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CRD - Central Rand Gold Limited - Interim Management Statement

Release Date: 19/11/2010 09:00:02      Code(s): CRD
CRD - Central Rand Gold Limited - Interim Management Statement                  
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: GG00B24HM601                                                              
Share code on LSE: CRND                                                         
Share code on JSE: CRD                                                          
Interim Management Statement                                                    
CRG the gold mining company with assets in Southern Johannesburg, is pleased    
to announce the following update:                                               
-    Total underground development for the year is 2,496m with 372 metres       
    being reported for the month of October 2010. This development will         
enable the Company to commence underground stoping in January 2011.         
-    The long-hole drill rig has arrived in South Africa. On site delivery is   
    expected in mid-December 2010.                                              
    6,809 ounces have been produced in the current year to date.                
-    2010 annual production target reduced to 9,000ounces - 11,000ounces, as    
    a result of the delayed start to underground production (as per guidance    
    given on 12 October 2010)                                                   
-    The combined surface Exploration Target material discovered in the         
immediate vicinity of the decline is estimated at between 36,400tonnes      
    and 86,700tonnes with an average grade of between 4.4g/t and 4.6g/t.        
Underground Drilling                                                            
During September and October an evaluation exercise was undertaken to           
duplicate face sampling results using an underground diamond drill. To this     
end a 20 metre long stretch of previously sampled reef development was          
drilled from the footwall tunnels immediately below the sampled reef at a       
depth of approximately 110m below surface. Previous face sampling of the 1581   
reef development returned an average grade of 16g/t over 55 centimetres over    
the length of the reef development.                                             
A conventional Kempe high torque underground diamond drill rig was used to      
drill 16 AX sized diamond drill holes toward the 1581 reef drive, aiming to     
intersect the Main Reef approximately one metre up-dip from the reef drive.     
Of the 16 holes drilled, four intersected Main Reef voids, one encountered      
poor ground conditions and the remaining 11 holes intersected thin, but high    
grade Main Reef as tabulated below:                                             
BH No.  Corr.Width  Grade Content                                               
       (cm)        (g/t) (cmg/t)                                                
PH01    38          16.38 622                                                   
PHO2B   48          10.02 481                                                   
PH03    54          16.38 885                                                   
PH04B   48          10.65 511                                                   
PH05    59          13.8  814                                                   
PH06    50          9.94  497                                                   
PH07    54          10.58 571                                                   
PH08    66          11.5  759                                                   
PH11    38          13.58 516                                                   
PH12    32          23.24 744                                                   
PH13    44          20.3  893                                                   
Average 48          13.74                                                       
The average drilled grade of 13.74g/t over 48centimetre very closely            
approximates the face sampled grade of 16g/t over 55centimetre for the same     
20metre stretch. This suggests that both techniques can be used for grade       
control purposes, allowing for a degree of flexibility in areas where ground    
conditions preclude on reef development.                                        
The Company is now exploring avenues of mechanising the diamond drill rig to    
match the underground mining and development cycle.                             
Surface Exploration Target Material                                             
The combined Surface Exploration Target material identified by means of         
opening up of additional trenches and ongoing lithologically controlled         
channel sampling and subsequent fire assaying for gold from the Main Reef and   
Main Reef Leader  conglomerates is estimated at between 36,400t and 86,700t     
with an average grade of between 4.4g/t and 4.6g/t and is made up as follows:   
-    An additional Exploration Target was identified in the Central Pit area    
    increasing the potential to between 11,000tonnes and 21,000tonnes at        
    grades of between 3.2g/t and 3.8 g/t.                                       
-    The Exploration Target potential at New Unified is estimated at between    
    9,500tonnes and 13,700tonnes at grades averaging between 2.9g/t and         
-    The stripping of the first 2.5metre cut at the New Unified Extension Pit   
showed a considerable number of double voids (areas where both Main Reef    
    Leader and Main Reef have been historically mined), within the              
    previously identified high grade area. Re-sampling and re-evaluation of     
    the remaining material within this area have returned a downgraded          
inventory of Exploration Target material of between 15,850tonnes and        
    52,000tonnes at grades averaging at around 5.3g/t.                          
Note: The potential quantity and grade described by the term "Exploration       
Target" 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 ore body continuity, mineability, dilution and throughput             
Exploration and Expansion                                                       
The Company`s growth strategy initiatives remain on track and include:          
-    Independent Scoping studies into the feasibility of developing CMR East    
are currently underway and results are expected by the end of this          
    calendar year.                                                              
-    CRG has also commissioned initial planning and scheduling studies to       
    investigate the economics of the City Deep and Village Main mining          
-    Tender processes have commenced for surface diamond drilling at the new    
    Crown Mines site. It is expected that this drilling programme will          
    ultimately lead to an upgraded Resource Statement and allow for the         
development of Crown Mines as the next major CRG operation, which will      
    enable the Company to leverage its fixed cost base. Drilling is expected    
    to begin late 2010/early 2011 and will run for most of 2011.                
