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CENTRAL RAND GOLD LIMITED - 2017 Interim Report

Release Date: 18/10/2017 17:20:00      Code(s): CRD       PDF(s):  
2017 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 2007/0192231/10)
ISIN: GG00B92NXM24
LSE share code: CRND JSE share code: CRD
("Central Rand Gold" or the “Company” or the “Group”)


2017 Interim Report


Central Rand Gold today announces its unaudited Interim Results for the six months ended 30 June 2017 (“period
under review”). The full set of results is available on the Company’s website: www.centralrandgold.com.

For further information, please contact:

Central Rand Gold                                                         +27 (0) 87 310 4400
Lola Trollip

ZAI Corporate Finance Ltd - Nominated Adviser                            +44 (0) 20 7060 2220
John Treacy

Peterhouse Corporate Finance Limited – Broker                            +44 (0) 20 7469 0930
Lucy Williams / Fungai Ndoro

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

18 October 2017
Johannesburg

Forward-looking statements

This Interim Report contains certain forward-looking statements with respect to the financial condition, results of
operations and business of the Central Rand Gold Group. The words “intend”, “aim”, “project”, “anticipate”,
“estimate”, “plan”, “believe”, “expect”, “may”, “should”, “will”, or similar expressions, commonly identify such
forward-looking statements. Examples of forward-looking statements in this Interim Report include those regarding
estimated Ore Reserves, anticipated production or construction dates, costs, outputs and productive lives of assets
or similar factors. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and
other factors set forth in this Interim Report that are beyond the Group’s control. For example, future Ore Reserves
will be based in part on market prices that may vary significantly from current levels. These may materially affect
the timing and feasibility of particular developments. Other factors include the ability to produce and transport
products profitably, demand for our products, the effect of foreign currency exchange rates on market prices and
operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political
uncertainty.

In light of these risks, uncertainties and assumptions, actual results could be materially different from any future
results expressed or implied by these forward-looking statements, which speak only as at the date of this Interim
Report. Except as required by applicable regulations or by law, the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, or future events.
The Group cannot guarantee that its forward-looking statements will not differ materially from actual results.

Condensed Group Statement of Financial Position as at 30 June 2017

                                                               30 June     31 December        30 June
                                                                  2017            2016           2016
                                               Notes          US$ '000        US$ '000       US$ '000
                                                            (Unaudited)       (Audited)    (Unaudited)
ASSETS
Non-current assets
Plant and equipment                              5               1,385           1,354          2,194
Intangible assets                                                1,257           1,430          2,219
Security deposits and guarantees                                    55              52             49
Environmental guarantee investment                               2,934           2,659          2,712
Loans receivable                                 6               8,646           7,706          8,071
                                                                14,277          13,201         15,245
Current assets
Security deposits and guarantees                                    30              29             26
Prepayments and other receivables                                  657             361            508
Inventories                                      7                  66              28             79
Cash and cash equivalents                                          413             489            435
                                                                 1,166             907          1,048

Total assets                                                    15,443          14,108         16,293
EQUITY
Attributable to equity holders of the parent
Share capital                                    8              29,467          28,372         27,283
Share premium                                    8             224,892         225,289        225,255
Share-based compensation reserve                                28,238          28,238         28,238
Treasury shares                                                    (6)              (6)            (6)
Foreign currency translation reserve                          (25,984)         (27,234)       (27,501)
Accumulated losses                                           (269,612)        (266,189)      (264,080)
                                                              (13,005)         (11,530)       (10,811)
Non-controlling interest                                            -                -              -
Total equity                                                  (13,005)         (11,530)       (10,811)
LIABILITIES
Non-current liabilities
Environmental rehabilitation                                    3,460            3,281          3,858
Loan payable                                     9              8,646            7,706          8,071
                                                               12,106           10,987         11,929
Current liabilities
Trade and other payables                                        8,031            6,767          6,981
Royalties taxation payable                                        198              188            147
Loan payable                                     9              7,939            7,522          7,400
Derivative liability                                              174              174            647
                                                               16,342           14,651         15,175

