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CRD - Central Rand Gold Limited - Operational Update

Release Date: 29/01/2009 09:00:07      Code(s): CRD
CRD - Central Rand Gold Limited - Operational Update                            
Central Rand Gold Limited ("CRG" or the "Company")                              
(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: GG00B248M601                                                              
Share code on LSE: CRND                                                         
Share code on JSE: CRD                                                          
OPERATIONAL UPDATE                                                              
29 January 2009 - London and Johannesburg listed Central Rand Gold ("CRG" or    
"the Company") is pleased to announce an operational update following the       
conclusion of the operating plan for 2009.                                      
-    Trial mining results to date are in line with management expectations      
-    Cash position as at 31 December 2008 - approximately US$ 70 million        
    2009 budget and production profile approved by the Board to achieve a       
    self-funding, sustainable business by 2010                                  
-    Reserve statement expected by March 2009                                   
-    Concentrator and Flotation modules operating efficiently                   
-    First portal and decline excavation is progressing according to target     
With the execution of the New Order Mining Right in November 2008, the          
commissioning of the 20tph Gekko Plant and the first gold pour in December      
2008, CRG has confirmed its plan to push ahead with trial mining in the Slot    
8 area as the next step in its path to sustainable commercial production.       
2009 Budget and Operating plan                                                  
In December 2008, the CRG Limited Board ("the Board") approved the              
operational plan for 2009. Prior to approval, an extensive review process was   
undertaken by the Board which included consideration on various options         
available to the Company in terms of production and cash spend. In light of     
the current global financial difficulties, the Board has focussed balancing     
cash conservation with investment in infrastructure.                            
The primary objective of CRG for 2009 is to ensure that our first target of     
producing at an annualised rate of 100,000oz per annum is achieved in the       
form of a sustainable and self-funding business. During this period, CRG will   
focus on managing and reducing non essential expenses by limiting headcount     
growth and use of on external consultants.                                      
Importantly, the Company does not anticipate that it will require additional    
funding during 2009 to achieve the targeted production rate.                    
As a result, management has decided to prioritise its efforts in converting     
resources to  reserves, with the first announcement anticipated in late March   
2009. Snowden Mining Consultants has been contracted to complete this           
The upscaling of production targets beyond 2009 will be set by the Board        
based on the results of the trial mining, successful execution of the mine      
plan and the status of the world financial markets.                             
Production Profile                                                              
CRG plans to have the following crushing and concentrating plants ("CC          
plants") commissioned during 2009.                                              
Plant         Annualised Anticipated  Cost          Expected                    
Plant      Annualised                 Commissioning                
             Capacity   Au                                                      
20tph Gekko   144 000t   14 000 oz    Purchased in  Fully                       
Concentrator                          2008          commissioned                
30tph         216 000t   20 000 oz    ZAR 50        May 2009                    
Bateman                               million (US$                              
Concentrator                          5 million) -                              
Plant                                 approximately                             
                                     30% paid in                                
50tph Gekko   360 000t   34 000 oz    AUD$ 9 - 12   End of Q3                   
Concentrator                          million (US$  2009                        
Plant with                            6 - 8                                     
ancillaries*                          million)                                  
50tph Gekko   360 000t   34 000 oz    AUD$ 9 - 12   Q4 2009                     
Concentrator                          million (US$                              
Plant with                            6 - 8                                     
ancillaries*                          million)                                  
*CRG has already entered into advanced discussion with Gekko Systems for the    
supply of the two additional 50tph plants detailed above. These will be based   
on the same platform as the 20tph Gekko CC plant that is currently being        
utilised. CRG expects to place the order for the two 50tph Gekko CC plants by   
the end of February 2009. The above CC plants will provide CRG with a           
production capability of approximately 90 000 tpm.                              
