Wrap Text
2015 Interim Report
Central Rand Gold Limited
(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: GG00B92NXM24
LSE share code: CRND JSE share code: CRD
("Central Rand Gold" or the “Company” or the “Group”)
2015 Interim Report
Central Rand Gold, the South African gold mining and exploration holding company, today announces its
unaudited condensed consolidated Interim Results for the six months ended 30 June 2015 (“period under
review”). The full set of results is available on the Company’s website: www.centralrandgold.com.
For further information, please contact:
Central Rand Gold +27 (0) 87 310 4400
Johan du Toit / Nathan Taylor
Panmure Gordon (UK) Limited +44 (0) 20 7886 2500
Mark Taylor
Merchantec Capital +27 (0) 11 325 6363
Monique Martinez / Marcel Goncalves
15 September 2015
Johannesburg
Forward-looking statements
This Interim Report contains certain forward-looking statements with respect to the financial condition, results of
operations and business of the Central Rand Gold Group. The words “intend”, “aim”, “project”, “anticipate”,
“estimate”, “plan”, “believe”, “expect”, “may”, “should”, “will”, or similar expressions, commonly identify such
forward-looking statements. Examples of forward-looking statements in this Interim Report include those
regarding estimated Ore Reserves, anticipated production or construction dates, costs, outputs and productive
lives of assets or similar factors. Forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors set forth in this Interim Report that are beyond the Group’s control. For example,
future Ore Reserves will be based in part on market prices that may vary significantly from current levels. These
may materially affect the timing and feasibility of particular developments. Other factors include the ability to
produce and transport products profitably, demand for our products, the effect of foreign currency exchange
rates on market prices and operating costs, and activities by governmental authorities, such as changes in
taxation or regulation, and political uncertainty.
In light of these risks, uncertainties and assumptions, actual results could be materially different from any future
results expressed or implied by these forward-looking statements, which speak only as at the date of this
Interim Report. Except as required by applicable regulations or by law, the Group does not undertake any
obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
or future events. The Group cannot guarantee that its forward-looking statements will not differ materially from
actual results.
Chief Executive Officer’s report
Introduction
The Company had two key objectives during the first six months of 2015, namely to continue with discussions
with the various investors for the acquisition of Central Rand Gold (Netherlands Antilles) N.V. and to stabilise
the operations of the Company.
Key salient features during the first six months of the year
- Negotiations continued with Asian suitors regarding a potential transaction with Central Rand Gold and a
conclusion is expected shortly;
- Loss before interest, tax and depreciation reduced in the period to US$0.7 million (2014: US$2.6 million);
- Significant reduction in cost structure for the Central Rand Group, with overall costs reducing by 40%;
- The rate of dewatering suggests that underground operations could resume in approximately 18 months;
and
- Sufficient surface material identified and evaluated to compensate for cessation of underground mining.
Safety
Safety Statistics
Type of injury Six months ended Six months ended
30 June 2015 30 June 2014
Dressing cases - 6
Lost-time injuries 2 4
Fatalities - 1
Safety remains a key focus for the Company, irrespective of the environment in which it is operating. Positively
the Company posted a reduction in all levels of safety incidents, with two lost-time injuries incurred versus four
for the previous period.
Potential sale of Central Rand Gold (Netherlands Antilles) N.V.
Following a sustained period of marketing in Asia during 2014, the Company was able to engage in the
discussions with four Asian Companies to acquire 100% of the share capital of Central Rand Gold (Netherlands
Antilles) N.V.(“CRGNV”). The four Asian Companies are Hiria Group Company Limited ("Hiria"), Beijing Ankong
Investment ("Ankong"), Shengbang Jiabo (Beijing) Consulting Company Limited ("Shengbang") and Huili
Resources Group Limited (“Huili”). All parties signed a similar Memorandum of Understanding (“MOU”), which
set out the timing and terms for the negotiations and due diligence process. Huili’s MOU includes a unique
provision which entitles Huili to the right of first purchase within 21 days of a third party offer being received for
the subsidiary.
Extensive desk top due diligence coupled with various site visits assisted in the due diligence process largely
being completed by the end of June 2015. On 15 June 2015, the Company announced the decision to
discontinue discussions with both Ankong and Shengbang. The Board is focused on ensuring that any
transaction presented to shareholders must be as free from conditions as possible and be in a form which can
be delivered on and be completed timeously. These considerations remain guiding principles of the Board,
which will be applied when considering the various alternatives.
