CRD - Central Rand Gold Limited - 2009 Interim report Release Date: 25/08/2009 08:30:11 Code(s): CRD CRD - Central Rand Gold Limited - 2009 Interim report
Central Rand Gold Limited
(Incorporated as a company with limited liability under
the laws of Guernsey,Company Number 45108)
(Incorporated as an external company with limited
liability under the laws of South Africa, registration number 2007/019223/10)
ISIN: GG00B24HM601
Share code on LSE: CRND
Share code on JSE: CRD
("Central Rand Gold" or "CRG")
2009 INTERIM REPORT
Central Rand Gold, the South African gold mining and exploration holding
company, today announces its Interim Results for the six months ended 30 June
2009. The full set of results is available on the Company`s website:
www.centralrandgold.com
Central Rand Gold will host a conference call on Tuesday 25 August 2009 at 10:00
am (London, UK time) / 11:00am (South Africa) to update investors and analysts
on its Q2 Results and Reserve Update.
Participants may join the call by dialling one of the three following numbers
approximately 10 minutes before the start of the call.
From UK: (toll free) 0808 109 1498
From South Africa: (toll free) 0800 999 539
From Australia: (toll free) 1800 052 112
Participant pass code: 878026#
Johan du Toit, Chief Executive Officer, will lead the discussion and will be
accompanied by other members of the management team. The discussion will be
followed by a question and answer period.
For further information, please contact:
Central Rand Gold +27 (0) 11 551 4000
Johan du Toit / Wayne Epstein
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
Thembeka Mgoduso/ Annerie Britz/
Melanie de Nysschen/ Manisha Ramlakhan
Buchanan Communications +44 (0) 20 7466 5000
Bobby Morse / Ben Willey / Katharine Sutton
Jenni Newman Public Relations (Pty) Ltd +27 (0) 11 506 7300
Jenni Newman / Megann Outram / Lerato Tlatlane
25 August 2009
Johannesburg
Sponsor
Macquarie First South Advisers (Pty) Limited
CHIEF EXECUTIVE`S REVIEW
OPERATIONAL UPDATE FOR THE SIX MONTHS ENDED JUNE 30, 2009
The first half of 2009 has been a challenging and rewarding period for Central
Rand Gold. The highlights for the period to date are:
Maiden Resource to Reserve conversion released
Trial Mining plan developed and confirmed
Substantial Metallurgical progress
Operational management team strengthened
Strong focus on cost containment
Cash on hand at June 30: US$46.3 million.
Anticipated need for further capital by mid 2010
RESOURCE TO RESERVE CONVERSION
The independent Resources to Reserves conversion report conducted by Snowden
Mining Industry Consultants ("Snowden Report" or the "Report") is now available
on the Company`s website: www.centralrandgold.com
This first report is based solely on two well-defined channels in the Main Reef
on a portion of the Consolidated Main Reef ("CMR") property. In this report
Snowden confirm that the mining method and mine plan can develop an economic
mine (without the inclusion of any additional revenue which may arise from
sweepings, vamping, Main Reef Leader pillars, auriferous middling material and
surface material).
Development and refining of the layout and methodology on this first production
area is the first of many steps in building a large and sustainable business
over the next few years.
The process for the Reserve conversion (which has been reported in accordance
with The JORC codes) developed with Snowden was conservative in its assumption
that only the Main Reef would be mined and the Board has confidence that the
results of this process represent a strong base case upon which the Company
hopes to build. The process has also established a methodology and template for
further Resources to Reserves conversions elsewhere within CRG`s other tenements
over a strike length of approximately 40km.
The Reserve Statement highlights:
- The first CMR mine is economic and technically feasible;
- JORC Probable Reserve of 270,900 ounces of gold (2.06 million tonnes at
4.1g/t) within the Main Reef on the CMR tenement in two well defined channels
at depths of between 70m and 500m and 70m and 750m below surface over
approximately 2km of strike. Trial mining is set to occur within one of these
channels;
- Conversion rate of 70% from Indicated Resource to Probable Reserve was
achieved for Main Reef mineralisation exceeding 3g/t within the identified
channels; and
- Run of Mine Operating Costs for this initial Reserve conversion - US$580/oz.
Area Classification Tonnes (Mt) Au (g/t) Au (oz)
East Limb Probable 0.719 4.1 94,400
West Limb Probable 1.342 4.1 176,500
Total Probable 2.061 4.1 270,900
EXPLORATION
Exploration at CRG has a twofold purpose:
Firstly, identifying and confirming Resources across the whole property; and
Secondly, improving the confidence in existing Resources to allow for their
inclusion into a mine plan.
Identification and confirmation of Resources
180 exploration diamond drill holes were drilled, supporting the delineation of
a further 1.76 million ounces of gold (reported in March, 2008), within the
Kimberley and Bird Reef Series as presented in Table 1 below.
Recoverable Mean Rec. Au Metal Content Metal Content
Tonnes after Grade (g/t) kg (`000) oz (`000)
10%
Geological
loss
Inferred 6.8 3.8 25.6 828
Indicated 9.61 3.0 29.0 932
Total 16.41 3.3 54.6 1 760
Table 1: March 2008 Inferred and Indicated Resource upgrade.
A further 48 diamond drill holes were drilled for geotechnical purposes,
focusing mainly in the immediate portal area to test rock strength and general
ground conditions for portal placement.
