Great Basin raising C$110 million primarily for Burnstone gold project

Great Basin Gold (GBG) has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and including, BMO Capital Markets, Raymond James Ltd. and Thomas Weisel Partners Canada who will purchase C$110 million of senior unsecured convertible debentures.  Further GBG has granted the underwriters an over-allotment option to purchase up to an additional 15% for a period of 30 days following the closing.  The company sees debentures as a preferred capital raising option offering a lower cost route than other exercises and also is less restrictive on the company.Net proceeds will be used for repayment of amounts drawn down on the GBG’s project finance facility, development of the Burnstone gold project in South Africa (replacing the proposed Burnstone project finance facility) and general corporate purposes.GBG will repay the outstanding principal amount of the debentures, on maturity in November 2014 or redemption, in cash.Ferdi Dippenaar, President and CEO, commented: "We have been reviewing funding alternatives given the long timeline and restrictions that project debt facilities require. Due to the extended time it has taken to finalise the facility, as well as the costs and constraints, including high upfront equity contribution and complex associated hedging structures, the company has been evaluating alternative funding options. The sale of convertible debentures is the preferred option with fewer encumbrances on Great Basin Gold’s balance sheet, no requirements to hedge gold production and, on a relative basis, comes at a lower cost of capital in a rising gold price environment. As we are making good progress with the delivery of the project, we are pleased that we could complete this convertible debenture offering on an equally timely basis."