Total liabilities                                              28,448           25,638         27,104
Total equity and liabilities                                   15,443           14,108         16,293


Condensed Group Statement of Profit or Loss and Other Comprehensive Income 
for the six months ended 30 June 2017

                                                              Six months        12 months      Six months
                                                                   ended            ended           ended
                                                                 30 June      31 December         30 June
                                                                    2017             2016            2016
                                                Notes           US$ '000         US$ '000        US$ '000
                                                              (Unaudited)        (Audited)     (Unaudited)

Revenue                                          10                2,653            4,825           1,765
Production costs                                 11               (1,504)          (1,684)         (1,553)
Employee benefits expense                                         (1,087)          (2,071)           (907)
Directors' emoluments                            12                  (36)            (254)           (124)
Operating lease expense                                             (331)          (1,252)           (285)
Operational expenses                             13                 (249)            (443)           (138)
Other expenses                                   14                 (650)          (2,388)           (665)
Other income and gains                           15                   10              169               5
Foreign exchange transaction (losses)/gains                          (77)             (49)             16
Loss before interest, tax, depreciation and
impairment                                                        (1,271)          (3,147)         (1,886)
Depreciation and amortisation charge                                (343)            (698)           (192)
Impairment of assets                                              (1,602)          (1,380)              -
Fair value movement in embedded derivative                           (40)           1,194               -
Finance and investment income                                        635            1,205             463
Finance costs                                                       (802)          (1,650)           (752)
Loss before income tax                                            (3,423)          (4,476)         (2,367)
Income tax expense                               16                    -                -               -
Loss for the period                                               (3,423)          (4,476)         (2,367)

Loss for the period is attributable to:
Non-controlling interest                                               -                -               -
Equity holders of the parent                                      (3,423)          (4,476)         (2,367)
                                                                  (3,423)          (4,476)         (2,367)

Shares in issue                                              299,833,285      207,750,698     141,400,341
Weighted average number of ordinary shares in
issue                                                        261,267,512      146,401,981     109,517,964
Fully diluted weighted average number of
ordinary shares in issue                                     261,267,512      146,665,981     110,121,964
Basic (loss)/earnings per share (US cents per
share)                                           18                (1.31)           (3.06)          (2.16)
Diluted loss per share (US cents per share)      18                (0.70)           (3.05)          (2.15)


Condensed Group Statement of Profit or Loss and Other Comprehensive
Income (continued)
for the six months ended 30 June 2017
                                                     Six months       12 months     Six months
                                                          ended           ended          ended
                                                        30 June     31 December        30 June
                                                           2017            2016           2016
                                                       US$ '000        US$ '000       US$ '000
                                                     (Unaudited)       (Audited)    (Unaudited)

(Loss)/profit for the period                             (3,423)         (4,476)        (2,367)
Other comprehensive (loss)/income:
Item that may be reclassified subsequently to
profit and loss
Exchange differences on translating foreign
operations                                                1,250             687            420
Other comprehensive (loss)/income for the
period, net of tax                                        1,250             687            420
Total comprehensive (loss)/income for the
period                                                   (2,173)         (3,789)        (1,947)

Total comprehensive (loss)/income is
attributable to:
Non-controlling interest                                      -               -              -
Equity holders of the parent                             (2,173)         (3,789)        (1,947)
                                                         (2,173)         (3,789)        (1,947)


Condensed Group Statement of Changes in Equity for the six months ended 30 June 2017

                                                                    Attributable to equity holders of the Group
                                                                                                                Foreign
                                                                            Share-based                        currency
                                                     Ordinary        Share compensation        Treasury     translation      Accumulated
                                         Notes   share capital    premium       reserve          shares         reserve           losses   Total equity
                                                    US$ '000      US$ '000     US$ '000        US$ '000        US$ '000         US$ '000       US$ '000