The diamond drilling that has been performed has also helped to confirm the
grades and widths as modelled in the existing Resource estimate undertaken by Dr
Lemmer and described in the Company`s 2007 Listing Prospectus. The results of
drilling in the Slot 8 area of CMR are presented below in Table 2. It is
important to note that these holes have not necessarily targeted high grade
areas and the grades presented in the table of results do not necessarily
reflect the expected grades to be mined.
Table can be viewed on the Company website: www.centralrandgold.com.
Table 2: Diamond drill holes drilled in the Slot 8 area of CMR targeting the
Main Reef Package.
The reported intervals above are continuous gold mineralised drill intercepts,
corrected for lithological dip. In areas of core loss within the reef value
zone, a nominal 0.01g/t grade has been applied.
The location and distribution of these holes is portrayed in the map attached
(Figure 1).
Figure can be viewed on the Company website: www.centralrandgold.com.
Figure 1: Diamond drill holes drilled in the Slot 8 area of CMR targeting the
Main Reef Package
In addition to this, a concerted campaign of reverse circulation drilling (552
holes) was used to broadly identify shallow resources with slot mining
potential. This drilling targeted areas of shallow mineralisation in the CMR and
Crown Mines areas.
Concentration has now been placed on the systematic trenching, sampling and
evaluation of the close-to-surface targets indentified during the earlier
reverse circulation drilling phase.
This exploration for gold on the Main, White and Kimberley Reefs on Slots 4, 5,
7, 8 and 9 (see Figure 2) has discovered an Exploration Target of between
200,000 and 250,000 tonnes at an anticipated in situ grade of between 2.4 and
4.4g/t. The Exploration Target depth is up to 30 metres below surface. These
figures are based on weighted average composite sampling and gold assay of
material obtained from systematic trenching, reverse circulation drilling and
diamond drilling*. * The potential quantity and grade is conceptual in nature
and there has been insufficient exploration to define a Mineral Resource and it
is uncertain if further exploration will result in the definition of a Resource.
Further exploration work is ongoing, and includes trial mining and processing of
this shallow target to establish grade and orebody continuity, mineability,
dilution and throughput characteristics
Improving the confidence in existing Resources to allow for their inclusion into
mine planning ahead of mine development
Focus is shifting from regional exploration and resource drilling of secondary
reef targets to focused systematic diamond drilling ahead of the developing
decline and in and around the footprint of the second decline. It is targeting
largely the western Slot 8 and Slot 9 areas as can be seen in Figure 2. This
will confirm Main Reef block grades, as estimated in the Resource Model, as well
as allowing for further geotechnical ground condition assessment.
Figure can be viewed on the Company website: www.centralrandgold.com
Figure 2: Slot positions
TRIAL MINING
Mine Progress
The Resource to Reserve conversion process has culminated in the conversion of
270,900oz Au from Resources to Probable Reserves in our first targeted mining
area.
The original mine plan that was proposed in this area was to perform extensive
development over the full extent of the Western side of CMR with a drift-and-
fill mining method being utilised. After an extensive review process it was
determined that, even though this approach would produce the 90,000 tonnes
originally required, the sustainable headgrade achieved would be uneconomical
The technical team reviewed this approach and, after Snowden`s confirmation of
its applicability, the Company has elected to concentrate on two higher grade
payshoot areas within the same area. This should result in lower development
costs, higher headgrades but lower tonnages being extracted. This presents a
more favourable start-up operating model for the Company. The mining method now
chosen (long hole, mechanised stoping) is new to the Witwatersrand Goldfields,
posing some questions that only physical mining will answer. Through trial
mining and mining optimisation it is expected that these uncertainties will be
overcome. This will also address any refinements needed to the mine plan and the
overall economics of this part of the project and future extensions.
Further investment in process plants may increase recoveries to the point where
reducing pay-limits will significantly enhance revenue from the pay-shoots and
render the intervening material recoverable. This is, as yet, unconfirmed and
excluded from the current plan and model.
The decline on Slot 8 is progressing well, having achieved some 300 metres as at
August 20, 2009, and is currently approximately 35 metres away from the reef.
The Company is achieving an average progression rate of 4.6 metres per day,
which will allow for the first reef drive to be intersected by the end of
August. Trial stoping is expected to begin at the end of 2009 or in January
2010.
The Company has engaged the services of Australian Contract Mining ("ACM"), an
Australian based mining contractor with specific expertise in mechanised
underground mining and development (particularly in long-hole stoping). ACM will
assist CRG with the underground development and the mining (previously
contracted to Mathoma Mining Consortium) and will also train CRG`s staff to be
able to implement the methods effectively without external assistance.
CRG continues with surface slot mining whilst the underground mine development
is underway. For the 2009 year to August 12, 2009, CRG has mined approximately
56,930 tonnes from surface with an average headgrade of 3.81g/t.
METALLURGICAL PROGRESS
Considerable metallurgical progress has been made. Initially commissioned in
October 2008, the 20tph Gekko crushing and concentrating plant had a flotation
circuit added and commissioned in January 2009. Following debottlenecking and
upgrading, throughput at the plant has been gradually increased with July
reaching a total of 10,016 tonnes with a 67% recovery (not unreasonable for
surface, oxidised material) and a production availability rate of around 75%.
Throughput, recovery and production availability will increase once underground
sulphide material is being treated.
