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CRD - Central Rand Gold Limited - Operations and Board Update

Release Date: 14/04/2010 08:00:07      Code(s): CRD
CRD - Central Rand Gold Limited - Operations and Board Update                   
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                                                          
("CRG" or the "Company" or the "Group")                                         
OPERATIONS AND BOARD UPDATE                                                     
CRG, the gold mining company with assets in Southern Johannesburg, is pleased   
to announce the following update:                                               
-    Successful conclusion of trial mining;                                     
-    Mining methodology proven and ready to be used across CRG`s existing       
mining right area;                                                          
-    Release of updated Competent Persons Report ("CPR") to underpin CRG`s      
    first mine and next capital raising;                                        
-    79% increase in Joint Ore Reserves Committee ("JORC") probable reserve     
base to 482 000 ounces of gold;                                             
-    Average operational cash (include water pumping costs) and capital costs   
    of US$582/oz and US$173/oz respectively;                                    
-    Reconfigured metallurgical plants commissioned;                            
Report on current activity and short term production strategy; and          
-    Michael McMahon succeeds Alastair Walton as Chairman. Mr McMahon has 20    
    years` experience in senior board roles at Impala Platinum Holdings         
    Limited, Gencor Limited and Gold Fields Limited.                            
TRIAL MINING                                                                    
Decline and reef development                                                    
A decline from a portal at Slot 8 is being developed to access the two          
channelised areas associated with higher grades ("pay-shoots") in the initial   
mining area at Consolidated Main Reef ("CMR"). Trial mining was conducted in    
the first areas of reef that could be accessed from this decline and            
consequently these areas were not chosen for grade. The objectives of trial     
mining were to validate the mining method and provide real physical and         
financial data for input into mine design, which have been achieved.            
The Slot 8 decline is approximately 125 metres below surface with 810 metres    
of decline development completed to date. In addition 440 metres of on reef     
development and crosscuts have been developed.                                  
In total 1,250 metres of development has been completed with a single double    
boom jumbo. Since the appointment of a mining contractor, Australian Contract   
Mining (Pty) Limited, rates of 240 metres per month have regularly been         
achieved. This is in line with world`s best practice and significantly exceeds  
South African norms.                                                            
Stoping                                                                         
Three stopes have been successfully blasted and extracted using mechanised      
long hole stoping and three cemented backfill support pillars (previous termed  
cemented aggregate fill pillars) have been poured. This simple but highly       
productive mechanised mining technique is common in Australia but new to the    
Witwatersrand.                                                                  
Hangingwall conditions experienced to date have been good and no abnormal roof  
support structures have been required.                                          
No damage occurred to cemented backfill support pillars or the hangingwall      
after stope blasting and subsequent extraction of blasted material.             
One of the stopes was successfully split-fired to separate low grade parting    
from Main Reef and to extract these strata separately.  The split-firing of     
low grade parting ore from Main Reef ore provides flexibility on a stope-by-    
stope basis to either split-fire or to take the entire package (Main Reef,      
parting and the sweepings and vampings lying on the parting) depending upon     
grade.                                                                          
Trial mining has also demonstrated that:                                        
-    90% of blasted stope material is recovered by the loader on the level      
    below. The 10% of broken stope ore left behind after blasting is            
confirmed to be amenable to water jetting;                                  
-    Roof support using split-sets and mesh allows for safe and economic        
    mining.                                                                     
This method of stoping and production avoids labour intensive and potentially   
hazardous hand-held in-stope drilling. CRG has now confirmed that highly        
mechanised mining methods common in Australia but new to the Witwatersrand      
basin are appropriate and economical.                                           
PROCESSING                                                                      
It has been recognised that gold output is maximised by the most effective      
utilisation of the 18,000 tonne per month Carbon-in-Pulp ("CIP") plant. To      
improve recovery and reduce costs the plant has been reconfigured to separate   
the feed into two streams, with the higher grade stream directed to an          
upgraded CIP plant and the lower grade material directed to the existing        
flotation plant. Optical sorting has also been trialled and will be added to    
the plant-flow sheet.                                                           
Result of optical sorting trials                                                
On reef development the optical sorter rejects 50% of the material fed to it    
whilst recovering 85% of the reef, with a reduction in dilution resulting in    
an uplift from an estimated 1.5 g/t to 3.0 g/t.                                 
For stoped ore the optical sorter will be used to separate a high grade stream  
to be sent directly to the CIP plant from the low grade flotation circuit       
stream.                                                                         
HIGHLIGHTS OF UPDATED CPR                                                       
The updated CPR has been carried out by Snowden Mining Industry Consultants (a  
full copy of which is available on www.centralrandgold.com). Highlights         
include:                                                                        
