TIDMCRND
RNS Number : 1872O
Central Rand Gold Limited
05 February 2016
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")
Subscription of 34,999,015 Ordinary Shares at 3.5 pence per
Ordinary Share
Central Rand Gold is pleased to announce that it is undertaking
a subscription to raise GBP1.22 million through the subscription of
34,999,015 new ordinary shares at an issue price of 3.5 pence per
ordinary share (the "Issue Price") (the "Subscription"). 14,279,371
new ordinary shares have already been allotted under the Company's
existing authorities (the "First Subscription Shares"). The issue
of the remaining 20,719,644 new ordinary shares (the "Second
Subscription Shares") is conditional, amongst other things, on the
passing of a resolution to be proposed at an extraordinary general
meeting of the Company (the "General Meeting").
Background to and reasons for the Subscription
As announced on 22 December 2015, the board of directors of
Central Rand Gold (the "Board") terminated discussions with four
Asian investor groups in relation to the potential sale of Central
Rand Gold (Netherlands Antilles) N.V. ("CRGNV"). The significant
uncertainty caused by falling commodity prices and difficult market
conditions across the junior mining sector, along with
Company-specific factors such as the continued dewatering of the
Central Basin, meant that no unconditional and appropriately valued
proposals had been received for CRGNV. The Board considered that
the continuation of the process would unnecessarily prolong
shareholder uncertainty with no immediate prospect of a
satisfactory outcome.
The Company continued to negotiate with one Asian investor
regarding a strategic investment into Central Rand Gold, along with
other third party investors, to provide funding in order to pursue
growth opportunities for the Company. The proceeds of the
Subscription will be used primarily to strengthen the Company's
balance sheet and provide working capital in order to undertake
continued surface mining operations, identify and source further
plant feed material and facilitate a programme of plant upgrades
and efficiency processes to further improve plant availability and
recovery rates.
The Witwatersrand area, having been a gold mining area for over
100 years, has numerous old sand, slimes and rock dumps. With some
of the older gold mines coming to the end of their life span,
Central Rand Gold has identified a number of these which may
provide the Company with opportunities to secure future feedstock
for its metallurgical plant. During 2015, the Company undertook an
extensive surface exploration programme and a number of near
surface opencast opportunities were identified. The Company is
presently mining two opencast slots (namely Slot 5 and Slot 7) and
plans to develop an additional opencast slot in 2016.
Based on preliminary fieldwork and sampling exercises, the
Company expects that the already identified opencast operations
will provide sufficient material at an acceptable grade so as to
allow for continued operation of the mine for a number of years.
However, further fieldwork and sampling will be required in order
for the Company to categorise this material as reserves. The
Company continues to identify and source additional material from
external sources to supplement the opencast operations and maximise
the metallurgical plant's capacity. The opportunity to secure
material from external sources is significant and the Company
continues to advance discussions with various parties involving
significant quantities of ore bearing material.
The management team remains optimistic regarding the viability
of the surface mining strategy and is committed to optimise this
further, however this is considered by the Board as an interim
measure whilst dewatering of the underground operations
continues.
Should the Board be successful in pursuing the growth
opportunities, such as the acquisition of additional surface
material from third parties, then there may be a requirement for
additional capital to fund such an acquisition. In these
circumstances, the Board will consider making an open offer to
shareholders as soon as practical following admission of the Second
Subscription Shares at the Issue Price, in order to raise
additional funding and to allow shareholders to participate in the
future growth and development of Central Rand Gold's operations.
The net proceeds of the open offer would provide Central Rand Gold
with capital to strengthen its financial position and provide
additional working capital for the purposes outlined above,
particularly to secure additional feedstock.
Operational update
Acid Mine Drainage
During the last quarter of 2015, the High Density Sludge ("HDS")
plant underwent a process of upgrading the two thickeners. The
thickener upgrades to the HDS plant were completed in December 2015
and the pumping rate has now increased from 72 million litres per
day to 84 million litres per day.