Discussions with Hiria and its financial partner, Hangzhou Everbright Private Equity Investment Management
("Hangzhou Everbright") are ongoing with various commercial structural alternatives being considered. The
discussions have largely progressed along the lines of a significant initial strategic investment in Central Rand
Gold Limited. This investment will provide the Group with the ability to increase its production capacity, upgrade
its resource base and to re-capitalise the balance sheet. The Board believes that this alternative will provide the
Company with a real opportunity to maximise the extraction of its vast resource base, thereby enhancing future
shareholder return and value.
Discussions with Huili remain ongoing with a range of commercial issues and technical matters, largely focused
on the continued dewatering of the Central Basin, being discussed and progressed.
The Company continues to caution that there can be no certainty that the discussions with both Huili or Hiria will
lead to a binding agreement being entered into by either party, nor that the potential sale of Central Rand Gold
(Netherlands Antilles) N.V., or any other transaction will be completed.
Acid Mine Drainage (“AMD”)
The High Density Sludge ("HDS") plant has been operational since mid-2014. The Company continues to
monitor the water level at its mining operations as well as the daily discharge pumped out of the Central Basin
from the HDS plant. The Company has observed that when the flow rate is maintained at approximately 60
million litres per day ("mlpd"), which equates to approximately 80% of nameplate capacity, a reduction in the
water level occurs, as indicated in the table below:
Water level
Average daily below surface
pumping rate (metres below
Month (mlpd) surface)
January 2015 35 144
February 2015 33 140
March 2015 70 142
April 2015 66 143
May 2015 65 145
June 2015 65 149
July 2015 65 151
August 2015 59 153
The above table provides an overview of the average daily pumping rate and the resultant impact on the water
table. Due to maintenance on one of the Ritz submersible pumps, pumping was limited to only one pumping
station during January and February 2015. A replacement submersible pump was installed at the end of
February 2015, and an immediate drop in the water table was observed. Since then the submersible pumps
have been pumping at a rate exceeding 60 mlpd, which has resulted in the water table dropping by
approximately 13 vertical meters since the end of February 2015.
Based on the current performance, and taking into account the potentially faster dewatering during the dry
winter months, it is believed that the underground mining areas will become accessible between September
2016 and February 2017.
Mining
Mineral Resources
The Mineral Resources remain unchanged as of June 2015 due to the cessation of underground workings.
Surface operations are classified as ‘Exploration Target’ in terms of the SAMREC code.
The temporary cessation of underground mining in September 2014, due to the rising water levels, precipitated
a dramatic shift in the mining operations. The Company started moving away from open cast mining to target
the higher grade underground ore body. The shift back to surface did have a significant impact on the
Company.
Open pit mining was stepped up and additional reclamation sources of ore were sourced, evaluated and
exploited. The Company’s aim was to secure sufficient resource base to enable the surface operations to
continue, whilst dewatering of the underground mine occurred.
There has been a considerable amount of work undertaken to identify sufficient surface material for processing.
The below table provides the current surface target areas:
Approximate
Slot Target area Reef Dip V. Depth Tonnage range (t) grade
Slot 5 Pits 1 to 3 White 40 deg 30m 4 000 to 125 900 2.8g/t
Slot 7 Main Pit White 45 deg 30m 60 000 to 174 000 2.7g/t
Slot 4 K7 Top Kimberly 45 deg 10m 5 000 to 22 000 1.7g/t
Slot 4 K7 Middle Kimberly 45 deg 10m 5 000 to 20 000 1.8g/t
Slot 4 K7 Bottom Kimberly 45 deg 10m 5 000 to 15 000 1.7g/t
NASREC Pits 1, 2 and 3 Main 45 deg 40m 30 000 to 37 800 2.7g/t
170 000 to 395 000 2.6g/t
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 ore body continuity,
mineability, dilution and throughput characteristics.
NOTE: The information in this statement relating to Mineral Resources and geology has been reviewed and approved by Mr Keith Matier,
BSc (Hons), GDE, PrSci Nat, who is a Competent Person in terms of the SAMREC code. Mr Matier is the Geology Manager of Central
Rand Gold South Africa (Pty) Limited and has over 21 years’ experience in exploration, mineral resource management and mineral
evaluation.
The Company considers the above table to be a conservative estimate of available material and is presently
conducting testwork to determine if the Exploration Target can be increased. Further, the above table does not
include surrounding sand and slimes resources which the Company has sourced.