A Bateman 30tph crushing and concentrating plant was commissioned in June 2009.
Concentrate from the Gekko and Bateman crushing and concentrating plants is now
being fed to the 10,000tpm Carbon-In-Leach concentrate treatment plant which was
assembled on site over a three month period and commissioned at the end of May
2009. Included in the CIL plant is a smelt house facility that enables CRG to
produce bullion bars (88%-90% gold), which is transported to Rand Refinery
Limited for final refinement and sale. The first smelt on site occurred in July
2009.
A further Gekko crushing and concentrating plant, with a capacity of 50tph
(30,000 tonnes per month), was ordered during the period and is expected to be
delivered to site and commissioned around November of this year.
OPERATIONAL MANAGEMENT CHANGES
A number of important management changes have been made that strengthen CRG`s
operations and provide the necessary skills and experience to achieve the
Company`s objectives.
Keith Matier was appointed Chief Geologist with effect from May 1, 2009
Don Harper was appointed Head of Mining with effect from June 1, 2009
Patrick Malaza was appointed Chief Financial Officer with effect from July 1,
2009
The addition of Keith, Don and Patrick to the management team has appropriately
strengthened the Company`s capabilities as it moves from a conceptual stage
towards being an operating company.
Keith Matier has spent more than 16 years in the mining and exploration
industry, specifically in gold and platinum, and is particularly well versed in
operational grade control and mineral resource management. He is a "competent
person" in terms of the JORC and SAMREC Codes.
Don Harper has particular knowledge and experience in the fast-track development
of declines and long hole stoping. A qualified and experienced mining engineer,
he has more than 19 years` experience in the underground base metal and gold
sectors in Australia. He is a seasoned operator in high-speed trackless decline
development and mechanised, narrow vein, stoping mining techniques.
Patrick Malaza, a qualified chartered accountant, has held senior finance
management positions with several major companies over the past 22 years. In
addition to managing large and complex finance teams, he has successfully led
and completed projects in costing models, international accounting standards
compliance, external annual and interim reporting, management reporting,
structured/asset finance, infrastructure investments, information systems,
procurement processes and systems improvements and internal controls.
COST CONTAINMENT AND FINANCIAL REVIEW
A comprehensive cost containment exercise has resulted in a substantial
reduction in ongoing costs across the Company`s operations and activities.
As a result of a voluntary retrenchment programme introduced in June 2009, the
permanent workforce has been reduced by 33 (13%). The use of consultants has
been reduced wherever possible and the shaft re-access programme has been placed
on care and maintenance. Infrastructure spending and certain exploration
activities have also been cut back to focus only on priority items. This
emphasis on cost containment will be continued in the six months to December 31,
2009.
As presented in the Interim Financial Statements attached, the loss for the six
months to June 30, 2009 amounted to US$14.55 million, equivalent to 5.89 cents
per share. As at June 30, 2009, cash and cash equivalents totalled approximately
US$46.45 million, decreasing by US$23.15 million from the $US69.6 reported at
December 31, 2008.
COMMUNITY INVOLVEMENT AND BLACK ECONOMIC EMPOWERMENT
Since its inception, CRG has been committed to uplifting the communities in
which it operates through a wide variety of initiatives aimed at education, job
creation, sport and living improvement programmes while providing opportunities
for individuals with scholastic and sporting talents the platform to excel.
Recent activities include:
A partnership with South Africa`s Department of Education to provide bursaries
to top students from the poorest backgrounds living in close proximity to the
Company`s mining tenements. A total of 13 bursaries have been awarded covering
tuition, a stipend, books and accommodation close to Wits University;
A weekend and vacation school project that aims to improve the Grade 12 pass
rate for some of the poorest performing schools in our community area by
teaming up learners with some of the best teachers in Gauteng; and
A CRG-sponsored soccer tournament featuring players from 29 Soweto schools
competing for a R150,000 (US$18,750) prize pool. The winning school received
R80,000 (US$10,000) (the players received an extra R20,000 (US$2,500) to share),
the second placed school received R30,000 (US$3,750) and the school that came
third was awarded R20,000 (US$2,500).
CRG is committed to transparent and sustainable Broad-based Black Economic
Empowerment. The dispute with our current BEE partner, Puno Gold Investments
(Proprietary) Limited, regarding alleged breaches of the CRGSA shareholders`
agreement has been referred to arbitration. This process should be concluded in
2010.
WATER
CRG is a member of Central Basin Environmental Corporation ("CBEC"), a Section
21 company, established to find a long term and sustainable solution for water-
related issues in the Central Basin area. CBEC, which also comprises DRDGold Ltd
and West Wits Mining Ltd, is currently analysing various options to keep the
area suitably de-watered to allow ongoing underground mining operations. As
mentioned in the Company`s 2008 annual report, CRG will be required to make a
substantial contribution to the building of a pump station in the Central Basin
as part of the CBEC initiative. It is expected that an announcement will be made
by CBEC in the last quarter of 2009.
MILESTONE RECAP
At this stage of the Company`s progression, with the achievement of the initial
conversion of Resources to Reserves, it is worth taking a step back and
reflecting on what tangible progress has been made on our Johannesburg gold
mining project in a relatively short space of time.
Milestone 1: Upgrading our Resource base through a comprehensive exploration and
shaft re-access programme.