Balance at 31 December 2015 –
previously reported                                    26,617     224,037        28,238              (6)        (28,993)        (260,117)      (10,224)
Adjustments - prior period errors         19                 -          -             -               -           1,072           (1,596)         (524)
Balance at 31 December 2015 – restated                 26,617     224,037        28,238              (6)        (27,921)        (261,713)      (10,748)
Total comprehensive income for the
period ended 30 June 2016
Loss for the period                                         -           -             -               -               -           (2,367)       (2,367)
Other comprehensive income
Foreign currency adjustments                                -           -             -               -             420                -           420
Transactions with owners, recorded
directly in equity
Issue of Shares:
Capital raising                            8              666       1,218             -               -               -                -         1,884
                                                              
Balance at 30 June 2016                                27,283     225,255         28,238             (6)        (27,501)        (264,080)      (10,811)
                                                             
                                                                                                                           
                                                                  Attributable to equity holders of the Group

                                                                                                             Foreign
                                                                         Share-based                        currency
                                                  Ordinary     Share    compensation        Treasury     translation      Accumulated
                                     Notes   share capital   premium         reserve          shares         reserve           losses  Total equity
                                                  US$ '000  US$ '000        US$ '000        US$ '000        US$ '000         US$ '000      US$ '000

Balance at 31 December 2016                        28,372    225,289          28,238              (6)        (27,234)        (266,189)      (11,530)
Total comprehensive income for the
period ended 30 June 2017
Loss for the period                                     -          -               -               -               -           (3,423)       (3,423)
Other comprehensive income

Foreign currency adjustments                            -          -               -               -           1,250                -         1,250
Transactions with owners, recorded
directly in equity
Issue of Shares:
Capital raising                        8            1,095      (397)               -               -               -                -           698
Balance at 30 June 2016                            29,467   224,892           28,238              (6)        (25,984)        (269,612)      (13,005)

Condensed Group Statement of Cash Flow for the six months ended 30 June 2017

                                                             Six months      12 months      Six months
                                                                  ended          ended           ended
                                                                30 June    31 December         30 June
                                                                   2017           2016            2016
                                                               US$ '000       US$ '000        US$ '000
                                                             (Unaudited)      (Audited)     (Unaudited)

 CASH FLOWS FROM OPERATING
 ACTIVITIES                                     Notes
 Loss before tax                                                (3,423)         (4,476)        (2,367)
 Adjusted for :
 Depreciation and amortisation                                     343             698            192
 Loss on disposal of plant and equipment                             -             892              -
 Profit on disposal of shares                                        -              (3)             -
 Revaluation of investment                                           -             (54)             -
 Impairment of assets                                            1,602           1,380              -
 Net loss/(gain) on foreign exchange                                77              49            (16)
 Finance income                                                  (635)          (1,205)          (463)
 Finance costs                                                     802           1,650            752
 Fair value movement in embedded derivative                         40          (1,194)             -
 Changes in working capital
 (Increase)/decrease in prepayments and other
 receivables                                                      (296)             84            (28)
 (Increase)/decrease in inventory                                  (38)             92             41
Increase/(decrease) in trade and other payables                  1,264            (172)           (18)
 Decrease in provisions                                              -          (1,294)             -
 Cash flows used in operations                                    (264)         (3,553)        (1,907)
 Finance income                                                      4             195              4
 Finance costs                                                    (289)              -           (289)
 Net cash used in operating activities                            (549)         (3,358)        (2,192)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment                 5                 (50)             (9)             -
Withdrawal of capital on guarantee investment                        -             422              -

Net cash (used in)/from investing activities                       (50)            413              -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares for cash                             698           3,185          2,062
Cost relating to the issue of shares                                 -            (178)          (178)
Net proceeds from issue of convertible notes                       200               -            441
Net cash from financing activities                                 898           3,007          2,325

Net (decrease)/increase in cash and cash
equivalents                                                        299              62            133
Cash and cash equivalents at 1 January                             489             556            556
Effects of exchange rate fluctuations on cash
balances                                                          (375)           (129)          (254)
Cash and cash equivalents at end of period                         413             489            435


Notes to the Condensed Interim Group Financial Statements for the six months ended 30 June 2017

1. Basis of preparation

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU. The Annual Financial Statements of the Group are prepared in accordance with
International Financial Reporting Standards and Interpretations (collectively “IFRS”) issued by the International
Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”). The condensed interim Group
financial statements have been prepared applying the accounting policies and presentation that were applied in
the preparation of the Company’s published consolidated financial statements for the year ended 31 December
2016 except for the changes described in note 2.

