TIDMCRND
RNS Number : 7213R
Central Rand Gold Limited
01 July 2015
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")
--------------------------------------------------------------
Abridged Annual Results and Annual Report Release
--------------------------------------------------------------
Central Rand Gold today announces its annual results for the
year ended 31 December 2014.
Full copies of the Company's Annual Report and Accounts,
including the Company Profile, Directors' Report, Corporate
Governance and Sustainable Development Report, Directors'
Responsibility Statement, Company Secretarial Confirmation,
Auditor's Report and full Financial Statements, are available on
the Company's website www.centralrandgold.com.
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 6478
Marc Milmo / Mark Taylor
Merchantec Capital +27 (0) 11 325 6363
Monique Martinez / Marcel Goncalves
Jenni Newman Public Relations +27 (0) 11 506 7351
Proprietary Limited
Jenni Newman
Chairman's report
I present to you the 2014 Annual Report for your Company.
The year 2014 was an extraordinary one for the Company, with a
number of key events occurring, such as:
-- significant capital improvement works carried out on the metallurgical plant;
-- temporary closure of the underground mine due to the rising water table; and
-- significant strategic investor interest in acquiring 100% of
Central Rand Gold (Netherlands Antilles) N.V. ("CRGNV").
All of these events are over and above the ordinary course of
business activities at Central Rand Gold. I believe that the board
of directors of Central Rand Gold ("the Board"), and more
particularly the Executive Committee, have done an excellent job in
managing these extraordinary events whilst maintaining their focus
on day-to-day operations. There is no doubt in my mind that we have
made some tremendous progress over the past 12 months, which will
enable the Company to be in a stronger operational position in
2015.
Undoubtedly, the most important event of the year was the strong
interest in the Company from Asian based investors. The Board and
Executive Committee spent much of the year marketing to investors
and strategic partners throughout South Africa, London and Asia,
with a view to attracting sufficient capital to better exploit the
Company's vast gold reserves and resources. This initiative
resulted in three Asian based companies submitting non-binding
Memoranda of Understanding ("MOU") in Q4 2014. The MOUs contemplate
Central Rand Gold selling 100 per cent of its shares in CRGNV to
the successful bidder.
The three Asian companies, Hiria Group Company Limited
("Hiria"), Beijing Ankong Investment ("Ankong") and Shengbang Jiabo
(Beijing) Consulting Company Limited ("Shengbang") submitted
substantively similar offers of not more than US$150 million, with
a target date for completion of 31 March 2015. This target date was
subsequently extended to 12 June 2015 to accommodate a fourth
interested party, Huili Resources Group Limited ("Huili"), who put
forward a further MOU on 12 February 2015, which again contained
substantively similar terms to the previously announced MOUs.
In June 2015, after the completion of the due diligence
processes, both Huili and Hiria requested a one month extension to
15 July 2015, to enable them both to complete their respective
internal processes. Further, the Board decided not to continue
discussions with Ankong and Shengbang at that time, to enable it to
focus on discussions and negotiations with Huili and Hiria.
We eagerly await the completion of the final negotiation
processes with the knowledge that an acquisition and subsequent
cash injection will finally allow the CRG project to reach its very
significant potential.
"UPS AND DOWNS"
I find it useful to reflect on the ups and downs experienced
throughout the year. In a year such as this it is often easy to
dwell on the negative aspects and not acknowledge the many
significant positives experienced throughout the year.
-- It was with great sadness that in May 2014 we experienced our
first fatality as a result of a fall of ground. This sad event
triggered company wide introspection into safety practices and
resulted in a number of improvements being made to our already
rigorous and diligent safety protocols.
-- On 28 May 2014, Trans Caledon Tunnel Authority ("TCTA")
commenced with pumping and treatment operations of the High Density
Sludge ("HDS") plant.
-- A notable highlight for the Company was re-joining the 10
million ounce club with the reinstatement of 4.5 million ounces of
JORC and SAMREC compliant Resources.
-- The significant improvements made to the metallurgical plant
in 2013 and early 2014 have begun to yield fruit. The third ball
mill and upgraded leach circuit were commissioned to provide
additional processing capacity and create sufficient redundancy to
enable proper and proactive maintenance to occur. The metallurgical
plant, having long been the Company's 'Achilles heel', is now
consistently performing at or above expectation. Recoveries are
strong and availability is typically above 85%. The new cone
crushing circuit, specifically designed for harder underground ore,
was commissioned and has performed consistently well throughout the
year.
-- Underground mining operations went from strength to strength
in the early portion of the year. The Mine Call Factor ("MCF")
stabilised well above industry averages and insitu grades
consistently exceeded expectations. Not only were we able to mine
the orebody with conventional techniques, we were able to mine it
efficiently and economically.
-- The unfortunate delay in commencement of pumping and the
initial teething issues experienced by the TCTA at the HDS plant
forced the Company to cease underground mining due to a rising
water table. This was a great pity as the underground operations
had just gotten into their stride and significant momentum had been
created.
-- The Company embarked on an intense and systematic exploration
and evaluation programme to identify and secure sufficient surface
material to sustain operations across the short- to mid-term. The
identification of more than 390,000 tonnes of ore on surface,
coupled with a number of third party toll treatment transactions,
has enabled the Company to not only continue to "fill the mills",
but to do so at a reduced cost.
-- The exploration and evaluation programme identified very
substantial low grade resources that would not ordinarily be
economic. The conclusion of a "low grade Joint Venture" with fellow
processor Mintails Limited has allowed both companies to monetise
these low grade resources and add further to the revenue stream of
the Company.