-    Studies are also underway to investigate the economic potential of         
subsidiary mineral assets such as the auriferous Kimberley and White        
    Reef packages. These largely unexploited and underexplored reefs are        
    developed over a continuous strike distance of more than 25 kilometres      
    and remain a very substantial part of the CRG portfolio.                    
Key Mining Statistics                                                           
 Year To Date      Actual                   Prospectus                          
 October 2010                                                                   
Tons(t)/      Grade(g/t) Tons(t)/      Grade                 
                   Metres(m)                Metres(m)     (g/t)                 
 Decline sinking   785                      669                                 
Waste development 991                      420                                 
 Footwall          365                      -                                   
 development (m)                                                                
Reef development  355                      2,008                               
 Total (m)         2,496                    3,097                               
 Trial stoping (t) 6,073         2.6        23,752        3.80                  
Reef development  39,924        1.7        77,202        1.80                  
 Surface mining    119,728       3.0        31,041        4.40                  
Total (t)         165,725       2.67       131,995       2.77                  
Underground Mining Operations                                                   
Pending receipt of the Long-Hole Drilling Rig (required for stoping)            
underground mining efforts have focused on footwall development. Monthly        
development has continued at a good rate, with 372 metres being achieved for    
the month of October 2010.                                                      
Good progress and pre-stoping preparation have meant that the targeted 45,000   
ounces (annualised) production rate by year end 2013 remains on track.          
The Long Hole Rig has been delivered to the Atlas Copco site in South Africa    
and delivery on CRG`s site is expected by mid December 2010, enabling the       
mining operations to commence underground stoping in early 2011.                
The December delivery of the Long Hole Rig has short-term production            
implications in that the production forecast contained in the prospectus        
published by the Company on 4 June 2010 (the "Prospectus") anticipated          
significant higher grade underground ore to be available before the end of      
the year. This delay in delivery of underground ore has been partially          
mitigated by extension of the surface exploration and surface mining to         
supplement gold production.                                                     
Surface Mining                                                                  
Year to date 119,728 tonnes of surface ore has been mined from the following    
-    Central Pit - this pit has yielded 27,105 reef tonnes at a mill head       
    grade of 4.24g/t.                                                           
-    Pit 2 (New Unified) - this open pit has yielded 57,535 reef tonnes at a    
mill head grade of 3.64g/t.                                                 
-    Pit 3 (New Unified extension) - this pit has yielded 4,000 reef tonnes     
    at a mill head grade of 5.94g/t.                                            
-    West Pit - this pit has yielded 16, 028 reef tons at a mill head grade     
of 4.8g/t.                                                                  
Gold production achieved between 01 January 2010 and the end October 2010, is   
6,809 ounces. Tonnes processed for the last three months remained relatively    
stable at around 23 kilotonnes per month; however improvements were made on     
plant availability and most significantly on recovery.                          
In October 2010, and following plant improvements the Bateman concentrator      
availability increased to 71%, above the YTD average of 60%.                    
The comminution upgrade initiated in October 2010 focuses primarily on the      
Bateman Concentrator with the objectives of increasing throughput to            
45Kilotonnes per month and achieving an 83% availability while eliminating      
stockpiles and unwanted material handling within the plant. This upgrade is     
in the detail design phase with long lead procurement packages being            
expedited to minimise any delays. Current planning schedules the upgrade to     
be commissioned in May 2011. CIP plant availability has been maintained on      
average at 85% throughout the year.                                             
Lower than anticipated surface oxide ore grade from the newly opened surface    
slots eroded upside potential in September and October 2010, however,           
increased plant grade assays evident in early November 2010 could increase      
Gold production above the 1,100 ounces per month record if sustained to end     
December 2010. Anticipated annual production remains above the 9,000 ounces     
The optical ore sorter implementation has further progressed with the           
commencement of site infrastructure erection in October 2010.                   
The Commodas Optical Sorter unit is expected in South Africa mid December       
2010 with on site commissioning taking place in January 2011 coinciding with    
the ramp up of underground production which will feed this unit.                
WATER TABLE                                                                     
As mentioned in previous releases the South African Government has appointed    
an inter-ministerial task team to review the problem of Acid Mine Drainage      
("AMD") for the Greater Johannesburg Area.  It is the Company`s understanding   
that the task team submitted a report to the Department of Water Affairs, in    
mid October 2010. The recommendations from the report have not been made        
public. The Department has announced that it will present the findings to       
Cabinet by mid December 2010.                                                   
CRG will continue to support the interim solution, which requires the           
construction of a submersible pump station 400 metres below surface and the     
refurbishment of an existing high density sludge ("HDS") plant. CRG is not      
aware of any other solution that can halt and treat the rising water table      
Currently the water level at the South Western Vertical Shaft, the area where   
the new pumping station will be situated, is at approximately 540 metres        
below surface as compared to the approximate level of 570 metres below          
surface in the Consolidated Main Reef area currently being mined.               