Production statistics
30 June 2015 30 June 2014 Variance
tonnes tonnes
Underground - 66 085 (66 085)
Surface 62 856 22 076 40 780
Reclamation 33 356 - 33 356
Total 96 212 88 161 8 051
Surface mining was largely focused at slots 5 and 7. Current pits have been mined down to a depth of
approximately 15 metres. The average belt grade for these pits to date is 2.13g/t. It is believed that
conventional drilling and cushion blasting will allow the existing pits to be further pushed back allowing mining at
twice the current operating depths.
With over 100 years of significant mining in the Johannesburg region, there remains a significant amount of old
rock and slimes dumps, which surround the Company’s metallurgical plant. Where economical grades have
been identified and with the consent of the resource owners, the Company has removed this material and
processed it through its metallurgical plant. This activity has an added benefit of rehabilitating the surrounding
area.
Metallurgy
Production Statistics
2015 2014
January January
to June to June
Internal
Tonnes processed (t) 87 895 80 749
Built up head grade (g/t) 1.45 1.77
Fine gold produced (oz) 3 435 3 205
External (Toll treatment)
Tonnes processed (t) 6 721 13 902
Delivered grade (g/t) 1.04 2.35
Fine gold produced (oz) 244 944
Total tonnes processed (t) 94 616 94 651
Total gold produced (oz) 3 679 4 149
Internal gold production for 2015 H1 was on par with 2014 H1 on a gold output context with the lower feed
grade being compensated by higher tonnage throughput, as a result of recent plant upgrades The benefit of the
plant upgrades have resulted in an improvement in plant performance with 18,532 wet tonnes being processed
through the plant in August 2015. The aim is to reach 20,000 tonnes by end October 2015.The external tolling
was impacted both by lower tonnage and lower delivered grades. This is a direct result of the new low grade
Joint Venture entered into with neighbouring producer Mintails Proprietary Limited (“Mintails”).
Mine Call Factor
During H1 2015, the Mine Call Factor (“MCF”) continued on the same positive trajectory seen during 2014. The
“face to pour” MCF reconciliation averaged at 81% for the period, with the belt MCF averaging 94%. This
compares very favourably to the MCF industry average of 74%.
Dry
tonnes
processed Face to
Date (t) Belt MCF pour MCF
January 2015 11 759 91% 84%
February 2015 15 300 93% 77%
March 2015 14 306 96% 89%
April 2015 14 634 101% 78%
May 2015 15 587 96% 85%
June 2015 16 309 90% 70%
Total 87 895 94% 81%
Plant improvement
The focus remains on improving plant efficiency. One of the highlights of the first half of 2015 was the
construction and commissioning of the new 243 m 3 leach tank in June 2015. The new tank will increase the
leach residence time from 14 hours to 22 hours, resulting in a significant drop in gold in tailings and
corresponding increase in gold production.
Financial update
Results
The loss before interest, tax and depreciation for the period under review amounted to US$0.7m, which is a
significant improvement on prior year period operational loss of US$2.6m. Revenue from internal gold
production is up by 7% to 3 435 ozs (2014: 3 205 ozs), despite the average grade dropping from 1.77g/t to
1.45g/t. Overall revenue is down from US$5.8m to US$4.3m due to the Company sending less material for toll
treatment by Mintails and the reduction in gold price. Significant restructuring occurred within the Company to
realign the business to its new focus on surface mining resulting in a reduction of 40% in the Group’s cost base.
These savings were not only reported through the elimination of underground mining costs but also as a result
of the re-negotiation of key contracts, improving operational processes and eliminating inefficiencies in
consumable usage. A key example is the reduction in the average cost per tonne for surface mining reducing
from US$19 per tonne to US$11 per tonne, a 42% improvement. Although the trend is positive the key focus
remains to move the organisation into sustainable cash generative and profitable position. Cash and cash
equivalents at 30 June 2015 was $1.1m. Cash generated from operations will be utilised to further upgrade the
metallurgical plant and to further reduce the Company’s net working capital position.
Looking forward
The focus over the next six months is to build on the momentum gained during the first half of 2015, with the
following areas being the main focus for the Company:
- Finalise the negotiations with Hiria and Huili;
- Continue to identify and mine sufficient surface material until underground mining operations are
recommenced; and
- Continual improvement of the Group’s operational processes thereby ensuring the efficiency of spend.