PUNO
The situation with Puno Gold Investments Proprietary Limited
("Puno"), our Black Economic Empowerment partner, remains a work in
progress. The appeal process to set aside the 2013 decision is
progressing slowly and has little to no impact on the Company's
operational performance. I am pleased to state that communication
channels with Puno have improved materially over the past 12 months
and the two parties are actively working toward an amicable and
mutually agreed solution. The Board truly hopes that the matter
will be shortly concluded and energies can be redirected into a
more fruitful endeavour.
APPRECIATION
I would like to thank Michael McMahon, who resigned as Director
and Chairman during the year, for his sterling efforts and steady
hand in guiding the Company during his tenure. I would also like to
thank Miklos Salamon, former Non-executive Director, for his
unsurpassed technical guidance and strategic foresight. The Company
has greatly benefited from the combined stewardship of Michael and
Miklos over the past number of years and we thank them for their
dedication to the Company. Furthermore, Patrick Malaza must also be
acknowledged for his strong work ethic and dedication he brought to
the role of Finance Director until his resignation during the
year.
I welcome to the Board new Non-executive Director, Allen
Phillips, with the confidence that his years of metallurgical
experience in operations will be transferred to the production
team. The Company has already seen the benefits of Allen's
involvement through the metallurgical plant upgrade process which
has been extremely successful. Allen's experience and 'hands on'
approach has brought a new dimension and energy to the Company's
metallurgical division and we look forward to him continuing to
drive improvements over the coming 12 months.
I also must acknowledge Jason Hou for his tireless work in
marketing the Company within mainland China and Hong Kong. He has
been instrumental in identifying and engaging with the four
Asian-based parties which signed MOUs to purchase CRGNV. His
guiding hand and insight into the Asian region has enabled the
Company to engage effectively and meaningfully with our MOU
counterparties.
Additionally, the Executive Committee must be commended on their
focus and unwavering determination. As aforementioned, the
Executive Committee has worked tirelessly to improve the operations
and grow shareholder value, whilst also playing a significant role
in the MOU negotiations and due diligence process. Johan du Toit
has once again led by example and I wish to thank him for working
so effectively with myself and the rest of the Board.
Finally, I thank the shareholders of Central Rand Gold for their
continued support and believe the Company is in a strong position
to embark on 2015.
Nathan Taylor
Chairman
Chief Executive Officer's report
INTRODUCTION
2014 has been a year full of unexpected events, from the Company
encountered its first fatality, to the temporary suspension of its
underground mining operations due to the rising water table, to
finding new economic surface mining opportunities potential and
concluding the year with the potential sale of CRGNV.
SAFETY
The Company's already strong focus on safety was heightened
throughout 2014 post the Company's first fatality. An underground
worker installing support died as a result of loose rocks becoming
dislodged from historically mined out areas up-dip from the working
area. This sad event led the Company to modify the mining and
support layout to ensure better safety at the working face.
ACID MINE DRAINAGE ("AMD")
The HDS plant has now been operational since May 2014. Despite a
good start to the operations, with the observation of a drop in the
water table in June 2014, the flow rate was unfortunately reduced
in mid-August 2014 as a result of the decision by the TCTA to
strengthen the mechanical components of the two 42 million litre
thickeners at the HDS plant. This upgrade was required in order to
improve, manage and control the AMD sludge and to ensure the longer
term improved performance of the HDS plant. The final upgrade is
planned for completion during 2015.
Whilst the pumping solution is showing positive signs of basin
wide dewatering, which will ultimately greatly benefit the Company,
the delays in the initiation of the pumping and the subsequent
teething problems have had a temporary but significant impact on
our underground mining operation.
Mining on the high grade Main Reef horizon began to tail off
from April 2014 as the water levels began to flood the lower Main
Reef workings. In July 2014, with most of the Main Reef submerged,
focus shifted to the much lower grade North Reef. Finally, as the
water level reached the ventilation shaft and secondary access way
in October 2014, crews were pulled out of the decline and
underground mining was halted.
The Company has been carefully gathering information regarding
HDS performance and water level movement at our mining operations.
It seems that if the flow rate can be maintained at approximately
60 million litres per day ("mlpd"), which equates to approximately
80% of nameplate capacity of the HDS plant, a reduction in the
water level occurs.
Positively since March 2015, the flow rate has been fairly
consistently maintained at approximately 72 mlpd, resulting in a
drop in the water table of approximately 4.5 vertical metres, from
March to end of May 2015, which is very positive as it indicates
that the central basin water level can be dropped even during the
raining season.
MINING UPDATE
Highlights
-- Underground production on the Main and North Reefs was halted
in October 2014 as a result of the rising AMD blocking the
secondary escape route and ventilation shaft.
-- Underground production for the year was 99,546 tonnes at an
average grade of 3.1g/t. The average Main Reef grade was 3.78g/t.
The average North Reef grade was 1.78g/t.
-- Open Pit production was 69,747 tonnes at an average grade of 2.41g/t.
Production
The following table shows key mining statistics for 2014,
comparing the actual statistics with those achieved in 2013.
