Wrap Text
Annual Results and Annual Report Release
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 2007/019223/10)
ISIN: GG00B92NXM24
LSE share code: CRND JSE share code: CRD
("Central Rand Gold" or the “Company” or the “Group”)
Annual Results and Annual Report Release
Central Rand Gold today announces its annual results for the year ended
31 December 2016.
Full copies of the Company's Annual Report and Accounts, including the
Company Profile, Chairman’s Report, Corporate Governance, Sustainable
Development Report, Company Secretarial Confirmation, Remuneration
Committee Report, Directors’ Report, Auditor's Report and full Financial
Statements, will be available on the Company’s website
www.centralrandgold.com on 16 October 2017.
For further information, please contact:
Central Rand Gold +27(0) 87 310 4400
Lola Trollip
ZAI Corporate Finance Ltd - Nominated Adviser +44 (0) 20 7060 2220
John Treacy
Peterhouse Corporate Finance Limited – Broker +44 (0) 20 7469 0930
Lucy Williams / Fungai Ndoro
Merchantec Capital - JSE Sponsor +27 (0) 11 325 6363
Marcel Goncalves / Monique Martinez
Chairman’s report
Dear Shareholder
I write in the slightly unusual circumstances of not having served as
your Company’s Chairman for the financial year under review in these
financial statements, but I am able to provide an overview of the
principal matters involving the Company since the end of that financial
year.
OUTGOING DIRECTORS
Shareholders will have noted the departure of Nathan Taylor as interim
Non-executive Chairman and Mark Austin as Non-executive Director in
January 2017. Lola Trollip has tendered her resignation as the Company’s
Chief Executive Officer and as a Director of the companies in the Group.
We are agreeing her final departure date.
ADVISER APPOINTMENTS
We appointed new advisers, Brandon Hill Capital and ZAI Corporate Finance
Limited, post year end as our broker and nominated adviser respectively.
Their assistance and wise advice has been invaluable and I should like
to thank them for accepting their respective appointments and for their
input since their appointments. Brandon Hill assisted us with a
fundraising in very difficult circumstances and their advice and input
was much appreciated. We have subsequently appointed Peterhouse
Corporate Finance Limited as broker in the light of the Company’s
possible change to an AIM Rule 15 cash shell as described in Rule 15 of the
AIM Rules for Companies, as foreshadowed by the Company’s announcement
this month about its financial and operational position. This appointment
is no reflection on Brandon Hill, whose input was invaluable. Our
nominated adviser, ZAI Corporate Finance Limited, shall cease nomad
operations on 19 October 2017 and we are in discussions with a potential
replacement nominated adviser.
FINANCING
We were significantly supported during the period by three principal
funders, the Wang family, Redstone Capital Limited and Bergen Global
Limited. I am very grateful to each of these funders for their crucial
support for the Company. We have also been supported by a placing of new
shares arranged by Brandon Hill Capital. Without their support, the
Company would have been unlikely to find any alternative sources of
funding and most likely therefore would have been unable to continue its
existence. The Company announced earlier this month that the capital
requirement it faces is inconsistent with the Company’s ability to remain
as a listed mining business and the Board has taken the difficult
decision to implement the steps described in that announcement, to move
towards disposing of the Company’s mining operations and to become an
AIM Rule 15 cash shell.
OPERATIONS
The Company has faced a number of challenges and has been, frankly, very
unlucky indeed in relation to the serious issues which it has had to
face. The period under review, and since, has been in many respects a
case of one step forward and two steps back. I refer you
to the financial update in the Chief Executive Officer’s Report on page
12 of this Annual Report. It is not a cliché to describe the convergence
of the events and circumstances as a “perfect storm”, but that has been
the effect.
The Company, and therefore shareholders, has had to bear the brunt of
the following:
- adverse weather conditions which have materially adversely affected
production operations;
- labour relations issues;
- significant operational difficulties;
- difficulties in materials processing; and
- a continued lack of co-operation from the operating subsidiary’s Black
Empowerment Partner, Puno.
I explain each of the above in more detail below.
On the face of it, the Company has made meaningful operational progress
since the end of the financial year. Unfortunately, such progress as has
been made is insufficient to justify the continued expenditure required,
which the Company simply cannot afford. The Company’s efforts and
progress have been hampered and interrupted by the following matters:
Puno Gold Investments Proprietary Limited
Relations at the operating subsidiary, Central Rand Gold SA, with a
Black Empowerment Partner, Puno Gold Investments Proprietary Limited
(“Puno”), are poor. In June 2017, Puno lost a High Court case brought
against it by each of the companies, Central Rand Gold SA and Central
Rand Gold SA’s immediate parent company, in respect of a cash call under
the shareholders agreement relating to Central Rand Gold SA, which has
resulted in an order for Puno to pay to Central Rand Gold SA the sum of
R72 326 573.47 plus the legal costs incurred by the applicants. The
Board of Central Rand Gold SA finds Puno a difficult and obstructive
partner, which seems to be something of a loose term in that context.
The management time and legal costs involved in having to deal with Puno
are, in my view, whilst necessary to protect the interests of
shareholders, largely attributable to the conduct of Puno.
Feed material
The feed material in 2016 from the tolling company was inappropriate in
that the materials supplied differed from those sampled, and as a result,
materials from the Mine Waste Dumps acquisition were used. This, however,
was too expensive to economically extract in this fashion as the grade
of the material is too low, and the requirement for additional chemicals
in order to extract the gold from the material is not economical. Since
year end, the majority of feed has been the Company’s own material.
Open pit
The Company has commenced small scale open pit mining, in slot 4 of the
Kimberley reef. Materials from those operations are being processed and
the Company is also processing third party materials on a tolling basis.
iProp motion
No sooner than the Company commenced open pit operations than iProp
Proprietary Limited (“iProp”) lodged a motion with the court to have the
settlement agreement entered into in 2009 ratified by Court order to,
in effect, compel the parties to implement the terms of the settlement
agreement. Following negotiations between the parties, iProp withdrew
its motion and discussions between the parties continue. This process
has taken a considerable amount of management attention and has required
the expenditure of legal fees which the Company would obviously have
preferred not to have had to incur.
In October 2017, iProp issued a claim to the Company’s subsidiary,
regarding the recovery of outstanding leases and rentals. The claim
includes late penalty charges and interest, which have not been accrued
in these consolidated financial statements. This matter is with the
Company’s legal advisors.
