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CRD - Central Rand Gold Limited - Operations update

Release Date: 08/07/2009 08:00:02      Code(s): CRD
CRD - Central Rand Gold Limited - Operations update                             
Central Rand Gold Limited                                                       
("Central Rand Gold" or "CRG")                                                  
(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: GG00B24HM601                                                              
Share code on LSE: CRND                                                         
Share code on JSE: CRD                                                          
OPERATIONS UPDATE                                                               
Central Rand Gold ("CRG" or "the Company"), the gold mining company with        
assets in Southern Johannesburg, announces an operations update, a summary of   
which is:                                                                       
-    A mining plan to extract initially two higher grade reef zones using a     
long hole stoping mining method and cemented backfill for regional ground   
    support;                                                                    
-    Decline development has now reached 200m with 100m to go before reaching   
    reef;                                                                       
-    Underground trial mining starts with reef development in August and trial  
    stoping will commence December 2009/January 2010;                           
-    New 30tph Bateman crushing and concentrating plant and Carbon In Leach     
    plant are being commissioned; and                                           
-    Cash on hand as at June 30, 2009 - US$ 46.3 million.                       
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Central Rand Gold will host a conference call for analysts on Wednesday 08      
July 2009 at 10:00 am UK time / 11:00am South Africa.                           
Participants may join the call by dialling one of the two following numbers,    
approximately 10 minutes before the start of the call.                          
From the UK: (toll free) 0808 109 1498                                          
From South Africa: (toll free) 0800 999 539                                     
Participant pass code: 878026#                                                  
Contact:                                                                        
Johan du Toit                             + 27 (0) 11 551 4000                  
Wayne Epstein                                                                   
info@centralrandgold.com                                                        
Enquiries:                                                                      
                                                                                
Evolution Securities Limited              + 44 (0) 20 7071 4300                 
Simon Edwards/ Chris Sim/Neil Elliot                                            
                                                                                
Macquarie First South Advisers (Pty) Ltd  + 27 (0) 11 583 2000                  
Thato Morojele/ Melanie de Nysschen                                             
/Manisha Ramlakhan                                                              
                                                                                
Buchanan Communications Limited           + 44 (0) 20 7466 5000                 
Bobby Morse/ Ben Willey                                                         
                                                                                