The consolidated financial statements are presented in United States Dollars (“US$” or “US Dollar”) and rounded
to the nearest thousand. The functional currency of the parent company, Central Rand Gold Limited, is the US
Dollar. The functional currency of its principal subsidiary, Central Rand Gold SA is the South African Rand (“ZAR”
or “Rand”).

The interim financial information for the six months to 30 June 2017 and 30 June 2016 is unaudited and does not
constitute statutory financial information. The comparatives for the full year ended 31 December 2016 are not the
Group's full statutory accounts for that year. It does not include all disclosures that would otherwise be required in
a complete set of financial statements and should be read in conjunction with the 2016 Annual Report. The
auditor's report on those accounts was (i) unqualified, (ii) included an emphasis of matter in respect of going
concern and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Going concern 

The Group had net current liabilities at 30 June 2017 of US$15.6 million, including US$8.3 million of loan notes
(and interest), with Redstone Capital Limited and Mr Wang, and US$8.0 million of trade and other payables. The
ability of the Group to continue as a going concern is dependent on the Group securing access to sufficient
additional funding and extending the repayment terms of existing loan notes or the loan note holders converting
the loan notes into equity, to support the Group’s cash flow projections.

During the period under review, the Group raised US$1.6 million (net) through share placements and drawn down
US$0.6 million of bridge finance under a convertible loan note facility (‘CLN’) with Bergen Global Opportunity
Fund, LP (‘Bergen’) for working capital purposes. Under the terms of the agreement, the Group can draw down up
to US$4.0 million subject to agreement by both parties.

Whilst CRGSA’s operations have by and large stabilised operationally in 2017, the financial and operational
positions remain fragile and there is a very thin working capital position at the operating company level with a
negative position within the Company, as mentioned above. The Company’s production for the period January
2017 to 30 June 2017 was 2 320 Troy Ounces. The Company’s overall financial position is accordingly negative
and the directors are now actively exploring urgent financing options. In order to remain a listed, operational
mining group, in steady state and with a view to achieving medium term profitability, the directors consider a cash
injection of not less than US$ 20 million would be required to be made. The directors consider that this is unlikely
to be forthcoming in the near future or at all. Accordingly the directors are actively pursuing options which would
involve retaining its listings but the disposal of the Company’s interests in its immediate subsidiary company,
Central Rand Gold (Netherlands Antilles) N.V., unless it is able to secure sufficient alternative finance at the
required level in the very near future.

The Group’s Senior Secured Loan Notes of US$7.25 million principal (‘the Notes’), held by the Group’s largest
shareholder Redstone Capital Limited (‘Redstone’), fell due for maturity in September 2016. Redstone has
provided a written undertaking to extend the maturity of the Notes to at least December 2018 subject to
concluding negotiations regarding revisions to the terms of conversion in the coming months. The Directors,
based on discussions with representatives of Redstone, fully expect that the Notes will ultimately be converted
rather than called for payment.

The Directors have prepared cash flow forecasts for a period of at least 12 months from the date these financial
statements were approved, which show that the Group is able to meet its liabilities as they fall due. However, the
cash flow forecasts are dependent upon the Group successfully concluding the sale of the operating listed entity,
and, by novating the loans to the operating entities, privatising those operations.
                                                          
The Directors have concluded that the above circumstances give rise to a material uncertainty that may cast
significant doubt on the Group’s ability to continue as a going concern and it may therefore be unable to realise its
assets and discharge its liabilities in the normal course of business. Nevertheless, after taking account of the
Group’s plans to sell off some of the assets, and having considered the risks and uncertainties associated with
the forecasts, the Directors have a realistic expectation that the Group will have adequate resources to continue
in operational existence for at least 12 months from the date of approval of these financial statements. For these
reasons, the Directors continue to prepare the financial statements on a going concern basis, and the financial
statements do not include any adjustments that would result from the going concern basis of preparation being
inappropriate.