2014 2013 Difference
------------------- --------------------- --------------------- ---------------------
Activity Metres (m) Grade Metres (m) Grade Metres (m) Grade
Tonnes (t) (g/t) Tonnes (t) (g/t) Tonnes (t) (g/t)
------------------- ------------ ------- ------------ ------- ------------ -------
Waste Development
(m) 313 595 282
------------------- ------------ ------- ------------ ------- ------------ -------
Reef Development
(m) 200 559 359
------------------- ------------ ------- ------------ ------- ------------ -------
Total (m) 513 1,154 641
------------------- ------------ ------- ------------ ------- ------------ -------
Stoping (t) 99,546 3.14 111,671 4.66 12,125 1.52
------------------- ------------ ------- ------------ ------- ------------ -------
Open Pits (t) 69,747 2.41 91,038 3.13 21,291 0.72
------------------- ------------ ------- ------------ ------- ------------ -------
Total Tonnes 169,293 202,709 33,416
------------------- ------------ ------- ------------ ------- ------------ -------
Mining update
Underground production and grades showed a large drop from 2013
due to the rising water levels cutting off the higher grade Main
Reef stopes progressively from April to July 2014. Underground
stoping moved to lower grade North Reef as a last resort in July
2014 but by October 2014 this too was cut off by the water
levels.
Notwithstanding the temporary cessation of underground mining,
the conventional mining methods employed have been a resounding
success with the key metrics of tonnage, grade and MCF all being
met and generally exceeded. Hanging wall dilution was effectively
controlled and backstope sweepings were systematically
undertaken.
During 2014, in an attempt to minimise staff redundancies, the
Company reviewed mining opportunities at Middelvlei Mine and
trialled a sweeping and vamping operation at one of Gravelotte
Mines Limited's ("Gravelotte") (a mining operation on the east rand
of Johannesburg) old shafts. After completing some reef picking at
Middelvlei rock dumps, operations were stopped, due to limited
further low cost opportunities in the area. The Gravelotte
operations provided some interesting results, however it did not
achieve the Company's minimum investment return and the operations
were stopped at the end of December 2014.
METALLURGICAL UPDATE
Production
The year 2014 saw the completion of the metallurgical plant
expansion projects which were initiated in 2013. These capital
projects were undertaken to improve overall plant availability, MCF
and gold recovery and tonnage throughput. The results of the
capital projects have been strong with a demonstrable improvement
in the key plant metrics aforementioned. Unfortunately however,
other factors such as the temporary cessation of underground mining
which reduced the availability of quality ore have lessened the
expected impact of these improvements.
Plant production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 1 (tonnes) 4,116 8,704 8,867 9,636 9,995 10,057 8,555 6,811 6,217 8,285 4,617 7,535
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 3 (tonnes) 2,960 3,683 3,470 3,899 2,430 468 - - - - - -
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 3 (tonnes) - - - - 3,492 7,472 7,183 5,779 4,587 7,036 6,678 5,988
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill availability
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 1 Availability
(%) 40.6 91.3 84.4 89.4 93.7 92.1 94.6 75.4 91.6 87.4 61.0 84.9
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 2 Availability
(%) 93.2 89.3 88.6 86.3 93.2 94.6 Off Off Off Off Off Off
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Mill 3 Availability
(%) N/A N/A N/A N/A 78.9 91.8 94.4 82.3 95.5 93.2 90.6 80.7
--------------------- ------ ------ ------ ------ ------ ------- ------ ------ ------ ------ ------ ------
Gold recovery throughout the year was somewhat variable, due
largely to the changing nature of the feedstock. The move from Main
Reef to North Reef to sands and slimes and open pit oxides did
place the equilibrium of the plant under strain. However, the
overall recoveries remained acceptable at 82%.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Plant recovery
(%) 94 92 90 87 82 84 77 60 73 78 87 79
---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Crushing and Screening
The Company completed the installation of its new Symons 4 1/4
cone crusher and commissioned the unit in November 2014. The unit
has thus far demonstrated excellent availability and reliability.
The commissioning of the cone completed the crushing and screening
upgrades which commenced in 2013 with the building of the Jaw
crusher and screening train. The upgraded crushing and screening
circuit allows the Company to reduce both hard sulphide ore from
underground as well as softer oxide ore sourced from the open pits
to the required minus 12mm for milling. The circuit has proven to
be able to produce in excess of 40ktpm.
Milling capacity
The additional 9' x 10' ball mill acquired toward the end of
2013 was commissioned on 15 May 2014 and has performed
exceptionally well, showing a 33% upgrade in the processing
capacity of the entire metallurgical plant. The availability of the
new mill has increased from 73% on hot commissioning to the current
steady state of 92%.
Further metallurgical upgrades
The cash injection from the Redstone Capital Limited
("Redstone") further enabled the refurbishment and upgrade of the
water reticulation system and a full rebuild and upgrade of the
elution column and heat exchanger.
The Company also started the installation of the new leach tank
which provides substantially more residence time allowing for
improved gold recoveries. The leach tank installation is scheduled
to be completed by early July 2015. The thickener project has been
put on hold pending the outcome of the potential sale of CRGNV.
GEOLOGICAL UPDATE
Resources
SAMREC Mineral Resources for the Company were updated in July
2014, with the reclassification of previous Exploration Target
material between 450 metres and 900 metres as Mineral Resource.
This was achieved through the demonstration of the ability of the
Ritz pumps to dewater the entire basin simultaneously as well as
the completion of capital and economic studies showing that further
de-watering beneath the 450 metre level can be done efficiently and
economically. With the installation of additional pumps and piping,
this hurdle for "eventual economic extraction", a key aspect in the
definition of 'Mineral Resources' in terms of the SAMREC Code, can
be satisfied.
This has allowed the Company and the Independent Competent
Person, Venmyn Deloitte Proprietary Limited, to re-rate the gold
mineralisation between 450 metres and 900 metres below surface from
"Exploration Target" to "Mineral Resource". This reclassification
has more than doubled the resource base of the Company from 4.51
Moz to 9.90 Moz of contained gold.
