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CRD - Central Rand Gold Limited - CRG the gold mining company with assets in

Release Date: 03/02/2011 09:00:11      Code(s): CRD
CRD - Central Rand Gold Limited - CRG the gold mining company with assets in    
Southern Johannesburg, announces the following update:                          
Central Rand Gold Limited                                                       
("CRG" or the "Company" or the "Group")                                         
(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                                                          
CRG the gold mining company with assets in Southern Johannesburg, announces the 
following update:                                                               
Water Table                                                                     
The Company has repeatedly received strong indications of support from the South
African Government ("the Government") with regards to providing funding for the 
rising Acid Mine Drainage ("AMD") problem. The Government consistently provided 
assurances of their commitment to a joint solution throughout the year,         
ultimately undertaking to communicate their decision by early January 2011. No  
formal undertaking has been received from the Government.                       
Recent heavy rains and flooding in the Gauteng province has exacerbated the AMD 
issue and accelerated the rise of the water table.                              
CRG, together with other affected mining companies, supports the first phase of 
the interim solution being considered by Government, which involves the         
construction of a submersible pump station that will have the ability to lift 72
megalitres of AMD per day. The plan further envisages that the water will       
thereafter be partially treated through the existing High Density Sludge plant  
at East Rand Proprietary Mines.                                                 
The full cost of the above project is estimated at US$26million and CRG`s       
proportionate funding thereof is expected to be approximately US$4million.      
To protect the existing resource base above 250 metres below surface ("mbs"),   
the project needs to commence construction by the end of the first quarter of   
2011. As there is no alternate proposal within the timeframe available to       
resolve this problem, CRG unilaterally ordered the longest lead item, i.e. the  
submersible pumps, in August of last year at a cost of US$4million, but the     
Company cannot shoulder the burden of the legacy from 120 years of mining along 
the central area of the Witwatersrand and complete or operate this project on   
its own.                                                                        
Absent clear commitment to this joint project by the end of the first quarter of
2011 CRG faces the very real prospect of inaccessibility to its reserves below  
250 mbs by the end of the year.                                                 
The uncertainty surrounding Government participation affects the viability of   
the Company, and until clarity emerges, the Board believes it is essential it   
adopts a prudent position with respect to its capital resources and operations. 
This includes the need to:                                                      
-    Protect cash resources and limit cash outflow as much as possible;         
-    Delay capital expenditure of $2.6million, including the planned            
metallurgical upgrade;                                                      
-    Pursue short term arrangements to process excess mining production, whilst 
    the metallurgical plants upgrade has been delayed. The Company is engaged   
    in advanced discussions on this matter; and                                 
-    Continue to engage with the Government as a matter of urgency with a view  
    to resolving the AMD/ water table issue.                                    
Further updates will be made as this situation unfolds. Shareholders should be  
in no doubt that if a clear and positive way forward is not identified by the   
end of March 2011 the prospects of the Company will need to re-evaluated.       
Cash held by the Company as at end December 2010 totalled US$14.6million. The   
lower than expected cash position can be attributed to:                         
-    production of 9,321 ounces against a target of 19,308 ounces in the year   
    ended 31 December 2010, due to delayed underground stoping caused by longer 
    equipment lead times and initial adverse ground conditions;                 
-    higher mine development costs due to poor ground conditions necessitating  
the implementation of an alternative mining method requiring increased      
    materials and services for safe mining;                                     
-    higher plant processing expenditure for repairs and upgrades to improve    
    capacity, availability and recovery rates;                                  
-    mining equipment has been self funded whilst the Company investigates      
    alternate debt financing alternatives. The prospectus assumed a level of    
    debt financing; and                                                         
-    Delay in receiving Value Added Tax refunds of $2.5million.                 
As indicated above, the short term focus for the Group is cash preservation;    
this will be achieved by delaying capital expenditure, placing a moratorium on  
all recruitment coupled by delaying all non essential operational spend. The    
sale of the Company`s 50tph Gekko concentrator plant is at an advanced stage and
the Company hopes to be able to provide an update on this shortly.              
Underground Mining                                                              
CRG commenced underground stoping at the beginning of January 2011 with the     
arrival of the Long Hole Rig ("LHR") at the end of December 2010. Early progress
has been encouraging and while underground operations are in ramp up stage, the 
Company believes it should still be on track to achieve its expected 2011       
production target, had this not been for the issues with AMD.                   
Immediate target areas for stoping were identified with the first target area   
being used to commission the LHR as well as to test the hanging wall competency.
The first Footwall access stoping took place from the 1571/1557 draw point 13   
stope and realised approximately 3096 tons of Main Reef ore grading at a diluted
blasted grade of 2.5 g/t.                                                       
The following results were achieved from the first Footwall access stope:       
-    The blasting of the stope from the draw point has proved that the vast     
    majority of the blasted material runs down to the bottom draw point         
following the blast;                                                        
-    The remainder of the material can easily be washed down using water jetting
-    Hanging wall remained largely intact during stope blasting;                
-    Ore can be easily accessed from the bottom draw point;                     
-    Good ore fragmentation occurred (-150mm) which is good for metallurgical   
    crushing requirements; and                                                  
-    Dilution control in this first stope was good with only 10cm of footwall   
being included in the stope ore. The lower grade middling encountered       
    during the blast will be partially removed by the optical sorter, in line   
    with CRG`s current plans.                                                   
Overall the Company is extremely pleased with the results of the first footwall 
stope as it is in line with its expectations. Underground production continues  
with an initial underground production target of 16,000 tones per month.        