2. Accounting policies

Except as described below, the accounting policies applied by the Group in these condensed interim Group
financial statements are the same as those applied by the Group in its consolidated financial statements as at and
for the year ended 31 December 2016, as described in those consolidated financial statements.

The Group has adopted the following standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 January 2017:

- IFRS 2: Share-based Payment
- IFRS 12: Disclosure of Interests in Other Entities
- IFRS 15: Revenue from Contracts with Customers
- IAS 7: Statement of Cash Flows
- IAS 12: Income Taxes

The adoption of these Standards is not expected to have a significant impact upon the Group’s net results, net
assets or disclosures.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total
annual earnings.

3. Estimates and judgements

The preparation of condensed interim Group 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.

In preparing this condensed interim Group financial statements, the significant judgements made by management
in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated annual financial statements as at and for the year ended 31 December 2016.

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 2016.

Fair value
The aggregate net fair values of all current financial assets and financial liabilities, as well as non-current
receivables, instalment sales and finance leases approximate the carrying amounts at the financial reporting date.

Foreign currency rates
The US Dollar rates of exchange applicable to the period are as follows:

                                                   2017                    2016                    2016
                                              Six months to             Year ended            Six months to
                                                 30 June               31 December               30 June
                                             Closing Average         Closing Average         Closing Average

South African Rand                             0.08     0.08           0.07     0.07          0.07     0.07
Pound Sterling                                 1.30     1.26           1.23     1.27          1.34     1.43
Australian Dollar                              0.77     0.76           0.72     0.75          0.74     0.74

5. Property, plant and equipment

During the six months ended 30 June 2017, the Group spent US$50,081 to purchase other items of plant and
equipment (2016: US$0).

6. Loans receivable

Puno Gold Investments Proprietary Limited ("Puno")
Since the last report for the year ended 31 December 2016 there has been no resolution to the dispute relating to
alleged procedural breaches of the Central Rand Gold SA Shareholders’ Agreement between Central Rand Gold
SA and its current Black Economic Empowerment (“BEE”) shareholder, Puno. The dispute surrounds the
allocation of intercompany loans which fund the budget and work programme and the incurring of, and level of,
certain costs.

On 1 April 2016, the appeal judgement was handed down and the appellants i.e. the Central Rand Gold
companies were wholly successful in that a full bench of the appeal court ruled that the court of first instance had
erred in its findings.

Costs in the appeal, including wasted costs pertaining to the preliminary argument were granted against Puno.
Although a large portion of these costs were recovered in 2017 with a portion amounting to US$65,073 still being
outstanding, Puno has brought a further application seeking to overturn a portion of the costs lawfully taxed and
awarded by the taxing master.

The remainder of the arguments pertaining to the merits of the matter have been referred back to the judge of first
instance for reconsideration and a fresh judgement is to be delivered by the court of first instance. The Central
Rand Gold companies have taken the necessary steps for the matter to be referred and the parties are advised
that the judge of first instance is presently engaged in the drafting of a new judgement.

Aside from the above, on 29 April 2016, Puno served on Central Rand Gold SA an application premised upon
sections 344(f) and 345 of the Companies Act, for an order to wind up (seek the liquidation of) Central Rand Gold
SA. These virulent proceedings are bewildering in that they entail Puno (as minority shareholder, yet BEE partner
in terms of the Mining Charter) seeking to liquidate the company in which it holds a valuable financial stake.

Central Rand Gold SA has opposed the application and lodged answering affidavits which set out the
baselessness of the application brought. The time period for Puno to file any replying affidavit lapsed on
22 June 2016 and Puno has taken no further steps to progress this application or indeed withdraw it. Central
Rand Gold SA is of the opinion that, as a subsidiary of a listed Company, it has sufficient support from the holding
company to successfully trade out of any loss-making situation.

Further to the above, and on 4 November 2016, Puno has issued a further application citing thirteen respondents
including not only the Central Rand Gold group of companies, but also the current Minister of Mineral Resources,
the Director General of the Department of Mineral Resources, the Regional Manager of the Gauteng Region of
the Department of Mineral Resources, the Reserve Bank of South Africa, the group’s former legal advisors and
attorneys.

