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CENTRAL RAND GOLD LIMITED - Placing, Subscription and Exercise of Redstone Warrants

Release Date: 17/12/2014 10:00:00      Code(s): CRD       PDF(s):  
Placing, Subscription and Exercise of Redstone Warrants

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
2007/0192231/10)
ISIN: GG00B92NXM24
LSE share code: CRND JSE share code: CRD
(“Central Rand Gold” or the “Company” or “CRG")


Placing, Subscription and Exercise of Redstone Warrants

Central Rand Gold is pleased to announce that it is undertaking a placing and subscription to raise £1.02 million
through the placing (the “Placing”) of 5,000,000 new ordinary shares (“Placing Shares”) and the offer for
subscription (the “Subscription”) of 5,200,000 new ordinary shares "Subscription Shares") at a price of 10 pence
per ordinary share ("Placing Price"). Additionally Redstone Capital Limited (“Redstone”) is exercising 1,800,000
warrants over 1,800,000 ordinary shares at a price of 8.78 pence per ordinary share (“Redstone Warrants”). The
funds from the Placing, Subscription and the exercise of the Redstone Warrants will provide gross proceeds of
US$ 1.85 million to the Company.

Background and Reasons for the Placing

Prior to the decision by the Company to temporarily suspend its underground operations in October 2014, as a
result of the delay in full commissioning of the High Density Sludge Plant ("HDSP"), the focus was to provide the
HDSP with as much time as possible to drop the water table, which in turn would enable to Company to re-
access its mining areas. The Company was forced to reduce its mine production and staff complement, in July
2014 based on the reef that was available above the water table, which at the time was approximately 160
metres below surface. The reduction in mine production, forced the Company to utilise old low grade sand, rock
and slimes dumps to keep the Metallurgical Plant operational. As a result of this change to its mining production
areas, the average feed grade dropped to an average of 1.11g/t.

The Company considered alternate approaches to mining some of its more technically challenging surface
resources. The introduction of mechanical ripping and other rock breaking technology has opened up SAMREC
Compliant Exploration Target material of between 91,000 and 350,000 tonnes of reef running up to 2.5g/t. The
Company commenced surface mining in early November 2014, with the first feedstock going to the Metallurgical
Plant in mid-November 2014, and the average grade has improved to 2.21g/t.

The board of directors of Central Rand Gold (the “Board”) considers that it has identified sufficient ore to sustain
the existing operation at similar production levels of approximately 18,000 - 20,000 tonnes per month for at least
the next 12 to 18 months. CRG’s operational team has significant experience in the surface mining of these thin
reefs gained as a result of the past five years of slot mining. In 2013, the cost per tonne of surface mining was
US$25 per tonne compared to underground mining costs of US$48 per tonne. The Company estimates that the
all in cash costs (mining, metallurgical and head office costs) at the estimated production rate and grade can be
between US$800 – US$900 per ounce.

The temporary cession of underground activities will allow the operational team to focus its attention on surface
operations while the final upgrade of the thickeners at the HDSP plant is being completed, which will in turn allow
the water table to be reduced to the extent that the Company can re-access to the high grade underground
working areas.

In addition, to the reactivation of existing surface Resources and Exploration Targets, the Company has
conducted a regional survey focussing on known surface gold sources. The study has identified a number of
interesting alternative and easily accessible target mining operations which may be available to the Company.
Given that a number of the target mining areas are outside Central Rand Gold's existing mining right areas, the
Board is presently engaged in numerous commercial discussions with a view to securing an option to mine these
areas. These initiatives are focused on maintaining the Company's production rate to ensure the Company
moves into a cash positive position.

Memoranda of Understanding
Over the last 14 months, the Company has been involved in a significant marketing campaign, of the CRG asset
base, to a predominately Asian audience. This has resulted in site visits to the Company’s operational site by a
number of interested investors. As announced on 2 December 2014, the Company has entered into three
separate non-binding Memoranda of Understanding with Hiria Group Company Limited ("Hiria"), Beijing Ankong
Investment ("Ankong") and with Shengbang Jiabo (Beijing) Consulting Company Limited ("Shengbang")
(“MOU’s”). The MOU’s are all on substantively consistent terms and contemplate the potential disposal of 100 per
cent. of the shares held by Central Rand Gold in its wholly-owned subsidiary, Central Rand Gold (Netherlands
Antilles) N.V. (“CRGNV”) for a cash consideration of up to US$150 million. Further, the Company has been
approached by a number of other parties regarding a potential sale of Central Rand Gold’s shareholding in
CRGNV, with these discussions ongoing. CRGNV owns the assets of the Group.

