Wrap Text
CRD - Central Rand Gold Limited - 2010 Annual Report Release
Central Rand Gold Limited
("CRG" or the "Company" or the "Group")
(Incorporated as a company with limited liability under the laws of Guernsey,
Company Number 45108)
(Incorporated as an external company with limited liability under the laws of
South Africa, registration number 2007/0192231/10)
ISIN: GG00B24HM601
Share code on LSE: CRND
Share code on JSE: CRD
2010 ANNUAL REPORT RELEASE
For full copies of the Company`s Annual Report and Accounts, including the
Company Profile, Directors` Report, Corporate Governance and Sustainable
Development Report, Directors` Responsibility Statement, Company Secretarial
Confirmation, Auditor`s Report and full Financial Statements, please refer to
the Company`s website: www.centralrandgold.com.
In addition, the notice of the 2011 annual general meeting to be held on 24
June 2011 ("AGM") has now been released using electronic means. Shareholders
should, therefore, download copies of the circular, notice and forms of proxy
at www.centralrandgold.com.
Shareholders are advised that the AGM of the Company is to be held at the
offices of Carey Olsen, Carey House, Les Banques, St Peter Port, Guernsey, GY1
4BZ at 11.00 a.m. UK time on 24 June 2010. Shareholders wishing to participate
in the AGM, in Guernsey via video link from London may do so at the offices of
K&L Gates, One New Change, London EC4M 9AF and Shareholders wishing to
participate in the AGM via video link from Johannesburg may do so at the
offices of Rudolph, Bernstein & Associates, Block B, 7 Eton Road, Sandhurst,
Johannesburg
HIGHLIGHTS
2010:
- US$5.7 million (GBP3.7 million) raised in a cashbox placing on 22 January.
- US$36.8 million (GBP24.2 million) raised in a "Firm Placing and Placing and
Open Offer" on 5 July.
- Completed a Competent Person`s Report ("CPR") on 12 April, indicating an
increased Joint Ore Reserves Committees ("JORC") probable reserve base of
482,000 ounces of gold.
- 9,321 ounces of gold produced in 2010.
- No fatalities
- Discussions progressed with South African Government regarding Acid Mine
Drainage ("AMD") and the rising water table in the Central Rand Basin.
- Order placed for submersible pumps (delivery expected in August 2011).
Post year-end:
- On 7 February 2011, announced an urgent need for South African Government
commitment to the AMD project.
- On 24 February 2011, South African Government issued its report on AMD.
- On 29 March 2011, announced suspension of underground mining.
CHAIRMAN`S REPORT
In late 2007, CRG raised GBP75 million in support of the concept of reopening
the gold mines of the Central Rand Basin and accessing gold reefs left behind
by the "old-timers". The key factors supporting the implementation of this
concept were:
- the threefold rise in the real gold price since closure of the original
mines;
- painstaking and visionary evaluation of the resource by the Viljoen
brothers;
- the liberalisation of mineral rights legislation with new "use it or lose
it" conditions;
- the Australian-led entrepreneurial initiative of CRG`s originators, RQS; and
- receptive capital market at that time.
Since then, the share price history of your Company has made for sorry reading
and now, as I write, it has been further impacted by the decision announced on
29 March 2011 to suspend underground mining operations.
Central Rand Gold vs FTSE 350 Mining index
(For the release with pictures and schematics, please refer to the Company`s
website: www.centralrandgold.com)
I am very aware of the pain that our shareholders have endured. The Company
and its officers have come in for some criticism in terms of the gap between
historical expectations and performance, so in reflecting on the current
position, I will consider the extent to which we have overpromised or under
delivered.
Much of this is history, but the issues of the moment which threaten our very
existence are:
- Acid Mine Drainage ("AMD") in the Central Rand Basin and the rising water
table;
- the higher than expected occurrence of "double-voids", i.e. stopes where not
only has the original Main Reef Leader been extracted but also the Main Reef,
contrary to the historical mining plans; and
- disappointingly high dilution in the reef currently being mined on the upper
levels.
Acid mine drainage
The rising tide of contaminated underground water from 120 years of mining
activity in the three geological compartments of the Witwatersrand, and the
spillage to surface that is already occurring on the far East and far West
Rand, is a well document phenomenon.
The Central Rand Basin (in which CRG is located) has, until recently, been
dewatered almost on a "last-man-standing" basis, by the South West Vertical
shaft of East Rand Proprietary Mines ("ERPM"). CRG`s founding premise was that
this would continue under the sponsorship of a coalition of interested and
affected parties, sharing capital and operating expenses into the future.
The parties were:
- Current and new mining companies - interested in the maintaining of the
water at a certain level below surface;
- A commercial operator of a water processing plant; and
- The South African Government - interested in the prevention of pollution.
In view of the lack of clarity and commitment to future funding - essentially
by the South African Government - ERPM declined to soldier on alone, closed
and allowed its South West Vertical operations to flood in 2009.
The urgency of the moment is that, despite strong words of encouragement by
the South African Government over time, by the end of 2010 there was no formal
commitment to participate in the re engineered solution proposed by the
industrial parties.
The crisis for CRG is that while other parties are mainly interested in
maintaining water levels below environmentally prudent levels, there is still
some time before these are reached. CRG`s current and future workings are
below that level and are already threatened.
There is much to be done to close the gap between the general commitments of
the South African Government and the Company`s specific needs. Whilst there is
no doubt that this will all be resolved, everything depends on the timing,
which is disappointingly uncertain. In the face of these uncertainties
concerning depth, the normal response of a mining Company would be to maximise
development and mining in the upper levels.
Mine development
In developing ahead of future stopes on the upper levels, some 30% of those
accessed have revealed unexpected "double-voids", ie not only has the original
Main Reef Leader been extracted but also the Main Reef, contrary to the
historical mining plans. Mine planning, based on the trial-mining programme of
early 2009, included only for the loss, for value and "void" reasons, of some
10% of the ore.
The frequency with which the double voids have been encountered have the
effect of slowing down the rate of access to mineable stopes, increasing the
cost of development per tonne of accessible ore, and most significantly,
dramatically reducing immediate revenues. This has unsustainable consequences
for the Company`s cash reserves.
Development on lower levels suggest that the double-void phenomenon decreases
with depth, leading to the interpretation that these voids are a result of
unmapped remnant mining on retreat by the previous mining operations.
In the face of these double voids at shallow levels, standard mining practice
would be to go deeper. However, as a result of the rising water table this is
not an option available to the Company in the interim.
Gold production
The first two footwall-accessed stopes were mined in March 2011. Comparison
between expected head-grades and a "built- up" head- grade, back calculated
from in-plant and tails sampling, indicated a Mine Call Factor of
approximately 65%, compared to budgeted values of around 75%. Since the Main
Reef is breaking cleanly on the footwall, the only conclusion is that a
considerable proportion of vintage hanging wall (over and above the planned-
for "middling") is diluting the mined ore.
A programme to refine the blasting and ore- handling techniques, including
trial testing of "split-firing" of middlings plus old hanging from reef is the
next stage.
The "empty tonnes" associated with this dilution severely impact the cost per
ounce of gold produced and the short-term cash flows while this gap between
planned and actual mine call factor is being closed.
The dilemma
Current development is sub-economic because of the double voids, deeper and
more promising development is not possible because of lack of definition on
AMD, and current stoping costs are prohibitive at present levels of dilution.
On 29 March, the Company announced the following:
- The suspension of underground capital development effective 30 April 2011,
i.e. after opening up the next stoping level which appears to have fewer
"double-voids".
- The mining out of all available stopes over the next three months. The prime
purpose of this programme is to develop and refine blasting and waste
separation techniques to establish the profitable basis for future mining.
- A study into the feasibility of selectively mining appropriate areas by
conventional hand-held in-stope drilling in order to reduce dilution and
improve grade selectivity as an additional methodology is currently underway.
- To the extent affordable, a programme of surface and underground drilling to
verify the presence of Main Reef (ie to define the "double-void" issue) in
near-term mining reserves will be undertaken.
- Except for underground exploration work, underground operations will be
placed on a "care and maintenance" basis following extraction of the
immediately available stopes.
- surface mining of currently defined South African Mineral Resources
Committee("SAMREC") and JORC Exploration Target Material (between 63,000
tonnes and 76,000 tonnes at an expected head-grade of approximately 3.2 g/t)
will continue until exhausted. This is expected to occur around September
2011.
- The commercial viability of treating all existing ore through a third-party
toll treating agreement will be reviewed.
- A financial feasibility study of processing high-grade tailings will be
completed; and
- In the interim CRG`s metallurgical operations will continue to process all
surface and underground ore. If a decision is made to toll treat, or if all
stockpiles have been depleted, the metallurgical plant will be cleaned out to
recover all in-process stock.
The Company has commenced the process of reducing its staff complement to
ensure alignment with the above business plan.
As at 30 March 2011, the Company had cash and near cash resources of US$10
million, which should meet all outstanding commitments until mid-2012.
Overpromised or underdelivered'
Perhaps, with hindsight, the Company`s plans at the time of its Initial Public
Offering ("IPO") could be seen as overly ambitious in:
- an apparently reasonable (as supported by Independent Competent Persons),
but ultimately simplistic approach to the mine plan and design;
- a presumption that Australian leadership would import Australian mining
technology and methodologies and achieve Australian efficiencies in the South
African environment with South African contractors and labour; and
- a seductively simplistic approach to the merits of underground metallurgical
processing, with hugely inefficient performance on surface by plants seriously
compromised by their geometric constraints.