At 28 January 2016, the water table measured at Central Rand
Gold's operations, was at approximately 143 vertical metres below
surface ("vmbs"). The Board anticipates that it will be able to
access Central Rand Gold's underground mining areas when the water
table is approximately 185 vmbs, which following a period of
rehabilitation, should enable Central Rand Gold's underground
mining operations to re-commence during 2017.
Mining operations
In the 12 months ended 31 December 2015, 205,022 tonnes (2014:
160,981 tonnes) were mined from the Company's open pits and other
surface material sources. The average grade for Central Rand Gold's
surface mining was 1.79 g/t (2014: 2.88g/t which included material
from underground operations) for the year. The reason for the
reduced grades is a result of the closure of the underground
operations, which contained higher grade material.
Processing results
In the 12 months ended 31 December 2015, 189,444 tonnes, which
includes 6,721 tonnes of material which was toll treated through an
external processing plant (2014: 183,410 tonnes), were processed by
Central Rand Gold, a 3.3 per cent. increase on the prior year
period.
Total gold produced in the 12 months to 31 December 2015 was
7,188 ozs (2014: 6,646 ozs); which was 8.2 per cent. higher than
that in the prior year. Gold production was impacted by the head
grade reducing from 1.88 g/t to 1.79 g/t in 2015, which again was
as a consequence of the closure of the underground operations. The
average grade is expected to remain at this level whilst surface
mining continues.
Central Rand Gold has focussed on improving its plant capacity
and efficiency during 2015. A new 243 square metre leach tank was
constructed and commissioned in June 2015, which will assist in
improving the gold recovery. Various other engineering improvements
have been introduced, which have contributed to cost savings. The
mine call factor continued on a positive trajectory with an average
"face to pour" mine call factor of 78 per cent. for the 12 months
ended 31 December 2015.
Details of the Subscription
The Company has conditionally raised gross proceeds of
approximately GBP1.22 million (USD$1.76 million) through the
proposed issue of 34,999,015 new ordinary shares (the "Subscription
Shares") at the Issue Price of 3.5 pence per ordinary share. The
Subscription Shares have been conditionally subscribed for by a
number of high net worth individuals including the principal of
Zhejiang Golden Machinery Plant. The Issue Price represents a
discount of approximately 28.6 per cent. to the middle market
closing price of 4.75 pence per ordinary share on 4 February 2016.
The Subscription Shares will represent approximately 26.88 per
cent. of the enlarged issued share capital.
The Subscription Shares are not being made available to the
public and are not being offered or sold in any jurisdiction where
it would be unlawful to do so.
The Subscription Shares will, when issued and fully paid, rank
pari passu with the existing ordinary shares, including the right
to receive all dividends and other distributions declared, made or
paid after the date of admission. No temporary documents of title
will be issued.
Subscription Agreements
The Company has entered into subscription agreements with four
investors for 34,999,015 Subscription Shares at an Issue Price of
3.5 pence per ordinary share.
First Subscription Shares
The Company has raised gross proceeds of approximately GBP0.50
million pursuant to the first subscription in relation to
14,279,371 First Subscription Shares at an Issue Price of 3.5 pence
per share. The First Subscription Shares have been allotted by the
Company, conditional only upon First Admission. Application will be
made to the London Stock Exchange and to the JSE Limited ("JSE")
for the First Subscription Shares to be admitted to trading on AIM
and AltX. It is expected that First Admission will become effective
and that dealings will commence on AIM at 8.00 a.m. (UK time) and
on AltX at 9.00 a.m. (South African time) ("First Admission").
Following admission of the First Subscription Shares, the total
issued share capital of the Company will increase to 109,475,179
ordinary shares. The Company does not hold any shares in treasury
and therefore the total number of voting rights will be 109,475,179
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 change to their
interest in, the Company under the Financial Conduct Authority's
Disclosure and Transparency Rules.
Second Subscription Shares
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February 05, 2016 02:15 ET (07:15 GMT)
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