Johan du Toit
Chief Executive Officer
Condensed Group Statement of Financial Position
as at 30 June 2015
30 June 31 December 30 June
2015 2014 2014
Notes US$ '000 US$ '000 US$ '000
(Unaudited) (Audited) (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment 5 3 172 3 592 4 763
Intangible assets 2 669 2 830 3 104
Security deposits and guarantees 59 191 210
Environmental guarantee investment 3 119 3 177 3 361
Loans receivable 6 8 619 8 646 8 961
17 638 18 436 20 399
Current assets
Security deposits and guarantees 32 65 71
Prepayments and other receivables 712 1 239 1 004
Inventories 7 112 76 813
Cash and cash equivalents 1 177 914 4 389
Non-current assets held-for-sale 8 - - -
Derivative asset 720 720 -
2 753 3 014 6 277
Total assets 20 391 21 450 26 676
EQUITY
Attributable to equity holders of the parent
Share capital 9 26 617 26 490 26 314
Share premium 9 224 048 222 963 218 630
Share-based compensation reserve 28 187 28 238 28 187
Treasury shares (6) (6) (6)
Foreign currency translation reserve (29 433) (29 534) (29 348)
Accumulated losses (262 743) (261 559) (249 133)
(13 330) (13 408) (5 356)
Non-controlling interest - - -
Total equity (13 330) (13 408) (5 356)
LIABILITIES
Non-current liabilities
Environmental rehabilitation 4 622 4 904 5 904
Loan payable 10 14 392 14 418 19 336
19 014 19 322 25 240
Current liabilities
Trade and other payables 6 078 6 911 6 792
Taxation payable 181 177 -
Derivative liability 8 448 8 448 -
14 707 15 536 6 792
Total liabilities 33 721 34 858 32 032
Total equity and liabilities 20 391 21 450 26 676
Condensed Group Statement of Profit or Loss
for the six months ended 30 June 2015
Six months 2 months Six months
ended ended ended
30 June 31 December 30 June
2015 2014 2014
Notes US$ '000 US$ '000 US$ '000
(Unaudited) (Audited) (Unaudited)
Revenue 11 4 352 8 212 5 774
Production costs 12 (2 776) (9 844) (4 856)
Employee benefits expense (1 293) (3 223) (1 607)
Directors' emoluments 13 (103) (717) (434)
Inventory write-down - (705) (40)
Operating lease expense (250) (787) (304)
Operational expenses 14 (174) (502) (639)
Other expenses 15 (560) (1 702) (882)
Other income and gains 16 107 543 131
Foreign exchange transaction (losses)/gains (16) 129 261
Loss before interest, tax and depreciation (713) (8 596) (2 596)
Depreciation (229) (460) (226)
Impairment of assets - (158) -
Loss on fair value of convertible loan note - (5 108) -
Finance income 546 1 233 456
Finance costs (788) (2 179) (476)
Loss before income tax (1 184) (15 268) (2 842)
Income tax expense 17 - - -
Loss for the period (1 184) (15 268) (2 842)
Loss is attributable to:
Non-controlling interest - - -
Equity holders of the parent (1 184) (15 268) (2 842)
(1 184) (15 268) (2 842)
Shares in issue 95 195 808 87 180 808 75 180 808
Weighted average number of ordinary shares in
issue 95 195 808 87 180 808 75 180 808
Fully diluted weighted average number of
ordinary shares in issue 95 195 808 87 180 808 75 180 808
Basic loss per share (US cents per share) 19 (1.24) (17.51) (3.78)
Diluted loss per share (US cents per share) 19 (1.24) (17.51) (3.78)
Condensed Group Statement of Comprehensive Income
for the six months ended 30 June 2015
Six months 12 months Six months
ended ended ended
30 June 31 December 30 June
2015 2014 2014
US$ '000 US$ '000 US$ '000
(Unaudited) (Audited) (Unaudited)
Loss for the period (1 184) (15 268) (2 842)
Other comprehensive income/(loss):
Item that may be reclassified subsequently to
profit and loss
Exchange differences on translating foreign
operations 101 (91) 94
Other comprehensive income/(loss) for the
period, net of tax 101 (91) 94
Total comprehensive loss for the period (1 083) (15 359) (2 748)
Total comprehensive loss is attributable to:
Non-controlling interest - - -
Equity holders of the parent (1 083) (15 359) (2 748)
(1 083) (15 359) (2 748)
Condensed Group Statement of Changes in Equity
for the six months ended 30 June 2015
Attributable to equity holders of the Group
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Non-controlling Total
Notes capital premium reserve shares reserve losses Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 31 December
2013 25 604 213 377 28 224 (6) (29 442) (246 291) (8 534) - (8 534)
Total comprehensive income
