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CRD - Central Rand Gold Limited - Interim Management Statement
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
19 May 2011
INTERIM MANAGEMENT STATEMENT
INTERIM BUSINESS PLAN UPDATE
Acid Mine Drainage ("AMD")
Since the last Company announcement dated 29 March 2011, the Company together
with other industry stakeholders have held four meetings with the South
African Department of Water Affairs ("DWA"). The purpose of these meetings was
to clarify and agree on the technical principles, funding allocation and
timing of the implementation of an interim solution to the AMD problem
currently being experienced in the Central Basin of the Witwatersrand area.
Following these meetings, the points set out below have been agreed:
* The DWA will take the lead role in co-ordinating the design and
implementation of the interim solution (`the Project").
* The DWA has appointed an implementation agent to manage and implement the
Project.
* The South African National Treasury committed, in the 2011 National
Budget speech, ZAR225 million (US$32 million) to the DWA for the
implementation of the Project. The receipt of this sum of money by the
DWA has been confirmed.
* Agreement between all stakeholders that a submersible pumps station and
the existing High Density Sludge ("HSD") plant situated at the ERPM South
West Vertical shaft ("SWV") will be used for the Project.
* The DWA is in commercial discussions with various suppliers to acquire
technical engineering designs for the refurbishment of the HDS plant and
the submersible pump station. The acquisition of this information will
accelerate the commencement of the Project.
* Discussions between the DWA and industry stakeholders are ongoing in
regard to the appropriate level to maintain the water table; the minimum
level set by DWA is at 150mbs at SWV (this translates to approximately
190mbs at CRG`s mining area). However owing to the close proximity of the
Gold Reef City theme park to the Company`s mining area it is expected
that the minimum water level may reasonably be set at a lower level below
surface. CRG`s initial target is to stop the water table at 250mbs, where
after a process of de-watering the Central Basin will commence. The water
table at SWV was approximately 450mbs, which is an improvement on the
anticipated water table level of 420mbs as predicted by the rate of rise
forecast model.
The Company has welcomed the discussions with the DWA and their commitment in
resolving the rising AMD problem in the Central Basin. It must be noted though
that although good progress has been made to date, until final engineering
designs are available for the Project, the commencement date as well as at
what level the water table can be stopped at, unfortunately remains uncertain.
The Company therefore maintains its cautious view and will maintain its focus
on the cash preservation measures as described in its 29 March 2011
announcement.
Mining operations
As previously highlighted, when developing ahead of the next planned stopes,
between 120mbs to 180mbs, some 30% of the stopes accessed have been found to
have unexpected "double voids" i.e. not only has the original Main Reef Leader
been extracted but also the Main Reef. The Company is currently engaged in
various studies to try and better understand the existence of these unplanned
double voids and determine if the resource and reserve base is materially
affected. The results of this work are expected to be completed by July 2011.
The Company is currently engaged in discussions with a South African mining
contractor to commence a three month trial of conventional mining in our
current mining area. The objective of the trial will be to understand whether
conventional handheld in-stope drilling can be undertaken safely, reduce
dilution and improve grade selectivity. The trial is expected to commence by
the end of June 2011.
The Company continues with its focus of extracting all available ore from
underground and surface. This is expected to continue until July/ August 2011,
where after, except for the conventional trial mining, the underground
operations will be put on care and maintenance.
Toll treatment
As previously announced the Company entered into a trial toll treatment
agreement with Mintails SA (Pty) Ltd with the intention of assessing the
viability of toll treating surplus ore following the suspension of the CRG
plant capacity upgrade.
In March 2011 the Company delivered 12,000 tonnes of crushed oxides at an
assayed grade of approximately 2.7g/t which was subsequently processed during
April through the Mogale mill.
A final reconciliation of ore received and processed has been completed and
the next phase of toll treating will commence by end May 2011.
Staff reduction
The Company has commenced a staff reduction process in terms of section 189 of
the South African Labour Relations Act, Act 66 of 1995.
Section 189 requires that once such a reduction is contemplated the Company
undertakes a consultation process with employee representations, in terms of
which the appropriate measures are discussed to:-
- Avoid retrenchments;
- Minimise the number of retrenchments; and
- Mitigate the consequences of retrenchments
It is anticipated that staff reductions will be aligned with operational
requirements. Dependant upon these operational requirements a total reduction
of up to 200 people (80%) is anticipated as the Company moves into a care and
maintenance phase.
Financial
As at the end of April 2011 the Company had cash and near cash resources in
the approximate amount of US$7million.
OPERATIONAL UPDATE
GEOLOGY AND MINERAL RESOURCE MANAGEMENT
Validation of Underground Grades
The change in reef access method from On-Reef development to Footwall
Development necessitated some changes in evaluation methodology. The previous
method of on-reef development allowed for comprehensive reef drive sampling
generating a very high degree of grade control and selectivity.
Test work has however demonstrated that underground drilling could be used to
duplicate the drive sampling referred to above. It was deemed prudent however
in the short term to test the application of draw-point face sampling before
committing further capital to additional underground equipment.
Draw point face sampling involves channel sampling only on the exposed
breakthrough points from the footwall drive and thus effectively only samples
a small portion of the reef to be mined. This technique, whilst not as well
controlled and accurate as drive sampling from a grade selectivity viewpoint,
does allow for gross selectivity.