The ongoing exploration programme has thus far delivered results in support of
original expectations. The early drilling programme and ongoing digitisation
have brought about an increase in our Indicated and Inferred Resources by 1.8
million ounces to 35.6 million ounces as announced in March 2008. More of this
will follow and greatly enhance our understanding of geological structures in
target areas.
Milestone 2: Obtaining necessary local community support and developing
strategic alliances in order to ensure the future sustainability of the mine and
receipt of New Order Mining Rights.
As a company operating in an urban environment, we are committed to our
communities in a variety of ways, including creating employment, improving
skills levels, uplifting standards of living and generating wealth. This was
demonstrated at the Company`s public participation meetings where more than
20,000 members of the local community were present. Achieving the New Order
Mining Right was only possible through such, and CRG will continue to work
closely with communities in the future.
Further demonstration of our commitment to these core values can be found in our
strategic alliances with groups such as Umkhonto we Sizwe Military Veterans`
Association, Youth in Minerals and Energy and the Congress of South African
Students.
Milestone 3: Receiving first New Order Mining Right and resolving ownership
structures through Section 11 Applications
The first New Order Mining Right was awarded to CRG in September 2008. It was
achieved in record time over the CMR, Langlaagte and Crown Mines tenements.
In February 2009, the Group was also granted New Order Mining and Prospecting
Rights over seven tenements in accordance with section 11 of South Africa`s
Mineral and Petroleum Resources Development Act of 2002, effectively
transferring these Rights from the founding partners into the Central Rand Gold
Group.
Milestone 4: Trial mining - Metallurgy and Underground Trial Mining
The Company has successfully commissioned two crushing and concentrating plants
(the Gekko 20tph plant and Bateman 30tph plant) as well as a 10,000tpm CIL
concentrate treatment plant. The first decline to be utilised to access
underground ore is approximately 35m away from the reef intersection which is
scheduled to occur by the end of August 2009.
Milestone 5: Maintaining a strong safety record
The Company has developed and implemented a robust safety control environment
focussing on standards and awareness. To date, zero fatalities and two lost time
injuries have been reported.
The milestones achieved to date lay a strong foundation for the future of CRG.
GOING FORWARD
The Story so far
In line with CRG`s progress to date and as indicated in this review, significant
investments have already been made by the Company in developing its exploration
programme, securing its first New Order Mining Right and procuring metallurgical
and mining equipment in the advancement of the Company`s surface mining
operations and decline development.
The second half of 2009 will be strongly focused on testing and proving that
CRG`s concepts are practical and workable and are providing the platform for
sustainable gold production. Essentially, the July-December 2009 period will
serve as a vital test or pilot phase, which will determine the future direction
of the Company.
Looking forward
At the time of CRG`s Initial Public Offering, it was outlined that the Company`s
initial capital was to carry it into production and that development from that
point would require more funding, probably towards the mid-end of 2009 (CRG`s
Listing Prospectus November 2007 - page 98).
In response to market turmoil (a risk identified in the risk analysis section of
the Listing Prospectus - page 18) the Company identified that it could confirm
its viability with a considerably scaled down development plan, conserve it cash
resources and defer consideration of larger scale and further funding until
markets stabilised. This is the plan currently in execution.
Cash in hand, planned expenditure and revenue expectations indicate that further
development of the mine will require further capital from about the middle of
2010.
Appropriate rates of development, the resultant cash flows and the required
future funding are under current consideration with a view towards finalisation
and communication in the early part of 2010 - at which time uncertainty
surrounding underground work will be rapidly reducing.
Key deliverables over the next 12 months
CRG`s key deliverables for the period to mid-2010 have been agreed by the
Company`s Board of Directors to be:
To execute the trial mining operation over the course of the next few months;
To demonstrate that the mining methods as well as the metallurgical and economic
assumptions used in the Snowden Report are robust and conservative in practice;
To demonstrate that there is material upside to the base case outlined in the
report from inclusion of vamping, sweepings, mineralisation outside the Main
Reef zone, extraction of some Main Reef Leader pillars and mining outside the
chosen pay shoots - none of which are included in the base case and all of which
would positively impact the return from the investment in the current
infrastructure, the cash cost and total cost per ounce;
To confirm the potential for significant improvements in metallurgical
recoveries and resulting reduction in underground pay-limits;
To utilise the knowledge gained from trial mining to firm up and develop
feasibility studies for additional mining targets in the CRG tenement areas; and
To raise additional funds (debt and/or equity) to develop mines on the
additional targets based on the feasibility studies to be undertaken - the
magnitude and method of which should be communicated within the first half of
2010.