The MOU’s are subject to a number of conditions including:

-    mutual completion of due diligence by both Central Rand Gold and the MOU signatories;
-    all parties obtaining necessary regulatory and exchange approvals for the potential sale of CRGNV; and
-    the execution of a formal share sale agreement for the sale of CRGNV anticipated by 31 March 2015.

Given the number of approaches that have been made, the Company has established a virtual data room that
has been made available to interested parties selected to participate, based on their credentials and expressions
of interest. In addition to Hiria, Ankong and Shengbang which have all entered into separate MOUs with the
Company, there are a further three parties which have entered the virtual data room. The Company wishes to
ensure that all interested parties are treated equitably and have access to identical information. Appropriate non-
disclosure agreements will be signed before any non-public information is disclosed to these third parties. A
number of the interested parties in the virtual data room have already conducted physical site visits to the
Company's operations. The Company is presently working with all the remaining interested parties to arrange site
visits which are expected to occur throughout December 2014 and January 2015.

In addition to shareholder approval, it is anticipated that the transaction will require South African Ministerial
approval, in terms of section 11 of the Mineral and Petroleum Resources Development (Act 28 of 2002).

The Board cautions that at this time there can be no certainty that the discussions with any of the interested
parties will lead to a formal share sale agreement being executed nor that the potential sale of CRGNV will be
completed.

Operational focus into 2015

The focus of the Company over the next 12 months will be on the following key areas:

Resource

The Company will target its current unmined surface resource, within its mining right area, through open cast
mining. Central Rand has identified up to 350,000 tonnes of ore at an estimated average grade of 2.5g/t, which
should be sufficient for 12 – 18 months of production feed. Additionally, The Company will seek other surface
mining opportunities and feedstock sources, to assist the Company in achieving its Metallurgical Plant capacity.
This feedstock, will either be from lower grade rock dumps or via trial operations currently underway where the
Company is trialling a sweepings and vampings operation at the East Rand of Johannesburg, which should
provide the Company with high grade but low volume feed material.

The Company has sufficient skills to effectively mine via open cast as it has been exploiting this shallow resource
base since 2009.

The Board will continue to monitor the underground water levels, so that it can establish when it can re-
commence underground operations. Given that the HDSP upgrade is not anticipated to be completed until the
end of the first half of 2015, underground mining will re-commence during the latter part of 2015 or early 2016
once the water table is below 180 mbs.

Production

The focus of the Company is to utilize the current Metallurgical Plant capacity, of 25,000tpm, with best available
alternative feed material and is currently targeting a minimum production 18,000tpm from its surface mining
operations. In order to ensure full utilization of the Metallurgical Plant, the Company is also engaged in
discussions with smaller mining operations to toll treat their material through the Company’s plant. The
Company’s target is to maintain its total cash cost between US$800 to US$900 per ounce during 2015.

Potential disposal of CRGNV

As previously announced, the potential disposal of the Company’s subsidiary CRGNV is dependent on the
satisfactory conclusion of due diligence. Therefore, over the coming months, the Company will continue to assist
all interested parties, by providing all relevant information, so that the due diligence can be completed within the
provided time. Once this process has been completed the Company can then select the preferred bidder with the
aim of executing a formal share sale agreement.

Use of Proceeds

The funds raised will be utilised to strengthen the Company’s balance sheet and ensure that it has sufficient
working capital to undertake:

Restructuring costs

Restructuring costs include the costs associated with staff reductions, removal of underground equipment to
surface and site establishment costs to increase surface mining production. Once the restructuring has been
completed the Company will have the appropriate cost base to ensure a viable cash positive business from its
surface mining operations. In addition, the protection of the underground resource will remain a priority for the
Company.

Disposal of CRGNV

To ensure a timely execution of the sales transaction, the Company will be required to appoint advisors that are
proficient in the laws and regulations of China, the United Kingdom and South Africa,

Placing and Subscription

The Company has conditionally raised gross proceeds of approximately USD1.60 million (£1.02 million) through
the proposed issue of the Placing Shares and the Subscription Shares at a price of 10 pence per ordinary share.
The Placing Shares have been conditionally placed with new and existing investors. The Placing Price represents
a discount of approximately 20.79 per cent. to the middle market closing price of 12.625 pence per ordinary share
on 16 December 2014, being the last practicable date prior to the announcement of the Placing and Subscription.
The Placing Shares and the Subscription Shares will represent approximately 11.70 per cent. of the enlarged
issued share capital.