Concentrator circuit
The Company has also progressed its strategy of procuring centrifugal
concentrators. These will be used to semi-process 40,000 tonnes per
month of sand and slimes reclaim material, and then to metallurgically
treat only a small percentage of the result, which will accordingly be
richer in gold. The concentrator circuit arrived in South Africa in
September 2017, after some delays, and is currently in the design phase
for construction. It is anticipated that concentrator circuit will be
installed and commissioned in December 2017, and will be fully
operational in January 2018.
Labour dispute
11 days of post year end production has been lost due to industrial
action under which the unionised workforce declared a dispute regarding
the implementation of wage increases. The parties settled at the CCMA
with the result that 50% of each employee’s monthly salary shall be paid
in the form of a “13th cheque” in December 2017. This dispute involved
picketing of the site and “no work, no pay”; the additional payment
agreed and the effect of the strike did not result in additional cost
to the Company although the management distraction, the downtime and the
additional cost has been unwelcome to say the least. I would like to
thank management and the employees for reaching the agreement they did.
Suspension of trading
The Company could not guarantee that it will be able to meet its financial
obligations as they fall due and as a result, the Company requested a
suspension in trading in its shares on 11 May 2017. The Board is
considering a number of solutions to ensure the Company meets its
financial obligations. As at the date of this report, the Company’s
shares remain suspended, pending further developments. The Company
announced this month the possibility of the disposal of its mining and
exploration assets (and related debt) and to become an AIM Rule 15
cash shell. Proposals are likely to be put to shareholders
shortly, which would involve a recapitalisation.
Mill downtime
The excessive rainfall in the region in the first quarter of 2017
adversely affected the running of the mills (mill 1, 2 and 3) which
struggled to cope with crushing significantly cloggier and muddier feed
materials than had been contemplated. This resulted in a significant
reduction in processing output.
The instability of the power grid in the region, combined with the
electrical storms resulting from the adverse weather, resulted in a
number of power outages on site, which materially affected production
in Q1 of this year. A generator has been ordered for the proposed
Concentrator Circuit, in order to avoid future power outages.
Perversely, the excessive rainfall had been preceded by a drought which
resulted in water use restrictions being imposed throughout Gauteng; the
Company invested in a reticulation system to enable production to
continue – this required additional expenditure for which the Company
had not budgeted.
CONCLUSION
I would like to thank shareholders for their patience and resilience
during this very difficult and unsatisfactory period for the Company.
It has not showed the results I had hoped to see and has not turned out
to be the Company I expected to chair.
Cash flows have been significantly lower than forecast. Accordingly,
demands for finance have increased. Such finance as has been available,
has inevitably been more expensive than ideally would be the case.
Please be assured the Board is committing a significant amount of time,
much of which is unremunerated, to seek to deliver an outcome for
shareholders which will provide what the Board considers is the best
long term result for shareholders in the context of the Company’s current
capital base and very limited free capital. Had the Company been better
capitalised, some of the difficulties could have been avoided or
mitigated but funding has simply not been available to address the
barrage of issues the Company has faced.
The Company’s financial position has been and remains very challenging
and the balance sheet is under significant strain.
We shall continue to keep shareholders informed of all material
developments and matters which affect the Company. It has disclosed to
the market its latest financial and operational status, with the likely
outcome being a complete disposal of its mining operations, the disposal
also of its debt obligations and its reclassification into an AIM Rule
15 cash shell.
I very much regret that I have been unable to deliver a positive message
for you but I hope to deliver a more favourable outcome in due course.
Simon Charles
Independent Non-executive Chairman
Chief Executive Officer’s report
INTRODUCTION
The Company had three key objectives during the first six months of
2016, namely:
- to repair and replace Mill No 1 that broke down in January 2016;
- to create a positive cash flow going forward; and
- to stabilise operations.
The objective for the second half of 2016 was to toll treat third party
material through the Central Rand Gold SA metallurgical processing plant,
as per the agreement concluded with Nikkel Mining.
KEY SALIENT FEATURES DURING 2016
- The loss before interest, tax, depreciation and impairment for the
2016 financial year amounted to US$3.1 million (2015: US$2.9 million
(restated)).
- The rate of dewatering of the underground workings increased and the
water table measured approximately 160 metres below surface (“mbs”)
in October 2016. However, the water levels increased to approximately
133 mbs at the end of 2016 as a result of heavy rains. The pumping
station is being managed by Trans Caledon Tunnel Authority (“TCTA”),
a government company.
- The Mill No 1 was successfully replaced by a refurbished Mill and
operations were temporarily halted in order to reduce expenditure
during the maintenance period.
- Excess labour issues were challenging for Central Rand Gold SA. This
was resolved by embarking on a process to right-size the workforce
according to the operational requirements. The process was
successfully concluded, resulting in only four employees being
retrenched.
SAFETY
Safety statistics
Type of injury Year ended Year ended
31 December 31 December
2016 2015
Dressing cases 2 -
Lost time 4 3
injuries
Fatalities - -
Safety remains a key focus for the Company, irrespective of the
environment in which it operates. The Company has embarked on a number
of safety campaigns to invigorate the safety culture in the Company. The
impact of the safety campaigns has resulted in 164 lost time injury free
days as at 22 June 2017, which is a record for Central Rand Gold SA to
date.
ACID MINE DRAINAGE (“AMD”)
The High Density Sludge ("HDS") plant is owned by a government entity,
TCTA, and 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. The water
levels dropped considerably to 160 mbs in October 2016. However, once
the rainy season started again during November 2016, the water increased
once again, to 133 mbs in December 2016.
Central Rand Gold SA visited the plant and had discussions with the
personnel operating the plant. The observation reached is that there are
various areas where there is further ingress of water along the Central
Basin, and therefore alternate pumping methods need to be considered in
addition to the AMD plant.
Various projects are being undertaken by the Company in order to evaluate
the possibility of expediting the water pumping, and of mining
underground, using different mine plans and methodologies.
MINING UPDATE
Mineral Resources
In August 2016, the application for the renewal of the Mining Rights was
compiled and submitted to the DMR in South Africa. Since the submission,
no further correspondence has been received from the DMR, and Central
Rand Gold has continued operations.
The Mineral Resources remain unchanged from the previous year, 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 pit mining to
target the higher grade underground ore body. The shift back to surface
did have a significant impact on the Company.