for the period ended 30 June
2014
Loss for the period - - - - - (2 842) (2 842) - (2 842)
Other comprehensive
income
Foreign currency adjustments - - - - 94 - 94 - 94
Transactions with owners,
recorded directly in equity
Issue of Shares:
Capital raising 710 5 253 - - - - 5 963 - 5 963
Employee Share Option
Scheme:
Share-based payments:
Employees' and Directors'
shares and options - - (37) - - - (37) - (37)
Balance at 30 June 2014 26 314 218 630 28 187 (6) (29 348) (249 133) (5 356) - (5 356)
Attributable to equity holders of the Group
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Non-controlling Total
Notes capital premium reserve shares reserve losses Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at 31 December
2014 26 490 222 963 28 238 (6) (29 534) (261 559) (13 408) - (13 408)
Total comprehensive income
for the period ended 30 June
2015
Loss for the period - - - - - (1 184) (1 184) - (1 184)
Other comprehensive
income
Foreign currency adjustments - - - - 101 - 101 - 101
Transactions with owners,
recorded directly in equity
Issue of Shares:
Capital raising 9 127 1 085 - - - - 1 212 - 1 212
Employee Share Option
Scheme:
Share-based payments:
Employees' and Directors'
shares and options 21 - - (51) - - - (51) - (51)
Balance at 30 June 2015 26 617 224 048 28 187 (6) (29 433) (262 743) (13 330) - (13 330)
Condensed Group Statement of Cash Flow
for the six months ended 30 June 2015
Six months 12 months Six months
ended ended ended
30 June 31 December 30 June
2015 2014 2014
US$ '000 US$ '000 US$ '000
(Unaudited) (Audited) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES Notes
Loss before tax (1 184) (15 268) (2 842)
Adjusted for :
Depreciation 229 460 226
Employment benefit expenditure (share-based
payments) (51) 14 (37)
(Profit)/loss on disposal and scrapping of
property, plant and equipment (9) (17) 9
Impairment of inventory 7 - 705 40
Impairment of assets - 158 -
Net loss/(gain) on foreign exchange 16 (129) (261)
Finance income (546) (1 233) (456)
Finance costs 788 2 179 476
Loss on fair value of convertible loan note - 5 108 -
Changes in working capital
Decrease/(increase) in prepayments and other
receivables 527 (325) (90)
(Increase)/decrease in inventory (36) 129 57
Decrease in trade and other payables (833) (60) (179)
(Decrease)/increase in provisions (282) 809 258
Cash flows used in operations (1 381) (7 470) (2 799)
Finance income 66 273 -
Finance costs - - (15)
Sundry income - (1 204) -
Net cash used in operating activities (1 315) (8 401) (2 814)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 5 (5) (1 049) (2 022)
Proceeds from disposal of property, plant and
equipment - 186 -
Increase in environmental guarantee deposit (17) (53) (54)
Net cash used in investing activities (22) (916) (2 076)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares for cash 1 260 4 254 -
Cost relating to the issue of shares (48) (257) -
Net proceeds from exercise of share options - 3 732 -
Net proceeds from issue of share capital - - 5 963
Net cash from financing activities 1 212 7 729 5 963
Net (decrease)/increase in cash and cash
equivalents (125) (1 588) 1 073
Cash and cash equivalents at 1 January 914 2 475 2 475
Effects of exchange rate fluctuations on cash
balances 388 27 841
Cash and cash equivalents at end of period 1 177 914 4 389
Notes to the Condensed Interim Group Financial Statements for the six months ended 30 June 2015
1. Basis of preparation
This condensed set of consolidated financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU. The annual Financial Statements of the Group are 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”). The condensed
interim Group financial statements have been prepared applying the accounting policies and presentation that
were applied in the preparation of the Company’s published consolidated financial statements for the year ended
31 December 2014 except for the changes described in note 2.
The consolidated financial statements are presented in United States Dollars (“US$” or “US Dollar”) and rounded
to the nearest thousand. The functional currency of the parent company, Central Rand Gold Limited, changed
during the prior year from the British Pound to the US Dollar as its main source of funding is now the US Dollar.