A further strong positive from this draw point face sampling exercise was the
additional validation of the diluted insitu grades (total extraction) used in
the base Resource and Reserve Models, the results of which are set out below:
Area Type Diluted Grade Width (cm) Distance
(g/t) (m)
1596 Drive 2.81 150 40
1583 Drive 2.23 150 4
1581 Drive 6.13 150 20
1580 Drive 0.82 150 30
1575 Drive 2.41 150 46
1563 Drive 3.44 150 36
1551 Drive 3.04 150 32
1534 Drive 3.67 155 10
1571 DP13 D Point 2.50 170 4
1571 DP12 D Point 4.49 177 4
1571 DP11 D Point 4.07 143 4
1571 DP10 D Point 3.10 208 4
1571 DP9 D Point 4.31 250 4
1585 DP 11 D Point 5.47 165 4
1585 DP 10 D Point 3.10 208 4
1585 DP 19 D Point 4.03 250 4
1557 DP 11 D Point 2.14 120 4
1511 DP7 D Point 5.19 146 4
1511 DP6 D Point 3.70 160 4
1511 DP5 D Point 3.52 145 4
1511 DP3 D Point 3.41 139 4
Diluted Grade 3.12 155
During the first quarter of 2011, additional validation studies were
undertaken by Dr Carina Lemmer, a well respected independent geostatistical
specialist. All data gained from the extensive sampling of boreholes, trenches
and pits during the past two years of exploration and mining as well as
current underground face sampling was incorporated into the extensive
historical database that was used for the initial Resource calculation. This
new study confirmed the grades used in the resource model suggesting that an
average diluted insitu grade of 3.14g/t over a width of 150cm could be
expected within the current stoping area. This compares very well with the
observed sampling data outlined in the table above.
Campaign Testing of Underground Sulphide Ore
During the first quarter of 2011 a programme of campaigning underground ore
from specific drawpoints was undertaken with a view to test Mine Call Factor
and dilution assumptions used in the financial forecasts and economic models.
To this end approximately 2,300t of sulphide ore was mined from three discrete
mining blocks at an average grade of 3.4g/t. This material was campaigned
through the metallurgical plant and generated a reconstituted head grade of
2.2g/t, representing an approximate 65% Mine Call Factor. This figure compares
with the 75% assumed in the financial model and the deviation is believed to
be the result of hanging wall and middling dilution in unmeasureable backstope
areas.
It is believed that this is a manageable operational challenge that can be
improved through better underground control and the incorporation of a surface
waste sorting regime.
Exploration Target Material
Mineral exploration through systematic mechanical trenching, geological
mapping, channel sampling and assaying continued unabated during the reporting
period resulting in the identification and delineation of further open pit
"Exploration Target" areas.
The table below details the inventory as of April 2011.
Mining Area Reef Grade Range Tonnage Range (t)
(g/t)
Central Pit Main Reef 2.6 - 2.8 12,100 - 18,300
Spenser Pit Main Reef 3.1 - 3.7 15,300 - 18,500
New Unified Pit Main Reef 2.9 - 3.1 7,100 - 11,900
New Unified West Pit Main Reef 4.2 - 4.5 17,700 - 25,500
Slot 5 Block A White Reef 2.6 - 3.1 27,000 - 48,000
Slot 5 Blocks B,C,D White Reef 1.5 - 1.9 17,000 - 33,000
Slot 7 White Reef 2.1 - 3.2 87,000 - 200,000
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 and 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.
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 Geology Manager of Central Rand Gold South Africa (Pty) Ltd and has
over 17 year`s experience in exploration, mineral resource management and
mineral evaluation.
MINING
Key Mining Statistics
Year - To - Date Actual
January - April 2011
Tons (t)/ meters Grade (g/t)
(m)
Decline sinking (m) 101
Waste development (m) 717
Footwall development (m) 583
Total (m) 1,401
Stoping Reef(t) 26,159 3.0g/t
Surface mining Reef(t) 71,717 4.3g/t
Development Reef (t) 21,481 1.6g/t
Total (t) 119,357
Surface Mining
As highlighted in the table above, year to date 71,717 tons of surface ore at
an average insitu grade of 4.3g/t has been mined. This cumulative total has
been obtained from the following pits:
* Pit 1 (Central Pit) - this pit has yielded 29,848 reef tons at a grade of
3.4g/t.
* Pit 2 (New Unified) - this open pit has yielded 41,869 reef tons at a
grade of 4.9g/t.
METALLURGY
In the first quarter of 2011 3,026 oz of gold was produced.
The first two months of the year were predominantly focussed on surface oxide
ore while the underground stopes were mined out and stockpiled. Thereafter the
programme of campaigning underground ore from specific drawpoints as
highlighted in the geology section above was undertaken.
A further benefit of undertaking this programme of campaigning underground ore
was the ability to commission and optimise the optical ore sorter which was
installed to remove waste (dilution) from the underground sulphide feed. The
optical sorter has shown significant potential to effectively and economically
remove waste prior to expensive crushing and milling downstream processes.
An overall 94% gold recovery was achieved on underground sulphide ore in March
as opposed to the typical 75% recovery on surface oxides. Notably, gravity
gold recovery increased from around 30% on surface oxides up to 80% on the
underground sulphides provided the appropriate mill grind was attained.
A significant drop in production tons resulted from the harder underground
sulphides which bottlenecked through the crushing circuit. This supported the
test work done last year that informed the crushing circuit upgrade that was
planned for mid 2011.
The March processing campaign has confirmed that industrially comparable
recovery is achievable even at the lower end of the grade range.
For further information, please contact:
CRG
Johan du Toit +27 (0) 11 674 2304
Patrick Malaza +27 (0) 11 674 2304
Evolution Securities Limited +44 (0) 20 7071 4300
Chris Sim / Neil Elliot
Buchanan Communications Limited +44 (0) 20 7466 5000
Bobby Morse / Katharine Sutton / James Strong
Date: 19/05/2011 08:00:01 Supplied by www.sharenet.co.za
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