The below table provides the current surface areas available for mining:
Viable
Strike Estimated Average Estimated Reef
Location Length Tonnes Grade Thickness Ounces Package
(m) (t) (g/t) (cm)
Slot 1 338 35,395 1.60 124 1,308 Kimberley
N1 Bypass 1,380 77,764 1.40 84 3,496 Bird
Slot 6 450 85,068 2.17 113 5,929 Kimberly
Slot 5
Nasrec 120 13,191 1.35 72 572 Bird
Slot 5 CW
Road 1,300 130,317 1.29 72 5,405 Bird
Slot 10 460 89,050 1.98 123 5,669 Kimberley
Slot 11
West 820 288,302 1.98 360 18,311 Bird
Slot 11
East 345 125,491 1.98 131 7,970 Bird
Slot 11 A
west 650 70,589 1.98 131 4,483 Bird
Slot 11 A
east 470 130,188 1.98 47 8,288 Bird
Slot 12 460 90,283 1.29 123 3,747 Kimberley
Slot 4 836 60,162 2.09 132 4,043 Kimberley
Slot 5 406 49,015 2.12 92 3,342 Bird
Slot 7 1,964 150,708 2.23 189 10,786 Bird
The quantity and grade described above has been derived from historical
sampling data, together with current information gathered and verified
by both the Mining Engineer (J Ramabaleha), and the Geologist (S Ngcobo)
at Central Rand Gold.
The above table does not include surrounding sand and slimes resources
which the Company has sourced and secured for the Concentrator Plant,
which was purchased in 2017 and will be operational by January 2018.
Production statistics
31 December 31 December
Variance
2016 2015
Tonnes (t)
Tonnes (t) Tonnes (t)
Underground - - -
Surface 33,424 204,916 (171,492)
Reclamation 36,892 - 36,892
Total 70,316 204,916 (134,600)
Surface mining was largely focused at Slots 4, 5 and 7 during 2016. Pits
at Slots 5 and 7 have been mined down to a depth of approximately 30
metres. The average belt grade for these pits to date is 1.94g/t. In
March 2016, the pits were put onto Care and Maintenance as Mill Number
1 was structurally damaged and the Company had to source a new mill. The
mining strategy was revised and commenced once again at Slot 4 in the
first quarter of 2017. Focus is now on the rehabilitation of previously
mined-out pits.
With over 100 years of significant mining in the Johannesburg region,
there remains a significant amount of old rock and slime dumps, which
surround the Company’s metallurgical plant. Various owners of these
dumps have approached Central Rand Gold to sell or enter into a joint
venture with them for the extraction of gold from the materials.
To this extent, drilling and sampling operations have been undertaken.
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. A project was undertaken in
partnership with Zhejiang Golden Machinery Plant (“ZGMP”) to test a
concentrator pilot plant. The material used is reclaimed slimes/sands,
with below 1g/t grades. The outcome of the test work was positive and
the concentrator plant was sourced from China. The concentrator plant
was delivered to site in September 2017 and is currently in the design
phase for construction. It is anticipated that the concentrator plant
will be installed and commissioned in December 2017, and will be fully
operational in January 2018. Central Rand Gold will then be able to
process the reclaimed slimes/sands dump material economically.
METALLURGICAL UPDATE
Production statistics
2016 2015
January January
to to
December December
Internal
Tonnes processed (t) 48,938 183,761
Built up head grade (g/t) 1.49 1.69
Fine gold produced (Oz) 1,394 7,017
External (Toll treatment)
Tonnes processed (t) 65,979 -
Delivered grade (g/t) 1.37 -
Fine gold produced (Oz) 1,740 -
Total tonnes processed (t) 114,917 183,761
Total gold produced (Oz) 3,134 7,017
Internal gold production for 2016 was less than that of 2015 due to the
fact that Mill Number 1 was irreparable after a breakdown and
consequently, the Company had to source another mill. A second-hand mill
was purchased, installed and commissioned in October 2016, with full
production capacity being reached in November 2016.
All production was halted at the end of May 2016, and a total plant
clean up and shut down maintenance was undertaken. Production commenced
in August 2016, with the tolling of a third party’s material for the
remainder of the year.
FINANCIAL UPDATE
Results
The loss before interest, tax, depreciation and impairment for the period
under review amounted to US$3.1 million, considerably higher than that
of 2015 at US$2.9 million (restated).
Revenue realised from the sale of gold, derived from mining activities
for the year pertaining to internal gold production, decreased to 3,134
ounces (2015: 7,017 ounces), which is as a direct result of halting
operations in May 2016 and then commencing only with toll treatment for
the remainder of the period. The gold recovered from the tolled material
is not recognised as income for Central Rand Gold, and is attributed to
the third party; only the tolling fee is recognised as income. Overall
revenue in US Dollar terms (being from gold sales as well as toll
treatment) decreased by 41% from US$8.1 million in 2015 to US$4.8 million
in 2016, which is as a result of the down-time of operations.
Significant restructuring occurred within the Company to realign the
business to its new focus on toll treatment, with significant job
reductions, as well as changes to the management team and structure. At
the end of 2015, the executive team exited from the organisation and
apart from the CEO position, the vacancies were not filled. The
operations were managed empowering the current personnel. The Chief
Executive Officer of Central Rand Gold SA managed both the roles of
Chief Financial Officer and Chief Executive Officer of the Group during
2016. This trend is positive and the key focus remains to move the
organisation into sustainable cash generation as well as into a profit
making position.
Cash generated from fundraising and through the subscription of new
ordinary shares was used throughout the year in order to sustain the
operations, and for the replacement and repairs of critical equipment.
Since the suspension of the trading of shares, the operations have
managed to fund their own cash flows from production.
During the financial period, the Group discovered a number of accounting
errors relating to transactions and balances that had not been recorded
during the year ended 31 December 2015. Please refer to note 35 of the
Annual Financial Statements for details of these prior period errors.
LOOKING FORWARD
The focus over the next year is to continue to toll treat material
through the plant, to mine a small open pit operation and to purchase,
install and commission a concentrator plant so that the Company can
diversify its risk. This diversification will enable the Company to
respond to the market conditions which may negatively affect the ability
of the Company to actively generate an income. Central Rand Gold SA will
also focus on the rehabilitation of the mined out areas.
Various opportunities have been brought to the attention of Central Rand
Gold, and project and task teams have been formed to evaluate each one,
and make recommendations to the Board for possible joint ventures,
mergers and/or mining opportunities. Despite none of the opportunities
being deemed as viable, capital raising efforts are continuing. To that
end, in September 2017 the Company appointed Peterhouse Corporate Finance
Limited as its brokers, with a view to the Company undertaking a
recapitalisation. Work is underway in relation to that process, in the
context of the Company putting proposals to shareholders for the
necessary authority to enable any such recapitalisation to occur and
subsequent proposals to restructure the Company to divest itself of its
mining interests and related indebtedness but retaining its listings.