The functional currency of its principal subsidiary, Central Rand Gold South Africa Proprietary Limited (“CRGSA”)
is the South African Rand (“ZAR” or “Rand”).
Going concern
The Directors have prepared the condensed Group financial statements on the going concern basis
notwithstanding net current liabilities at 30 June 2015 of US$12.0 million, having considered the current
operations, the current funding position and the projected funding requirements for the business for at least 12
months from the date of approval of the financial statements as detailed below. Since the 2014 year end the
Group has continued with its surface mining operations and processing of third party ore and has also raised a
further US$1.2 million from share placements in June 2015.
The Directors have prepared cash flow projections until December 2016 that reflect the current mine plan adopted
by the Directors. The mine plan is based on surface mining only as the underground mine remains on care and
maintenance until the water level reduces following the re-commissioning of the dewatering plant. The mining
plan assumes that the upgrades will increase processing plant capacity from 16 000 tonnes per month to 20 000
tonnes per month from January 2016. These projections show that the Group has sufficient funding for at least
the next 12 months from the date of approval of these condensed interim Group financial statements and hence
the Directors have prepared the condensed interim Group financial statements on a going concern basis.
The Directors are optimistic about the future of the Company and the dewatering may give the Company
improved access to deeper mining levels over time. However, the risks inherent in any single metal mining
operation remain for the longer term.
2. Accounting policies
Except as described below, the accounting policies applied by the Group in these condensed interim Group
financial statements are the same as those applied by the Group in its consolidated financial statements as at and
for the year ended 31 December 2014, as described in those consolidated financial statements.
The Group has adopted the following standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 January 2015:
• IFRS 9: Financial Instruments
The adoption of these standards is not expected to have a significant impact upon the Group’s net results, net
assets or disclosures.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total
annual earnings.
3. Estimates and judgements
The preparation of condensed interim Group financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this condensed interim Group financial statements, the significant judgements made by management
in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated annual financial statements as at and for the year ended 31 December 2014.
4. Financial risk management
The Group’s financial risk management objectives and policies are consistent with those disclosed in the
consolidated annual financial statements as at and for the year ended 31 December 2014.
Fair value
The aggregate net fair values of all current financial assets and financial liabilities, as well as non-current
receivables, instalment sales and finance leases approximate the carrying amounts at the financial reporting date.
Foreign currency rates
The US Dollar rates of exchange applicable to the period are as follows:
2015 2014 2014
Six months to Year ended Six months to
30 June 31 December 30 June
Closing Average Closing Average Closing Average
South African Rand 0.08 0.08 0.09 0.09 0.09 0.09
Pound Sterling 1.57 1.52 1.55 1.65 1.70 1.67
5. Property, plant and equipment
During the six months ended 30 June 2015, the Group spent US$5 280 to purchase other items of property, plant
and equipment. In the six month period ending 30 June 2014, the Group spent US$1 894 534 to upgrade the plant
and US$127 634 to purchase other items of property, plant and equipment.
6. Loans receivable
Puno Gold Investments Proprietary Limited ("Puno")
Since the last report for the year ended 31 December 2014 there has been no resolution to the dispute relating to
alleged procedural breaches of the Central Rand Gold South Africa (Proprietary) Limited (“CRGSA”)
Shareholders’ Agreement between CRGSA and its current Black Economic Empowerment (“BEE”) shareholder,
Puno. The dispute surrounds the allocation of intercompany loans which fund the budget and work programme
and the incurring of, and level of, certain costs.
During the previous financial year, the Company was granted the right to appeal the December 2013 ruling.
The Group still believes that ultimately their position will prevail. The Board is still of the opinion that this will not
have any material consequences in respect of the consolidated accounts of the Group.
The loan payable to Puno contains the same allocations referred to above.
7. Inventories
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Consumables 39 30 80
Ore stockpiles 73 46 733
Total inventories 112 76 813
The amount of the write-down of ore stockpiles to net realisable value, and recognised as an expense is US$0 (2014: US$881 109).
8. Non-current assets held-for-sale
During the previous financial year, the Group disposed the flotation plant for US$168 265, resulting in a loss of
US$9 220. No additional items were classified as held-for-sale during the period under review.
9. Share capital and share premium
On 17 June 2015, the Company allotted and issued 6 015 000 New Ordinary Shares at 10 pence, which raised
US$0.94 million (£0.60 million). On 18 June 2015, the Company allotted and issued a further 2 000 000 New
Ordinary Shares at 10 pence, which raised US$0.32 (£0.20 million).