Between mid-2008 and the end of 2009, as these many nettles were grasped, the
Company:
- replaced the Chief Financial Officer ("CFO"), the Company Secretary, the
heads of Geology and Metallurgy and the Chief Executive Officer ("CEO") by
promoting the new CFO to Chief Executive and recruited another CFO;
- replaced the entire Senior Mining and Mine Planning Team;
- reduced the number of Board members by two;
- reassessed production methodologies, targets and costs based upon
underground realities and actual metallurgical performance; and
- most significantly, concluded that it could not fund itself through to a
cash-positive position.
This last realisation defined the 2010 year as follows:
- In January 2010, there was a cashbox placing fund-raise of US$5.7 million
(GBP3.7 million) to provide interim funding until trial mining was completed
and mine plans of sufficient integrity to support a formal fund-raising
exercise, were completed;
- A coherent mine plan was completed and approved by independent third-party
appraisers (Snowden) in April 2010;
- The Board was restructured and further reduced in size and a new Chairman
was appointed;
- Head office staffing was dramatically reduced in order to cut costs;
- The Killarney head office was closed and all its functions and personnel
were moved to the Rand Leases (Roodepoort) technical offices, close to the
Company`s mine site;
- A prospectus was issued and US$36.8 million (GBP24.2 million) was raised in
July 2010;
- The requisite additional mining equipment, as laid out in the prospectus,
was ordered;
- Metallurgical problems were finally understood and addressed - cutting
losses on historical mistakes and embarking on substantial re- engineering and
the disposal of suboptimal equipment;
- An alternative Acid Mine Drainage System was engineered and costed (as
discussed above);
- The pumping equipment to handle these pumping arrangements was ordered; and
- A "gap analysis" on governance compliance with both the UK Combined Code and
South Africa`s new King III Code was conducted, and levels of governance
awareness and financial controls all round were raised.
Following the maxim that no battle plan survives first contact there were two
major changes in the second half of 2010 to the expectations of the
prospectus, namely:
- Finalisation of the CPR for the prospectus delayed the capital-raising
process by approximately six weeks. This squeezed the Company`s cash
resources, stopped underground production and delayed the placement of orders
for new mining equipment. The cumulative effect, particularly of the late
placement of equipment orders in an ever-tightening resources market, was
essentially a six - month delay to the recommencement of underground stoping.
A conscious decision to then apply all the Company`s resources towards
increased underground development and open-cast mining, while awaiting stoping
equipment, has meant the Company incurred 120% of the planned expenditure, but
received only 57% of the planned revenue; Primarily as a result of these two
variances, cash balances at year-end were a significant US$10.4 million lower
than tabled in the prospectus
- The Trial Mining project completed in March 2010 concluded that the
"vintage" hanging wall above the mined-out Main Reef Leader was competent and,
with due care, could be successfully undermined. Subsequent on-reef
development to open ground for future stoping has, in some areas, struggled to
cope with "self-mining" of the old hanging wall. The dangers, costs and
inefficiencies of trying to support this incompetent hanging wall, triggered a
search for alternatives.
An alternative plan to access reef from footwall drives and crosscuts, and
then to long-hole stope from the crosscut-reef intersection points, has been
developed and looks set to overcome the problems, albeit at slightly higher
unit costs. The practicality of this concept has been proven, but its
economics, particularly in terms of grade and dilution control, still have
some way to go.
In terms of whether we have overpromised or underdelivered, I conclude that
until the start of 2009 it was largely the former. Since then, for all kinds
of good reasons, we have failed to deliver on a set of concrete, testing but
not unreasonable plans.
CRG cannot deliver on the promises of its IPO wherein it aspired to be the
largest single gold mine in the world, but it does have the potential to be a
most impressive "string of pearls", with many similar operations (some bigger,
some richer) to the one we are now developing.
The Company`s very substantial gold resource base remains intact and its short
- term reserves have recently been reconfirm. Work to demonstrate economically
viable extraction has progressively eliminated certain approaches and has
highlighted the keys to success - which future planning intends to deliver. A
combination of this focus, plus much clearer direction from South African
Government on dealing with AMD pumping and treatment, together with the
consequent ability to physically access the relatively "double-void" free
deeper levels, should allow the Company to show its real value.
Given resolution and progress on the above-listed uncertainties, the Company
expects to be able to reassess its prospects by the end of October 2011. Part
of this reassessment will be the question of further funding and possible
other corporate actions.
In the interim, given the continued difficulties and uncertainties faced by
the Company the Board continues to look at all strategic options for the
Company, one of which could lead to an offer for the entire issued share
capital of the Company. However, this option is at an early stage and there
can be no certainty that an offer for the Company will be forthcoming.
The Directors have resolved to reduce the Board to the minimum size stipulated
in the Articles, and the remaining two Non-Executive Directors have
volunteered a 20% reduction in their fees.
I will not dwell in this report on the ongoing and unfortunate dispute with
CRGSA`s broad-based black economic empowerment partner - Puno. This dispute is
a distraction and a cost, but it is not Company- threatening. It was
comprehensively covered in the 2010 prospectus and the current status is dealt
with in the body of this report.
I extend my thanks to my fellow directors and the Executive Team, who have
laboured mightily this year.
Michael McMahon
Chairman
CHIEF EXECUTIVE OFFICER`S REPORT
Introduction
The past year has been significant for Central Rand Gold. CRG`s initial focus
in 2010 was to complete trial mining and metallurgical testing with the
following specific objectives:
- To process ore parcels from underground and surface activities as bulk
samples to test gold grades and recoveries.
- To allow the conversion of Mineral Resources into Ore Reserves after
confirming mining and metallurgical processes.
- To physically test mining and backfilling techniques.
These objectives were all achieved in March 2010. On the completion of the
Competent Person`s Report, the Company engaged in a fund-raising exercise and
received US$36.8 million in July 2010. The Company continued underground
development with the aim of commencing underground production during the
latter part of 2010, which was delayed until 2011 due to lack of equipment
availability.
However, as is evident from the Chairman`s Report above 2010 and 2011 have had
their challenges. While by no means glossing over or ignoring these, in order
to avoid repetition, I have mainly concentrated in my report on activities in
2010. My reporting of progress and achievements in early to mid 2010 clearly
need to be seen in the context of the issues around AMD, the double-voids
discovered, our announcement made on 29 March 2011 and our funding position
(Explained in detail in note 1.1 to the financial statements). Together with
my fellow directors, I am working hard to find resolution to the serious we
face.
Exploration and geological update
Resources and reserves
The completion of the trial mining exercise in March by Snowden Mining
Industry Consultants allowed for the upgrade of the existing JORC/SAMREC
Reserve statement to 0.48 million ounces.
Probable Reserves Indicated Inferred Resources
Resources
Tonna Grade Metal Tonna Grade Metal Tonna Grade Metal
ge (g/t) (Moz) ge (g/t) (Moz) ge (g/t) (Moz)
(Mt) (Mt) (Mt)
CMR 3.70 4.00 0.48 10.70 5.42 1.86 1.70 9.13 0.51
MR
and
MRL
<900
m
Crown 5.80 5.95 1.11 3.10 8.05 0.81
MR
and
MRL
<900
m
V&R 1.80 6.70 0.39 0.20 15.55 0.10
MR
and
MRL
<900
m
City 2.90 6.81 0.63 2.50 6.76 0.54
MR
and
MRL
<900
m
Simme 1.50 8.80 0.43 0.20 8.20 0.04
r and
Jack
MRL
<900
m
Kimbe 3.70 3.75 0.44 4.3 3.70 0.51
rley
Reef
(CMR)
<900
m
White 2.60 3.69 0.31 0.60 3.71 0.07
Reef
(CMR)
<900
m
MR 58.50 9.68 18.22 45.60 7.36 10.81
and
MRL
>900
m and
other
sourc
es
Total 3.70 4.00 0.48 87.50 8.31 23.39 58.20 7.15 13.39
Note: Resources are quoted inclusive of reserves.
During the latter part of 2010 it became apparent that areas of undocumented
reef extraction exist in the immediate mining area. It is believed that these
uncharted voids are limited to shallow areas of the mine close to the vicinity
of historical shafts and mining progresses deeper beyond 250 metres below
surface their frequency will diminish.
The close monitoring of unexpected underground voids continues with the
establishment of footwall access drawpoints. As this area of uncharted mining
voids represents a very small portion of the total project area, it is not
considered necessary at the point to adjust the Resource statement.
Surface
Surface exploration target
Exploration through systematic mechanical trenching and geological mapping and
sampling continued throughout 2010, resulting in the identification and
delineation of several significant open pit "Exploration Target" areas within
the New Order Mining Right. The table below details the Exploration Target
Inventory as of December 2010.
Mining area Reef Exploration material target
Central Pit Main Reef 3.1 g/t - 3.9 g/t 6,000 t - 15,000 t
New Unified Pit Main Reef 1.8 g/t - 5.2 g/t 11,000 t - 19,000 t
New Unified West Main Reef 4.6 g/t - 6.1 g/t 10,000 t - 47,000 t
Pit
Slot 5 Block A White Reef 2.9 g/t - 3.1 g/t 27,000 t - 48,000 t
Slot 5 Blocks B, White Reef 1.5 g/t - 1.9 g/t 17,000 t - 33,000 t
C, D
Slot 7 White Reef 2.1 g/t - 3.2 g/t 87,000 t - 200,000 t
Note: The potential quantity and grade described by the term "Exploration
Target" is conceptual in nature and there has been insufficient exploration to
define a Mineral Resource. It is uncertain if further exploration will result
in the definition of a Resource. Further exploration work is ongoing and
includes trial mining and processing of this shallow target to establish grade
and orebody continuity, mineability, dilution and throughput characteristics.
Further exploration during 2011 will focus on improving confidence in
exploration target material and identifying additional surface mining
potential to supplement underground production.