Lola Trollip
Chief Executive Officer
Statement of Financial Position
as at 31 December 2016
Group
Restated Restated
2016 2015 2014
Notes US$'000 US$'000 US$'000
ASSETS
Non-current assets
Plant and equipment 1,354 2,146 3,409
Intangible assets 1,430 1,691 2,830
Security deposits and
guarantees 52 46 191
Environmental guarantee
investment 2,659 2,584 3,177
Loans receivable 7,706 6,164 7,513
13,201 12,631 17,120
Current assets
Security deposits and
guarantees 29 26 65
Prepayments and other
receivables 361 444 1,239
Inventories 28 120 76
Cash and cash equivalents 489 556 914
Derivative asset - - 720
907 1,146 3,014
Total assets 14,108 13,777 20,134
EQUITY
Attributable to equity holders
of the parent
Share capital 9 28,372 26,617 26,490
Share premium 9 225,289 224,037 222,963
Share-based compensation
reserve 28,238 28,238 28,238
Treasury shares (6) (6) (6)
Foreign currency translation
reserve (27,234) (27,921) (29,597)
Accumulated losses (266,189) (261,713) (261,715)
(11,530) (10,748) (13,627)
Non-controlling interest - - -
Total equity (11,530) (10,748) (13,627)
LIABILITIES
Non-current liabilities
Environmental rehabilitation 3,281 3,676 4,904
Loan payable 7,706 6,164 13,285
10,987 9,840 18,189
Current liabilities
Trade and other payables 6,767 6,939 6,947
Royalties taxation payable 188 140 177
Loan payable 6 7,522 6,959 -
Derivative liability 6 174 647 8,448
14,651 14,685 15,572
Total liabilities 25,638 24,525 33,761
Total equity and liabilities 14,108 13,777 20,134
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2016
Group
Restated
2016 2015
Notes US$'000 US$'000
Revenue 4,825 8,093
Production costs (1,684) (6,079)
Employee benefits expense (2,071) (2,252)
Directors' emoluments (254) (468)
Operating lease expense (1,252) (872)
Operational expenses (443) (469)
Other expenses (2,388) (1,072)
Other income and gains 169 305
Foreign exchange transaction losses (49) (75)
Loss before interest, tax, depreciation
and impairment (3,147) (2,889)
Depreciation and amortisation charge (698) (925)
Impairment of assets (1,380) (1,418)
Fair value movement in embedded derivative 6 1,194 7,081
Finance and investment income 1,205 1,149
Finance costs (1,650) (2,996)
(Loss)/profit before income tax (4,476) 2
Income tax expense - -
(Loss)/profit for the year (4,476) 2
(Loss)/profit is attributable to:
Non-controlling interest - -
Equity holders of the parent (4,476) 2
(4,476) 2
(Loss)/earnings per share for loss
attributable to the equity holders during
the year (expressed in US cents per share)
Basic (loss)/earnings per share (3.06) -
Diluted loss per share (3.05) (2.79)
Statement of Profit or Loss and Other Comprehensive Income (continued)
for the year ended 31 December 2016
Group
Restated
2016 2015
US$'000 US$'000
(Loss)/profit for the year (4,476) 2
Other comprehensive (loss)/income:
Item that may be reclassified subsequently
to profit or loss
Exchange differences on translating foreign
operations 687 1,676
Other comprehensive (loss)/income for the
period, net of tax 687 1,676
Total comprehensive (loss)/income for the
period (3,789) 1,678
Total comprehensive (loss)/income is
attributable to:
Non-controlling interest - -
Equity holders of the parent (3,789) 1,678
(3,789) 1,678
Statement of Changes in Equity
for the year ended 31 December 2016
Attributable to equity holders of the Group
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Total
capital premium reserve shares reserve losses equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at
1 January 2015 –
previously reported 26,490 222,963 28,238 (6) (29,534) (261,559) (13,408)
Adjustments – prior
period errors - - - - (63) (156) (219)
Balance at
1 January 2015 –
restated 26,490 222,963 28,238 (6) (29,597) (261,715) (13,627)
Total comprehensive
income for the year
Profit for the year
- restated - - - - - 2 2
Other comprehensive
income
Foreign currency
adjustments - - - - 1,676 - 1,676
Transactions with
owners, recorded
directly in equity
Issue of shares:
Capital raising 127 1,074 - - - - 1,201
Balance at
31 December 2015 –
as restated 26,617 224,037 28,238 (6) (27,921) (261,713) (10,748)
Attributable to equity holders of the Group
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Total
capital premium reserve shares reserve losses equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance at
31 December 2015 –
previously reported 26,617 224,037 28,238 (6) (28,993) (260,117) (10,224)
Adjustments – prior
period errors - - - - 1,072 (1,596) (524)
Balance at
31 December 2015 –
restated 26,617 224,037 28,238 (6) (27,921) (261,713) (10,748)
Total comprehensive
income for the year
Loss for the year - - - - - (4,476) (4,476)
Other comprehensive
expense
Foreign currency
adjustments - - - - 687 - 687
Transactions with
owners, recorded
directly in equity
Issue of shares:
Capital raising 1,755 1,252 - - - - 3,007
Balance at
31 December 2016 28,372 225,289 28,238 (6) (27,234) (266,189) (11,530)
Statement of Cash Flow
for the year ended 31 December 2016
Group
Restated
2016 2015
Notes US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before tax (4,476) 2
Adjusted for :
Depreciation and amortisation 698 925
Loss/(profit) on disposal of plant and
equipment 892 (146)
Profit on disposal of shares (3) -
Impairment of assets 1,380 1,418
Revaluation of investment (54) -
Net loss on foreign exchange 49 75
Finance income (1,205) (1,149)
Finance costs 1,650 2,996
Fair value movement in embedded derivative 6 (1,194) (7,081)
Changes in working capital
Decrease in prepayments and other
receivables 84 795
Decrease/(increase) in inventory 92 (44)
Decrease in trade and other payables (172) (8)
Decrease in provisions (1,294) -
Cash flows used in operations (3,553) (2,217)
Finance income received 195 783
Net cash used in operating activities (3,358) (1,434)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment (9) (92)
Proceeds from disposal of plant and
equipment - 180
Increase in environmental guarantee deposit - 65
Withdrawal of capital on guarantee
investment 422 -
Net cash from investing activities 413 153
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares for cash 9 3,185 1,261
Cost relating to the issue of shares 9 (178) (60)
Net cash from financing activities 3,007 1,201
Net decrease in cash and cash equivalents 62 (80)
Cash and cash equivalents at 1 January 556 914
Effects of exchange rate fluctuations on
cash balances (129) (278)
Cash and cash equivalents at 31 December 489 556
Notes to the Annual Financial Statements
1. General information
Central Rand Gold Limited (“Central Rand Gold”) 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.
