP Loan proceeds will be used, subject to the concurrence of a  business rescue practitioner in South Africa and KPMG LLP, the  CCAA-appointed monitor in Canada, to affect an orderly suspension of  operations at Burnstone, ongoing care and maintenance of Burnstone  assets, and for working capital at Hollister. Hollister is expected to  continue profitably producing gold at the rate of 6,000-7,000 ounces  per month for the foreseeable future and no insolvency filings are  currently expected for the Nevada operations. 

 Lou van Vuuren, interim CEO, commented on the recent developments, "We believe the DIP loan will be in the best interest of our workforce  and other key stakeholders, as its proceeds will be use to ensure the  proper treatment of our Burnstone employees and the responsible care  and maintenance of this valuable project while Hollister operations  will be enhanced by some additional working capital. We are confident  that given the industry interest we are seeing in these two assets we  will see one or more realization or recapitalization transactions  complete within the term of the DIP Loan." 

 Lou van Vuuren CEO (interim) 

  

 Cautionary and Forward Looking Statement Information 

 This document contains "forward-looking statements" that were based on  Great Basin's expectations, estimates and projections as of the dates  as of which those statements were made. Generally, these  forward-looking statements can be identified by the use of  forward-looking terminology such as "outlook", "anticipate", "project",  "target", "believe", "estimate", "expect", "intend", "should" and  similar expressions. Forward-looking statements are subject to known  and unknown risks, uncertainties and other factors that may cause the  Company's actual results, level of activity, performance or  achievements to be materially different from those expressed or implied  by such forward-looking statements. These include but are not limited  to: 




        --  uncertainties related to the Company's liquidity challenges and
            need for near term financing
        --  uncertainties related to project realization values
        --  uncertainties and costs related to the Company's exploration
            and development activities, such as those associated with
            determining whether mineral resources or reserves exist on a
            property;
        --  uncertainties related to feasibility studies that provide
            estimates of expected or anticipated costs, expenditures and
            economic returns from a mining project; uncertainties related
            to expected production rates, timing of production and the cash
            and total costs of production and milling;
        --  uncertainties related to the ability to obtain necessary
            licenses, permits, electricity, surface rights and title for
            development projects;
        --  operating and technical difficulties in connection with mining
            development activities;
        --  uncertainties related to the accuracy of our mineral reserve
            and mineral resource estimates and our estimates of future
            production and future cash and total costs of production, and
            the geotechnical or hydrogeological nature of ore deposits, and
            diminishing quantities or grades of mineral reserves;
        --  uncertainties related to unexpected judicial or regulatory
            proceedings;
        --  changes in, and the effects of, the laws, regulations and
            government policies affecting our mining operations,
            particularly laws, regulations and policies relating to
      o mine expansions, environmental protection and associated compliance
        costs arising from exploration, mine development, mine operations
        and mine closures;
      o expected effective future tax rates in jurisdictions in which our
        operations are located;
      o the protection of the health and safety of mine workers; and
      o mineral rights ownership in countries where our mineral deposits
        are located, including the effect of the Mineral and Petroleum
        Resources Development Act (South Africa);
        --  changes in general economic conditions, the financial markets
            and in the demand and market price for gold, silver and other
            minerals and commodities, such as diesel fuel, coal, petroleum
            coke, steel, concrete, electricity and other forms of energy,
            mining equipment, and fluctuations in exchange rates,
            particularly with respect to the value of the U.S. dollar,
            Canadian dollar and South African rand;
        --  unusual or unexpected formation, cave-ins, flooding, pressures,
            and precious metals losses (and the risk of inadequate
            insurance or inability to obtain insurance to cover these
            risks);
        --  changes in accounting policies and methods we use to report our
            financial condition, including uncertainties associated with
            critical accounting assumptions and estimates;
        --  environmental issues and liabilities associated with mining
            including processing and stock piling ore;
        --  geopolitical uncertainty and political and economic instability
            in countries which we operate;  and
        --  labour strikes, work stoppages, or other interruptions to, or
            difficulties in, the employment of labour in markets in which
            we operate mines, or environmental hazards, industrial
            accidents or other events or occurrences, including third party
            interference that interrupt the production of minerals in our
            mines.
        --  There is currently no certainty that Southgold Exploration
            (Pty) Ltd will successfully emerge from business rescue
            proceedings and thereby prevent liquidation.




 For further information on Great Basin Gold, investors should review the  Company's annual Form 40-F filing with the United States Securities and  Exchange Commission www.sec.com and home jurisdiction filings that are available at www.sedar.com. 

  


   

Great Basin Gold Ltd.


CONTACT:  For additional details on Great Basin Gold Ltd. and its goldproperties, please visit the Company's website at www.grtbasin.com orcontact Michael Curlook, Head of Investor Services at 1-888-633-9332. 


    

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