TIDMCRND
RNS Number : 4020A
Central Rand Gold Limited
07 June 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")
----------------------------------------------------
OPERATIONAL, FINANCIAL AND CORPORATE UPDATE AND
BOARD CHANGES
----------------------------------------------------
The Board of Directors ("the Board") of Central Rand Gold ("CRG"
or the "Company") is pleased to provide the following update to
Shareholders.
Operational Update
Toll Treatment and Joint Venture Opportunities
The Company has entered into a binding Joint Venture Tolling
Agreement (the "Tolling Venture") with a third party supplier of
ore for the sourcing and processing of gold-bearing material
through the metallurgical plant at Central Rand Gold.
The Tolling Venture envisages the processing through the
Company's metallurgical plant of a minimum of 18,000 tonnes per
month, commencing from July 2016. The plant currently has capacity
for up to 20,000 tonnes per month and the intention of the parties
in the Tolling Venture is to fully utilise that capacity. The
material processed under the Tolling Venture will be of a similar
nature and grade to the material, which has been historically
processed through the metallurgical plant.
Under the Tolling Venture, the third party material supplier
will be responsible to source and deliver gold bearing material to
CRG's metallurgical plant for processing by CRG. Under the
agreement, CRG will receive a graduated fee for processing the
material in accordance with the number of tonnes processed through
the metallurgical plant (the "Processing Fee").
The Company is excited by the formation of the Tolling Venture
and looks forward to building on the relationship with the third
party supplier. In addition, the Company is presently assessing
further joint venture opportunities within the region surrounding
the Company's metallurgical plant. In this regard, the Company is
engaging closely with its strategic partner Zhejiang Golden
Machinery Plant ("ZGMP").
As previously announced, the Company and ZGMP worked closely
throughout 2015 regarding potential metallurgical plant designs and
configurations associated with the future exploitation of the
Company's large-scale underground resources. In relation to the
surface joint venture opportunities currently under review, the
Company is working with ZGMP to optimise the existing metallurgical
plant with the objective to increase tonnage throughput and
efficiencies. Representatives from ZGMP will be onsite at CRG in
early June 2016 to progress these opportunities to an investment
decision stage. As soon as the Company, in consultation with ZGMP,
has finalised the preferred strategy it will update Shareholders
with necessary details.
Short Term Open Pit Mining
As disclosed in previous announcements, due to the flooding of
the Central Basin, the Company has been forced to focus on mining
surface and open pit operations. The Company has worked hard to
identify and exploit various surface accessible resources over the
past 18 months since the flooding of the Central Basin caused the
suspension of the underground operations. The Company has worked
closely with its stakeholders to continue to maintain operations
until the Central Basin water table reduces sufficiently to enable
underground mining to recommence.
Since the beginning of the year until suspension of the open pit
operations in late May 2016, 68,077 tonnes were mined from the
Company's open pits and other surface material sources, at an
average grade of 1.93g/t. However, due to recently experienced
grade variability from the surface operations, the Company has
decided to cease open pit mining operations for the immediate
period and will focus on rehabilitation of opened up areas, as well
as processing material under the Tolling Venture. Notwithstanding
this course of action, CRG continues to identify and analyse
further open pit and surface opportunities and retains the option
to re-access such areas if commercially viable.
Acid Mine Drainage ("AMD") and Central Basin Water Table
The Company continues to actively engage with the Trans Caledon
Tunnel Authority ("TCTA") regarding the ongoing de-watering of the
Central Basin. Over the past several months, the pump station and
High Density Sludge plant ("HDS Plant") have been running
intermittently. In particular, one of the Ritz pumps which was
donated by CRG to the de-watering project has experienced a degree
of 'down time' over the first half of 2016, which was caused by
ongoing mechanical issues. However, the pump's availability rates
have improved over the past 3 months with May 2016 being its
strongest month from an operational perspective since January 2016.
As at 25 May 2016, the water table measured at Central Rand Gold's
operations, was at approximately 148 vertical metres below
surface.
As previously announced, in 2015 the HDS Plant underwent a
series of upgrades to specific components contained within the back
end of the HDS Plant. Pleasingly, since these upgrades have been
completed, the HDS Plant has seen improved throughput. With the HDS
Plant now performing in line with nameplate specifications, the
Company anticipates that dewatering should once again accelerate
during the winter months, assuming the mechanical issues with the
Ritz pump are rectified.