Underground grade verification and grade control
The correlation between underground Reef Drive sampling and the JORC/SAMREC
resource model continues to be very strong.
The table below portrays the expected grades in the reef drives excavated so
far (Theoretical Resource) and compares them to the actual grades measured
through drive sampling. It can be seen that while there is some degree of
variation between the expected grades and the actual sampled grades, this
variation is generally on the upside and overall a small positive increase in
grade from 5.13 g/t to 5.27 g/t is observed.
Underground
Theoretical resource
On-reef Resource In CO Payable Average Average
developmen block situ g/t % width g/t
t g/t
1596 CMR 46 3.04 3.00 46 151 4.67
1583 CMR 46 3.04 3.00 46 151 4.67
1581 CMR 33 3.55 3.00 50 112 5.29
1580 CMR 33 3.55 3.00 50 112 5.29
1575 CMR 33 3.55 3.00 50 112 5.29
1563 CMR 33 3.55 3.00 50 112 5.29
1551 CMR 33 3.55 3.00 50 112 5.29
1534 CMR 32 3.45 3.00 47 110 5.32
Average 3.42 3.00 49 120 5.13
Contained 410 616
Au
Equivalent 3.42 5.13
g/t
Reef drive sampling
On-reef Resourc In situ CO Payable Average Average
developmen e block g/t g/t % width g/t
t
1596 CMR 46 3.81 3.00 35 100 9.18
1583 CMR 46 2.96 3.00 50 100 3.85
1581 CMR 33 8.80 3.00 80 100 10.58
1580 CMR 33 0.83 3.00 - 100 0.83
1575 CMR 33 3.14 3.00 35 103 6.07
1563 CMR 33 4.37 3.00 72 111 5.36
1551 CMR 33 4.04 3.00 56 104 5.83
1534 CMR 32 5.80 3.00 100 123 5.80
Average 3.88 3.00 45 103 6.12
Contained 401 633
Au
Equivalent 3.34 5.27
g/t
In areas of poor ground conditions where the adoption of an alternative reef
access method (footwall drive) is indicated, it is noted that the ability to
selectively mine to a cut-off may be somewhat compromised. With this in mind,
test work to evaluate the use of underground diamond drilling as a potential
replacement for reef drive sampling was undertaken during the second half of
2010.
To this end, a 20-metre-long stretch of previously sampled reef development
was drill targeted from the footwall tunnels immediately below the sampled
reef at a depth of approximately 110m below surface. Previous face sampling of
the 1581 reef development returned an average grade of 16 g/t over 55cm over
the length of the reef development. The drill evaluation returned a very
similar grade of 13.74 g/t over 48cm. Details are tabulated below:
BH number Corr width (cm) Grade (g/t) Content (cmg/t)
PH01 38 16.38 622
PH02B 48 10.02 481
PH03 54 16.38 885
PH04B 48 10.65 511
PH05 59 13.80 814
PH06 50 9.94 497
PH07 54 10.58 571
PH08 66 11.50 759
PH11 38 13.58 516
PH12 32 23.24 744
PH13 44 20.30 893
Average 48 13.74
Additional studies and financial models have further been undertaken to gauge
the impact of mining using limited grade control with face sampling occurring
at draw points only.
Expansion projects
There was considerable focus during the latter half of 2010 on the development
and optimisation of the significant JORC/SAMREC resource base available to the
Company.
Independent scoping studies into the feasibility of developing CMR East have
been completed and suggest that CMR East is economically viable at a scoping
level. Further work is now anticipated to increase this confidence to a
prefeasibility / feasibility level, which will allow for a full capitalisation
decision to be made.
CRG has also commenced initial planning and scheduling studies to investigate
the economics of the City Deep and Village mining propositions.
A comprehensive tender process for the planned resource drilling at the new
Crown Mines site has been completed and a detailed programme of diamond
drilling has been designed to upgrade a substantial block of Main Reef in the
Crown Mines West target area from Inferred Resources to Indicated Resources.
(The information in this statement relating to Mineral Resources and geology
has been reviewed and approved by Mr Keith Matier, BSc (Hons), GDE, Pr Sci
Nat, who is a Competent Person in terms of the SAMREC and JORC codes. Mr
Matier is the Geology Manager of Central Rand Gold South Africa (Pty) Limited
and has over 17 years` experience in exploration, mineral resource management
and mineral evaluation.)
Completion of trial mining
Trial mining, which began in September 2009 and was completed in April 2010,
effectively and meaningfully demonstrated at that time , that the Main Reef
can be safely and efficiently mined, although the issues faced since then have
surpassed this view
The successful trial mining process has also provided confidence that the
reserve modifying factors are reasonable.
Operational update
Underground mining
Following the success of trial mining, underground mining operations commenced
in May 2010.
With effect from August 2010, underground mining efforts were focused on
footwall development due to reef access development being changed from reef
development to footwall development, as a result of poor ground conditions
experienced when developing on-reef.
Mine development
Monthly development progressed at an improved rate with 434.5 metres being
achieved in December, compared to 407.5 metres in November and 371.6 metres in
October.
In developing ahead of the next planned stopes, between 120 metres below
surface to 180 metres below surface, some 30% of the stopes accessed in the
current mining area have been found to have unexpected "double-voids". As the
Chairman has explained in his report, this is an unexpected problem for which
a workable and sustainable solution needs to be found as soon as possible.
In the face of these "voids" at shallow levels standard mining practice would
be to go deeper, however, as a result of the rising water table, this is not
an option available to the Company in the interim.
The long-hole drilling rig (required for stoping) was delivered in December
2010 and immediately commissioned, enabling stoping operations to commence in
January 2011.
The December delivery of the long-hole drilling rig had short-term production
implications in that the production forecast contained in the prospectus,
published by the Company on 2 June 2010, anticipated significantly higher
grade ore to be available by the end of 2010. However, the delay in the supply
of underground ore has been partially mitigated by the extension of surface
exploration and surface mining to supplement gold production.
The following table shows key underground mining statistics for 2010,
comparing actual statistics and those included in the June Prospectus (some
surface mining statistics are also included in the table):
2010 Actual Prospectus
Tonnes Grade (g/t) Tonnes Grade (g/t)
(t)/metres (t)/metres
(m) (m)
Decline 858 1,358
sinking (m)
Waste 1,266 678
development
(m)
Footwall 859 -
development
(m)
Reef 355 3,815
development
(m)
Total (m) 3,338 5,851
Trial stoping 6,073 2.60 23,752 3.80
(t)
Reef 33,875 1.63 77,202 1.70
development
(t)
Surface 155,452 3.19 38,000 4.30
mining (t)
Total (t) 195,400 2.67 138,954 2.77
Surface mining
All safety and production targets for surface mining in 2010 were achieved
with no injuries to personnel occurring during the year.
During 2010, 155,452 tonnes of surface ore was mined from the following pits:
- Central Pit - 51,147 reef tonnes at a (trammed) grade of 3.25 grams/tonne.
- New Unified Pit - 69,690 reef tonnes at a grade of 2.67 grams/tonne.
- New Unified Extension Pit - 18,366 reef tonnes at a grade of 4.88
grams/tonne.
- Main Pit - 16,249 reef tonnes at a grade of 5.80 grams/tonne.
(The grades presented are diluted, trammed to stockpile grades.)
Metallurgical update
After listing in 2007, CRG commenced with the concept of metallurgical
concentrators being placed underground in the mining vicinity to produce a
concentrate that could be transported to surface for gold extraction, thereby
eliminating significant haulage and surface operations. These concentrators
and a small Carbon-in-Leach ("CIL") plant required to treat low-volume high-
grade concentrate, were procured in 2008 and 2009. Trial mining highlighted
the that this concept was sub-economic at shallow depths and the plant was
commissioned on surface at the Consolidated Main Reef ("CMR") portal. This
shift from a low-volume high-grade operation to a high-volume medium/low-grade
operation during the trial mining and resource to reserve conversion process,
necessitated improved metallurgical recovery to be economically viable.
Following the principle of utilising the existing plant already capitalised,
optimisation initiatives were commenced to increase direct whole ore leach
capacity and also to improve overall recovery. During early 2010, the
metallurgical plant was reconfigured to ensure a steady feed into the plant,
increase gravity gold recovery and convert the CIL into a Carbon-in-Pulp
("CIP") plant with increased direct leaching capacity. These changes were
successfully completed in March, after which production capacity increased to
23 kilotonnes per month with associated gold production of around 1,200 ounces
per month.
To date, crushing capacity and availability have been limiting factors to
plant throughput. An independent design review has assessed that this would be
addressed by the incorporation of two appropriately sized cone crushers to
replace the original Horizontal Shaft Impactor ("HSI") and Vertical Shaft
Impactor ("VSI") units and increase the crushing circuit capacity to the
required 45 kilotonnes per month. Increased milling capacity will also be
needed to achieve the 45 kilotonnes capacity on the harder underground
sulphide ore and would most likely incorporate a further shift towards whole
ore leach processing, with added recovery benefits. Optimal design and costing
options for additional milling capacity are being evaluated as this
expenditure is only budgeted in 2012. The implementation of the comminution
upgrade will be evaluated following clarity on the rising water issue. The
intention would be to increase crushing capacity to 45 kilotonnes per month
and further streamline our process, eliminating intermediary stockpiles with
associated material handling costs and gold losses. The CIP will also require
changes, particularly to the elution circuit, to accommodate the increased
gold production.
The supplementation of surface oxide ore into the plant to mitigate the
delayed underground production also needed to be accommodated in terms of
material handling, and particularly processing, due to varying chemical
compositions affecting acidity and organic material which "robbed" the gold
prior to leaching. Surface oxide ore remains a significant portion of the
intended plant feed in 2011. Recovery (R+R - recovered and residue) averaged
75% for 2010 on predominantly oxide material.