-    CMR (Slot 8) ore reserve increased by 79% to 3,73 million tonnes at 4.0    
    g/t which equates to 482,000 ounces of gold;                                
-    An updated mine plan which will produce 476,190 ounces of gold over a      
    mine life of 12 years;                                                      
-    Average operational cash (include water pumping costs) and capital costs   
    of US$582/oz and US$173/oz respectively;and                                 
-    Extensions of mineralised reef zones (partings), sweepings and vampings    
    and remnant reef pillars have been identified as other potential and        
    readily available sources of gold have not been included in the above.      
Future strategy and fundraising                                                 
The Board believes that CRG`s mining and metallurgical methodologies can be     
implemented across its entire tenement area, requiring, relatively minimal      
adjustment to and re-testing of its mining methods to suit local conditions,    
and in particular reef widths, before full-scale mine development can           
commence.                                                                       
The Company`s next target area for development is the western tract of the      
historic Crown Mines area, contiguous with the eastern tract of CMR and         
Langlaagte. The move to commence feasibility work at Crown Mines is expected    
to result in further increases in CRG`s JORC reserve base.                      
In summary, management`s "vision" of developing and building a major economic   
gold operation is intact. The upside potential of developing both the current   
and future mining areas remains considerable.                                   
The immediate target for the Group is to ramp-up production to create a         
sustainable and cash positive mining operation. In order to fulfil this stage   
of its strategy, CRG will be required to raise new equity finance. The Company  
and its advisers are in the process of finalising a prospectus which is         
expected to be published in the second half of May 2010.                        
CURRENT ACTIVITIES AND SHORT TERM PRODUCTION PLANS                              
With the completion of trial mining, underground activities are now             
concentrated on decline and reef development in line with the mine plan         
contemplated in the CPR in anticipation of a successful capital raising.        
With the completion of the plant reconfiguration and until underground ore      
becomes available, in steady-state production during the third quarter of       
2010, the plant will process:                                                   
a)   An estimated ore stockpile of approximately 23,000 tonnes at 3.9 g/t       
    sourced from underground development and trial mining; and                  
b)   Accessible surface material, comprising tailings and oxide ore material    
    to be mined from Slots 8 and 9 on CMR:                                      
-    Systematic auger sampling in the tailings disposal area has            
         identified exploration target material* between 30,000 tonnes and      
         50,000 tonnes of tailings material at an estimated grade of between    
         2.2 g/t and 3.5 g/t.                                                   
-    Previous and ongoing exploration for oxide ore in the Slot 8 and 9     
         areas identified an exploration target of between 15,000 tonnes and    
         30,000 tonnes at an anticipated in situ grade of between 2.4 g/t and   
         4.4 g/t. 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 of exploration target material is    
         conceptual in nature and there has been insufficient exploration to    
define a Mineral Resource. 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.                  
BOARD CHANGES                                                                   
With the completion of trial mining and the release of the updated CPR the      
future development of CRG has been underpinned. This is an appropriate moment   
to bring forward the previously stated board changes detailed in the            
announcement dated 22 January 2010, with Michael McMahon assuming the           
chairmanship to lead the Company into the next phase. Accordingly, Alastair     
Walton and Robert Kirkby resign from the board with immediate effect.           
Commenting on the operations update and the Board changes, Johan du Toit,       
Chief Executive, said:                                                          
"The trial mining has demonstrated that CRG has not only an economic mine, but  
also a template to breathe new life into a vast area which has remained         
dormant for decades.  The Board of CRG thanks Alistair Walton and Robert        
Kirkby for their significant contribution to the Company over the years - they  
have both been instrumental in getting CRG to the point of starting commercial  
gold production".                                                               
Johannesburg                                                                    
14 April 2010                                                                   
JSE Sponsor                                                                     
Macquarie First South Advisers (Pty) Limited                                    
For further information, please contact:                                        
Central Rand Gold                              +27 (0) 11 551 4000              
Johan du Toit / Patrick Malaza                                                  
                                                                                
Evolution Securities Limited                   +44 (0) 20 7071 4300             
Simon Edwards / Chris Sim / Neil Elliot                                         
                                                                                
Macquarie First South Advisers (Pty) Limited   +27 (0) 11 583 2000              
Thembeka Mgoduso / Annerie Britz /                                              
Melanie de Nysschen / Manisha Ramlakhan                                         
                                                                                
Buchanan Communications                        +44 (0) 20 7466 5000             
Bobby Morse / Katharine Sutton                                                  
                                                                                
Jenni Newman Public Relations (Pty) Limited    +27 (0) 11 506 7300              
Jenni Newman / Megann Outram                                                    
Date: 14/04/2010 08:00:07 Supplied by www.sharenet.co.za                     
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