JOHAN du TOIT
CENTRAL RAND GOLD LIMITED
Condensed Group Statement of Financial Position as at 30 June 2009
31 December
30 June 2009 2008 30 June 2008
US$`000 US$`000 US$`000
Notes (Unaudited) (Audited) (Unaudited)
NON CURRENT ASSETS
Property, plant and
equipment 5 30 712 10 458 3 331
Intangible assets 6 1 251 - -
Prepayments - - 2 202
Loans receivable 7 6 626 5 205 5 808
38 589 15 663 11 341
CURRENT ASSETS
Inventory 8 4 142 732 -
Prepayments and other
receivables 5 176 5 332 1 264
Security deposits and
guarantees 6 686 6 095 2 865
Cash and bank
balances 46 449 69 601 132 551
62 453 81 760 136 680
TOTAL ASSETS 101 042 97 423 148 021
EQUITY AND
LIABILITIES
Share capital 5 023 5 023 5 023
Share premium 191 406 191 406 191 406
Share-based
compensation reserve 26 644 26 429 23 174
Treasury shares 9 (2) (4) (35)
Foreign currency
translation reserve (30 290) (42 900) (9 807)
Accumulated losses (106 859) (92 490) (70 271)
85 922 87 464 139 490
Minority interest - - -
TOTAL EQUITY 85 922 87 464 139 490
NON CURRENT
LIABILITIES
Environmental
rehabilitation and
other provisions 10 39 244 -
Borrowings 35 46 74
Operating lease
liability 41 41 42
115 331 116
CURRENT LIABILITIES
Trade and other
payables 6 413 3 758 2 227
Loan payable 6 626 5 205 5 808
Environmental
rehabilitation and
other provisions 10 1 206 324 186
Taxation payable 709 310 161
Operating lease
liability 13 2 -
Borrowings 38 29 33
15 005 9 628 8 415
TOTAL LIABILITIES 15 120 9 959 8 531
TOTAL EQUITY AND
LIABILITIES 101 042 97 423 148 021
The condensed interim financial statements were approved by the Board on 24
August 2009 and were signed on its behalf by:
S.J. du Toit A.J.M Walton
Johannesburg
24 August 2009
The notes are an integral part of these financial statements.
CENTRAL RAND GOLD LIMITED
Condensed Group Income for the 6 months ended 30 June 2009
12 months
6 months ended 31 6 months
ended 30 June December 2008 ended 30 June
2009 US$`000 2008
US$`000 (Audited) US$`000
Notes (Unaudited) (Unaudited)
Other income and
gains 6 085 252 9
Employee benefits
expense (5 027) (7 809) (2 688)
Directors` emoluments 11 (925) (9 830) (5 689)
Depreciation (911) (1 210) (387)
Operating lease
payments (689) (809) (384)
Exploration
expenditure 12 (12 137) (20 310) (8 692)
Other expenses (2 680) (6 043) (3 692)
Operating loss (16 284) (45 759) (21 523)
Interest received 2 458 7 051 4 493
Finance costs (329) (853) (461)
Loss before income
tax (14 155) (39 561) (17 491)
Income tax 13 (399) (218) (69)
Loss for the period (14 554) (39 779) (17 560)
Loss is attributable
to:
Minority shareholders - - -
Equity holders of the
Parent (14 554) (39 779) (17 560)
(14 554) (39 779) (17 560)
Shares in issue 246 919 650 246 919 650 246 919 650
Weighted average
number of ordinary
shares in issue 246 919 650 245 387 150 245 075 309
Fully diluted
weighted average
number of ordinary
shares in issue 246 919 650 245 387 150 246 611 958
Basic loss per share
(cents) (5.89) (16.21) (7.17)
Headline loss per
share (cents) (5.62) (16.21) (7.16)
Diluted loss per
share (cents) (5.89) (16.21) (7.12)
Diluted headline loss
per share (cents) (5.62) (16.21) (7.12)
Reconciliation
between loss
attributable to the
equity holders of the
Group and the
headline loss
attributable to the
equity holders of the
Group:
Loss attributable to
equity holders of the
Group (14 554) (39 779) (17 560)
Provision for
restructuring 472 - -
Loss on disposal of
property, plant and
equipment 217 1 -
Headline loss
attributable to
equity holders of the
Group (13 865) (39 778) (17 560)
The notes are an integral part of these financial statements.
CENTRAL RAND GOLD LIMITED
Condensed Group Statement of Comprehensive Income for the 6 months ended
30 June 2009
12 months
6 months ended 31 6 months
ended 30 June December 2008 ended 30 June
2009 US$`000 2008
US$`000 (Audited) US$`000
Notes (Unaudited) (Unaudited)
Loss for the period (14 554) (39 779) (17 560)
Other comprehensive
income:
Exchange differences
on translating
foreign operations 12 610 (33 588) (495)
Income tax relating
to components of
other comprehensive
income - - -
Other comprehensive
income for the
period, net of tax 12 610 (33 588) (495)
Total comprehensive
income for the period (1 944) (73 367) (18 055)
Total comprehensive
income is
attributable to:
Minority shareholders - - -
Equity holders of the
Parent (1 944) (73 367) (18 055)
(1 944) (73 367) (18 055)
The notes are an integral part of these financial statements.
CENTRAL RAND GOLD LIMITED
Condensed Group Statement of Changes in Equity for the period ended 30
June 2009
Attributable to equity holders of the Parent Company
Notes Ordinary Share Foreign Share-Based Treasury
Share Premium Currency Compensation Shares
Capital Translation Reserve
Reserve
US$`000 US$`000 US$`000 US$`000 US$`000
Balance at 31
December 2007
5 017 191 406 (9 312) 18 152 (31)
Total
comprehensive
income for
the period
ended 30 June
2008
Profit or
loss - - - - -
Other
comprehensive
income
Foreign
currency
adjustments - - (495) - -
Transactions
with owners,
recorded
directly in
equity
Employee
Share Option
Scheme:
Treasury
shares issued 6 - - - (6)
Share-based
payments:
Employees and
director`s
shares - - - 5 022 2
Balance at 30
June 2008 5 023 191 406 (9 807) 23 174 (35)
Balance at 31
December 2008 5 023 191 406 (42 900) 26 429 (4)
Total
comprehensive
income for
the period
ended 30 June
2009
Profit or
loss - - - - -
Other
comprehensive
income
Foreign
currency
adjustments - - 12 610 - -
Transactions
with owners,
recorded
directly in
equity
Employee
Share Option
Scheme:
Transfer of
forfeited
share options - - - (185) -
Share-based 16
payments:
Employees and
director`s
shares - - - 400 2
Balance at 30
June 2009 5 023 191 406 (30 290) 26 644 (2)
The notes are an integral part of these financial statements.
