Mining company Great Basin Gold's main focus this year will be on reducing the cost of mining in order to establish a steady cash flow.

CEO Ferdi Dippenaar says that not much has changed since the company released its cost estimates in January 2010. Electricity is still a major concern to the company, costing an estimated $5/t, based on an exchange rate of R9 to the greenback.

He says Great Basin Gold has calculated a few scenarios, all of which the company is prepared for. However, it is hoping for the weakening of the rand in international trade.

“If the rand strengthens and rallies to R7 to the dollar, the company’s cash cost to exchange estimate would be $85/t, as opposed to the current $67/t. however, if the rand weakens and falls to R10 to the dollar, the company’s cash cost to exchange rate would be $61/t,” says Dippennar.

This would mean that the company would have a steady cashflow, which it would use to fund its African expansion.

Over the past two years, the company has initiated exploration projects in Tanzania and Mozambique.

“The focus over the past two years has been the completion of Burnstone and to get Hollister up and running. With both of these projects now complete, the focus of the company will be to generate a steady cash flow, which will fund further exploration work in Africa,” says Dippenaar.

He points out that the company is carrying out exploration projects in the Lupa region of Tanzania as well as further north in the Lake Victoria region. Initial resource estimates indicate that the Lupa exploration project has an estimated resource of about 600 000 oz, while the Lake Victoria resource holds a resource that is a few hundred-thousand ounces.

“All of these estimates are based on one-pass exploration that the company carried out over two years ago. More infill drilling needs to be conducted to get a better understanding of the resources. Despite this, the company is happy with the initial results and is excited at the prospect of expanding its African footprint to capitalise on the increased global commodity demand,” says Dippenaar.

In Mozambique, Dippennar reports that the company has identified a need for world-class gold projects in the region and has carried out early stage exploration in the country. Based on the initial exploration’s technical report, the company will decide on a date to initiate the second phase of its drilling programme.

To watch a video on Great Basin Gold CEO Ferdi Dippenaar discussing the company’s cash cost conundrum go to www.miningweekly.com

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