Poised to become a mid-tier gold producer

Long Hole Stoping (“LHS”)

A LHS trial was completed at Burnstone in Q4 2010, following 12 months experimenting with drilling, blasting and cleaning techniques. The progress made and results achieved during the trial period enabled the Company to implement LHS as the preferred mining method for the Burnstone Mine and develop a life-of-mine (“LOM”) plan based on this mining method. The ore body also allows Great Basin Gold to use LHS due to the relative flat dip (7 – 11 degrees) as well as the fact that mining will occur at depths of 924 – 1,980 ft (280 – 600 meters) for the majority of the LOM. The development of standard drill rigs able to drill the 50 ft (15 meters) extremely accurately also benefits this mining technique. The remainder of the equipment is standard to the industry and includes load haul dumpers, dump trucks, roof bolters and single and twin boom drill rigs used for development in most underground mines throughout the world. The actual drilling, blasting and cleaning of the stope material is performed by specialized teams that have received the necessary and intensive training, while the majority of the workforce focuses on development and support services to the mine.

Click here to view a video about the Long Hole Stoping process

Highlights

• World-class mining method, completely mechanized and extremely safe
• Shallow: no extra cost of refrigeration and high mining stresses
• On-reef stoping and development is also on-reef
• Production build up is comparatively fast
• Personnel free stopes
• Fully trained, highly skilled teams
• Workforce has minimum Grade 10 qualification and the company uses English as the medium of communications

Click here to view a video introduction to Burnstone Mine

Underground development and production build-up

Good progress continues to be made to open up mining blocks B and C. A total of approximately 19,061ft (5,810 meters) of reef development was completed in 2010, and 21,792 ft (6,644 meters) of reef development remains. Tons from reef development will be treated by the Plant but due to the added dilution associated with these tons, a relatively low head grade is being delivered to the mill. The rate of stoping will be increased as more stopes become available which will increase the blended head grade delivered to the Plant.

The Metallurgical Plant is performing in line with expectation with approximately 202,660 tonnes processed during the second quarter of 2011(Q1 2011:199,878 tonnes).Tonnes processed however remain predominantly from development ore which includes more dilution than stoped material and negatively impacts on the mill head grade. Recoveries for the second quarter of 2011 improved to 85% (Q1 2011:83%) although still impacted by the low head grade ore delivered to the mill.

Production build-up during 2011 to reach the planned Au ounces of 110,000 to 140,000 for the year will be dependent on achieving the planned rate of development as this will ensure required stopes being available to achieve production targets. Development rates will increase from a monthly average of 3,300 ft (1,000 meters) in Q1 2011 to 10,000 ft (3,000 meters) by the end of Q4 2011. As at December 31, 2010, approximately 197,000 ore tonnes from mining and development had been accumulated on the surface stockpiles at an average grade of 1 g/t. These tons are being co-mingled with development and stope tons mined in Q1 2011 to allow for a steady increase in the milling rate from 90,000 tonnes in January to 125,000 tonnes in July 2011. The blended head grade will also increase from 0.03 Au oz/t in Q1 2011 to 0.10 Au oz/t in Q4 2011.

Plans for fiscal 2011

Ore development remains the key to delivering the planned production build-up. During the first half of 2011 the ratio of waste to reef development was skewed towards waste development with the resultant impact on stope availability for mining. Although this ratio has already improved with all development ends currently being on-reef, a variance in the planned 2011 production targets is expected. Production targets for the remainder of 2011 are 16,500 Au oz for Q3 with 33,500 Au oz targeted for Q4 2011. A positive development for the remainder of the year is the higher than planned grade in the mining blocks currently accessed which could negate the impact on production targets Cash costs for the remainder of 2011 are estimated in the range of US$650 – US$750/oz and will be impacted by the actual ounces recovered for the remainder of the year.