SAMREC Compliant Mineral Resources
July 2014 February 2014
-------------- -------------------- ------------------------- -------------------------
Area Category Tonnes Grade Content Tonnes Grade Content
-------------- --------------------
(Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
-------------- -------------------- ------- ------ -------- ------- ------ --------
CMR Measured 1.46 3.65 0.17 1.46 3.65 0.17
-------------- -------------------- ------- ------ -------- ------- ------ --------
Indicated 14.43 4.22 1.97 11.30 4.53 1.64
----------------------------------- ------- ------ -------- ------- ------ --------
Inferred 5.64 6.65 1.23 4.34 5.60 0.78
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 12.02 9.26 3.59 15.86 8.49 4.33
----------------------------------- ------- ------ -------- ------- ------ --------
Crown Indicated 5.78 5.83 1.11 2.58 5.67 0.47
-------------- -------------------- ------- ------ -------- ------- ------ --------
Inferred 3.11 8.03 0.80 2.77 7.19 0.64
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 20.81 10.07 6.73 24.34 9.61 7.52
----------------------------------- ------- ------ -------- ------- ------ --------
City Indicated 2.88 6.97 0.63 0.78 7.58 0.19
-------------- -------------------- ------- ------ -------- ------- ------ --------
Inferred 2.43 6.99 0.55 0.70 8.00 0.18
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 19.12 9.66 6.32 22.95 9.66 7.13
----------------------------------- ------- ------ -------- ------- ------ --------
Village Indicated 1.80 6.48 0.39 0.53 5.87 0.10
-------------- -------------------- ------- ------ -------- ------- ------ --------
Inferred 0.20 13.60 0.10 0.17 14.64 0.08
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 12.27 10.93 4.30 13.57 10.57 4.61
----------------------------------- ------- ------ -------- ------- ------ --------
Simmers Indicated 1.53 8.80 0.43 0.73 8.10 0.19
-------------- -------------------- ------- ------ -------- ------- ------ --------
Inferred 0.15 8.20 0.04 0.15 8.29 0.04
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 8.75 10.35 2.92 9.55 10.29 3.16
----------------------------------- ------- ------ -------- ------- ------ --------
Other Indicated 3.16 1.22 0.13 - - -
-------------- -------------------- ------- ------ -------- ------- ------ --------
Inferred 20.47 3.61 2.36 - - -
----------------------------------- ------- ------ -------- ------- ------ --------
Exploration
Target 10.04 9.07 2.92 33.67 8.34 5.41
----------------------------------- ------- ------ -------- ------- ------ --------
Total Measured Resource 1.46 3.57 0.17 1.46 3.57 0.17
-------------- -------------------- ------- ------ -------- ------- ------ --------
Total Indicated Resource 29.58 4.85 4.66 15.92 5.06 2.59
-------------- -------------------- ------- ------ -------- ------- ------ --------
Total Inferred Resource 32.00 4.92 5.08 8.13 6.58 1.72
-------------- -------------------- ------- ------ -------- ------- ------ --------
Exploration
Total Target 83.01 10.03 26.78 119.94 8.34 32.16
-------------- -------------------- ------- ------ -------- ------- ------ --------
Grand Total* 146.05 7.80 36.69 145.45 7.84 36.64
------------------------------------ ------- ------ -------- ------- ------ --------
*Totals are based on additional decimal points resulting in
minor total discrepancies.
The cessation of underground mining during the year means that
no further changes or updates to the Mineral Resources were
undertaken as only a nominal amount of ore was extracted prior to
the cessation.
There was a significant focus on exploration and evaluation
throughout the year, brought on by the need to source replacement
ore as a result of the short to mid-term cessation of underground
operations. The introduction of concentric ripper machinery to the
mining fleet has facilitated the exploitation of surface deposits
containing very hard rock which has previously been considered
uneconomic due to the need for explosives. Consequently, the
introduction of the concentric ripper machinery has enabled the
Company to re-evaluate known deposits which contain very hard rock
such as Slots 4, 5 and 7.
The re-evaluation of these slots has shown that they can be
strongly economic and have been reclassified as Shallow Exploration
Target in terms of the SAMREC code. Operations in early 2015 have
demonstrated that the grades actually exceed expectations and
significant further potential exists in these areas over and above
that already discovered.
Tonnage range Approximate
Slot Target area Reef Dip V. Depth (t) grade
-------- ------------- ---------- -------- --------- ------------------- ------------
Pits 1 to
Slot 5 3 White 40 deg 30m 64,000 to 125,900 2.8g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
Slot 7 Main Pit White 45 deg 30m 60,000 to 174,000 2.7g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
Slot 4 K7 Top Kimberly 45 deg 10m 5,000 to 22,000 1.7g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
Slot 4 K7 Middle Kimberly 45 deg 10m 5,000 to 20,000 1.8g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
Slot 4 K7 Bottom Kimberly 45 deg 10m 5,000 to 15,000 1.7g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
Pits 1, 2
NASREC and 3 Main 45 deg 40m 30,000 to 37,800 2.7g/t
-------- ------------- ---------- -------- --------- ------------------- ------------
170,000 to 395,000 2.6g/t
------------------------------------------ --------- ------------------- ------------
The potential quantity and grade described by the term
"Exploration Target" is conceptual in nature and there has been
insufficient exploration to define a Mineral Resource and it is
uncertain if further exploration will result in the definition of a
Resource. Further exploration work is ongoing, and includes trial
mining and processing of this shallow target to establish grade and
ore body continuity, mineability, dilution and throughput
characteristics.