The CC plants will produce a concentrate of approximately 10% of the ore        
inputted that will then be treated by a Carbon in Leach plant detailed in the   
table below:                                                                    
Plant            Annualised    Cost          Expected                           
                Plant                       Commissioning                       
Carbon in Leach  120 000t of   ZAR 48        April 2009                         
Concentrate      concentrate   million (US$                                     
Treatment Plant                4.8 million)                                     
35% paid in                                       
The Company expects to produce between approximately 40 000 and 50 000 oz of    
gold as it ramps up to the target annualised production rate of 100 000oz per   
annum by the end of 2009.                                                       
Budgeted Spend                                                                  
The Company has budgeted gross cash spend of approximately US$103 million in    
2009 to be funded by existing cash reserves as well as from revenues            
generated by gold sales. The economic assumptions set are as follows:           
Indicator           Assumption                                                  
Average Gold Price  US$850 per oz                                               
ZAR:US$             10:1                                                        
The breakdown in spend is detailed in the table below:                          
Department                                     % of Spend                       
Plant and Equipment, Decline Development,      62%                              
Mining, Rehabilitation and Metallurgy                                           
Geological Support, Exploration and Shaft      21%                              
Other Mining Support Services                  3%                               
Environmental Support, Social and Labour Plan  4%                               
and Corporate Social Investment                                                 
Administrative Overheads                       10%                              
As described in the table above, 90% of spend is to be spent in the             
operational aspects of the business.                                            
Besides for the capital equipment to be purchased as described above, other     
highlights include:                                                             
-    Approximately 13 000 metres of stoping and decline development to be       
-    Approximately 400 000 to 450 000 tonnes of ore to be treated               
Capital Resources                                                               
The Board identified that in 2009, the vast bulk of capital and operating       
expenditure would be in South African Rand and Australian Dollars. Following    
the Initial Public Offering in November 2007, the Company has maintained its    
capital resources in the form of Sterling bank deposits. With the recent        
currency volatility, the Board decided it would be prudent to match the         
Company`s currency reserves with its operating and capital requirements for     
2009. Consequently, in January 2009, the Company converted its Sterling         
reserves in ZAR and AUD$ to match fund the budgeted spend. Assuming that        
revenues from gold sales and operating and capital spend are consistent with    
the 2009 budget, the Company anticipates that it will have sufficient cash      
resources to operate comfortably in 2010 at a production rate of 100 000 oz     
per annum without additional financing.                                         
Trial Mining                                                                    
Slot 8 is located on the Consolidated Main Reef tenement and covers a strike    
length of approx 2 kilometres of the Main Reef package. Exploration work,       
availability of open land and availability of utilities made the slot an        
ideal area to start operations.                                                 
Surface exposures of Main Reef and Main Reef Leader are currently being         
extracted on Slot 8 while a decline will be developed in the footwall to        
access ore underground. The method utilised is referred to as the "slot and     
undercut" method. The "undercut" extraction method employed will be drift and   
fill where backfilling is completed immediately after mining. Initial surface   
trials have begun with mining and processing of oxidized slot ore material to   
approximately 5 to 10 metres deep.                                              
The objectives of the first phase of the trial mining process was as follows:   
-    Test efficiency of grade control techniques                                
-    Test surface mining techniques                                             
-    Test metallurgical processes and equipment relating to the surface         
    oxidized material and where possible fresh underground rock                 
Geological input on trial mining first focused on grade control drilling and    
trenching which identified mineable reef which then allowed the excavation      
and exposure of the Main Reef package to a depth of 10m.  The Main Reef         
package consisted of a block of approximately 150m along strike to a depth of   
10m giving an approximate available tonnage of 8 100 tonnes at an estimated     
in situ grade of 4.85g/t. The targeted reef was exposed by stripping the        
overburden utilising backhoe excavators and 30t articulated dump trucks in      
two phases - from zero to five metres below surface and from five to ten        
metres below surface. Ore was then measured, sampled, extracted and             
transported to the Gekko CC plant stockpile. It is important to note that the   
mine material was extracted utilising free digging and no blasting was          
required. Reconciliations of predicted and actual grades and tonnages have      
been computed and the results are in line with expectation. During the trial    
mining period 15 November 2008 to 15 January 2009 approximately 5 920 tonnes    
of this block was mined of which 5 120 tonnes has been processed.               
