Great Basin Gold (TSE:GBG) (AMEX:GBG) said Thursday that an over-allotment option granted under a public financing that closed late last month was exercised, for gross proceeds of additional $7.5 million to the gold producer.
RBC Capital Markets, on behalf of a syndicate of underwriters in the offering, exercised the over-allotment option to purchase an additional 10.0 million common shares at a price of 75 cents each, and 5.0 million warrants at a price of 90 cents each.
Each full warrant will entitle the holder to purchase one common share of the company at a price of 90 cents at any time before 5:00 p.m. on March 30, 2014.
The option was granted to underwriters to cover over-allotments under the terms of the company's public financing completed on March 30, 2012.
The excercise of the option brings the total gross proceeds raised from the offering to $57.53 million.
The new funds will be used for working capital for the development and ramp up of the Burnstone Mine in South Africa.
The company said it expects Burnstone to produce between 90,000 and 100,000 gold ounces at a cash cost of US$900 to US$1,000 per ounce for the 2012 fiscal year, a marked improvement from the US$1,801 cash cost seen in 2011.
The mine is expected to be cash flow positive by the third quarter, with its cash contribution to group activities to increase in line with the production build-up.
Burnstone, which started commercial production in February last year, recorded a net operating loss of $15 million in 2011, the first year of its production build-up.
Great Basin Gold also has operations at its Hollister Mine in Nevada.