NOTE: The information in this statement relating to Mineral
Resources and geology has been reviewed and approved by Mr Keith
Matier, BSc (Hons), GDE, PrSci Nat, who is a Competent Person in
terms of the SAMREC code. Mr Matier is the Geology Manager of
Central Rand Gold South Africa Proprietary Limited and has over 21
years' experience in exploration, mineral resource management and
mineral evaluation.
Mine Call Factor
The MCF during 2014 continued on the same positive trajectory
seen during 2013. The "face to pour" MCF reconciliation averaged a
solid 78% for the year. The wind down and changeover from
underground operations to surface operations during September 2014
had a predictable negative impact on that month's figures; however
this was quickly rectified in October.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
--------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
MCF (%) 66 65 94 127 73 67 74 72 57 85 75 77
--------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Whilst 78% is a very satisfying result brought about by several
years of focus on gold preservation, it is believed that further
improvement is possible.
FINANCIAL REVIEW
The financial performance was negatively impacted during the
year, mainly from the rising water table and the resultant
cessation of underground mining. What was disappointing was that
the year started well, with underground mining performing in line
with expectations. Operational plans were being implemented for the
Company's medium term growth strategy, which included the
successful commissioning of the new mill, in May 2014, which
provided the operations with additional processing capacity.
The delay in commissioning of the HDS plant, coupled with the
resultant rise of the water table during the first half of 2014,
resulted in the active underground mining areas being flooded. As
the Company was unsure how the HDS would perform, once commissioned
and how quickly the water table could be dropped, it decided to
retain as many key mining skills and resources so that it would
have the ability to quickly restart underground mining operations.
As an alternative it decided to mine a new target area being the
North reef, to maintain some form of underground mining presence.
In September 2014, based on the performance of the HDS plant and
its commissioning issues, the Company realised that in the short
term it would not be able to restart normal underground operations.
With the North Reef grades becoming sub-economic and the second
access way being flooded, the Company made the decision to suspend
underground operations.
With lower underground production, the Company needed to find an
appropriate substitute ore body to continue to produce gold. The
Company immediately commenced a review process to re-analyse all
open cast opportunities. During this time the Company strived to
maintain its plant throughput by processing available material
which was accessed from numerous sources including old waste rock
and sand dumps. As can be seen from the below gold production
graph, during April - September 2014, the high variability and low
reliability of this material resulted in the Company's gold
production and ultimately cash reserves being placed under serious
strain.
In September 2014, the assessment of new open cast potential was
completed and the Company commenced mining at Slot 5. During the
last quarter of 2014, the Company restructured it business and
started the process of staff reductions (which was effective early
2015), to closely reflect its new operational business
requirements. Overall with lower gold production due to the
transition from underground to surface mining coupled with
redundancy costs all put significant strain on the Company's
balance sheet. The cash resources at the end of the year were
US$0.9 million.
POST BALANCE SHEET EVENT
In order to strengthen its balance sheet and in pursuit of
achieving its stated mine plan, the Company has subsequent to
year-end completed the following fundraising:
-- A share placement on 17 June 2015 of 6,015,000 new ordinary
shares at 10 pence per ordinary share, which raised GBP0.602
million.
-- A further share placement on 18 June 2015, of 2,000,000 new
ordinary shares at 10 pence per ordinary share, which raised GBP0.2
million.
In June 2015, after the completion of the due diligent
processes, both Huili and Hiria requested a one month extension to
15 July 2015, to enable them both to complete their respective
internal processes. Further, the Board decided not to continue
discussions with Ankong and Shengbang at that time, to enable it to
focus on discussions and negotiations with Huili and Hiria. It is
important to note that the transaction will still be subject to
obtaining regulatory and exchange approvals. In addition,
shareholder approval for the transaction will be required.
LOOKING FORWARD
The transition from underground mining to surface mining was
undoubtedly a painful process during 2014. The exploration work
undergone in 2014 has put the Company on a steady footing while it
waits to re-commence underground mining. With just under 400,000
tonnes of open cast potential and the Company identifying other
surface mining opportunities outside its mining right area, it
believes based on its smaller organisational structure, that it can
be operationally sustainable during this time. The Company has
plans to further increasing its Metallurgical capacity, which
should come on line during the second half of 2015. This additional
revenue coupled with the small June 2015 fundraise will be used to
strengthen the Company's balance sheet.
The sale of CRGNV remains a key focus for the Company. As stated
by Nathan Taylor, in the Chairman's statement: "We eagerly await
the completion of the final negotiation processes with the
knowledge that an acquisition and subsequent cash injection into
the Company will finally allow the CRG project to reach its very
significant potential." If the Company is unsuccessful in effecting
the above transaction, it will continue to market the project to
international investors.
In August 2016, the US$7.25 million convertible loan note ("loan
note") issued to Redstone, becomes repayable. Redstone has the
right to covert this loan note to equity at any time before this
date. If this conversion is not effected, then the Company will
look at either re-negotiating the terms of the agreement with
Redstone, possibly extending the expiry date, or consider
approaching the capital markets, where it has successfully raised
funds over the last 18 months, to fund the repayment of this debt.
The Board will ultimately, at the appropriate time, consider and
adopt the best possible solution to manage this position.
The Company expects to recommence underground mining, by end
2016. The Company will continue to monitor the water table, and
effect plans to recommence underground operations as soon as
practically possible. An amended Mine Works Programme was submitted
to the DMR in 2015, to reflect the cession of underground works and
the refocus on open pit mining.