2010 was extremely beneficial in terms of establishing rhythm in the plant
with associated metal accounting, feedback and reporting, so that future
increased capacity can be fully utilised.
Our current focus on site is to commission the Optical Ore Sorter, which is
key to addressing dilution and economically remove waste prior to processing,
with the added benefit of being able to sell the waste as washed and screened
aggregate.
Gold production of 9,321 ounces was achieved in 2010. This is within the range
projected in September 2010 following the fund-raising.
Despite the positive trend in recovery rates and plant availability, the mined
surface oxide grades reporting to the plant from the newly opened surface
slots were within the lower end of the expected range.
The proportion of underground sulphides being processed versus surface oxides,
was around 15/85 in 2010. Confirmation of grade, dilution and possible old
workings contaminants, will also be evaluated in assessing gold output.
Safety
Throughout 2010, CRG continued to place major emphasis on safety in the
workplace, resulting in the Company yet again being able to ensure that no
fatalities took place at our operations.
Under the leadership of Australian Contract Mining, the underground workforce
maintained its focus on meeting and achieving world-class safety standards and
outcomes. There is no room for complacency and safety will continue to receive
priority attention from management and staff.
The following table shows overall safety statistics for 2010 (a more
comprehensive safety overview is contained in the Sustainable development
section of this report):
Type of injury 2010 2009
Dressing cases 20 9
Lost-time injuries 5 5
Incidents 97 41
Water
Background
Since 2008, when the East Rand Proprietary Mines (part of the DRD Gold Limited
Group) ceased pumping water from its SWV shaft due to a double fatality, the
water table in the Central Basin area continued to rise at an average rate of
0.54 metres per day and as at the end of December 2010, the water table was
just over 500 metres below surface at the SWV shaft.
CRG, along with other affected industry stakeholders, has since early 2009
been engaged in discussions with the South African Government in an attempt to
resolve this problem.
On 24 February 2011, the Department of Water Affairs of the South African
Government published its report on AMD to the Inter-Ministerial Committee. Our
team has attended two meetings with the South African Government in pursuit of
further clarity. The Company has now evaluated its prospects in terms of the
AMD risks as they now stand and its short-term production situation and
concludes as follows:
Whilst the publication by the South African Government of the AMD report has
been very welcome in that it crosses the first hurdle of a commitment towards
resolution of this major environmental issue, there remains insufficient
clarity on key issues such as targeted minimum water levels, project
engineering and technology, the role and responsibilities of the interested
parties, cost allocation between interested and affected parties and timing to
meet the degree of definition needed by the Company to continue development
and mining at the present rate.
The submersible pumps, ordered and paid for by the Company at a cost of
Euro3.5 million, and due for delivery in August 2011, have a capacity to pump
72 million litres of water per day compared to the average daily ingress of 55
million litres. Should it be decided to utilise these pumps and the
engineering already completed for the ERPM South West Vertical shaft
dewatering station, these pumps have the capability to dewater the Central
Rand Basin and restore CRG`s reserves. In the event that these pumps are not
utilised for this purpose, the Company will sell them.
The need to have this (or some alternative equivalent) capacity installed by
December 2011 in order to protect the 250 metres below surface level and
enable gradual dewatering thereafter, and the timelines inherent in the
Western Utility Corporation`s technical proposals informed the previously
published need for definition by the end of March 2011.
Based on studies completed by Western Utilities Corporation, an engineering
plan was developed to stop and partially treat AMD in the Central Basin by the
establishment of a submersible pump station that would be constructed at the
South West Vertical ("SWV") shaft. Based on the above engineering study, the
capital cost was estimated to be R178 million at 400 metres below surface,
which included R91 million for the pump station and R87 million for the
refurbishment of the High Density Sludge ("HDS") plant. This proposal was
presented to the South African Government in 2009 and 2010 for consideration.
Due to receiving strong indications of support from the South African
Government with regard to providing support and funding for the rising AMD
problem, CRG unilaterally ordered the longest lead item, ie the submersible
pumps, in August of last year at a cost of US$4 million. This was done to
ensure that once agreement was reached with the South African Government, the
solution could be implemented without any delays, ultimately protecting as
much of the resource base as possible.
Current situation
In late 2010, the South African Government established an Inter-Ministerial
Commission tasked with the responsibility of identifying how the AMD problem
could be resolved in the Witwatersrand area. The task team issued its report
in February 2011 and focused on three key strategies in dealing with AMD,
namely:
- Decant prevention and management.
- Reduction in ingress of water into the various basins (Central, Eastern,
Western).
- Water quality management in each of the basins, treated separately through
their own water treatment plants.
An amount of R225 million was set aside in the 2011/12 South African
Government budget to solve this problem.
It is encouraging to note that the above proposal was at concept level aligned
with the proposal presented by the mining industry. The report was, however,
silent on the location and final design for the pump station. CRG therefore
remains concerned about the time it will take to implement the above project
and has held two meetings with the Department of Water Affairs ("DWA") to
stress the importance of speedy action. The matters that still require
clarification from the DWA include:
- targeted minimum water levels;
- project engineering and technology;
- the role and responsibilities of the interested parties;
- cost allocation between interested and affected parties; and
- timing to meet the degree of definition needed by the Company to continue
development and mining at the current rate.
Broad-based black economic empowerment ("BBBEE")
Significant activity took place during 2010 regarding the Company`s black
economic empowerment ("BEE") shareholding. Events that took place over this
last year can be summarised in the table below:
Date Event
1 April 2010 The Court rejected Puno`s application
for leave to appeal the decision handed
down by the South African High Court on
5 November 2009.
August 2010 Subsequent to Puno, as claimant, failing
to commence arbitration proceedings,
CRG, as respondent, attempted to
commence arbitration proceedings and
requested that AFSA appoints an
arbitrator in the absence of agreement
between the parties on an arbitrator.
September 2010 AFSA advised CRG that it would indeed
appoint an arbitrator, and Judge Lewis
Goldblatt was subsequently appointed.
October 2010 Judge Goldblatt found that the matter
could not proceed to arbitration as the
matter was not brought before him by the
claimant ("Puno").
Current - Puno has indicated its intention to
challenge the constitutionality of the
CRGSA Shareholders` Agreement despite
having based various court applications
thereon.
- Various alternatives are being
investigated, amongst them being:
(i) methods in which CRG itself can
commence arbitration proceedings; and
(ii) various other non-arbitration-based
methods to conclude the dispute between
the CRGSA shareholders.
Financial update
Capital raising
On 22 January 2010, the Company successfully placed a total of 24,691,964 new
ordinary shares of GBP0.01 each in the capital of the Company (the "Placing
Shares") at a price of GBP0.15 per share to raise net proceeds of US$5.7
million (GBP3.7 million) (the "Placing"). The Placing was supported by the
Directors, senior management and certain existing substantial shareholders.
23,781,964 Placing Shares were placed using a cashbox structure with investors
and 910,000 Placing Shares were placed with Directors and senior management of
the Company.
After completing this US$5.7 million cashbox placing on 22 January 2010 to
enable trial mining to be completed, CRG placed a total of 1,328,071,380 new
ordinary shares ("Firm Placing" of 649,042,355 new shares and "Placing and
Open Offer" of 679,029,025 new shares) of GBP0.01 each in the capital of the
Company at a price of GBP0.02, to successfully raise net proceeds of US$36.8
million (GBP24.2 million) on 5 July 2010, which was fully underwritten by
Evolution Securities.
Cash position
Cash held by the Company as at end December 2010 totalled US$14.6 million.
This compares with the estimated closing cash in the prospectus of US$25.1
million to support the Placing and Open Offer. The lower than expected cash
position is attributed to:
- production of 9,321 ounces against a target of 19,308 ounces in the year
ended 31 December 2010, due to delayed underground stoping caused by longer
equipment lead times and adverse ground conditions;
- higher mine development costs due to poor ground conditions and unexpected
"double voids" necessitating the implementation of an alternative mining
method requiring increased materials and services for safe mining;
- higher plant processing expenditure for repairs and upgrades to improve
capacity, availability and recovery rates;
- the funding of mining equipment whilst the Company investigates alternate
debt financing options. The prospectus assumed a level of debt financing; and
- delay in receiving value-added tax refunds of US$2.5 million.
Set out below is an abridged cash flow statement:
2010 Prospectus
US$`000 2010 US$`000
Cash and cash equivalents at the beginning of the 15,899 15,899
year
Cash used in operations (20,423) (17,011)
Interest received 513 2,817
Finance costs (16) -
Mine property, plant and equipment (20,124) (17,391)
Security deposits (4,251) -
Repayment of borrowings (33) -
Proceeds from issue of share capital 42,552 40,751
Effects of exchange rate movement on cash balances 507 -
Cash and cash equivalents at the end of the year 14,624 25,065
Note 1 - Includes water pump security deposit of US$3.5million as analysed in
note 9 of the financial statements.
Impairment
The uncertainty on the rising water table solution implementation plan and the
initial unexpected "double voids" encountered underground which existed at the
year-end which ultimately triggered the suspension of further underground
development had an adverse impact on projected cash flows. In the light of
this, management performed a review of asset values and where relevant
obtained advise of an independent expert valuer, Reinertsen Valuation
Services, a division of Marsh (Pty) Ltd. On the basis of this review it was
considered appropriate and prudent to recognise an impairment loss of
US$44.45million as set out below (Refer to Note 21 of financial statements):
Asset US$`000 US$`000
1. Mine under construction, PPE 37,214
and mining rights
This represents costs capitalised
since 1 September 2009.