At the end of January 2011 approximately 56 kilotons of underground Main Reef   
ore was exposed. The Company did identify unplanned double voids (where both the
Main Reef and Main Reef Leader are mined out) in certain parts of its targeted  
mining area, but this seems largely an isolated occurrence.                     
Grades obtained from chip sampling at available draw points appear to be        
consistent with those estimated in the current Resource evaluation. Sampling    
results from the first three accessible draw points are tabulated below.        
Level          Draw Point Grade     Reef Width                                  
1525           1          4.34g/t   195cm                                       

1571           9          6.65g/t   150cm                                       
1571           13         3.20g/t   134cm                                       
Monthly development progressed at a good rate with 434 metres being achieved    
in December 2010 compared to 408 metres achieved in November 2010 and 372       
metres in October 2010, respectively. It is anticipated that the arrival        
of the new charge-up vehicle at the end of January 2011 will shorten the        
charging-up cycles thereby having a commensurate effect on the achievement      
of the set production targets.                                                  
Gold production of 9,321 Oz was achieved for the year ending December 2010,     
which was within the range projected in the Company`s Interim Management        
Statement announced in November 2010.                                           
Consistent production of approximately 23 kilotonnes per month was maintained   
in the second half of 2010 on the predominantly surface Oxide ore feed.         
The optical ore sorter was installed mid January 2011 with commissioning        
commencing at month end coinciding with the underground mining ramp up. The     
ore sorter will be utilised to remove waste from the feed thereby increasing    
the ore grade into the process plants with the added benefit of the waste being 
on sold as aggregate.                                                           
Further plant upgrade relating to the crushing and milling circuit will be      
postponed until clarity can be obtained with regards to the AMD solution        
The proportion of underground sulphides being processed vs surface oxides       
will increase to around 50/50 in 2011 from around 15/85 in 2010 requiring a     
processing shift to address the harder and chemically different ore feed.       
Confirmation of grade, dilution and possible old workings contaminants will     
also be evaluated in assessing gold output.                                     
Surface Exploration                                                             
Mineral Exploration through systematic mechanical trenching, geological         
mapping and channel sampling continued throughout the fourth quarter of 2010    
resulting in the identification and delineation of several significant open     
pit "Exploration Target" areas within the New Order Mining Right.               
Table 1 below details the Exploration Target Inventory as of December 2010.     
Mining Area      Reef         Exploration Target Material                       
Central Pit      Main Reef    3.1g/t - 3.9g/t   6,000t - 15,000t                
New Unified Pit  Main Reef    1.8g/t - 5.2g/t   11,000t - 19,000t               
New Unified      Main Reef    4.6g/t - 6.1g/t   10,000t - 47,000t               
West Pit                                                                        
Slot 5 Block A   White Reef   2.9g/t - 3.1g/t   27,000t - 48,000t               
Slot 5 Blocks    White Reef   1.5g/t - 1.9g/t   17,000t - 33,000t               
Slot 7           White Reef   2.1g/t - 3.2g/t   87,000t - 200,000t              
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 orebody continuity, mineability, dilution and throughput              
Further exploration for 2011 will focus on improving confidence in Exploration  
Target material and identifying additional surface mining potential to          
supplement underground production.                                              
Expansion Projects                                                              
There has been considerable focus during the fourth quarter of 2010 on the      
development and optimization of the significant JORC/SAMREC resource base       
available to the company.                                                       
Independent Scoping studies into the feasibility of developing CMR East have    
been completed and suggest that CMR East is economically viable at a 30%        
confidence level. Further work is now required to increase this confidence to   
pre-Feasibility/Feasibility level which will allow for a full capitalization    
decision to be made.                                                            
As the resolution of the AMD/ water table issue remains unclear, additional     
economic studies across the lease area, focussing in particular on CMR East     
are scheduled to gauge the economic impact of the water level stabilising at    
various depth levels.                                                           
A comprehensive tender process for the planned Resource Drilling at the new     
Crown Mines site has been completed and the detailed programme of diamond       
drilling is designed to upgrade a substantial block of Main Reef in the Crown   
Mines West target area from Inferred Resources to Indicated Resources. It is    
expected that this drilling programme will commence during the second half      
of 2011. This is a change of schedule from the previously planned commencement  
date of the first quarter of 2011. This deviation was deemed prudent to allow   
for cash preservation, until greater clarity can be obtained with regards to    
the AMD solution.                                                               
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 known to be continuously  
developed over strike distances in excess of 25 kilometres and remain a very    
substantial part of the CRG portfolio.                                          
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. Mr.       
Matier is the 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                                                       
03 February 2011                                                                
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          
Rob Collins / Chris Sim / Neil Elliot                                           
Macquarie First South Advisers (Pty) Ltd          +27 (0) 11 583 2000           
Annerie Britz /Melanie de Nysschen /                                            
Yvette Labuschagne                                                              
Buchanan Communications                           +44 (0) 20 7466 5000          
Bobby Morse / Katharine Sutton / James Strong                                   
Jenni Newman Public Relations (Pty) Ltd           +27 (0) 11 772 1033           
Jenni Newman                                                                    
Date: 03/02/2011 09:00:10 Supplied by www.sharenet.co.za                     
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