CENTRAL RAND GOLD LIMITED
Condensed Group Statement of Changes in Equity for the period ended 30
June 2009 continued
Notes Accumulated Minority
losses Total Interest Total
US$`000 US$`000 US$`000 US$`000
Balance at 31
December 2007 (52 711) 152 521 - 152 521
Total
comprehensive
income for the
period ended 30
June 2008
Profit or loss (17 560) (17 560) - (17 560)
Other
comprehensive
income
Foreign currency
adjustments - (495) - (495)
Transactions
with owners,
recorded
directly in
equity
Employee Share
Option Scheme:
Treasury shares
issued - - - -
Share-based
payments:
Employees and
director`s
shares - 5 024 - 5 024
Balance at 30
June 2008 (70 271) 139 490 - 139 490
Balance at 31
December 2008 (92 490) 87 464 - 87 464
Total
comprehensive
income for the
period ended 30
June 2009
Profit or loss (14 554) (14 554) - (14 554)
Other
comprehensive
income
Foreign currency
adjustments - 12 610 - 12 610
Transactions
with owners,
recorded
directly in
equity
Employee Share
Option Scheme:
Transfer of
forfeited share
options 185 - - -
Share-based
payments: 16
Employees and
director`s
shares - 402 - 402
Balance at 30
June 2009 (106 859) 85 922 - 85 922
CENTRAL RAND GOLD LIMITED
Condensed Group Cash Flow Statement for the 6 months ended 30 June 2009
12 months
6 months ended 31 6 months
ended 30 June December 2008 ended 30 June
2009 US$`000 2008
US$`000 (Audited) US$`000
Notes (Unaudited) (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss before tax (14 155) (39 561) (17 491)
Adjusted for :
Depreciation 911 1 210 387
Employment benefit
expenditure (Share-
based payments) 638 8 769 4 700
Loss on disposal of
fixed assets 217 1 -
Net gain on foreign
exchange (6 085) (165) (1 297)
Increase in operating
lease liability 3 18 4
Interest received (2 458) (6 225) (4 493)
Finance costs 329 27 461
Changes in working
capital
(Increase)/decrease
in receivables 2 266 (5 144) (125)
Increase in
provisions 485 660 60
Increase in inventory (2 813) (852) -
Increase/(decrease)
in trade and other
payables 1 303 2 107 (307)
Cash flows absorbed
by operations (19 359) (39 155) (18 101)
Interest received 2 458 6 225 4 493
Finance costs (329) (27) (461)
Net cash used in
operating activities (17 230) (32 957) (14 069)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchases of
property, plant &
equipment 5 (18 193) (10 856) (1 087)
Proceeds from
disposal of property, - 18 -
plant and equipment
Increase in non-
current prepayment - - (2 202)
Purchases of
subsidiaries 6 (917) - -
Net cash used in
investing activities (19 110) (10 838) (3 289)
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayments of
borrowings (15) (30) (35)
Decrease/(increase)
in security deposits 516 (5 347) (792)
Proceeds from
issuance of shares - 2 2
Net cash from/(used
in) financing
activities 501 (5 375) (825)
Net decrease in cash
and cash equivalents (35 839) (49 170) (18 183)
Cash and cash
equivalents at
beginning of period 69 601 149 195 149 195
Effects of exchange
rate movement on cash
balances 12 687 (30 424) 1 539
Cash and cash
equivalents at end of
period 46 449 69 601 132 551
The notes are an integral part of these financial statements.
CENTRAL RAND GOLD GROUP
Notes to the Condensed Interim Group Financial Statements
1. Basis of preparation
This condensed consolidated interim financial information for the six
months ended 30 June 2009 has been prepared in accordance with IAS 34,
`Interim financial reporting`. The interim results for the six months
ended 30 June 2009 are unaudited. The condensed consolidated interim
financial information should be read in conjunction with the annual
financial statements for the year ended 31 December 2008, which have
been prepared in accordance with International Financial Reporting
Standards (`IFRS`). The financial information set out in this document
in respect of the year ended 31 December 2008 does not constitute the
Group`s statutory accounts for the year ended 31 December 2008.
2. Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the year
ended 31 December 2008, as described in those annual financial
statements.
Taxes on income in the interim periods are accrued using the tax rate
that would be applicable to expected total annual earnings.
The following new standards and amendments to standards are mandatory
for the first time for the financial year beginning 1 January 2009.
IAS 1 (revised), `Presentation of financial statements`. The revised
standard prohibits the presentation of items of income and expenses
(that is `non-owner changes in equity`) in the statement of changes in
equity, requiring `non-owner changes in equity` to be presented
separately from owner changes in equity. All `non-owner changes in
equity` are required to be shown in a performance statement.
Entities can choose whether to present one performance statement (the
statement of comprehensive income) or two statements (the income
statement and statement of comprehensive income).