THANKS
Sincere thanks must go to everyone who has played a role in the
Company successfully negotiating another challenging, yet rewarding
year. All stakeholders have made a meaningful contribution to
Central Rand Gold's ongoing development as a sustainable junior
mining enterprise - this includes Directors, managements, staff,
suppliers, shareholders and community members.
Johan du Toit
Chief Executive Officer
Statement of Financial Position
as at 31 December 2014
Group
------------------------------------------------ ---------------------------
2014 2013
US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 3,592 3,619
Intangible assets 2,830 3,131
Security deposits and guarantees 191 194
Environmental guarantee investment 3,177 3,338
Loans receivable 8,646 8,571
18,436 18,853
----------- -------------
Current assets
Security deposits and guarantees 65 70
Prepayments and other receivables 1,239 914
Inventories 76 910
Cash and cash equivalents 914 2,475
Non-current assets held-for-sale - 174
Derivative asset 720 -
3,014 4,543
----------- -------------
Total assets 21,450 23,396
=========== =============
EQUITY
Attributable to equity holders of the parent
Share capital 26,490 25,604
Share premium 222,963 213,377
Share-based compensation reserve 28,238 28,224
Treasury shares (6) (6)
Foreign currency translation reserve (29,534) (29,442)
Accumulated losses (261,559) (246,291)
----------- -------------
(13,408) (8,534)
Non-controlling interest - -
Total equity (13,408) (8,534)
----------- -------------
LIABILITIES
Non-current liabilities
Environmental rehabilitation 4,904 5,713
Loan payable 14,418 13,719
19,322 19,432
----------- -------------
Current liabilities
Trade and other payables 6,911 6,971
Taxation payable 177 155
Derivative liability 8,448 5,372
15,536 12,498
----------- -------------
Total liabilities 34,858 31,930
----------- -------------
Total equity and liabilities 21,450 23,396
=========== =============
Statement of Profit or Loss
for the year ended 31 December 2014
Group
-------------------------------------------- ------------- ---------
2014 2013
US$'000 US$'000
Revenue 8,212 14,627
Production costs (9,844) (16,344)
Employee benefits expense (3,223) (3,969)
Directors' emoluments (717) (850)
Inventory write-(down)/up (705) 39
Operating lease expense (787) (523)
Operational expenses (502) (1,583)
Other expenses (1,702) (2,860)
Other income and gains 543 622
Foreign exchange transaction gains/(losses) 129 (121)
--------- ---------
Loss before interest, tax and depreciation (8,596) (10,962)
Depreciation (460) (536)
Impairment of assets (158) (224)
Loss on fair value of convertible loan note (5,108) (3,234)
Finance income 1,233 1,287
Finance costs (2,179) (1,123)
--------- ---------
Loss before income tax (15,268) (14,792)
Income tax expense - -
--------- ---------
Loss for the year (15,268) (14,792)
--------- ---------
Loss is attributable to:
Non-controlling interest - -
Equity holders of the parent (15,268) (14,792)
(15,268) (14,792)
--------- ---------
Loss per share for loss attributable to the
equity holders during the year (expressed
in US cents per share)
Basic loss per share (17.51) (46.23)
Diluted loss per share (17.51) (46.23)
Statement of Comprehensive Income
for the year ended 31 December 2014
Group
--------------------------------------------- --------------------
2014 2013
US$'000 US$'000
Loss for the year (15,268) (14,792)
--------- ---------
Other comprehensive loss:
Item that may be reclassified subsequently
to profit or loss
Exchange differences on translating foreign
operations (91) (784)
Other comprehensive loss for the period, net
of tax (91) (784)
--------- ---------
Total comprehensive loss for the period (15,359) (15,576)
--------- ---------
Total comprehensive loss is attributable to:
Non-controlling interest - -
Equity holders of the parent (15,359) (15,576)
(15,359) (15,576)
--------- ---------
Statement of Changes in Equity
for the year ended 31 December 2014
Attributable to equity holders of the Group
----------------------------------------------------------------------------------
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Non-controlling Total
Notes capital premium reserve shares reserve losses Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
-------------- ------ --------- --------- ------------ --------- ----------- ----------- --------- --------------- ---------
Balance at
31 December 2012 25,604 213,377 28,176 (6) (28,658) (231,499) 6,994 - 6,994
Total
comprehensive
income for the
year
Loss for the year - - - - - (14,792) (14,792) - (14,792)
Other
comprehensive
income
Foreign currency
adjustments - - - - (784) - (784) - (784)
Transactions
with
owners,
recorded
directly
in equity
Employee Share
Option
Scheme:
Share-based payments:
Employees' and
Directors'
shares and options - - 48 - - - 48 - 48
-----------
Balance at
31 December 2013 25,604 213,377 28,224 (6) (29,442) (246,291) (8,534) - (8,534)
Attributable to equity holders of the Group
----------------------------------------------------------------------------------
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Non-controlling Total
Notes capital premium reserve shares reserve losses Total interest equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
-------------- ------ --------- --------- ------------ --------- ----------- ----------- --------- --------------- ---------
Total
comprehensive
income for the
year
Loss for the year - - - - - (15,268) (15,268) - (15,268)
Other
comprehensive
income
Foreign currency
adjustments - - - - (92) - (92) - (92)
Transactions
with
owners,
recorded
directly
in equity
Issue of
shares:
Capital raising 886 9,586 - - - - 10,472 - 10,472
Employee Share
Option
Scheme:
Share-based payments:
Employees' and
Directors'
shares and options - - 14 - - - 14 - 14
--------- --------- ------------ --------- ----------- ----------- --------- --------------- ---------
Balance at
31 December 2014 26,490 222,963 28,238 (6) (29,534) (261,559) (13,408) - (13,408)
--------- --------- ------------ --------- ----------- ----------- --------- --------------- ---------
Statement of Cash Flow
for the year ended 31 December 2014
Group
------------------------------------------------ --- ----------------------
2014 2013
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (15,268) (14,792)