The Company is also pleased and encouraged by the significant
amount of work being conducted by the TCTA and the South African
Government regarding the strategy to upgrade the infrastructure
used to dewater and treat the AMD. Under the present system adopted
by the TCTA, the AMD is cleaned, with the pH increased to 9 through
the addition of lime. Further, heavy metals are removed from the
solution and gypsum is also added which has the effect of reducing
the salt content of the treated water but not removing the salts
completely. The treated water is then discharged into the Vaal
River system.
Under the proposed long-term solution for AMD (the "Long Term
AMD Solution"), which was recently announced by Water Minister
Nomvula Mokonyane, the salt content of the treated AMD water will
be further reduced through either reverse osmosis or an alternative
desalination technology. Once this process has occurred, it will
enable the treated water to be sold for safe commercial use as
either industrial or potable water. The Long Term AMD Solution will
effectively turn AMD into a critical and reliable source of potable
water to the water-short Gauteng Province, which is the economic
driver of South Africa.
Implementation of the Long Term AMD Solution has to be preceded
by a full environmental-impact assessment, which is expected to be
concluded in 2017. The South African Government has indicated that
the long-term solution, which will incorporate the desalination
technology, will be commissioned in late 2019.
The Company is also closely following privately developed
potential solutions for de-watering and commercial application of
AMD. The Company notes that there are several private sector
companies that have developed water treatment processes to extract
valuable elements from the AMD for application and commercial sale
to the fertilizer and construction industries. The by-product of
such water treatment processes is potable water, which may be sold
to industry and municipalities. The Company will continue to
monitor these developments to determine if there is an opportunity
for CRG to participate in the development and application of these
private sector water treatment processes. The Company will continue
to keep shareholders informed of any updates. The Company will
ensure that background information relating to these developments
is uploaded to the Company's website over the near term.
Appointment of Chief Executive Officer to SA subsidiary
The Board is pleased to advise that Lola Trollip has been
appointed as Chief Executive Officer of Central Rand Gold SA
Proprietary Limited ("Central Rand Gold SA"), the Company's
operating subsidiary, effectively immediately.
Ms Trollip, a financial executive with over 30 years of African
and international experience in the resources industry, joined CRG
in late 2015 to lead the finance function as Chief Financial
Officer and as a member of the Executive Committee of the Company.
She will now have overall responsibility for the day-to-day
operations of the business as Chief Executive Officer Central Rand
Gold SA and it is anticipated that she will be joining the Board of
CRG as soon as all necessary regulatory paperwork has been
processed. Prior to Ms Trollip's appointment as Chief Executive
Officer of Central Rand Gold SA, she was Chief Financial Officer of
the Company.
The Board also announces the retirement of Mr. Allen Phillips
from his role as Non-Executive Director and Interim Chief Executive
Officer, effective immediately. Mr Phillip's will remain involved
with the Company going forward in a consulting capacity to ensure
his continued guidance with respect to the metallurgical function
of the Company. The Company's Interim Chairman, Mr Nathan Taylor,
thanked Mr Phillips for his contribution to CRG saying: "Allen has
helped guide CRG through a challenging time. He has made a valuable
contribution to the development of the Company generally and has
played a particularly significant role in the improved performance
of the Company's metallurgical plant and workforce. On behalf of
all CRG stakeholders, I thank Allen for his contribution and look
forward to his future involvement in a consulting capacity."
Acquisition Opportunities
In addition to the work being done to actively pursue near term
gold production opportunities in and around the Company's operation
within the Witwatersrand area, the Board has resolved to broaden
its acquisition strategy to pursue opportunities throughout the
African continent. The Board is particularly interested in near
term production assets across a number of commodities including but
not limited to precious metals and precious stones.
The Board is presently working with two parties regarding
potential acquisition opportunities within Sub-Sahara Africa.
Whilst discussions are at a preliminary stage, both opportunities
exhibit characteristics which the Board considers appealing, namely
near term cash flow potential and low capital start-up costs. The
Board will continue to advance these opportunities and will advise
the market as and when discussions are finalised.
Funding Discussions
Strategic Partnership with ZGMP
Over the past three months the Company has conferred with ZGMP
regarding a potential investment into Central Rand Gold (the "ZGMP
Investment"). It is envisaged that the ZGMP Investment will be
applied to fund the growth initiatives which have been outlined
above as well as for general working capital purposes. Discussions
regarding the size, structure and timing of the ZGMP Investment
remain ongoing but are expected to be finalised in the near
term.