The Group has elected to present two statements: an income statement and
a statement of comprehensive income. The interim financial statements
have been prepared under the revised disclosure requirements.
IFRS 8, `Operating segments`. IFRS 8 replaces IAS 14, `Segment
reporting`. It requires a `management approach` under which segment
information is presented on the same basis as that used for internal
reporting purposes.
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief
operating decision-maker has been identified as the Board of Directors
that makes strategic decisions.
Management has determined that the Group operates primarily in one
business and geographical segment, being the exploration and mining of
gold and other related minerals on the Central Rand Goldfield of South
Africa. Accordingly, no analysis of segment revenue, results or net
assets has been presented.
IFRS 2, `Share-based payment`. IFRS 2 provides guidance on whether share-
based transactions involving treasury shares or involving group entities
(for example, options over a parent`s shares) should be accounted for as
equity-settled or cash settled share-based payment transactions in the
stand alone accounts of the parent and group companies.
The change does not have a material effect on the interim financial
statements.
The following new standards, amendments to standards and interpretations
are mandatory for the first time for the financial year beginning 1
January 2009, but are not currently relevant for the Group.
IAS 23 (amendment), `Borrowing costs`.
IAS 32 (amendment), `Financial instruments: Presentation`.
IFRIC 13, `Customer loyalty programmes`.
IFRIC 15, `Agreements for the construction of real estate`.
IFRIC 16, `Hedges of a net investment in a foreign operation`.
IAS 39 (amendment), `Financial instruments: Recognition and
measurement`.
The following new standards, amendments to standards and interpretations
have been issued, but are not effective for the financial year beginning
1 January 2009 and have not been early adopted:
IFRS 3 (revised), `Business combinations` and consequential amendments
to IAS 27, `Consolidated and separate financial statements`, IAS 28,
`Investments in associates` and IAS 31, `Interests in joint ventures`,
effective prospectively to business combinations for which the
acquisition date is on or before the beginning of the first annual
reporting period beginning on or after 1 July 2009.
IFRIC 17, `Distributions of non-cash assets to owners`, effective for
annual periods beginning on or after 1 July 2009. This is not currently
applicable to the Group, as it has not made any non-cash distributions.
IFRIC 18, `Transfers of assets from customers`, effective for transfers
of assets received on or after 1 July 2009. This is not relevant to the
Group, as it has not received any assets from customers.
The following accounting policies are applicable to new transactions and
events during the period:
Intangible assets
Acquisition of assets
Frequently, the acquisition of mining licences is effected through a non-
operating corporate structure. As these structures do not represent a
business, it is considered that the transactions do not meet the
definition of a business combination. Accordingly the transaction is
accounted for as the acquisition of an asset. The net assets acquired
are recognised at cost. Where the Group has full control but does not
own 100% of the assets, then a minority interest is recognised at an
equivalent amount based on the Group`s cost, the assets continue to be
carried at cost and changes in those values are recognised in equity.
Inventories
Inventories are valued at the lower of cost and net realisable value
after appropriate allowances for redundant and slow moving items. Cost
is determined on the following bases:
gold in process is valued at the average total production cost at the
relevant stage of production;
gold dore / bullion is valued on an average total production cost
method;
ore stockpiles are valued at the average moving cost of mining and
stockpiling the ore. Stockpiles are classified as a noncurrent asset
where the stockpile exceeds current processing capacity; and
mine operating supplies are valued at average cost
A portion of the related depreciation, depletion and amortisation charge
is included in the cost of inventory.
3. Estimates
The preparation of interim financial statements requires management to
make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
During the six months ended 30 June 2009 management reassessed its
estimates in respect of:
the recoverable amount of inventories (see note 8)
provisions (see note 10)
4. Financial Risk Management
The Group`s financial risk management objectives and policies are
consistent with those disclosed in the consolidated annual financial
statements as at and for the year ended 31 December 2008.
Foreign currency rates
The US Dollar rates of exchange applicable to the year are as follows:
2009 2008 2008
Six months to 30 Six months to 30 Year ended 31
June June December
Closing Average Closing Average Closing Average
South African Rand 0.13 0.11 0.13 0.13 0.11 0.12
British Pound 1.65 1.49 2.00 1.98 1.45 1.86
5. Property, plant and equipment
During the period the Group spent US$16,982,694 (six months ended 30
June 2008: US$0) on processing plants and mining equipment. Assets with
a net book amount of US$216,510 (six months ended 30 June 2008: US$0)
were disposed of during the year. The foreign exchange effect on the
movements in property, plant and equipment amounts to US$4,606,677.
6. Intangible assets
During the reporting period, the Group purchased the issued share
capital of Ferreira Estate and Investment Company ("FEIC"), the
registered holder of the Prospecting and Mining rights over the
Consolidated Main Reef, Crown Mines and Langlaagte mining areas. The
purchase price included an amount of US$ 1,251,243 for the purchase of
these Prospecting and Mining rights.