Central Rand Gold's operating subsidiary is Central Rand Gold South
Africa Proprietary Limited (“Central Rand Gold SA”). Central Rand Gold
has a primary listing on the London Stock Exchange (“LSE”) and a secondary
listing on JSE Limited (“JSE”).
Central Rand Gold 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 financial information for the year ended 31 December 2016 set out in
this announcement does not constitute the Company’s statutory accounts.
These financial statements included in the announcement have been
extracted from the Group annual financial statements for the year ended
31 December 2016. The financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards adopted for use in the European Union.
However, this announcement does not itself contain sufficient information
to comply with IFRS.
The auditor has issued his opinion on the Group’s financial statements
for the year ended 31 December 2016 which is qualified and contains an
emphasis of matter paragraph in respect of the matters referred to under
note 2 ‘Going concern’ and is available for inspection at the Company’s
registered address and will be posted to the Group’s website.
The basis for the qualified opinion is presented below:
With respect to plant and equipment amounting to US$1.35 million at
31 December 2016, evidence available to us was limited because we were
unable to carry out sufficient physical testing of items and verification
into the Group’s fixed asset register. Owing to the nature of the Group’s
accounting books and records, we were unable to obtain sufficient audit
evidence regarding the valuation, existence and completeness of plant
and equipment by using other audit procedures.
The emphasis of matter paragraph is presented below:
Emphasis of matter – Going concern
In forming our opinion on the consolidated financial statements, we have
considered the adequacy of the disclosures made in note 2 to the
consolidated financial statements concerning the Group’s ability to
continue as a going concern. The Group incurred a net loss of
US$4.48 million during the year ended 31 December 2016 and, at that date,
the Group’s net current liabilities amounted to US$13.6 million. These
conditions, along with the other matters explained in note 2 to the
consolidated financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about the Group’s ability
to continue as a going concern. The consolidated financial statements do
not include adjustments that would result if the Group was unable to
continue as a going concern.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards and Interpretations (collectively “IFRS”) issued by
the International Accounting Standards Board (“IASB”) as adopted by the
European Union (“EU”). However, this announcement does not itself contain
sufficient information to comply with IFRS. The Company will publish full
financial statements that comply with IFRS on 16 October 2017.
The consolidated financial statements are presented in United States
Dollars (“US$” or “US Dollar”) and rounded to the nearest thousand. The
functional currency of the parent company is the US Dollar. The
functional currency of its principal subsidiary, Central Rand Gold SA is
the South African Rand (“ZAR” or “Rand”).
Going concern
The Group had net current liabilities at 31 December 2016 of US$13.6
million, including US$7.7 million of loan notes (and interest), with
Redstone Capital Limited and Mr Wang, and US$6.8 million of trade and
other payables. The ability of the Group to continue as a going concern
is dependent on the Group securing access to sufficient additional
funding and extending the repayment terms of existing loan notes or the
loan note holders converting the loan notes into equity, to support the
Group’s cash flow projections.
In April 2016, following the decision of the High Court of South Africa
to uphold the Company's appeal with costs in relation the dispute with
Puno Gold Investments Proprietary Limited ("Puno"), Puno submitted an
application to wind up the Group’s South African operating subsidiary.
As previously announced, the Board believes this to be the latest
strategy from Puno to frustrate the operations of the Company and
considers the application to be without merit. The Company has engaged
legal advisers to defend the action and has submitted its legal rejection
of the application. The time period for Puno to file their replying
affidavit lapsed on 22 June 2016. Puno’s opportunity to file further
affidavits has now lapsed and the Company awaits Puno’s confirmation
whether they intend to persist in their application. In May 2017, the
Company applied for the abandonment of the liquidation application, and
was successful. This resulted in the liquidation application being
rendered null and void.
In May 2016, the Group ceased open pit mining operations and will instead
temporarily focus on toll treatment operations under a binding tolling
agreement with a third party which is expected to be cash flow generative.
The open pit was recommenced in March 2017, and various other tolling
agreements were entered into. This has created flexible income streams,
and has also reduced the risk of scarcity of material for feeding the
plant.
Since the year end, the Group has raised US$1.6 million (net) through
share placements and drawn down US$0.6 million of bridge finance under
a convertible loan note facility (‘CLN’) with Bergen Global Opportunity
Fund, LP (‘Bergen’) for working capital purposes. Under the terms of the
agreement, the Group can draw down up to US$4.0 million subject to
agreement by both parties.
Whilst CRGSA’s operations have by and large stabilised operationally in
2017, the financial and operational positions remain fragile and there
is a very thin working capital position at the operating company level
with a negative position within the Company, as mentioned above. The
Company’s production for the period January 2017 to 30 June 2017 was 2
320 Troy Ounces. The Company’s overall financial position is accordingly
negative and the Directors are now actively exploring urgent financing
options. In order to remain a listed, operational mining group, in steady
state and with a view to achieving medium term profitability, the
Directors consider a cash injection of not less than US$ 20 million would
be required to be made. The Directors consider that this is unlikely to
be forthcoming in the near future or at all. Accordingly the Directors
are actively pursuing options which would involve retaining its listings
but the disposal of the Company’s interests in its immediate subsidiary
company, Central Rand Gold (Netherlands Antilles) BV, unless it is able
to secure sufficient alternative finance at the required level in the
very near future.
The Group’s Senior Secured Loan Notes of US$7.25 million principal (‘the
Notes’), held by the Group’s largest shareholder Redstone Capital Limited
(‘Redstone’), fell due for maturity in September 2016. Redstone has
provided a written undertaking to extend the maturity of the Notes to at
least December 2018 subject to concluding negotiations regarding
revisions to the terms of conversion in the coming months. The Directors,
based on discussions with representatives of Redstone, fully expect that
the Notes will ultimately be converted rather than called for payment.