Jenni Newman Public Relations (Pty) Ltd   +27 (0) 11 772 1033                   
Jenni Newman/ Megann Outram/ Lerato                                             
Tlatlane                                                                        
1.   Mine Plan, Mining Method and Reserve Update                                
As advised in the Company`s Interim Management Statement in May 2009, Central   
Rand Gold engaged independent mining consultants, Snowden Mining Consultants    
("Snowden"), to review its proposed development strategy and mining methods to  
extract the Main Reef on the Consolidated Main Reef ("CMR") tenement (See       
figure 1).                                                                      
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Figure 1                                                                        
Extensive work has continued between the CRG team, lead by Mr Don Harper        
(recently appointed as the Company`s Head of Mining) and Snowden to develop a   
detailed and optimised plan for mining from the initial decline. Details of     
the new mine plan and mining method are outlined in Appendix 1 and focus on a   
high grade channel located between 50m and 750m below surface at Slot 8. This   
will be followed by a second high grade channel and decline to the West of the  
first (See figure 2). The aim of this plan is to generate the parameters for a  
Resource to Reserve conversion for these mining areas which, in turn, could     
become the template for much of the remainder of CRG`s near surface Resource.   
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Figure 2                                                                        
As the method chosen (long hole, mechanised stoping) is new to the              
Witwatersrand Goldfields, there remains a range of uncertainties which          
probably only physical mining will clear up. Key amongst these are:             
-    The extent and distribution of gold outside of the reef zone;              
-    Dilution generated during on reef development and stoping;                 
-    Consequently the head grade to be expected in practice and the amount of   
development required relative to payable reef; and                          
-    The  percentage  of cement required in the backfill                        
Trial mining and mining optimisation is expected to provide answers to these    
key questions and drive any future revisions to the mine plan and overall       
project economics.                                                              
CRG and Snowden are in the process of completing studies relating to the        
geotechnical program and detailed costings required for Snowden to prepare the  
initial Reserve estimate based on the current mine plan. The initial ore        
Reserve estimate will relate specifically to the conversion of the two higher   
grade channels of the Main Reef Resource described above. Revised Cash costs    
estimates and forecast of production build up will be communicated at the time  
of release of the Snowden Reserve statement. The Resource to be converted in    
this area is approximately 4.38mt @ 4 g/t Au although, when mining parameters   
are applied, it is expected that not all of this Resource will be converted to  
Reserves.                                                                       
The Company is continuing to progress its decline from the surface towards the  
first higher grade zone using the Eastern decline (as shown in the figure 2     
above). To date, the Company has achieved approximately 200m of development,    
with approximately a further 100m required to reach the zone where the next     
phase of trial mining will commence with development of the reef drives.        
Underground trial mining is expected to commence in August 2009 once the reef   
has been intersected and trial stoping is expected to commence at the end of    
2009/January 2010.                                                              
2.   Metallurgical Plant Progress                                               
The new Bateman 30tph crushing and concentrating plant is being commissioned    
along with the Carbon-in-Leach ("CIL") concentrate treatment plant with gold    
on carbon already being achieved. The plants have been processing surface       
material from the Main Reef and Main Reef Leader outcrops.                      
The existing 20tph Gekko crushing and concentrating plant continues to process  
surface outcrop material. To June 25, 2009, approximately 40,800t have been     
processed producing a concentrate with an estimated 2,950 oz of contained gold  
(excluding some gold already refined at Rand Refinery Limited).                 
3.   Cash Position                                                              
CRG`s cash on hand as at June 30, 2009 was US$ 46.3 million. As advised in the  
Company`s Interim Management Statement in May 2009, the Company is undertaking  
significant cost cutting initiatives which is minimising the Company`s cash     
burn rate.                                                                      
The information in this statement has been reviewed and approved in writing by  
Mr. Keith Matier, BSc (Hons), GDE, Pr Sci Nat, who is a competent person in     
terms of the SAMREC and JORC codes. Mr. Matier is Geology Manager of Central    
Rand Gold South Africa (Pty) Ltd and has over 16 years experience in            
exploration, mineral resource management and mining.                            
Appendix 1                                                                      
The Proposed Mining Method                                                      
The key parameters that influence underground mining of the Main Reef at CMR    
are:                                                                            
The Main Reef, which underlies the Main Reef Leader, is a well developed        
conglomerate reef dipping at about 35 to the south, which averages 130 cm over  
channel width. Economic mineralisation is predicted to occur in two broad       
shoots within the area of the CMR lease currently under review.                 
The Main Reef Leader was extensively mined in the early to mid 1900s. The Main  
Reef was also sporadically stoped at this time. The parting between the Main    
Reef and Main Reef Leader ranges from aproximately 0.5 m to 3.0 m thick. It     
will be difficult to safely maintain the parting as a stable beam and it will   
therefore be extracted concurrently with the Main Reef. As the parting is, for  
these purposes, assumed to be unmineralised it will be removed from the run-of- 
mine ore stream using selective blasting and ore sorting.                       