Adjusted for :
Depreciation 460 536
Employment benefit expenditure (share-based
payments) 14 48
Profit on disposal and scrapping of property,
plant and equipment (17) (541)
Impairment of inventory 705 (39)
Impairment of assets 158 224
Net (gain)/loss on foreign exchange (129) 121
Decrease in operating lease liability - -
Sundry income - -
Finance income (1,233) (1,287)
Finance costs 2,179 1,123
Loss on fair value of convertible loan note 5,108 3,234
Changes in working capital
(Increase)/decrease in prepayments and other
receivables (325) 38
Decrease in inventory 129 370
(Decrease)/increase in trade and other payables (60) 935
Increase in provisions 809 974
---------
Cash flows used in operations (7,470) (9,056)
Finance income 273 -
Finance costs - (245)
Sundry income (1,204) -
---------
Net cash used in operating activities (8,401) (9,301)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,049) (839)
Proceeds from disposal of property, plant
and equipment 186 566
Increase in environmental guarantee deposit (53) (60)
Net cash used in investing activities (916) (333)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares for cash 4,254 7,027
Cost relating to the issue of shares (257) -
Net proceeds from exercise of share options 3,732 -
---------
Net cash from financing activities 7,729 7,027
--------- -----------
Net decrease in cash and cash equivalents (1,588) (2,607)
Cash and cash equivalents at 1 January 2,475 4,512
Effects of exchange rate fluctuations on
cash balances 27 570
--------- -----------
Cash and cash equivalents at 31 December 914 2,475
========= ===========
Notes to the Annual Financial Statements
1. General information
These are the non-statutory financial statements, extracted from the
Group annual financial statements for the year ended 31 December 2014.
Central Rand Gold Limited ("Central Rand Gold") is a Guernsey incorporated
company and it is also registered in South Africa as an external company.
One of its subsidiaries, Central Rand Gold (Netherland Antilles) N.V.
("CRGNV"), was incorporated in the Netherlands Antilles. Central Rand
Gold's operating subsidiary is Central Rand Gold South Africa Proprietary
Limited ("CRGSA"). Central Rand Gold has a primary listing on the London
Stock Exchange ("LSE") and a secondary listing on JSE Limited ("JSE").
Central Rand Gold complies with the company laws of its place of incorporation
being Guernsey and the company laws of the place of its external registration
being South Africa. One of its subsidiaries, CRGNV, is incorporated
in the Netherlands Antilles, therefore the Group is also impacted by
the company laws of the Netherlands Antilles.
The Group's annual financial statements for the year ended 31 December
2014 were approved for issue on 30 June 2015. The auditor has issued
his opinion on the Group's financial statements for the year ended 31
December 2014 which is unmodified but does contain an emphasis of matter
paragraph in respect of the matters referred to under note 2 'Going
concern' and is available for inspection at the Company's registered
address.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not modified,
we have considered the adequacy of the disclosures set out in the financial
statements concerning the Group's ability to continue as a going concern
which depends, in particular, upon a number of key factors. These key
factors include achieving the improved operating performance forecast,
the continued support of the Group's creditors, the Group having no
liability under the recent changes in South African tax legislation
and the outcome of discussions regarding the possible sale of the trade
and assets of the Group. These factors, together with the other matters
outlined in the audited financial statements, indicate the existence
of a material uncertainty that may cast significant doubt on the Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group was unable
to continue as a going concern.
2. Basis of preparation
The consolidated financial statements have been 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 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,
changed during the year from the GB Pound to the US Dollar as its main
source of funding is now US Dollar. The functional currency of its principal
subsidiary, CRGSA is the South African Rand ("ZAR" or "Rand").
Going concern
The Directors have prepared the financial statements on the going concern
basis notwithstanding net current liabilities at 31 December 2014 of
US$12.5 million, having considered the current operations, the current
funding position and the projected funding requirements for the business
for at least 12 months from the date of approval of the financial statements
as detailed below. Since the year end the Group has continued with its
surface mining operations and processing of third party ore and has
also raised a further US$1.2 million from share placements in June 2015.
As at 26 June 2015 the Group had cash and cash equivalents of US$1 million.
The Directors have prepared cash flow projections until December 2016
that reflect the current mine plan adopted by the Directors. The mine
plan is based on surface mining only as the underground mine remains
on care and maintenance until the water level reduces following the
re-commissioning of the dewatering plant. In addition, the Group has
deferred payments to existing creditors of US$6 million which together
with the cash held has allowed the Group to commence work on plant upgrades.
The Group will settle those creditors over the next 18 months. The mining
plan assumes that the upgrades will increase processing plant capacity
from 16,000 tonnes per month to 20,000 tonnes per month from January
2016.
These projections, which are based on current levels of ore processing
but increasing own and third party processing in accordance with the
enhanced plant capacity, show that the Group will generate sufficient
cash to fund both the planned plant upgrades and meet the rescheduled
repayment of the trade creditors whilst maintaining a headroom of at
least US$1 million. On this basis the Directors believe that the Group
has sufficient funding for at least the next 12 months from the date
of approval of these financial statements and hence have prepared the
financial statements on a going concern basis.