The Directors have prepared cash flow forecasts for a period of at least
12 months from the date these financial statements were approved, which
show that the Group is able to meet its liabilities as they fall due.
However, the cash flow forecasts are dependent upon the Group
successfully concluding the sale of the operating listed entity, and, by
novating the loans to the operating entities, privatising those
operations.
The Directors have concluded that the above circumstances give rise to
a material uncertainty that may cast significant doubt on the Group’s
ability to continue as a going concern and it may therefore be unable to
realise its assets and discharge its liabilities in the normal course of
business. Nevertheless, after taking account of the Group’s plans to
sell off some of the assets, and having considered the risks and
uncertainties associated with the forecasts, the Directors have a
realistic expectation that the Group will 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, the
Directors continue to prepare the financial statements on a going concern
basis, and the financial statements do not include any adjustments that
would result from the going concern basis of preparation being
inappropriate.
3. Accounting policies
These results have been prepared on a basis that is consistent with the
accounting policies applied by the Group in its audited consolidated
financial statements for the year ended 31 December 2015 and which will
form the basis of the 2016 annual report.
(a) New and amended standards adopted by the Group
In 2016 the Group adopted the amendments to IFRS 7 'Financial
Instruments: Disclosures', IFRS 10 'Consolidated Financial Statements',
IAS 1 'Presentation of Financial Statements', IAS 16 ‘Property, Plant
and Equipment, IAS 19 ‘Defined Benefit Plans: Employee Contributions and
IAS 38 ‘Intangible Assets’. These have had no significant impact on the
Group’s results.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations
are effective for annual periods beginning after 1 January 2016, and
have not been applied in preparing these consolidated financial
statements. Those which may be relevant to the Group are set out below.
The Group does not plan to adopt these standards early.
The amendments to IFRS 2 'Share-based Payment', IFRS 12 'Disclosure of
Interests in Other Entities', IFRS 15 'Revenue from Contracts with
Customers', IAS 7 'Statement of Cash Flows' and IAS 12 'Income Taxes'
are effective for accounting periods beginning on or after 1 January
2017 but with early adoption permitted. The amendments to IFRS 15
'Revenue from Contracts with Customers' is effective for accounting
periods beginning on or after 1 January 2018 but with early adoption
permitted. Management is still evaluating the effect of the adoption of
IFRS 15 ‘Revenue from Contracts with Customers’ to the operating results
of the entity. The amendments to IFRS 16 'Leases' is effective for
accounting periods beginning on or after 1 January 2019 but with early
adoption permitted. The adoptions are not expected to have a significant
impact upon the Group’s net results, net assets or disclosures.
IFRS 9 ‘Financial Instruments’ replaces IAS 39 Financial Instruments:
Recognition and Measurement. The standard includes requirements for
recognition and measurement, impairment, derecognition and general hedge
accounting. It uses a single approach, based on how an entity manages
its financial instruments (its business model) and the contractual cash
flow characteristics of the financial assets, to determine whether a
financial asset is measured at amortised cost or at fair value. It
requires a single impairment method to be used, replacing the numerous
impairment methods in IAS 39 that arose from the different classification
categories. It also removes the requirement to separate embedded
derivatives from financial asset hosts. The standard introduces new
requirements for an entity choosing to measure a liability at fair value
to present the portion of the change in its fair value due to changes in
the entity’s own credit risk in the other comprehensive income section
of the statement of comprehensive income, rather than within profit or
loss. This new standard may impact the classification and measurement of
financial assets and the Group is in the process of assessing the impact.
The standard is effective for year ends beginning on or after 1 January
2018.
4. Directorate
During the financial period under review, the composition of the
Board of Directors was as follows:
Name Position
Mr Nathan Taylor Non-executive Chairman
Mr Jason Hou Non-executive Director
Mr Allen Phillips1 Non-executive Director
Mr Mark Austin Non-executive Director
1 Mr Allen Phillips resigned from the Board and its committees on
6 June 2016.
5. 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.
6. Loans payable – Redstone Capital Limited
Central
Rand
Redstone’s Gold’s
debt debt
conversion conversion
Debt Warrant option option Total
US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000 US$ ‘000
At 1 January
2015 5,772 2,383 6,065 (720) 13,500
Fair value
(gain)/loss - (1,905) (5,896) 720 (7,081)
Interest 1,767 - - - 1,767
Cash paid (580) - - - (580)
At 31 December
2015 6,959 478 169 - 7,606
Fair value
(gain)/loss (618) - 5 - (613)
Derivative
lapsed - (478) - - (478)
Interest 582 - - - 582
At 31 December
2016 6,923 - 174 - 7,097
7. Related party transactions
On 19 August 2013, shareholders of the Company approved the issue to
Redstone, of US$7.25 million convertible loan note instruments bearing
8% p.a. coupon interest payable on a quarterly basis and repayable on
19 August 2016. The repayment terms were amended and extended to 31
December 2018. In addition to this, the Company entered into an
agreement to issue to Redstone warrants equivalent to 50% of the
Convertible Loan Note and an Option Agreement that, in the event that
the Company undertook an open offer, Redstone will have an option to
subscribe for such additional number of Ordinary Shares to ensure that
its percentage holding of the issued share capital of the Company
would remain unchanged (assuming the full conversion of the Loan Notes)
following any such open offer. All warrants lapsed on 19 August 2016.
8. Share-based payments
During the year, no further share options were granted to employees.
9. Share capital and share premium
Issued and
Number of fully paid Share
shares up shares premium Total
US$ ‘000 US$ ‘000 US$ ‘000
At 1 January 2015 87,180,808 26,490 222,963 249,453
Issue of shares for
cash 8,015,000 127 1,134 1,261
Cost of share issue - - (60) (60)
At 31 December 2015 95,195,808 26,617 224,037 250,654
Issue of shares for
cash 43,811,340 627 1,430 2,057
Shares issued in
respect of convertible
securities 68,743,550 1,128 - 1,128
Cost of share issue - - (178) (178)
At 31 December 2016 207,750,698 28,372 225,289 253,661
On 5 February 2016, the Company issued 14,279,371 new Ordinary Shares
of £0.01 each at a price of 3.5 pence per Ordinary Share, which raised
gross proceeds of approximately US$0.72 million (£0.50 million).
On 7 March 2016, the Company issued 20,719,644 new Ordinary Shares of
£0.01 each at a price of 3.5 pence per Ordinary Share, which raised
gross proceeds of approximately US$1.05 million (£0.72 million).
