TORONTO, ONTARIO--(Marketwire - Aug. 27, 2008) - GBS Gold International Inc. (TSX: GBS.TO) ("GBS Gold" or the "Company") provides the following preliminary results of its internal business review.
Operations Review As previously announced, GBS Gold's new management team recently commenced a detailed review of the Company's operations, internal growth projects and financing requirements. The review is focused on the Company's short term mine schedule and cash position following recent production disruptions in the Brocks Creek underground mine and the negative impact on operating cashflow. Mine plans are being finalized to stabilize production and operating cashflows for the remainder of the year. Preliminary results of the review indicate that gold production for 2008 will be in line with previous guidance of 130,000 ounces. For 2009, however, the Company will focus on its higher grade underground mines, specifically the Brocks Creek and Tom's Gully mines, and production will be lower than in 2008. The objective of this strategy is to focus on lower risk and higher margin production, thereby improving operating cashflows and reducing cash operating costs. The Brocks Creek mine produced approximately 23,600 ounces in the first half of 2008 and further drilling from underground is planned in the current quarter to further delineate the orebody at deeper levels and optimize economic continuity. At the Tom's Gully project, gold pours have commenced and production levels are forecast to increase to an annualized rate of 35,000-40,000 ounces by the end of this year. As previously reported, cash operating costs for the first half of 2008 were US$738/oz reflecting inflationary cost pressures, the production strategy of milling low-grade material to utilize the capacity of the Union Reefs plant, transportation and energy costs, and the high A$/US$ exchange rate. Given this cost performance, cash operating costs for 2008 are expected to be in excess of previous guidance of US$630-660/oz. Corrective actions to reduce cash expenditures have been taken, including suspension of resource definition drilling and exploration activities, and employee redundancies. Cash and bullion holdings are below previously anticipated levels at approximately C$11 million. The Company is therefore pursuing various financing options to supplement working capital and to fully enable the operation and development of its projects and large gold resource base. A further update regarding the final outcomes of the business review will be provided in early September. Base Metals Projects Following the recently announced strategic alliance with RBS Sempra Commodities, an initial drilling program has been completed at the Iron Blow and Mt Bonnie polymetallic deposits. Five holes have been drilled into the Iron Blow deposit and two holes into the Mt Bonnie deposit. Preliminary assay results from this drilling are in line with significant historical drilling results and resource estimates, and indicate strong potential for robust underground mining operations. Full assay results from the first holes into the Iron Blow deposit are due for release next week. Scoping work has now commenced to assess the results and the potential for the deposits to be developed into underground base metal mining operations. The next phase of work involves metallurgical testwork, further drilling, preparation of a formal resource estimate and commencement of a feasibility study. Within the strategic alliance with RBS Sempra Commodities, GBS Gold retains ownership and control of its base metals assets and has flexibility to realize value from these assets via direct sale, farm-out, joint ventures, spin-off or other divestment strategies. RBS Sempra Commodities will retain involvement as marketer or off-taker of future base metals production from these assets. The proceeds expected to be realized from these strategies are planned to be invested in GBS Gold's core gold business. Cosmo Deeps Project The business review has also focused on expanding the scope of the Cosmo Deeps underground project to consolidate it with the adjacent Chinese "big pit" area to form a future mining centre along a 5km strike length. The previously announced consolidated resource estimate for this area is tabulated below:
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Indicated Resources Inferred Resources
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Tonnes g/t Ounces Tonnes g/t Ounces
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Cosmo Deeps 4,244,000 4.9 670,000 4,503,000 3.9 570,000
Chinese "big pit" area 7,195,000 1.7 387,000 2,866,000 1.6 151,000
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Total 11,439,000 2.9 1,057,000 7,369,000 3.0 721,000
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Note: Reported cut-off grades are 2.0g/t for Cosmo Deeps and 1.0g/t for the
Chinese "big pit" area.