As part of this fresh litigation on the part of Puno it seeks an order before the High Court that a string of non-
existent agreements be declared void. Further to this, Puno has sought to implicate the aforementioned parties in
an elaborate fraudulent scheme which resulted in Central Rand Gold SA having been awarded certain
prospecting and mining rights. In spite of these sweeping allegations and the far reaching scheme conjured by
Puno’s application, it has been established that Puno has failed to serve its application on all the cited parties and
hence the particular application is hamstrung. Equally, Puno’s ability to progress such application is hamstrung by
interlocutory disputes which it must also address.

On 13 June 2017, the High Court of South Africa, (Gauteng Division, Pretoria) handed down judgment on the
matter initiated by the Company, CRGNV and CRGSA against Puno on 25 November 2011. The judgment
delivered was in favour of the Company, Central Rand Gold (Netherlands Antilles) N.V. and Central Rand Gold
SA. The Court upheld the views of these entities and rejected the defences proffered by Puno. This judgment has
definitively and positively pronounced on the validity and enforceability of the funding call, and found that such
funding call was made in accordance with the overarching law and the Shareholders Agreement. The Court
provided an Order that the funding call directed by the first and second applicant (Central Rand Gold SA and
Central Rand Gold (Netherlands Antilles) N.V.) to the respondent (Puno) on or about 17 September 2008, for
payment by the respondent for ZAR72,326,573.47 was declared valid and enforceable; the respondent was
ordered to pay the costs of the application; the respondent was ordered to pay the costs of the application; and
both cost orders include the costs of senior and junior counsel. Puno retains interest in Central Rand Gold SA but
owes Central Rand Gold SA and Central Rand Gold (Netherlands Antilles) N.V. ZAR72,326,573 (approximately
US$5,537,033 being the original loan amount plus compound interest).

The Group still believes that ultimately their position will prevail. The Board is still of the opinion that this will not
have any material consequences in respect of the consolidated accounts of the Group.

The loan payable to Puno contains the same allocations referred to above.

7. Inventories
                                                                                            Group
                                                                       June              December                  June
                                                                       2017                  2016                  2016
                                                                   US$ '000              US$ '000              US$ '000

Consumables                                                              66                    28                    42
Ore stockpiles                                                            -                     -                    37
Total inventories                                                        66                    28                    79

There was no write-down of ore stockpiles to net realisable value, and recognised as an expense during the
financial year under review (2016: US$0).

8. Share capital and share premium

The Company issued the following shares during the period under review:

-   Subsequent to the appointment of Brandon Hill Capital Limited as the Company’s broker on 23 January 2017,
    Central Rand Gold issued 936,330 ordinary shares in the Company as part consideration of their fee, in
    accordance with the terms of their engagement letter.
-   A share placement on 23 March 2017 of 60,000,000 new ordinary shares at 0.5 pence, which raised £0.30
    million.
-   A bridge funding (the “Bridge Funding”) through a combined convertible securities with Bergen. The Bridge
    Funding raised US$240,000. The Convertible Securities were (subject to the satisfaction of certain customary
    conditions) issued in tranches and were fully converted into 26,946,257 new Ordinary Shares by 2 May 2017.
-   On 8 May 2017, the Company issued 4,200,000 ordinary shares to a creditor in lieu of a fee due by the
    Company.

9. Loan payable
                                                                                   Group                      
                                                                                             
                                                                 June             December                 June
Net proceeds (USD million)                                       2017                 2016                 2016
                                                             US$ '000             US$ '000             US$ '000

Non-current                                                     8,646                7,706                8,071
Current                                                         7,939                7,522                7,400
                                                               16,585               15,228               15,471

Loan payable consists of the following:

                                                                                    Group
                                                                 June             December                 June
                                                                 2017                 2016                 2016
                                                             US$ '000             US$ '000             US$ '000

Puno Gold Investments Proprietary Limited                       8,646                7,706                8,071
Redstone Capital Limited                                        6,340                6,923                6,959
Bergen Global Opportunity Fund, LP                                  -                    -                  441
Loans from investors                                            1,599                  599                    -
                                                               16,585               15,228               15,471