On 7 June 2016, the Company issued 4,620,005 new Ordinary Shares of
£0.01 each at a price of 3.0 pence per Ordinary Share, which raised
gross proceeds of approximately US$0.2 million (£0.14 million).
On 7 June 2016, the Company entered into a convertible securities
issuance deed (“Bergen Funding Agreement”) with Bergen Global
Opportunity Fund, LP (“Bergen”), an institutional investment fund
managed by Bergen Asset Management, LLC, a New York asset management
firm, in connection with an issuance by the Company of zero coupon
convertible securities (the “Convertible Securities”). The Convertible
Securities were (subject to the satisfaction of certain customary
conditions) issued in tranches and as at 31 December 2016 the
Convertible Securities were fully converted into 72,935,870 new
Ordinary Shares.
On 21 July 2016, the Company issued 4,192,320 new Ordinary Shares of
£0.01 each at a price of 1.3 pence per Ordinary Share, which raised
gross proceeds of approximately US$0.09 million (£0.05 million).
10. Dividends
No dividends were declared or paid during the year under review.
11. Reconciliation between (loss)/earnings and headline
(loss)/earnings attributable to equity holders of the Group
Headline (loss)/earnings are specific disclosures defined and required
by the Johannesburg Stock Exchange and are non-GAAP financial measures.
Group
2016 2015
US$’000 US$’000
(Loss)/profit attributable to equity
holders of the Group (4,476) 2
Add: Loss on disposal of plant and
equipment 892 -
Less: Profit on disposal of plant and
equipment - (146)
Headline (loss)/earnings (3,584) (144)
12. Contingent liability
Thin capitalisation
The tax legislation with regards to thin capitalisation changed with
effect from 1 April 2012 and is 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. 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 (“DWT”), at a rate of 15%.
In prior years, management obtained a 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 finalising a full Transfer Pricing
benchmarking study applying OECD (Organisation for Economic Co-
operation and Development) principles.
Open tax years
Central Rand Gold SA has entered into an Alternative Dispute Resolution
with the South African Revenue Service relating to income tax returns
submitted for the years of assessments 2010 to 2012.
iProp claim
iProp, the landowner of various mining sites, has lodged a claim for
outstanding rentals and leases. The amounts claimed are currently being
reconciled, in order to quantify the position.
13. Events occurring after reporting date
Operating
Feed material
The feed material provided by the tolling company was inappropriate in
that the materials supplied differed from those sampled and as a result
materials from the Mine Waste Dumps acquisition was used. This,
however, was too expensive to economically extract in this fashion as
the grade of the material was too low, and the requirement for
additional chemicals in order to extract the gold from the material
was not economical. Since the year end, the majority of feed has been
the Company’s own material.
Open pit
The Company has commenced small scale open pit mining, in slot 4 of
the Kimberley reef. Materials from those operations are being processed
and the Company is also processing third party materials on a tolling
basis.
Concentrator circuit
The Company has progressed its strategy of procuring centrifugal
concentrators. These will be used to semi-process 40,000 tonnes per
month of sand and slimes reclaim material, and then to metallurgically
treat only a small percentage of the result, which will accordingly be
richer in gold.
Labour dispute
11 days of post year end, production was lost due to industrial action
under which the unionised workforce declared a dispute regarding the
implementation of wage increases. The parties settled at the CCMA with
the result that 50% of each employee’s monthly salary shall be paid in
the form of a “13th cheque” in December 2017.
Suspension of trading
The Company cannot guarantee that it will be able to meet its financial
obligations as they fall due and as a result, the Company requested a
suspension in trading in its shares on 11 May 2017. The Board is
considering a number of solutions to ensure the Company meets its
financial obligations. As at the date of this report, the Company’s
shares remain suspended, pending further developments
Mill downtime
The drought experienced resulted in water use restrictions being
imposed throughout Gauteng. The Company invested in a reticulation
system to enable production to continue, which required additional
expenditure for which the Company had not budgeted.
The excessive rainfall in the region adversely affected the running of
the mills and both mill 1 and mill 2 struggled to cope with crushing
significantly cloggier and muddier feed materials than had been
contemplated. This resulted in a reduction in processing capacity.
The instability of the power grid in the region, and the adverse weather
which resulted in electrical storms, together resulted in a number of
power outages on site which materially affected production in the first
quarter of 2017.
Fundraising
In order to strengthen its working capital and to procure, ship,
install and commission the Concentrator Circuit, the Company has
subsequent to year-end completed the following fundraising:
- A new loan agreement (“the Loan Agreement”) entered into on
9 January 2017 with Mr Jia Bang Wang (“Mr Wang”) for funding in the
amount of US$1 million (“Loan”). The loan bears interest at the UK
prime lending rate plus 2% per annum and is repayable within six
months from the date of entering into the Loan Agreement. In the
circumstance where the Company would not be able to repay the Loan,
the Loan Agreement stipulates that the Company is to inform Mr Wang
of such circumstances. To date, the full value of the Loan had been
received by the Company. The Loan became repayable on 9 July 2017
but the Company was not in a position to repay the Loan at that stage
and accordingly informed Mr Wang as such.
- A share placement on 23 March 2017 of 60,000,000 new ordinary shares
at 0.5 pence, which raised £0.30 million.
- A bridge funding (the “Bridge Funding”) through a combined
convertible securities with Bergen. The Bridge Funding raised
US$240,000. The Convertible Securities were (subject to the
satisfaction of certain customary conditions) issued in tranches and
were fully converted into 26,946,257 new ordinary shares by
2 May 2017.
Financing
The Directors have been actively exploring urgent financing options.
In order to remain a listed, operational mining group, in steady state
and with a view to achieving medium-term profitability, the Directors
consider that a cash injection of not less than US$ 20 million would
be required. The Directors consider that this is very unlikely to be
forthcoming in the near future or at all. Accordingly, the Directors
have been actively pursuing options which would involve retaining its
listings but would require the disposal of the Company’s interests in
its immediate subsidiary company, Central Rand Gold (Netherlands
Antilles) NV, unless it is able to secure sufficient alternative
finance at the required level in the very near future.