10. Loan payable
Group
June December June
Net proceeds (USD million) 2015 2014 2014
US$ '000 US$ '000 US$ '000
Loan payable consists of the following:
Puno Gold Investments Proprietary Limited 8 620 8 646 8 961
Redstone Capital Limited 5 772 5 772 10 375
14 392 14 418 19 336
11. Revenue
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Gold sales 4 314 7 840 5 337
Other by-product sales 38 372 437
4 352 8 212 5 774
The revenue relates to the sale of gold derived from surface and underground mining activities and the sale of
other by-products. 4 316 (30 June 2014: 4 150) ounces of gold was sold.
12. Production costs
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Production costs comprise the following items:
- Consumables 791 2 930 1 307
- Utilities 404 1 739 465
- Plant hire 957 2 023 1 090
- Labour hire 199 2 066 1 259
- Toll treatment 425 1 161 470
- Environmental rehabilitation provision - (75) 265
2 776 9 844 4 856
13. Changes to the Board
During the period under review, there was no change in the composition of the Board.
14. Operational expenses
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Operational expenditure comprises the following items:
- Assaying costs 98 337 155
- Consulting services 58 294 355
- Environmental costs 3 (168) 5
- Mineral property options paid 15 39 124
174 502 639
15. Other expenses
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Auditor's remuneration - 232 39
Corporate social investment - 8 2
Legal costs 40 208 140
Travel and accommodation 26 20 4
Telecommunications 174 113 65
Other expenses 320 1 121 632
560 1 702 882
16. Other income and gains
Group
June December June
2015 2014 2014
US$ '000 US$ '000 US$ '000
Sundry income 107 543 131
In 2015, sundry income included US$89 321 from Gravelotte Mine Limited for consumables, US$9 420 (2014:
US$16 851) for profit on disposal of property, plant and equipment, US$0 (2014: US$308 438) for the sale of
carbon, US$0 (2014: US$118 563) for a diesel refund claimed from the South African Revenue Service (SARS),
US$5 194 (2014: US$52 269) for a royalty paid to Central Rand Gold by Goldplat Recovery Proprietary Limited for
exploration work performed by Goldplat Recovery Proprietary Limited on the Company's site and US$3 331
(2014: US$46 772) for other sundry income.
17. Income tax expense
Income tax expense is recognised based on management’s best estimate of the weighted average annual income
tax rate expected for the full financial year. The estimated average annual tax rate used for the period to 30 June
2015 is 0% (2014: 0%) due to assessable losses available to CRGSA and the Guernsey resident status of the
Company resulting in 0% effective rates.
18. Commitments
Group
June December June
2014 2013 2013
US$ '000 US$ '000 US$ '000
Fees payable to Sekgwa Mining Services Proprietary
Limited for underground mining services - - 209
Acquisition of tangible assets contracted for - - 48
- - 257
The only commitments outstanding at 30 June 2015 are similar in nature to those disclosed at the 31 December
2014 year end and are those incurred in the normal course of business.
19. Loss per share
Group
June December June
2015 2014 2014
Headline loss per share (US cents per share) (1.24) (17.53) (3.76)
Diluted headline loss per share (US cents per share) (1.24) (17.53) (3.76)
Reconciliation between loss attributable to the
equity holders of the Group and the headline loss
attributable to the equity holders of the Group:
Loss attributable to equity holders of the Group
(US$'000) (1 184) (15 268) (2 842)
Add: Loss on disposal of property, plant and
equipment (US$ '000) - - 9
Less: Profit on disposal of property, plant and
equipment (US$ '000) (9) (17) -
Headline loss attributable to equity holders of the
Group (US$ '000) (1 193) (15 285) (2 833)
20. 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.
21. Share-based payments
No additional shares and share options in the Company were granted during the six months ending 30 June 2015.
22. Related parties
No disclosable related party transactions occurred during the period.