Furthermore the water level is currently rising at 0.3metres per day which is   
on the low end of the expected rate of rise of between 0.3metres and            
0.9metres per day.                                                              
FINANCIAL UPDATE                                                                
Cash and cash equivalents for the four months ended 30 October 2010 increased   
from US$3.9 million at 30 June 2010 to US$25.9 million as a result of the       
following items:                                                                
-    net proceeds from recent capital raising of US$36.5 million;               
-    revenue from the sale of 3,461 ounces of gold processed from surface       
-    refund of the deposit on cancellation of the order for the processing      
    plant of US$2.3 million; and                                                
-    later than anticipated purchases of underground mining equipment.          
Cash and cash equivalents were reduced by expenditure required to continue      
development of the mine and surface mining operations, more specifically:       
-    underground mine development expenditure of US$5.2 million;                
-    procurement of mining fleet and other equipment of US$1.4 million;         
-    prepayment and civil works for the optical ore sorter and submersible      
    water pump;                                                                 
-    mining of nearby surface materials as an additional source of gold while   
the underground mining fleet is being procured; and                         
-    payment of voluntary retrenchment packages for 46 head office and          
    support staff, in a long term cost-cutting effort.                          
Set out below is an abridged cash flow for the four months to October 2010.     
US$ (million)                     
Cash and cash equivalents at 1 July 2010       3.9                              
Gold Sales                                     4.2                              
Cash used in operations                        (10.8)                           
Mine development                               (5.2)                            
Mine property, plant and equipment             (1.4)                            
Prepayments and deposits                       (3.0)                            
Net Proceeds from shares issue                 36.5                             
Interest Received                              0.1                              
Effect of exchange movement on cash balances   1.6                              
Cash and cash equivalents at 30 October 2010   25.9                             
The Company`s prospectus (issued 4 June 2010) assumed that its mining fleet     
would be finance through debt. To date it has been unable to secure asset       
finance and has utilised its own cash reserves to secure its fleet.             
Negotiations continue with various local finance houses, to fund its current    
and future fleet requirements.                                                  
BLACK ECONOMIC EMPOWERMENT                                                      
-    Puno Gold Investments (Pty) Limited`s ("Puno") failed to launch            
    arbitration proceedings with the Arbitration Foundation of South Africa     
    ("AFSA"). As such, Central Rand Gold Netherlands Antilles N.V. ("CRGNV")    
sought to expedite such arbitration proceedings by bringing the             
    application to AFSA in its capacity as respondent to the proceedings.       
    At the pre-arbitration meeting held between Puno, Central Rand Gold SA      
    (Pty) Limited ("CRGSA") and CRGNV the appointed arbitrator ruled that,      
despite being properly appointed by the Arbitration Foundation of South     
    Africa, he was unable to hear the matter as it had been brought before      
    him by the respondent in the case and not by the applicant.                 
    CRGNV will now amend the plea that it lodged in the first instance and      
file this amended document before AFSA in the form of a statement of        
    claim and thus bring the application to AFSA as an applicant (claiming      
    that it is in fact entitled to exercise a call over Puno`s entire           
    shareholding and setting out the circumstances which entitle it to make     
this call).                                                                 
-    In regard to the successful opposing of the application brought by Puno    
    to halt mining operations, the Company`s cost order awarded against Puno    
    has been taxed and the sum of ZAR300,000 (c. US$43,000) is now due and      
is expected to be paid to the Company by mid to late November.              
1) The information in this statement relating to Mineral Resources and          
geology has been reviewed and approved by Mr. Keith Matier, BSc (Hons), GDE,    
Pr Sci Nat, who is a competent person in terms of the SAMREC and JORC codes.    
2) Mr. Matier is Geology Manager of Central Rand Gold South Africa (Pty) Ltd    
and has over 17 years experience in precious metal exploration, mineral         
resource management and evaluation                                              
19 November 2010                                                                
JSE Sponsor                                                                     
Macquarie First South Advisers (Pty) Limited                                    
For further information, please contact:                                        
Central Rand Gold                       +27 (0) 11 674 2304                     
Johan du Toit / Patrick Malaza                                                  
Evolution Securities Limited            +44 (0) 20 7071 4300                    
Simon Edwards / Chris Sim / Neil Elliot                                         
Macquarie First South Advisers (Pty)    +27 (0) 11 583 7000                     
Annerie Britz /Melanie de Nysschen /                                            
Yvette Labuschagne                                                              
Buchanan Communications                 +44 (0) 20 7466 5000                    
Bobby Morse / Katharine Sutton                                                  
Jenni Newman Public Relations (Pty)     +27 (0) 11 772 1033                     
Jenni Newman                                                                    
Date: 19/11/2010 09:00:01 Supplied by www.sharenet.co.za                     
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