For the trial milling period from 15 November to 30 December only gravity       
concentrate was extracted from the Gekko CC plant.  From 31 December to 15      
January, plant extraction employed both gravity and flotation concentration     
with the flotation circuit having been commissioned on 30 December 2008.        
Sufficient information is available to show that the flotation component of     
the extraction is operating close to expectations i.e. no fundamental flaws     
or process threatening operating conditions were encountered even with the      
heavily oxidized surface (lower density) ore processed.                         
Estimated final operating recoveries have proven to be in line with             
predictions of 70% to 80% in the heavily oxidized surface material.             
On 16 January 2008, a speed trial of 1.5 hours on the Gekko CC plant was        
conducted using screened fresh hardrock material of ore from the surrounding    
old plant site.  The CC plant proved that it could operate at 20 tonne per      
hour, with the maximum throughput achieved for a one hour period being 21.3     
tonnes. A test is planned to take place shortly to have a two day operation     
on the competent rock to verify that the plant can process at a sustained       
rate of 20 tonnes per hour.                                                     
The remaining trial objectives still to be concluded include:                   
-    Testing the backfilling, reconsolidation and surface rehabilitation        
-    Testing of the CIL plant component                                         
-    Trial stoping underground                                                  
-    Testing of the plant in an underground environment                         
Current Developments                                                            
Portal Excavation and Decline Development                                       
The portal excavation for the main decline is nearing completion. Upon          
completion, the development of the decline will commence which is to be set     
at 8?.The first level will be developed at 25 metres below surface.  This       
level will be utilised as a ventilation access level and for the development    
of water storage dams. The second level will be cut at 75 metres below          
surface. The trial CC plant site will be cut 50 metres below surface.           
The trial stoping sites will be positioned between 25 and 50 metres below       
Underground Water Level                                                         
The Company has calculated that DRD Gold Limited`s decision to suspend ERPM`s   
operations and the decision to stop pumping at its South West Vertcal Shaft     
will have no short or medium term effects on its own mining operations.         
The Company is currently in negotiations through the Central Environmental      
Basin Corporation (a not for profit company of which all effected mining        
companies in the Central Rand area are shareholders) to establish a pump        
station at the South West Vertical Shaft at a depth of 600 metres. The          
installation process is estimated to take approximately 18 months to complete   
Commenting on the advancement to date, Johan du Toit, CRG`s CEO stated:         
"Following the granting of the mining right, the commencement of trial mining   
and early-stage gold production in late 2008 our understanding of this vast     
ore body deepens with every passing day.  We have also been encouraged by the   
results so far from trial mining, with no significant discrepancies from our    
original modeling of the asset so far.  We remain confident of reaching an      
exit rate production of 100,000 ounces per annum by the end of this year.  We   
also recognise the importance of maintaining a strong balance sheet during      
the current difficulties associated with global capital markets and will        
maintain flexibility on how we ramp up production over the next 2 years or      
so.  We look forward to announcing further progress on our trial mining and     
to starting commercial production within the next few months."                  
For further information please contact:                                         
Johan du Toit                                                                   
(011) 551 4000                                                                  
Wayne Epstein                                                                   
(011) 551 4000                                                                  
Buchanan Communications Limited                                                 
+44 (0) 20 7466 5000                                                            
Bobby Morse / Ben Willey                                                        
Evolution Securities Limited                                                    
+44 (0) 20 7071 4300                                                            
Simon Edwards / Chris Sim / Neil Elliot                                         
Jenni Newman Public Relations (Pty) Ltd                                         
+27 (0) 11 772 1033                                                             
Jenni Newman / Megann Outram                                                    
Macquarie First South Advisers (Pty) Ltd                                        
+27 (0) 11 583 2307                                                             
Thato Morojele / Annerie Britz / Melanie de Nysschen                            
Date: 29/01/2009 09:00:06 Supplied by www.sharenet.co.za                     
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