2. Non-current assets held for 5,559
sale
- Fair value adjustment on Gekko
50 tonne per hour concentrating
plant
- Fair value adjustment on Gekko 997
20 tonne per hour concentrating
plant reclassified to property plant
and equipment
3. Other assets 137
This represents leasehold
improvements , vehicles ,furniture
and computer equipment written down
to estimated fair value.
4. Deposits 548
This represents provision for
cancellation penalties on deposits
paid.
Total 44,455
Further details on the impairment of property, plant and equipment can be
found in note 3 of the annual financial statements.
Results
Loss for the year is reported at US$72.1 million (4.51 US$ cents per share)
against prior year of US$46.3 million (18.77 US$ cents per share). This
increased loss is mainly attributed to:
- Higher mining costs due to poor ground conditions and unexpected "double
voids" resulting in increased material and services consumption per metre
advanced;
- Higher process plant costs due to repairs and reconfiguration to improve
capacity, efficiency, availability and recoveries;
- Impairment of capitalised mine development costs and asset write down to
fair value; and
- Mitigated by higher gold production sourced mainly from nearby open pits,
which also compensated for loss of underground production due to longer than
expected lead time for the long hole drill rig.
Going Concern
The Directors have prepared the financial statements on the going concern
basis having considered the current operations, the current funding position
and the projected funding requirements of the business for at least 12 months
from the date of approval of the financial statements.
The continued uncertainty around the resolution of the rising water table and
the continued difficulty in finding a viable mining method, together with the
need for additional fund raising if the water table and viable mining method
issues are satisfactorily resolved, are material uncertainties that may cast
significant doubt on the Group`s and Company`s ability to continue as a going
concern and they may therefore be unable to realise their assets and discharge
their liabilities in the normal course of business.
Nevertheless, after taking account of the Group`s funding position and its
cash flow projections which show that available cash will not run out until
July 2012, and having considered the following:
- the risks and uncertainties associated with these projections;
- the current trading position which has not provided the Directors with any
evidence that their assumptions are not achievable; and ,
- the strategic options available to the Directors,
The Directors have a realistic expectation that the Group and Company have
adequate resources to continue in operational existence for at least 12 months
from the date of approval of these financial statements. For these reasons,
they continue to prepare the financial statements on a going concern basis.
These financial statements do not include any adjustments that would result
from the going concern basis of preparation being inappropriate. Further
consideration of the basis of preparation is set out in note 2.
Prospects
The Company`s future prospects will be impacted by how it resolves the
following three major challenges:
1. Stopping the rising water table within the Central Basin remains a top
priority. The Company remains confident that the water table will be stopped,
but it remains unclear at what level it will be stopped and managed on an
ongoing basis. A programme of lowering the water level of the Central Basin
will commence once the pump station is operational. However, short-term
production could be impacted whilst the resource base is being "dewatered".
2.The Company needs to have a better understanding of and an improved ability
to predict the occurrence of double-voids within its direct mining area. To
the extent that it is affordable, a programme of surface and underground
drilling to verify the presence of Main Reef (ie to define the "double-void"
issue) in near-term mining reserves will be undertaken.
3.The major focus of mining during the first half of 2011 will be the further
investigation of viable methods to reduce dilution in the currently available
stopes.
Given resolution and progress on the above-listed uncertainties, the Company
expects to be able to reassess its prospects by the end of October 2011. Part
of this reassessment will be the question of further funding and the
possibility of other corporate actions taking place.
Thanks
On behalf of Central Rand Gold`s Executive Team, I would like to thank all
management and staff for their tireless efforts over the past year and during
the first quarter of 2011. Whatever we do is a team effort, but this also
requires exceptional effort and commitment from individuals. My thanks to all
of our shareholders, suppliers, other stakeholders and the members of the
communities in which we operate.
Johan du Toit
Chief Executive Officer
Statements of Financial Performance for the year ended 31 December 2010
Group Company
2010 2009 2010 2009
No US$`000 US$`000 US$`000 US$`000
te
s
Other income and gains 11,681 1,666 - -
Employee benefits expense (10,875) (9,688) (8) (61)
Directors` emoluments 12 (1,237) (1,676) (631) (874)
Depreciation and amortisation (2,524) (2,479) - -
Inventory write-down (263) (1,947) - -
Impairment of assets (44,455) (4,476) (300,46 -
7)
Operating lease expense (1,045) (833) - (47)
Surface mining costs (17,099) - - -
Operational expenses (718) - (405) -
Exploration expenditure - (30,884) - (393)
Other expenses (6,578) (5,956) (836) (1,582)
Operating loss (73,113) (56,273) (302,34 (2,957)
7)
Interest receivable 1,512 3,996 29,078 23,029
Finance costs (1,015) (1,108) - -
Foreign exchange transaction 1,384 7,596 37,373 32,177
gains
(Loss)/Profit before income (71,232) (45,789) (235,89 52,249
tax 6)
Income tax expense (840) (546) - -
(Loss)/Profit for the year (72,072) (46,335) (235,89 52,249
6)
Loss is attributable to:
Non-controlling interest - -
Equity holders of the parent (72,072)
(46,335)
(72,072)
(46,335)
Loss per share for loss
attributable to the equity
holders during the year
(expressed in US cents per
share)
Basic loss per share (4.51) (18.77)
Diluted loss per share (4.51) (18.77)
Statements of Comprehensive Income for the year ended 31 December 2010
Group Company
2010 2009 2010 2009
US$`000 US$`000 US$`000 US$`000
(Loss)/ Profit for the year (72,072) (46,335) (235,896)
52,249
Profit/(Loss) for the year (72,072) (46,335) (235,896)
52,249
Profit/(Loss) for the year (72,072) (46,335) (235,896)
52,249
Income tax relating to components - - - -
of other comprehensive income
Other comprehensive income/ (Loss) 1,445 14,500 (6,623)
for the period, net of tax (34,447) 16,799
Total comprehensive (Loss)/ income (70,627) (31,835) (242,159)
for the period 69,048
Total comprehensive (Loss)/ income
is attributable to:
Non-controlling interest - - - -
Equity holders of the parent (70,627) (31,835) (242,159)
(31,835) 69,048
(70,627) (31,835) (242,159)
(31,835) 69,048
Statements of Financial Position as at 31 December 2010
Group Company
2010 2009 2010 2009
Note US$`000 US$`000 US$`000 US$`000
s
NON-CURRENT ASSETS
Property, plant and 6 10,022 34,298 - -
equipment
Intangible assets 8 - 1,316 - -
Investment in - - 9,809 9,776
subsidiaries
Security deposits and 6,498 5,806 226 203
guarantees
Loans receivable 9 9,830 7,818 9,830
209,936
26,350 49,238 19,865
219,915
CURRENT ASSETS
Security deposits and 4,069 510 62 382
guarantees
Prepayments and other 6,626 5,272 220 164
receivables
Inventories 10 207 1,574 - -
Cash and cash 14,624 15,899 9,906 8,847
equivalents
Non-current assets held 7 4,074 2,750 - -
for sale
29,600 26,005 10,188 9,393
TOTAL ASSETS 55,950 75,243 30,053
229,308
EQUITY
Attributable to equity
holders of the parent
Share capital 11 25,604 5,023 25,604 5,023
Share premium 11 213,377 191,406 213,377
191,406
Share-based compensation 27,925 27,482 27,925
reserve 27,482
Treasury shares (6) (2) - -
Foreign currency (26,955) (28,400) (55,667)
translation reserve (49,404
)
Accumulated (210,897) (138,825) (181,256)
(losses)/profit 54,640
29,048 56,684 29,983
229,147
Non-controlling interest - - - -
TOTAL EQUITY 29,048 56,684 29,983
229,147
NON-CURRENT LIABILITIES
Environmental 6,474 1,434 - -
rehabilitation and other
provisions
Loan payable 9,830 7,818 - -
Operating lease 4 26 - -
liability
Borrowings - 12 - -
16,308 9,290 - -
CURRENT LIABILITIES
Trade and other payables 8,884 7,620 70 161
Environmental - 701 - -
rehabilitation and other
provisions
Taxation payable 1,704 895 - -
Operating lease - 26 - -
liability
Borrowings 6 27 - -
10,594 9,269 70 161
TOTAL LIABILITIES 26,902 18,559 70 161
TOTAL EQUITY AND 55,950 75,243 30,053
LIABILITIES 229,308
Attributable to equity holders of the Parent Company
Group Ordinary Share Share-Based
Share Premium Compensation
Capital Reserve
US$`000 US$`000 US$`000
Balance at 31 December 2008 5,023 191,406 26,429
Total comprehensive income for
the year
Loss for the year - - -
Other comprehensive income
Foreign currency adjustments - - -
Transactions with owners,
recorded directly in equity
Employee Share Option Scheme:
Share-based payments: Employees - - 1,053
and Directors shares and options
Balance at 31 December 2009 5,023 191,406 27,482
Total comprehensive income for
the year
Loss for the year - - -
Other comprehensive income
Foreign currency adjustments - - -
Transactions with owners,
recorded directly in equity
Issue of shares:
Capital raising 20,581 21,971 -
Employee Share Option Scheme:
Share-based payments: Employees - - 443
and Directors shares and options
Balance at 31 December 2010 25,604 213,377 27,925
Attributable to equity holders of the Parent Company
Group Treasury Foreign Accumulated
Shares Currency Losses
Translation
Reserve
US$`000 US$`000 US$`000
Balance at 31 December 2008 (4) (42,900) (92,490)
Total comprehensive income for
the year
Loss for the year - - (46,335)
Other comprehensive income
Foreign currency adjustments - 14,500 -
Transactions with owners,
recorded directly in equity
Employee Share Option Scheme:
Share-based payments: Employees 2 - -
and Directors shares and
options
Balance at 31 December 2009 (2) (28,400) (138,825)
Total comprehensive income for
the year
Loss for the year - - (72,072)
Other comprehensive income
Foreign currency adjustments - 1,445 -
Transactions with owners,
recorded directly in equity
Issue of shares:
Capital raising - - -
Employee Share Option Scheme:
Share-based payments: Employees (4) - -
and Directors shares and
options
Balance at 31 December 2010 (6) (26,955) (210,897)
Attributable to equity holders of the Parent Company
Group Total Non- Total Equity
Controlling
Interest
US$`000 US$`000 US$`000
Balance at 31 December 2008 87,464 - 87,464
Total comprehensive income for
the year
Loss for the year (46,335) - (46,335)
(46,335)
Other comprehensive income
Foreign currency adjustments 14,500 - 14,500
Transactions with owners,
recorded directly in equity
Employee Share Option Scheme:
Share-based payments: Employees 1,055 - 1,055
and Directors shares and options
Balance at 31 December 2009 56,684 - 56,684
Total comprehensive income for
the year
Loss for the year (72,072) - (72,072)
Other comprehensive income
Foreign currency adjustments 1,445 - 1,445
(34,447)
Transactions with owners,
recorded directly in equity
Issue of shares:
Capital raising 42,552 - 42,552
Employee Share Option Scheme:
Share-based payments: Employees 439 - 439
and Directors shares and options
Balance at 31 December 2010 29,048 - 29,048
Company Ordinary Share Premium Share Based
Share Capital Compensation
Reserve
US$`000 US$`000 US$`000
Balance at 31 December 2008 5,023 191,406 26,429
Total comprehensive income for
the year
Profit for the year - - -
Other comprehensive income
Foreign currency adjustments - - -
Transactions with owners,
recorded directly in equity
Employee Share Option Scheme:
Share-based payments: Employees - - 1,053
and Directors shares and
options
Balance at 31 December 2009 5,023 191,406 27,482
Total comprehensive income for
the year
Loss for the year - - -
Other comprehensive income
Foreign currency adjustments - - -
Transactions with owners,
recorded directly in equity
Issue of Shares:
Capital raising 20,581 21,971 -
Employee Share Option Scheme:
Transfer of forfeited share
options
Share-based payments: Employees - - 443
and Directors shares and
options
Balance at 31 December 2010 25,604 213,377 27,925
Company Foreign Accumulated Total Equity
Currency Losses
Translation
Reserve
US$`000 US$`000 US$`000
Balance at 31 December 2008 (66,203) 2,391 159,046
Total comprehensive income for
the year
Profit for the year - 52,249 52,249
Other comprehensive income
Foreign currency adjustments 16,799 - 16,799
Transactions with owners,
recorded directly in equity
Employee Share Option Scheme:
Share-based payments: Employees - - 1,053
and Directors shares and
options
Balance at 31 December 2009 (49,404) 54,640 229,147
Total comprehensive income for
the year
Loss for the year - (235,896) (235,896)
Other comprehensive income
Foreign currency adjustments (6,263) - (6,263)
Transactions with owners,
recorded directly in equity
Issue of Shares:
Capital raising - - 42,552
Employee Share Option Scheme:
Transfer of forfeited share
options
Share-based payments: Employees - - 443
and Directors shares and
options
Balance at 31 December 2010 (55,667) (181,256) 29,983
Statements of Cash Flow for the year ended 31 December 2010
Group Company
2010 2009 2010 2009
US$`000 US$`000 US$`000 US$`000
CASH FLOWS FROM OPERATING
ACTIVITIES
(Loss)/Profit before tax (71,232) (45,789) (235,896) 52,249
Adjusted for :
Depreciation and amortisation 2,524 2,479 - -
Bad debts written off 11 - - -
Employment benefit expenditure 443 1,053 78 280
(Share-based payments)
Loss on disposal and scrapping 24 501 - -
of property, plant and equipment
Impairment of inventory 578 1,947 - -
Impairment of assets 44,455 4,476 300,467 -
Net gain on foreign exchange (1,384) (7,596) (37,373)
(32,177)
Increase in operating lease (47) 9 - -
liability
Sundry income (36) (2) - -
Interest received (1,512) (3,996) (29,078)
(23,029)
Finance costs 1,015 1,108 - -
Changes in working capital
(Increase)/decrease in (1,354) 60 (56) (12)
prepayments and other
receivables
Decrease/(increase) in inventory 1,367 (842) - -
Increase/(decrease) in trade and 1,264 3,862 (91) (134)
other payables
Increase in provisions 3,461 13 - -
Cash flows used in operations (20,423) (42,717) (1,912) (2,823)
Interest received 513 2,899 37 2,165
Finance costs (16) (83) - -
Sundry income - 2 - -
Net cash used in operating (19,926) (39,899) (1,912) (658)
activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property, plant & - -
equipment (20,595) (26,915)
Proceeds from disposal of 471 104 - -
property, plant and equipment
Purchases of intangible assets - (1,185) - -
Increase in loans receivable - - (40,062)
(103,205)
Net cash used in investing (20,124) (40,062)
activities (27,996) (103,205)
CASH FLOWS FROM FINANCING
ACTIVITIES
Repayment of borrowings (33) (36) - -
(Increase)/decrease in security (4,251) (221) 297 (9)
deposits
Net proceeds from issue of share 42,552 - 42,552 -
capital
Net cash from/(used in) 38,268 (257) 42,849 (9)
financing activities
Net decrease in cash and cash (1,782) (68,152) (875)
equivalents (103,872)
Cash and cash equivalents at 1 15,899 69,601 8,847 66,089
January
Effects of exchange rate 507 14,450 184 46,630
fluctuations on cash balances
Cash and cash equivalents at 31 14,624 15,899 9,906 8,847
December
Basis of preparation and general information:
1. General information
These are the non statutory financial statements, extracted from the Group and
Company annual financial statements for the year ended 31 December 2010.
Central Rand Gold Limited ("CRG") is a Guernsey incorporated company and it is
also registered in South Africa as an external company. One of its
subsidiaries, Central Rand Gold (Netherland Antilles) N.V. ("CRGNV"), was
incorporated in the Netherlands Antilles. CRG`s operating subsidiary is
Central Rand Gold South Africa ("CRGSA"). CRG has a primary listing on the
London Stock Exchange ("LSE") and a secondary listing on JSE Limited ("JSE").
Legally, CRG complies with the company laws of its place of incorporation
being Guernsey and the company laws of the place of its external registration
being South Africa. One of its subsidiaries, CRGNV, is incorporated in the
Netherlands Antilles, therefore the Group is also impacted by the company laws
of the Netherlands Antilles.
The Group and Company annual financial statements for the year ended 31
December 2010 were approved for issue on 28 April 2011. The auditor has issued
their unqualified auditors` opinions on the Group and Company financial
statements for the year ended 31 December 2010.
2. Basis of preparation
The consolidated and company annual financial statements have been prepared in
accordance with International Financial Reporting Standards and
Interpretations (collectively "IFRS") issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union ("EU") in accordance
with EU laws (IA`s regulation EC 1606/2002).
The consolidated and company financial statements have been prepared according
to the historical cost basis.
The consolidated and company financial statements are presented in United
States Dollars ("US$" or "US Dollar") and rounded to the nearest thousand. The
Company`s functional currency is British Pound Sterling ("GBP") and the
functional currency of its principal subsidiary, Central Rand Gold South
Africa (Proprietary) Limited ("CRGSA"),is South African Rand ("ZAR" or
"Rand").
Going Concern
The Directors have prepared the financial statements on the going concern
basis having considered the current operations, the current funding position
and the projected funding requirements of the business for at least 12 months
from the date of approval of the financial statements.
Current operations
The Company is facing two significant challenges: the rising water table in
the Central Rand Basin and unexpected delays with the underground mine
development. On 29 March 2011 the Company announced the results of its
operational and strategic review which considered these two challenges and led
to the announcement of the suspension of underground mining operations.
Rising water table
The water table in the Central Rand Basin is rising. It is imperative that the
water table is kept 250 meters below surface for the mine to retain access to
its reserves and resources and hence be able to reach full commercial
production. The directors believe that the South African Government will
inevitably need to step in to resolve this to prevent Acid Mine Drainage
("AMD") reaching the surface. The discussions held by the Company with the
Government to date and the public commitment made by the Government to
resolving this issue give the Directors confidence that a suitable solution
will be found, although no deadline has been set.
While the South African government has now made this commitment towards
resolving the AMD issue, there remains insufficient clarity on key issues such
as preferred technology solution, timing and depth at which the water table is
to be maintained to enable the Company to continue underground development and
the costs to be borne by the company.
Delays in underground mine development
In addition, the Company has encountered difficulties in the underground mine
development. A greater than anticipated level of stopes have been found to
have "double-voids", i.e. not only has the original Main Reef Leader been
extracted but also the Main Reef. This was not indicated on the historical
mining plans. The effect of these double voids has been to increase
significantly the cost of development per ton of accessible ore and to reduce
revenue compared with the Company`s projections. Having encountered these
voids, standard mining practice would be to go deeper. However, as a result
of the rising water table referred to above, this is not an option available
to the Company.
The Company has also faced lower than anticipated Mine Call Factors due to a
considerable proportion of vintage hanging wall (over and above the planned
for "middling") diluting the mined ore. The empty tons associated with this
dilution severely impact the cost per ounce of gold produced.
As a result of these challenges, underground mine development is to be
suspended with effect from 30 April 2011. The focus for the remainder of 2011
will be to continue to investigate viable mining methods to avoid the dilution
problem while mining out ore from currently available stopes and processing
all available underground ore and surface materials. The underground
operations will then be placed on a care and maintenance basis following
extraction of ore from the immediately available stopes. The Company has
already commenced a process of reducing staff levels to reflect the lower
level of activity.