It is also contemplated that one or more of the Joint Venture
opportunities will require a capacity expansion to be conducted at
CRG's metallurgical plant. The size and cost of this capacity
expansion is still being considered by CRG and ZGMP. Once the
necessary financial modelling and engineering design work has been
completed, ZGMP has proposed that it manufacture and supply the
capital goods from its facilities within China. As contemplated by
the MOU signed with ZGMP in 2014, the Company can elect to pay ZGMP
through the issuance of new ordinary shares in Central Rand Gold
rather than in cash, subject to the required shareholder approvals
and applicable rules and regulations. This option would have the
benefit of reducing balance sheet strain while aligning the
interests of Central Rand Gold and ZGMP. As mentioned above, CRG
will host representatives from ZGMP in early June 2016 to finalise
a decision regarding the growth opportunities and ZGMP
Investment.
Bridging Finance and Subscription
Given the ongoing discussions with ZGMP and the continued
progress regarding growth opportunities, the Board has elected to
complete a bridge funding (the "Bridge Funding") through a combined
convertible securities and warrant issuance with Bergen Global
Opportunity Fund, LP, a New York based institutional fund. The
Bridge Funding has raised US$598,000, with the potential for an
increase to up to US$4,098,000 million should both parties agree.
In addition, the Company has today undertaken a subscription to
raise US$200,000 through the subscription of 4,620,005 new ordinary
shares at an issue price of 3 pence each (the "Subscription"). The
details of the Bridge Funding and Subscription have been separately
announced today.
The Bridge Funding and Subscription will be used for general
working capital purposes and the installation of a refurbished
milling circuit recently acquired by the Company.
Puno Gold Investments Proprietary Limited Update
As announced on 3 May 2016, the Company received correspondence
from Puno Gold Investments Proprietary Limited ("Puno") relating to
an application made by Puno to wind-up CRG SA (the
"Application").
As announced on 11 April 2016, the Board believes this to be the
latest strategy from Puno to frustrate the operations of the
Company. The Board considers the Application to be without merit
and has engaged legal advisers to defend the action. Shareholders
will be kept fully informed as the matter progresses.
The Company also eagerly awaits the judgement of the Supreme
Court regarding the long running dispute with Puno relating to the
shareholder funding provisions relating to the operation of Central
Rand Gold SA. The Company and its Counsel remain confident of the
strength of case and will keep Shareholders fully informed as the
matter progresses in the Supreme Court.
About Zhejiang Golden Machinery Plant
ZGMP is one of China's largest private mining machinery
manufacturers and is located in the Zhejiang province. ZGMP has a
significant and well established client list, with many of its
clients ranking amongst the world's largest gold and base metals
producers, including ZiJin Mining, Jiangxi Copper, Zhongjin
Lingnan. The product list and manufacturing capabilities of ZGMP
are significant, with industry leading capabilities in crushing and
grinding circuits, mixing and flotation equipment, concentration
and filtration equipment and hydrometallurgy equipment.
Furthermore, ZGMP has the capability to provide ancillary goods and
services to its clients including engineering services, building
materials, metallurgy, nonferrous metal, electric power, chemical
industry and other basic industries. ZGMP has manufactured mining
and processing equipment for operating mines across the globe
including Asia, Africa, North America and Australia.
For further information, please contact:
Central Rand Gold +27 (0) 87 310 4400
Lola Trollip / Nathan Taylor
Panmure Gordon (UK) Limited - Nominated Adviser & Broker +44
(0) 20 7886 2977
Adam James / James Greenwood
Merchantec Capital - JSE Sponsor +27 (0) 11 325 6363
Marcel Goncalves / Monique Martinez
Jenni Newman Public Relations Proprietary Limited +27 (0) 11 506
735
Jenni Newman
Johannesburg
7 June 2016
Sponsor
Merchantec Capital
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUGUGWQUPQUAM
(END) Dow Jones Newswires
June 07, 2016 02:01 ET (06:01 GMT)
Central Rand (LSE:CRND)
Historical Stock Chart
From Jun 2024 to Jul 2024
Central Rand (LSE:CRND)
Historical Stock Chart
From Jul 2023 to Jul 2024