10. Revenue
                                                                                    Group
                                                                 June            December                June
                                                                 2017                2016                2016
                                                             US$ '000            US$ '000            US$ '000

Gold sales                                                      2,596               3,353               1,764
Toll treatment                                                     56               1,471                   -
Other by-product sales                                              1                   1                   1
                                                                2,653               4,825               1,765

The revenue relates to the sale of gold derived from mining activities that take place in South Africa, tolling
revenue and the sale of other by-products. 2,320 (30 June 2016: 1,417) ounces (inclusive of gold arising from the
toll treatment) of gold was sold.

11. Production costs
                                                                                    Group
                                                                  June           December                 June
                                                                  2017               2016                 2016
                                                              US$ '000           US$ '000             US$ '000
Production costs comprise the following items:
- Consumables                                                      414                626                  347
- Utilities                                                        551               (475)                 452
- Plant hire                                                       428                646                  534
- Labour hire                                                        5                174                  131
- Toll treatment                                                   106              1,970                   89
- Environmental rehabilitation provision fair value
  adjustment                                                         -              (1,294)                  -
- Other                                                              -                  37                   -
                                                                 1,504               1,684               1,553

12. Changes to the Board

On 10 January 2017, Mr N Taylor and Mr M Austin resigned as Directors of the Group and Mr S Charles,
Mr W Zhuang and Ms L Trollip were appointed as Directors of the Group.

13. Operational expenses
                                                                                Group
                                                                  June       December                June
                                                                  2017           2016                2016
                                                              US$ '000       US$ '000            US$ '000
Operational expenditure comprises the following items:
- Assaying costs                                                    48             64                  41
- Consulting services                                              205            351                  93
- Environmental costs                                               (4)            28                   4
                                                                   249            443                 138

14. Other expenses
                                                                                 Group
                                                                  June        December              June
                                                                  2017            2016              2016
                                                              US$ '000        US$ '000          US$ '000

Auditor's remuneration                                               8             122               113
Corporate social investment                                          -              15                13
Legal costs                                                         75              15                64
Loss on disposal of plant and equipment                              -             892                 -
Travel and accommodation                                             2              24                12
Telecommunications                                                  48              96                42
Other expenses                                                     517           1,224               421
                                                                   650           2,388               665

15. Other income and gains
                                                                              Group
                                                                 June      December               June
                                                                 2017          2016               2016
                                                             US$ '000      US$ '000           US$ '000

Sundry income                                                      10           169                  5

16. Income tax expense

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
30 June 2017 is 0% (2016: 0%) due to assessable losses available to Central Rand Gold SA and the Guernsey
resident status of Central Rand Gold resulting in 0% effective rates.

17. Commitments

As at 30 June 2017, there were fees to the amount of US$91,867 payable to iProp. In addition, there was
US$9,187 outstanding in respect of the concentrator circuit payable in one year from the date of being
commissioned.

18. Loss per share
                                                                                          Group
                                                                      June             December                  June
                                                                      2017                 2016                  2016

Headline loss per share (US cents per share)                         (1.31)               (2.45)                (2.16)
Diluted headline loss per share (US cents per share)                 (0.70)               (2.44)                (2.15)

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
(US$'000)                                                           (3,423)              (4,476)               (2,367)
Add: Loss on disposal of plant and equipment
(US$'000)                                                                -                  892                     -
Loss used in calculating headline (loss)/earnings per
share (US$'000)                                                     (3,423)              (3,584)               (2,367)

19. Prior period errors

During the 2016 financial period, the Group discovered a number of accounting errors relating to transactions and
balances that had not been recorded during the years ended 31 December 2014 and 31 December 2015. These
errors have an impact on the 2016 Interim Results. Please refer to the 2016 Annual Report, as announced to
Shareholders on 16 October 2017, for an explanation of these errors.

20. Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment and assess its performance,
and for which discrete financial information is available. The entity’s chief operating decision maker reviews
information in one operating segment, being the acquisition of mineral rights and data gathering in the Central
Rand Goldfield of South Africa, therefore management has determined that there is only one reportable segment.
Accordingly, no analysis of segment revenue, results or net assets has been presented. No corporate or other
assets are excluded from this segment.