The stability of the Main Reef Leader hangingwall will be maintained by rock    
bolting from the reef drives and filling approximately 25% of the Main Reed     
Leader void with a stiff (1.2 MPa) backfill prior to extracting underlying      
Main Reef between the 3m wide Main Reef Leader geotechnical pillars.            
An unquantifiable volume of broken sweepings and vamping may be recovered from  
the Main Reef Leader concurrently with Main Reef stoping.                       
CRG will trial a mechanised mining method to extract the Main reef. Each shoot  
will be accessed using a conventional decline and crosscuts to intersect the    
Main Reef at about 11m vertical intervals. Reef drives will be developed east   
and west to the limits of the high grade shoot using singleboom development     
rigs (jumbos) and small load-haul-dump loaders (LHDs). Blasted development      
rock will be trucked to surface, where the high grade material will be          
separated from the the waste, using tried and tested traditional hand-sorting.  
This is expected to improve the development grade significantly. Sampling of    
the reef drives will identify the payable zones on each level. Within these     
payable zones, the overlying Main Reef Leader will be stabilised with cemented  
backfill. Only every second stope panel will require backfill. The backfill     
crew will gain entry to the Main Reef Leader stope by progressively installing  
pre-stressed elongate supports, which will be used to support the backfill      
bags. Any Main Reef Leader sweepings and vamping will be removed at this time.  
A mechanised drill will be used to drill up to 15 m long blast holes on dip in  
the waste parting and the Main Reef. The parting will be blasted and either     
trucked to surface or tipped into old stope voids. The Main Reef will then be   
blasted and removed to surface. The stope void will be filled with cemented     
backfill.                                                                       
Main Reef material will be trucked to surface initially as it is not planned    
to relocate the concentrators underground unless technical and financial        
studies demonstrate that this is an economically feasible option for the upper  
levels. Waste is planned to be backfilled into the open stope voids between     
the cemented backfilled pillars.                                                
For schematics of the mining method, please refer to appendix 2.                
Geological Resource Model                                                       
As previously indicated the Company is targeting the Main Reef Mineral          
Resource estimated for the Consolidated Main Reef tenement and prepared by Dr   
C Lemmer in 2007. Dr. Lemmer applied a minimum channel width of 100 cm for the  
reef. Where channel widths were less than 100 cm, they were bulked up at zero   
grade. This bulking retains the metal content, but at a lower grade.            
The Main Reef Mineral Resource estimate over CMR, from 70m below surface to     
900m below surface comprises an Indicated Resource of 8.7 Mt at 4.7 g/t Au and  
an Inferred Resource of 0.3 Mt at 5.8 g/t.                                      
Metallurgical Process                                                           
The metallurgical plants will consist of three modular crushing and             
concentrating plants and a CIL concentrate treatment plant. The crushing and    
concentrating plants will comprise a 20 tph concentrator, purchased from Gekko  
Systems in Australia and commissioned in October 2008, a 30 tph plant from      
Bateman Projects currently being commissioned and a 50 tph Gekko plant with     
commissioning scheduled for the last quarter of 2009. These will have combined  
capacity of 60,000 tonnes per month ("tpm") be utilised to concentrate the      
gravity and flotation recoverable gold. A 10,000 tpm CIL concentrate treatment  
plant will be utilised to treat the concentrate from the crushing and           
concentrating plants.                                                           
Run of mine (ROM) material will be delivered by truck or from the handsorting   
belt to a stockpile. It will then be fed into a jaw crusher and then to the     
concentrator to recover the gravity recoverable gold. The concentrate tail      
will pass through flotation cells to produce a flotation concentrate. The two   
concentrate streams will be processed in a CIL circuit to recover the gold by   
electrowinning and smelting. Flotation and CIL tailings will be disposed of as  
backfill in the underground voids.                                              
Overall actual recoveries and unit costings from the metallurgical process      
will be confirmed once the complete CIL cycle has been commissioned and         
optimised. However, the six phases of metallurgical test work that have been    
undertaken provide confidence that a metallurgical recovery of 80% is           
achievable from unoxidised underground reefs.                                   
Appendix 2                                                                      
Pre-mining schematic view:                                                      
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Step 1: Create Reef drives (reef material transported to surface and hand       
sorted), insert appropriate support utilising rockbolts in the Main Reef        
Leader roof and backfill bags. Collect all available old gold, sweepings and    
vampings from above the middling                                                
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Step 2: Blast out the middling (assuming no gold), muck out and send to waste   
disposal point underground.                                                     
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Step 3: blast out the Main Reef and transport to surface utilising LHD`s for    
metallurgical treatment.                                                        
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Step 4: Repeat this process on the lower levels                                 
(For the release with pictures and schematics, please refer to the Company`s    
website: www.centralrandgold.com)                                               
Step 5: Rehabilitate and support the void by backfilling with cemented          
tailings                                                                        
(For pictures and schematics, please refer to the Company`s website:            
www.centralrandgold.com)                                                        
Date: 08/07/2009 08:00:01 Supplied by www.sharenet.co.za                     
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