The Placing and Subscription are conditional upon admission of the 12,000,000 new ordinary shares issued
pursuant to the Placing, the Subscription and the exercise of the Redstone Warrants becoming effective on or
before 8.00 a.m. on 19 December 2014 (or such later time and/or date as the Company and Charles Stanley may
agree, but in any event no later than 8.00 a.m. on 5 January 2015).

Redstone Warrants

The Company will raise additional gross proceeds of USD 0.25 million (£0.16 million) through the exercise of
1,800,000 warrants over 1,800,000 ordinary shares at a price of 8.78 pence per ordinary share by Redstone
Capital.

Holdings

For the purposes of the Takeover Code, Mr Gu is part of the Redstone concert party as outlined in the
Company’s circular to shareholders dated 2 August 2013. Following the Placing, the Subscription and the
exercise of the Redstone Warrants, the Redstone concert party will be interested in 31.4% of the Company’s
enlarged issued share capital. The holdings of the Redstone concert party post admission and on the
assumption of the full conversion of Redstone's loan notes and warrants into ordinary shares will be as follows:


                                                               Following Full
                                                                                               Following Full
               Following admission                         Conversion of Loan
                                                                                       Conversion of Warrants
                                                                        Notes

                     No. of Shares           %        No. of Shares         %        No. of Shares          %
 Redstone*              12,791,300      14.67%           66,973,736    47.38%           92,264,954     55.36%
 Yizhou Gu               8,600,000       9.86%            8,600,000     6.08%            8,600,000      5.16%
 Hong Tang               6,000,000       6.88%            6,000,000     4.24%            6,000,000      3.60%

*Nathan Taylor and Jason Hou, directors of Central Rand Gold, are also shareholders in Redstone and therefore have a
beneficial interest in the shares held by Redstone.

Settlement and Dealings

The 12,000,000 new ordinary shares to be issued pursuant to the Placing, the Subscription and the exercise of
the Redstone Warrants will rank pari passu in all respects with the existing ordinary shares, including the right to
receive all dividends and other distributions declared, made or paid on the existing ordinary shares on or after
admission.

Application has been made for the 12,000,000 new ordinary shares to be admitted to trading on AIM and AltX
and it is expected that admission will occur and dealings in the new ordinary shares will commence on AIM at
8.00 a.m. on 19 December 2014 and on AltX at 9.00 a.m. (South African time) on 19 December 2014.

Following admission of the new ordinary shares, the total issued share capital of the Company will increase to
87,180,808 ordinary shares. The Company does not hold any shares in treasury and therefore the total number
of voting rights is 87,180,808 ordinary shares. This figure may be used by shareholders as the denominator for
the calculations by which they will determine if they are required to notify their interest in, or a charge to their
interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

For further information, please contact:

Central Rand Gold                                                                                     +27 (0) 87 310 4400
Johan du Toit / Nathan Taylor

Charles Stanley Securities Limited                                                                   +44 (0) 20 7149 6000
Marc Milmo / Mark Taylor

Merchantec Capital                                                                                    +27 (0) 11 325 6363
Marcel Goncalves / Monique Martinez

Jenni Newman Public Relations Proprietary Limited                                                      +27 (0) 11 506 735
Jenni Newman


Johannesburg
17 December 2014


Sponsor
Merchantec Capital


Charles Stanley Securities, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is
acting as nominated adviser and broker to Central Rand Gold for the purpose of the AIM Rules in connection with the Placing
and, as such, its responsibilities are owed solely to the London Stock Exchange and are not owed to the Company or to any
Director or to any other person or entity. Charles Stanley Securities will not be responsible to any person other than the
Company for providing the protections afforded to clients of Charles Stanley Securities or for providing advice to any other
person in connection with the Placing or any other matter referred to herein. Charles Stanley Securities has not authorised the
contents of, or any part of, this document, and no liability whatsoever is accepted by Charles Stanley Securities for the
accuracy of any information or opinions contained in this document or for the omission of any material information.

This announcement does not constitute, or form part of the Placing or any invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for, any shares in the Company nor shall this announcement or any part of it, or the fact of its
distribution, form the basis of, or be relied on, in connection with or act as any inducement to enter into any contract or
commitment whatsoever with respect to the Placing or otherwise.

Date: 17/12/2014 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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