Having taken account of the challenges outlined above which provide further
evidence of impairment at 31 December 2010, the Directors have reviewed the
carrying values of the Group`s assets at 31 December 2010 and an impairment
charge of US$ 44 million has been booked in these consolidated financial
statements (and a charge of US 300 million has been booked in the Company
financial statements), further details of which are set out in note 3 and 21
to these financial statements.
As noted above, underground development has continued in the 2011 financial
year and in accordance with the Company`s accounting policy, the cost of this
development has been capitalised. However, as a result of the challenges
outlined above and the cessation of development on 30th April, these
capitalised costs will be impaired in the 2011 financial statements resulting
in a charge of at least US$4.4 million.
Current and projected funding requirements
At 31 December 2010, the Group had cash of US$ 14.6 million. At 31 March 2011
the Group had cash of US$ 5.3 million; the reduced level of cash resulting
from continued expenditure on underground mine development.
The Directors have prepared cash flow projections for the next 18 months (from
the date of these financial statements) that reflect the decision of the
Directors to place the underground operations on to a care and maintenance
basis, to continue to process the available ore from developed stopes or on
surface and to run the company with a significantly reduced cost base to
reflect these lower activity levels. These projections show that the Group has
sufficient funding for at least the next 12 months from the date of approval
of the financial statements and hence the Directors have prepared the
financial statements on a going concern basis.
However, the available cash is projected to run out in July 2012.
The risks inherent in any early-stage mining operation will continue to apply
to the Group. In particular, the cash flow projections prepared by the
Directors are critically dependent on three key assumptions: the gold grade of
the ore; the mining production; and, the metallurgical recovery and production
rate. If any one of these key assumption: the gold grade of the ore; the
mining production; and, the metallurgical recovery and production rate. If any
one of these key assumptions is not achieved, then this will result in the
need for additional funding.
Conclusion
The continued uncertainty around the resolution of the rising water table and
the continued difficulty in finding a viable mining method, together with the
need for additional fund raising if the water table and viable mining method
issues are satisfactorily resolved, are material uncertainties that may cast
significant doubt on the Group`s and Company`s ability to continue as a going
concern and they may therefore be unable to realise their assets and discharge
their liabilities in the normal course of business.
Nevertheless, after taking account of the Group`s funding position and its
cash flow projections which show that cash is available until July 2012, and
having considered the following:
- the risks and uncertainties associated with these projections;
- the current trading position which has not provided the Directors with any
evidence that their assumptions are not achievable; and ,
- the strategic options available to the Directors,
the Directors have a realistic expectation that the Group and Company have
adequate resources to continue in operational existence for at least 12 months
from the date of approval of these financial statements. For these reasons,
they continue to prepare the financial statements on a going concern basis.
These financial statements financial statements do not include any adjustments
that would be result from the going concern basis of preparation being
inappropriate.
3. Accounting policies
The accounting policies have been consistently applied to all years presented.
(a) New and amended standards adopted by the Group
The Group has adopted the following new and amended IFRSs as of 1 January
2010:
IAS 7 (amendment): Statement of Cash Flows
The amendment clarifies that only expenditures that result in the recognition
of an asset can be classified as a cash flow from investing activities.
IFRS 5 (amendment): Non-Current Assets Held for Sale and Discontinued
Operations
The amendment clarifies that the disclosure requirements in standards other
than IFRS 5 do not generally apply to non-current assets classified as held
for sale and discontinued operations.
IFRS 8 (amendment): Operating Segments
The amendment to IFRS 8 clarifies that segment information with respect to
total assets is required only if such information is regularly reported to the
chief operating decision maker.
(b) Standards, amendments and interpretations to existing standards that are
not yet effective and have not been early adopted by the Group
A number of standards and amendments to existing standards have been published
and are mandatory for the Group`s accounting periods beginning on or after 1
January 2011 or later periods, but the Group has not early adopted them.
IFRS 3 (Revised) Business Combinations:
From 1 January 2010 the Group has applied IFRS 3 Business Combinations (2008)
in accounting for business combinations. Business combinations are accounted
for using the acquisition method as at the acquisition date, which is the date
on which control is transferred to the Group. Control is the power to govern
the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, the Group takes into consideration
potential voting rights that currently are exercisable. The change in
accounting policy has been applied prospectively and has had no material
impact on the financial statements.
IAS 27 Consolidated and separate financial statements:
From 1 January 2010 the Group has applied IAS 27 Consolidated and Separate
Financial Statements (2008) in accounting for acquisitions of non-controlling
interests. The change in accounting policy has been applied prospectively and
has had no impact on earnings per share.
Under the new accounting policy, acquisitions of non-controlling interests are
accounted for as transactions with owners in their capacity as owners and
therefore no goodwill is recognised as a result of such transactions. The
adjustments to non-controlling interests are based on a proportionate amount
of the net assets of the subsidiary.
Previously, goodwill was recognised on the acquisition of non-controlling
interests in a subsidiary, which represented the excess of the cost of the
additional investment over the carrying amount of the interest in the net
assets acquired at the date of the transaction.
IAS 24 (Revised): Related Party Disclosures
IAS 24 (revised) will be adopted by CRG for the first time for its financial
reporting period ending 31 December 2011. This standard will be applied
retrospectively.
IAS 24 (revised) addresses the disclosure requirements in respect of related
parties, with the main changes relating to the definition of a related party
and disclosure requirements by South African government-related entities.
The change in the definition of a related party has resulted in a number of
new related party relationships being identified.
IFRS 7 (amendment): Disclosures: Transfers of Financial Assets
The amendment to IFRS 7 will be adopted by CRG for the first time for its
financial reporting period ending 31 December 2012.
In terms of the amendment additional disclosure will be provided regarding
transfers of financial assets that are:
i) Not recognised in their entirety; and
ii) Derecognised in their entirety but for which CRG retains continuing
involvement.
IFRS 9: Financial Instruments
IFRS 9 will be adopted by CRG for the first time for its financial reporting
period ending 31 December 2013. The standard will be applied retrospectively,
subject to transitional provisions.
IFRS 9 addresses the initial measurement and classification of financial
assets and will replace the relevant sections of IAS 39.
Under IFRS 9 there are two options in respect of classification of financial
assets, namely, financial assets measured at amortised cost or at fair value.
Financial assets are measured at amortised cost when the business model is to
hold assets in order to collect contractual cash flows and when they give rise
to cash flows that are solely payments of principal and interest on the
principal outstanding. All other financial assets are measured at fair value.
Additions to IFRS 9
The additions to IFRS 9 are expected to be adopted by CRG for the first time
for its financial reporting period ending 31 December 2013. The standard will
be applied retrospectively, subject to transitional provisions. The additions
to IFRS 9 have not yet been endorsed by the EU.
Under IFRS 9 (2010), the classification and measurement requirements of
financial liabilities are substantially the same as per IAS 39, barring the
following two aspects:
i) Fair value changes for financial liabilities (other than financial
guarantees and loan commitments) designated at fair value through profit or
loss, attributable to the changes in the credit risk of the liability will be
presented in other comprehensive income. The remaining change is recognised in
profit and loss. However, if the requirement creates or enlarges an accounting
mismatch in profit or loss, then the whole fair value change is presented in
profit or loss. The determination as to whether such presentation would create
or enlarge an accounting mismatch is made on initial recognition and is not
subsequently reassessed.
ii) Under IFRS 9 (2010) derivative liabilities that are linked to and must be
settled by delivery of an unquoted equity instrument whose fair value cannot
be reliably measured, are measured at fair value.
IFRS 9 (2010) incorporates the guidance in IAS 39 dealing with fair value
measurement.
The impact on the financial statements for CRG has not yet been estimated.
Other amendments to standards effective on or after 1 January 2011 are not
expected to have a material impact on the Group.
4. Estimates
The preparation of the financial statements requires the Group`s management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. The determination of estimates requires the exercise of
judgement based on various assumptions and other factors such as historical
experience and current and expected economic conditions. Actual results may
differ from these estimates.
5. Financial risk management
The Group`s activities expose it to a variety of financial risks: credit risk,
liquidity risk and market risk (including currency risk, interest rate risk
and gold price risk). The Group`s overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group`s financial performance. The Board monitors this
risk management process.
Foreign Currency Rates
The US Dollar rates of exchange applicable to the year are as follows:
Year ended 31 December 2010 Year ended 31 December 2009
Closing Average Closing Average
South 0.15090 0.13721 0.13482 0.12057
African
Rand
Pound 1.54710 1.54633 1.59257 1.56593
Sterling
6. Property, plant and equipment
The public announcement of 29 March 2011 declared that underground capital
development operations will be suspended effective 30 April 2011. Therefore,
property, plant and equipment was impaired. The value of the impairment was
US$35,863,232.
7. Non-current assets held for sale
An item of plant and machinery, a Gekko 50 tonne per hour processing plant,
has been classified as held for sale during the period. The value of the asset
is now expected to be realised from the sale of the asset rather than the
continuing use. A formal agreement was drawn up by Gekko and signed on 15
March 2011 whereby Gekko would purchase the Gekko 50 tonne per hour plant from
CRG for US$4,116,300, payable in instalments with the first instalment payable
on the date of the agreement.. At year end the Group valued the asset at
US$4,074,000. The value of assets transferred to non-current assets held for
sale is US$10,192,422 at 31 December 2010. Based on management`s estimate of
the fair value to be obtained from the sale, the asset held for sale has been
impaired by US$5,559,159 to its fair value less costs to sell.
8. Intangible assets
As a result of the suspension of the underground mining activities, the future
expected cash flows as a result of the mining right could not be justified.
Therefore the mining right was fully impaired.