7. Loans receivable
Puno Gold Investments (Proprietary) Limited ("Puno")
Since the last report for the year ended 31 December 2008 there has been
no resolution to the dispute relating to alleged procedural breaches of
the CRGSA Shareholders Agreement between Central Rand Gold SA
(Proprietary) Limited and its current Black Economic Empowerment ("BEE")
shareholder, Puno Gold Investments (Proprietary) Limited. The dispute
surrounds the allocation of intercompany loans which fund the budget and
work programme and the incurring of, and level of, certain costs. In
order to prevent protracted litigation, the parties have agreed to refer
the matter to arbitration pursuant to the dispute resolution mechanism
under the shareholders agreement. The Group still believes that
ultimately their position will prevail. The Directors are still of the
opinion that this will not have any material consequences in respect of
the consolidated accounts of the Group. Notwithstanding this position,
the Group have pending the outcome of any dispute allocated 100% of the
intercompany balances directly through from the Company to CRGSA. This
additional 26% of intercompany debt excluding interest amounts to ZAR
85,120,418 (US$9,345,371) between 1 January and 30 June 2009 (ZAR
114,139,770 (US$12,099,957) between 1 January and 31 December 2008).
The loan payable to Puno Gold Investments (Proprietary) Limited contains
the same allocations referred to above.
Group
June December
2009 2008
US$`000 US$`000
8. Inventory
Exploration consumables 1 701 731
Ore stockpiles 2 438 -
Stationery on hand 3 1
Total inventory 4 142 732
The amount of the write-down of ore stockpiles to net realisable value,
and recognised as an expense is US$1,075,429 (2008: US$0). This expense
is included in exploration expenditure.
9. Treasury shares
During the year ended 31 December 2008, the Company issued 300,000
shares to Mr M McMahon. 100,000 vested on 19 June 2008, 100,000 vested
on 29 April 2009 and 100,000 will vest on 29 April 2010. No further
shares were issued from the Employee Share Trust.
10. Environmental rehabilitation and other provisions
A provision of US$547,562 has been recognised for restructuring. The
costs are expected to be incurred during the current financial year.
11. Directors` Emoluments
A director of the Group, Mr M Sullivan, resigned during the period. Mike
Sullivan was granted 2,465,996 share options on 31 October 2007. One
third of the options vest per annum, with full vesting on the third
anniversary of the grant date. The options expire on the fourth
anniversary of the date of grant. The first and second tranche of share
options were not forfeited and the vesting remains unchanged. The final
portion of the options granted were forfeited. The total number of share
options that were forfeited are 821,999. Due to his resignation the
future share options were recognised on the date of his resignation. The
value of the accelerated share-based payments for these share options is
GBP69,709 (US$104,108). The value of the share options that were
forfeited as a result of his resignation is GBP212,397 (US$317,204). The
value of the forfeited share options that were previously recognised was
reversed in the period. The value of this reversal is GBP81,199
(US$121,267).
12. Exploration expenditure
Included in exploration expenditure are the costs and revenues
incidental to the trial mining operations of the Company. CRGSA sold
122.87 ounces of gold recovered from the metallurgical concentrator
plant during the six months ended 30 June 2009. The revenue attributable
to this sale is US$115,345. The remaining gold bearing concentrate
recovered from the plant in the trial mining operations has been
stockpiled for the extraction of gold by chemical process.
13. Income taxes
Income tax expense is recognised based on management`s best estimate of
the weighted average annual income tax rate expected for the full
financial year. The estimated average annual tax rate used for the year
to 31 December 2009 is 2.82% (2008: 0.55%). The increase is mainly due
to an increase in the intercompany loans from the Company to Central
Rand Gold (Netherlands Antilles) N.V. ("CRGNV") and the disallowed
interest on these loans.
14. Commitments
a) Various contractual fees payable
Group
June December
2009 2008
US$`000 US$`000
Capital committed for
the purchase of
processing plants 5 869 6 295
Fees payable to iProp
Limited for prospecting - 500
Option fees payable to
Gravelotte Mines
Limited - 100
5 869 6 895
15. Segment reporting
The group operates predominately in one business and geographical
segment, being the exploration and mining of gold and other related
minerals on the Central Rand Goldfield of South Africa. Accordingly, no
analysis of segment revenue, results or net assets has been presented.
16. Share-based payments
Grant of options in the Company
During the period further share options were granted to selected
employees. The options granted are summarized below.
Vesting Strike price Allocation Number of share
options granted
600,000 on 31 Exercise price Mr S.J. du Toit 1 800 000
October 2009, escalates in
600,000 on 31 accordance with
October 2010 and the vesting
600,000 on 31 tranches. One
October 2011. third at price of
GBP0.50, one
third at GBP1.00
and one third at
GBP1.50.
A director of the Group, Mr M Sullivan, resigned during the period.
Please refer to Note 11 - Directors emoluments above for further
information.
17. Related parties
Except for the grant of share options in the Company disclosed in Note
16 - Share-based payments and the resignation of a director disclosed in
Note 11- Directors Emoluments, no other disclosable related party
transactions occurred in the period.
18. Events occurring after balance sheet date
On 19 August 2009, the Company was issued with its first Resource to
Reserve conversion report compiled by Snowden Mining Industry
Consultants. The JORC Probable Reserve of 270,900 ounces of gold (2.06
million tonnes at 4.1g/t) is from within the Main Reef on the
Consolidated Main Reef tenement in two well defined channels at depths
of between 70m and 500m and 70m and 750m below surface over
approximately 2km of strike. Details of this are covered in a separate
Reserve Statement. The impact of this is not yet recognised in these
interim financial statements.
Date: 25/08/2009 08:30:09 Supplied by www.sharenet.co.za
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