Puno dispute
On 13 June 2017, the High Court of South Africa, (Gauteng Division,
Pretoria) (“the Court”) handed down judgement under case number:
45200/2011, being the matter initiated by the Company, CRGNV and CRGSA
against Puno on 25 November 2011. The judgement delivered was in favour
of the Company, CRGNV and CRGSA. The Court upheld the views of these
entities and rejected the defences proffered by Puno. This judgement
has now definitively and positively pronounced on the validity and
enforceability of the funding call, and found that such funding call
was made in accordance with the overarching law and the Shareholders
Agreement.
iProp claim
In October 2017, iProp issued a claim to the Company’s subsidiary,
regarding the recovery of outstanding leases and rentals. The claim
includes late penalty charges and interest, which have not been accrued
in these consolidated financial statements. This matter is with the
Company’s legal advisors.
Recapitalisation of the Company
In September 2017, the Company appointed Peterhouse Corporate Finance
Limited as its brokers, with a view to the Company undertaking a
recapitalisation. Work is underway in relation to that process at the
time of approval of these consolidated financial statements, in the
context of the Company putting proposals to shareholders for the
necessary authority to enable any such recapitalisation to occur and
subsequent proposals to restructure the Company, to divest itself of
its mining interests and related indebtedness but retaining its
listings.
Other
Subsequent to the appointment of Brandon Hill Capital Limited (“Brandon
Hill”) as the Company’s broker on 23 January 2017, Central Rand Gold
issued 936,330 ordinary shares in the Company as part consideration of
their fee, in accordance with the terms of their engagement letter.
On 8 May 2017, the Company issued 4,200,000 ordinary shares to a
creditor in lieu of a fee due by the Company.
14. Correction of prior period errors
During the financial period, the Group discovered a number of
accounting errors relating to transactions and balances that had not
been recorded during the years ended 31 December 2014 and 31 December
2015. Details are as follows:
1. An item of plant and equipment, being the dosing tank, that was
sold in 2014 was not recorded as such. As a consequence, plant and
equipment has been overstated by US$464,243 and the loss on the
disposal of the asset has been understated by US$496,556 during
the year ended 31 December 2014. As a results of the above, plant
and equipment has been overstated by US$334,725 and the
depreciation and amortisation charge has been overstated by
US$14,743 during the year ended 31 December 2015.
2. Interest on the Puno loan payable was incorrectly calculated at
prime plus 2% instead of at the prime rate. As a consequence, the
Puno loan balance at 31 December 2014 has been overstated by
US$1,132,960 and the related interest expense has been overstated
by US$1,211,820. As a result of the above, the loan payable has
been overstated by US$1,071,656 and the related interest expense
has been overstated by US$70,245 during the year ended
31 December 2015.
3. Intangible assets, relating to the water pumps previously donated
to the Government, had not been amortised during the year ended 31
December 2015 in accordance with IFRS and the Group’s accounting
policies. As a consequence, intangible assets have been overstated
by US$422,889 and the related amortisation expense has been
understated by US$514,822.
4. Certain items of plant and equipment, being the cone crusher, jaw
crusher and electrical house, were not capitalised during the 2014
year of assessment. As a consequence, plant and equipment has been
understated by US$281,238, production costs have been overstated
by US$320,424, depreciation has been understated by US$19,610,
trade and other payables have been understated by US$35,770 and
the taxation expense has been understated by US$38,259 during the
year ended 31 December 2014. As a result of the above, plant and
equipment has been understated by US$210,113 and trade and other
payables have been understated by US$26,723 during the year ended
31 December 2015.
5. The auditor’s fees accrual during the 2015 financial year was
overstated in comparison with the actual fee incurred. As a
consequence, trade and other payables have been overstated by
US$57,701 and other expenses have been overstated by US$70,245
during the year ended 31 December 2015.
6. A prepayment in respect of insurance has been overstated as the
related expense was supposed to be fully recognised in 2015. As a
consequence, prepayments and other receivables have been
overstated by US$36,054 and other expenses have been understated
by US$43,891 during the year ended 31 December 2015.
7. An outstanding debt past its collectable date and that has been
carried forward from previous financial periods was written off.
As a consequence, trade and other payables have been overstated by
US$29,499 and the operational expense has been overstated by
US$35,911 during the year ended 31 December 2015.
8. Based on the current circumstances with Puno, the net difference
between the Puno loan receivable and Puno loan payable should be
provided for. As a consequence, the Puno loan receivable was
overstated and the impairment expense was understated as at
31 December 2014 and 31 December 2015 by US$1,133,000 and
US$1,071,653 respectively.
1. Consolidated Statement of Financial Position
Impact of correction of errors
Previously
stated Adjustments Restated
US$’000 US$’000 US$’000
1 January 2015
Non-current assets 18,436 (1,316) 17,120
Current assets 3,014 - 3,014
Total Assets 21,450 (1,316) 20,134
Non-current liabilities 19,322 (1,133) 18,189
Current liabilities 15,536 36 15,572
Total Liabilities 34,858 (1,097) 33,761
Total Equity (13,408) (219) (13,627)
31 December 2015
Non-current assets 14,251 (1,620) 12,631
Current assets 1,182 (36) 1,146
Total Assets 15,433 (1,656) 13,777
Non-current liabilities 10,912 (1,072) 9,840
Current liabilities 14,745 (60) 14,685
Total Liabilities 25,657 (1,132) 24,525
Total Equity (10,224) (524) (10,748)
2. Consolidated Statement of Profit or Loss and Other Comprehensive
Income
Impact of correction of errors
Previously
stated Adjustments Restated
US$’000 US$’000 US$’000
31 December 2015
Profit 1,442 (1,440) 2
Item that may be
reclassified subsequently
to profit and loss
Exchange differences on
translating foreign
operations 541 1,135 1,676
Total comprehensive
income 1,983 (305) 1,678
3. Consolidated Statement of Cash Flow
Impact of correction of errors
Previously
stated Adjustments Restated
US$’000 US$’000 US$’000
31 December 2015
CASH FLOWS FROM OPERATING
ACTIVITIES
Net cash used in operating
activities (1,421) (13) (1,434)
CASH FLOWS FROM INVESTING
ACTIVITIES
Net cash from investing
activities 153 - 153
CASH FLOWS FROM FINANCING
ACTIVITIES
Net cash from financing
activities 1,201 - 1,201
Net decrease in cash and
cash equivalents (67) (13) (80)
Cash and cash equivalents
at 1 January 914 - 914
Effects of exchange rate
fluctuations on cash
balances (291) 13 (278)
Cash and cash equivalents
at 31 December 556 - 556
Issued on behalf of: Central Rand Gold Limited
Date: 16 October 2017
Date: 16/10/2017 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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