23. Contingent liability
During the previous financial year, the following contingent liability existed:
Thin capitalisation
The tax legislation with regards to thin capitalisation changed with effect from 1 April 2012 and applicable in
respect of years of assessment commencing on or after that date. The safe harbour ratio of 3:1 included in the
previous legislation was replaced with the concept of “arm’s length.” In instances where the loans are considered
not to be on an arm’s length basis all or part of the interest charged could be disallowed as a deduction. Any
interest not allowed as a deduction will be treated as an adjustment in terms of Section 31 of the Income Tax Act
1962 (Act 58 of 1962), as amended (“Income Tax Act”). In terms of Section 31(3) of the Income Tax Act, any
adjusted amount for transfer pricing and thin capitalisation purposes, prior to 1 January 2015, constituted a
deemed loan. As per the amended law, should this amount, plus interest deemed to have accrued on it, not have
been repaid to the taxpayer by the relevant non-resident connected person by 31 December 2014, the outstanding
“deemed loan” must “be deemed to be a dividend consisting of a distribution of an asset in specie, that was
declared and paid by that resident to that other person on 1 January 2015”. Such deemed dividend will be subject
to Dividends Withholding Tax, at a rate of 15%.
Management has obtained legal opinion based on which they concluded that there is no deemed loan. In further
assessing the impact of the amendments on its intercompany loans, management concluded that due to the lack in
industry guidance pertaining to the application of the “arm’s length” concept, management will be unable to confirm
their conclusion without performing a full Transfer Pricing benchmarking study applying OECD (Organisation for
Economic Co-operation and Development) principles.
Section 8F
Section 8F of the Income Tax Act was introduced with effect from 1 April 2014, in terms of which any interest
bearing instrument in respect of which a company owes an amount during the year of assessment could be seen
as a hybrid debt instrument. Should this be the case the interest paid on shareholders’ the loan from 1 April 2014
to 31 December 2014 would be deemed to be a dividend in specie and therefore subject to withholding tax at a
rate of 15%. Management obtained legal counsel opinion which focusses on the reasonable time in which payment
was anticipated by the contracting parties. Based upon this opinion management has concluded that the
shareholders’ loan does not fall within the ambit of section 8F.
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. To
date the dispute has not been resolved and consequently management has been unable to amend the funding
structure of CRGSA.
24. Events occurring after reporting date
No material changes, other than those highlighted in this report, have occurred in the affairs of the Group between
the end of the half year and the date of this report.
Company profile
Our business
Central Rand Gold Limited (“Central Rand Gold” or “the Company”) is engaged in a gold mining and exploration
project that aims to bring profitable and sustainable gold mining back to the City of Johannesburg, bringing many
benefits to the City, the communities surrounding its mining operations, its staff, its shareholders and other
stakeholders. The Company plans to extract all profitable gold from its resource base using appropriate mining,
processing and environmentally friendly technologies. Once the mineralised areas are worked out, stabilised and
rehabilitated, the land will become available for urban development.
History
Central Rand Gold is the holding company for a group of companies (“Group”). Central Rand Gold listed on the
Official List of the UK Listing Authority and the Main Boards of both the London Stock Exchange (“LSE”) and the
JSE Limited (“JSE”) in November 2007, after consolidating contiguous exploration permits covering approximately
138 square kilometres in the most prolific gold-producing area of the world – the Central Rand Goldfields on the
southern outskirts of Johannesburg. On 18 September 2013, Central Rand Gold opted to transfer its listing to AIM
in London and to the AltX in Johannesburg.
Mining Rights and Prospecting Rights
The Group acquired seven New Order Prospecting Rights which constitute from west to east, Western Areas A, B
and E, the three Cs (one Prospecting Right for Consolidated Main Reef, Crown Mines and City Deep), Anglodeeps
area, Village Main and Robinson Deep (one Prospecting Right) and the mining area of the defunct Simmer and
Jack Gold Mine. The Prospecting Rights extend over an area from west to east of approximately 40 kilometres and
north to south of approximately seven kilometres (the “Central Rand Project”). In addition, the Southern Deeps New
Order Prospecting Right Application (the “Prospecting Application”), if granted, would extend the Central Rand
Project by a further 13 kilometres to the south. On 27 February 2012, it was announced that the Prospecting Rights
in respect of Western Areas A, B and E had been transferred from Rand Quest Syndicate Limited to CRGSA via
Section 11 applications lodged with the South African Department of Mineral Resources (“DMR”). The Prospecting
Application is still in the process of being transferred. The Anglodeeps Prospecting Right renewal was submitted to
the DMR but was unfortunately rejected on a technicality. This is currently being taken on appeal.
The Company received its first New Order Mining Right from the DMR on 17 September 2008. This Mining Right,
which was awarded 14 months after the initial application, enables Central Rand Gold to mine gold at its
Consolidated Main Reef, Langlaagte and Crown Mines tenements.
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