21. Share-based payments

No additional shares and share options in the Company were granted during the six months ended 30 June 2017.

22. Related parties

No disclosable related party transactions occurred during the period.

23. Contingent liability

During the previous financial year, the following contingent liability existed and still exists as at 30 June 2017:

Thin capitalisation
The tax legislation with regards to thin capitalisation changed with effect from 1 April 2012 and is applicable in
respect of years of assessment commencing on or after that date. The safe harbour ratio of 3:1 included in the
previous legislation was replaced with the concept of “arm’s length.” In instances where the loans are considered
not to be on an arm’s length basis all or part of the interest charged could be disallowed as a deduction. Any
interest not allowed as a deduction will be treated as an adjustment in terms of Section 31 of the Income Tax Act.
In terms of Section 31(3) of the Income Tax Act, any adjusted amount for transfer pricing and thin capitalisation
purposes, prior to 1 January 2015, constituted a deemed loan. As per the amended law, should this amount, plus
interest deemed to have accrued on it, not have been repaid to the taxpayer by the relevant non-resident
connected person by 31 December 2014, the outstanding “deemed loan” must “be deemed to be a dividend
consisting of a distribution of an asset in specie, that was declared and paid by that resident to that other person
on 1 January 2015”. Such deemed dividend will be subject to Dividends Withholding Tax (“DWT”), at a rate of
15%.

In prior years, management obtained a legal opinion, based on which they concluded that there is no deemed loan.
In further assessing the impact of the amendments on its intercompany loans, management concluded that due to
the lack in industry guidance pertaining to the application of the “arm’s length” concept, management will be unable
to confirm their conclusion without finalising a full Transfer Pricing benchmarking study applying OECD
(Organisation for Economic Co-operation and Development) principles.

Open tax years
Central Rand Gold SA has entered into an Alternative Dispute Resolution with the South African Revenue Service
relating to income tax returns submitted for the years of assessments 2010 to 2012.

iProp claim
iProp, the landowner of various mining sites, has lodged a claim for outstanding rentals and leases. The amounts
claimed are currently being reconciled, in order to quantify the position.

24. Events occurring after reporting date

The following events have taken place subsequent to 30 June 2017:

Financing
The Directors have been actively exploring urgent financing options. In order to remain a listed, operational mining
group, in steady state and with a view to achieving medium-term profitability, the directors consider that a cash
injection of not less than US$20 million would be required. The Directors consider that this is very unlikely to be
forthcoming in the near future or at all. Accordingly, the Directors have been actively pursuing options which would
involve retaining its listings but would require the disposal of the Company’s interests in its immediate subsidiary
company, Central Rand Gold (Netherlands Antilles) NV, unless it is able to secure sufficient alternative finance at
the required level in the very near future.

Puno dispute
In July 2017, Puno Gold Investments Proprietary Limited withdrew the application for the winding up of Central
Rand Gold SA on the basis that each party pays its own costs. This proposal was accepted by Central Rand Gold
SA.

Recapitalisation of the Company
In September 2017, the Company appointed Peterhouse Corporate Finance Limited as its brokers, with a view to
the Company undertaking a recapitalisation. Work is underway in relation to that process at the time of approval of
these consolidated financial statements, in the context of the Company putting proposals to shareholders for the
necessary authority to enable any such recapitalisation to occur and subsequent proposals to restructure the
Company, to divest itself of its mining interests and related indebtedness but retaining its listings.

iProp claim
In October 2017, iProp issued a claim to the Company’s subsidiary, regarding the recovery of outstanding leases
and rentals. The claim includes late penalty charges and interest, which have not been accrued in these
consolidated financial statements. This matter is with the Company’s legal advisors.

Resignation of Chief Executive Officer and director
On 4 October 2017 Ms Trollip tendered her resignation as the Company’s Chief Executive Officer, and as a
director of the Company and relevant Group subsidiaries, effective on a date to be agreed on by the Board.




                                                       

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