9. Loans receivable
Puno Gold Investments (Proprietary) Limited ("Puno")
On 15 June 2007, as part of the restructuring, the Company advanced a loan of
ZAR 111,196,279 (US$ 16,457,049) to CRGSA and in terms of the Puno Loan
Agreement, a further loan of ZAR 39,068,963 (US$ 5,782,207) to Puno Gold
Investments (Proprietary) Limited (``Puno``). The loan bears interest at South
African prime lending rate plus 2% and is payable as and when free cash flows
as determined by the Board of CRGSA are available.
During 2007, a dispute arose between the shareholders of CRGSA in regard to
the allocation of intercompany loans which fund the budget and work programme
and the incurring of, and level of, certain costs by CRGSA. Subsequently on 16
February 2009, CRGNV, the direct holding company of CRGSA, exercised the call
option granted to it in terms of the shareholders agreement and gave Puno 90
days notice, to acquire Puno`s entire interest in CRGSA ("the call").
During April 2009, Puno made an urgent application to the South Gauteng
Division of the High Court of South Africa to interdict CRGNV from proceeding
with the Call pending the final determination by arbitration of the validity
and enforceability of: 1) the various funding calls made by CRGSA; and the
consequent Call and; 2) the interpretation of the shareholder funding
provisions of the Shareholders` Agreement. The parties agreed that the matter
would proceed to arbitration as sought in the application. Puno, in its
capacity as claimant in the matter delayed and ultimately failed to bring the
matter before the Arbitration Foundation of South Africa ("AFSA") and
consequently, in an effort to expedite matters CRGNV and CRGSA approached AFSA
as respondent requesting that an arbitrator be appointed and that arbitration
proceedings commence. In response to this request during September 2010 AFSA
advised the Company that it would indeed appoint an arbitrator and Judge Lewis
Goldblatt was subsequently appointed.
During October 2010, however Judge Goldblatt found that the matter could not
proceed to arbitration as the matter was not brought before him by the
claimant in the matter ("Puno") but rather was sought to be brought by the
respondent ("CRG"). Following from this finding Puno has indicated their
intention to challenge the validity and constitutionality of the CRGSA
shareholders agreement despite having based various of their court
applications thereon - including the application brought in the South Gauteng
High Court, Johannesburg, South Africa against CRGNV, the Company and CRGSA,
in which it sought to interdict CRGSA from proceeding with mining operations
pending an arbitration award or court order on the proper interpretation of
clause 18 of the CRGSA Shareholders` Agreement which ultimately failed as the
Court found that Puno had failed to make out a case for the relief sought on
each and every ground which formed the subject of the application hearing.
In an effort to bring this matter to finality various alternatives are now
being investigated, amongst them being 1) methods in which CRG itself can
commence arbitration proceedings; and 2) various other non-arbitration based
methods to conclude the dispute between the CRGSA shareholders. It should be
noted however that in the event that the matter not be successfully brought to
arbitration or resolved by other means, CRGNV will not be able to introduce a
new BBBEE compliant partner who the Directors believe will be more beneficial
for the Group as a whole.
Despite the above the Directors remain confident of success and further
believe that the return of the shares by Puno will not have any material
consequences in respect of the consolidated accounts of the Group as the 26%
shareholding will be held in trust pending the outcome of discussions relating
to new BEE arrangements. Notwithstanding this position, we have, pending the
outcome of any dispute, allocated 100% of the intercompany balances directly
through from the Company to CRGSA. This additional 26% of intercompany debt
excluding interest amounts to ZAR 75,913,440 (US$ 10,416,083) between 1
January and 31 December 2010 (ZAR 151,903,560 (US$ 18,315,012) between 1
January and 31 December 2009).
The loan payable to Puno contains the same allocations referred to above.
Group
2010 2009
US$`000 US$`000
10. Inventories
Current
Consumables 59 1,223
Ore stockpiles 125 308
Stationary and 23 43
office consumables
on hand
Total inventories 207 1,574
The amount of the write-down of ore stockpiles to net realisable value, and
recognised as an expense is US$263,451 (2009: US$1,946,955).
11. Share capital and share premium
On 22 January 2010, CRG placed a total of 24,691,960 new ordinary shares of
GBP0.01 each in the capital of the Company at a price of GBP0.15 per share to
raise net proceeds of US$5.7 million (GBP3.7 million). 23,781,964 Placing
Shares were placed using the cashbox structure with existing investors and
909,996 Placing Shares were placed with Directors and senior management of the
Company. As part of this placing, 2,567,964 ordinary shares were placed with
entities owned and controlled by Mark Creasy who is deemed to be a related
party under the UKLA`s Listing Rules by virtue of the fact that he is a
substantial shareholder. The placing of ordinary shares is classified as a
smaller related party transaction under Listing Rule 11.1.10 and this
disclosure is being made in accordance with that rule.
In July 2010, CRG placed a further 649,042,355 new ordinary shares of GBP0.01
each in a Firm Placing and 679,029,025 new ordinary shares of GBP0.01 each in
a Placing and Open Offer in the capital of the Company at a price of GBP0.02
per share to raise net proceeds of US$36.8 million (GBP24.2 million).
12. Directors` emoluments
During the current year, the composition of the Board of Directors changed.
Two Directors of the Group, Mr A. Walton and Mr R. Kirkby, resigned on 14
April 2010. Mr P. Malaza and Mr J. Brauns were appointed to the Board on the
17 February 2010.
13. Commitments
Group 2010 2009
US$`000 US$`000
a)Various contractual
amounts payable
Fees payable to iProp 500 500
Limited for prospecting
Fees payable to the 2 6
Department of Mineral
Resources within one
year
Plant and equipment 6,517 -
contracted for
b) Donations payable
Donations payable to - 109
Umkhonto we Sizwe
Military Veterans
Association (MKMVA)
14. Segment reporting
An operating segment is a component of an entity that engages in business
activities from which it may earn revenues and incur expenses, whose operating
results are regularly reviewed by the entity`s chief operating decision maker
to make decisions about resources to be allocated to the segment and assess
its performance and for which discrete financial information is available. The
entity`s chief operating decision maker reviews information in one operating
segment, being the acquisition of mineral rights and data gathering in the
Central Rand Goldfield of South Africa, therefore management has determined
that there is only one reportable segment. Accordingly, no analysis of segment
revenue, results or net assets has been presented. No corporate or other
assets are excluded from this segment.
15. Share-based payments
Grant of options in the Company
During the year, further share options were granted to selected employees. The
options granted are summarised below:
Vesting Strike Price Allocation Number of share
options granted
500,000 on 10 Exercise price Mr S.J. du Toit 1,500,000
February 2011, escalates in
500,000 on 10 accordance with
February 2012 and the vesting
500,000 on 10 tranches. One
February 2013. third at price of
GBP0.20, one
third at GBP0.40
and one third at
GBP0.60.
1,100,000 on 6 Exercise price Mr S.J. du Toit 3,300,000
July 2011, escalates in
1,100,000 on 6 accordance with
July 2012 and the vesting
1,100,000 on 6 tranches. One
July 2013. third at price of
GBP0.04, one
third at GBP0.06
and one third at
GBP0.08.
400,000 on 6 July Exercise price Mr P. Malaza 1,200,000
2011, 400,000 on escalates in
6 July 2012 and accordance with
400,000 on 6 July the vesting
2013. tranches. One
third at price of
GBP0.04, one
third at GBP0.06
and one third at
GBP0.08.
1,433,333 on 6 Exercise price Executive 4,300,000
July 2011, escalates in Management
1,433,333 on 6 accordance with
July 2012 and the the vesting
balance on 6 July tranches. One
2013. third at price of
GBP0.04, one
third at GBP0.06
and one third at
GBP0.08.
10,300,00
16. Related parties
Two dormant subsidiaries in the Group, Central Rand Gold Assay Laboratory
(Proprietary) Limited and Central Rand Gold Water (Proprietary) Limited, were
deregistered during the year. The deregistration has no material impact on the
Group.
Except for the information disclosed in Note 15 Share-based payments above, no
other disclosable related party transactions occurred in the period.
17. Events occurring after balance sheet date
- As at 31 December 2010, a Gekko 50 tonne per hour plant was classified as
non-current asset held for sale. On 15 March 2011, a formal agreement was
signed between CRG and Gekko whereby CRG would sell the plant to Gekko for a
sale price of US$4,116,300, payable in instalments with the first instalment
payable on the date of the agreement.
- On the 29 March 2011, the Company announced suspension of underground mine
development with effect from 30 April 2011, as a result of uncertainty on the
rising water table solution and the unexpected "double voids".
28 April 2011
Johannesburg
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
For further information, please contact:
Johan du Toit +27 (0) 11 674 2304
Patrick Malaza +27 (0) 11 674 2304
Enquiries:
Evolution Securities Limited +44 (0) 20 7071 4300
Rob Collins / Chris Sim / Neil Elliot
Macquarie First South Advisers (Pty) Ltd +27 (0) 11 583 2000
Annerie Britz / Melanie de Nysschen/ Yvette Labuschagne
Buchanan Communications Limited +44 (0) 20 7466 5000
Bobby Morse / Katharine Sutton / James Strong
Jenni Newman Public Relations (Pty) Ltd +27 (0) 11 772 1033
Jenni Newman
The information in this statement relating to Mineral Resources and geology
has been reviewed and approved by Mr Keith Matier, BSc (Hons), GDE, Pr Sci
Nat, who is a Competent Person in terms of the SAMREC and JORC codes. Mr
Matier is the Geology Manager of Central Rand Gold South Africa (Pty) Limited
and has over 17 years` experience in exploration, mineral resource management
and mineral evaluation.
Date: 29/04/2011 07:05:01 Supplied by www.sharenet.co.za
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