The Cosmo-Chinese area has the potential to be a long term mining centre for the Company. The area comprises the large Cosmo Deeps underground mine project which, based on the feasibility study completed earlier this year, is expected to be a robust mining operation producing 75,000-100,000 ounces per year, plus the Chinese "big pit" area which contains a substantial gold resource which is targeted to form the basis of a large open pit mining operation. A feasibility assessment will be completed on the consolidation of the Cosmo Deeps and Chinese operations, which has the potential to produce in excess of 150,000 ounces per year. As part of this strategy, current mining activities in the southern part of the Chinese area may be curtailed pending review of a larger open pit mining strategy in the area. In addition, as part of the review process, potential capital cost savings have also been identified for the removal of water and tailings from the existing Cosmo open pit to enable underground mine development to commence in late 2009 as planned. About GBS Gold International Inc. GBS Gold is a junior gold producer with 2.7 million ounces of Indicated Resources and 1.7 million ounces of Inferred Resources of gold at its Union Reefs Operations Centre located in the Northern Territory of Australia. GBS Gold produces gold through its 2.5Mtpa Union Reefs processing plant. The Company has recently commenced gold production at its Tom's Gully operation and plans to develop its Cosmo Deeps underground mine in 2009-10. GBS Gold has consolidated over 3,500km2 of prospective tenements and gold deposits and also holds gold exploration properties in Western Australia. The Company trades on the Toronto Stock Exchange under the symbol "GBS". The drilling results and technical disclosures in this news release regarding GBS Gold's properties were approved by Alf Gillman, an employee of GBS Gold and a qualified person under National Instrument 43-101. The Company's mineral resources comprise indicated resources of 26.8 million tonnes at 3.1g/t for 2.7 million ounces of contained gold and inferred resources of 21.5 million tonnes at 2.4g/t for 1.7 million ounces of contained gold as set out in its technical reports (refer below) and news releases dated May 13 and July 2, 2008. The Company has filed on May 8, 2008 a technical report entitled "GBS Gold International: Burnside, Union Reefs, Maud Creek and Moline Projects, Northern Territory, Australia" dated February 2008 and authored by Jeames McKibben and Christine Standing of Snowden Mining Industry Consultants Pty Ltd and Heath Gerritsen of HG Mine Design Pty Ltd. The Company has also filed two technical reports on its Tom's Gully project being a technical report entitled "Form 43-101 Technical Report on the Tom's Gully Project" authored by Paul Payne of Resource Evaluations Pty Ltd dated and filed on January 14, 2008 and a technical report entitled "Technical Report on the Mineral Reserves of the Tom's Gully Gold Mine" authored by Heath Gerritsen of HG Mine Design Pty Ltd dated December 2007 and filed on January 31, 2008. The Company has completed feasibility studies on its Tom's Gully and Cosmo Deeps projects, and a life-of-mine study on its operating Brocks Creek underground mine, all of which have declared mineral reserves in accordance with the above technical reports. Where the Company has not completed a feasibility or life of mine study on a particular project, there is no certainty that such project will be economically successful. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Certain disclosures in this release, including management's assessment of GBS Gold's plans and projects, constitute forward-looking statements that are subject to numerous risks, uncertainties and other factors relating to GBS Gold's operation as a mineral development company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: fluctuations in gold prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; general market conditions; the uncertainty of future profitability; and the uncertainty of access to additional capital. Full descriptions of these risks can be found in the Company's Annual Information Form available on the SEDAR website, www.sedar.com. Readers are cautioned not to place undue reliance on forward-looking statements. GBS Gold expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. The TSX does not accept responsibility for the adequacy or accuracy of the information contained herein.ContactsGil Playford GBS Gold International Inc.
Chairman
+61 8 9492 2500
Peter Breese
GBS Gold International Inc.
CEO and President
+61 8 9492 2500
Peter Kerr
GBS Gold International Inc.
Chief Financial Officer
+61 8 9492 2500
Email: gbs@gbsgold.ca
Website: www.gbsgold.com
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