However, the cash flow projections are sensitive to a number of factors
including: the mine call factor assumption (the mine call factor is
the ratio, expressed as a percentage, of the total quantity of recovered
mineral product after processing with the amount estimated in the ore
based on sampling) being maintained at existing levels; the increased
ore processing and the agreement of the trade creditors to defer payments
on the basis informally agreed.
Any changes to the assumptions, individually or in aggregate, may alter
the going concern conclusion and a reasonably possible change in assumptions
may result in the Group not having sufficient funding.
In addition, the cash flow projections assume that, on the basis of
legal advice received by the Directors, no payments are to be made resulting
from changes to the thin capitalisation legislation and changes to Section
8F of the Income Tax act in South Africa. Should this legal advice not
be accurate then this may result in the Group not having sufficient
funding.
If, in either of these cases, the Group had insufficient funding, the
Directors would have to explore alternative arrangements such as raising
additional equity which would require shareholder approval. However,
the Group is also in discussion with a number of potential bidders about
the possible sale of the trading operations of the Group. Any sale would
be subject to successful due diligence by any potential acquirer and
also subject to shareholder approval. Should it proceed, the Group would
no longer be a going concern.
For the longer term, the risks inherent in any single metal mining operation
remain. In addition, there are further uncertainties relating to, the
possible choice by Redstone Capital in September 2016 to request repayment
of US$3.7 million loan notes in cash rather than their conversion into
shares; the renewal of the mining licences at the end of 2016; the successful
operation of the dewatering plant to reduce the water level to the environmental
critical level; and the successful redevelopment of the underground
mine. Given the current level of operations the Directors have no reason
to believe that Redstone Capital will not take the conversion option;
the licenses will not be renewed and the continued positive progress
towards dewatering and ultimate mining of the underground mine will
not continue.
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 funding position and
its cash flow projections, and having considered the risks and uncertainties
associated with these projections, the Directors have a realistic expectation
that the Group has adequate resources to continue in operational existence
for at least 12 months from the date of approval of these financial
statements. For these reasons, they continue to prepare the financial
statements on a going concern basis. These financial statements do not
include any adjustments that would result from the going concern basis
of preparation being inappropriate.
3. Accounting policies
The accounting policies have been consistently applied to all years
presented.
(a) New and amended standards adopted by the Group
In 2014 the Group adopted the amendments to IFRS 10 'Consolidated Financial
Statements', IFRS 11 'Joint Arrangements', IFRS 12 'Disclosure of Interests
in Other Entities', IAS 27 'Separate Financial Statements', IAS 28 'Investments
in Associates and Joint Ventures', IAS 32 'Offsetting Financial Assets
and Financial Liabilities' and IAS 36 'Recoverable amount disclosures
for non-financial assets'. These have no significant impact on the Group's
net assets.
As a result of IFRS 10, the Group has changed its accounting policy
for determining whether it has control over and consequently whether
it consolidates its investees. IFRS 10 introduces a new control model
that focuses on whether the Group has power over an investee, exposure
or rights to variable returns from its involvement with the investee
and ability to use its power to affect those returns.
In accordance with the transitional provisions of IFRS 10, the Group
reassessed the control conclusion for its investees at 1 January 2014.
No modifications of previous conclusions about control regarding the
Group's investees were required.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations
are effective for annual periods beginning after 1 January 2014, and
have not been applied in preparing these consolidated financial statements.
Those which may be relevant to the Group are set out below. The Group
does not plan to adopt these standards early.
IFRS 9 'Financial Instruments' was reissued in October 2010. It is applicable
to financial assets and financial liabilities. For financial assets
it requires classification and measurement in either the amortised cost
or the fair value category. For a company's own debt held at fair value,
the standard requires the movement in the fair value as a result of
changes in the company's own credit risk to be included in other comprehensive
income. It is effective for accounting periods beginning on or after
1 January 2015. The standard has not yet been endorsed by the EU. The
adoption of IFRS 9 is not expected to have a significant impact upon
the Group's net results or net assets.
4. Directorate
During the financial period under review, the composition of the Board
of Directors was as follows:
Name Position
------------------ -----------------------------------
Mr Nathan Taylor Non-executive Chairman
------------------ -----------------------------------
Mr Johan du Toit Chief Executive Officer
------------------ -----------------------------------
Mr Jason Hou Non-executive Director
------------------ -----------------------------------
Mr Allen Phillips Independent Non-executive Director
------------------ -----------------------------------
5. 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.
6. Share-based payments
During the year, no further share options were granted to employees.
7. Dividends
No dividends were declared or paid during the year under review.
8. Reconciliation between loss and headline loss attributable to equity
holders of the Group
Group
2014 2013
US$'000 US$'000
Loss attributable to equity holders of
the Group (15,267,972) (14,791,863)
Less: Profit on disposal of property, plant
and equipment (16,851) (541,436)
---------------- -------------
Loss used in calculating headline loss
per share (15,284,823) (15,333,299)
================ =============
9. Events occurring after reporting date
Share placement
In order to strengthen its balance sheet and in pursuit of achieving
its stated mine plan, the Company has subsequent to year-end completed
the following fundraising:
* On 17 June 2015, 6,015,000 New Ordinary Shares were
issued at 10 pence, which raised GBP0.602 million.
* On 18 June 2015, 2,000,000 New Ordinary Shares were
issued at 10 pence, which raised GBP0.2million.
Asset held for sale
During 2014, the Board and executive committee marketed the Group to
investors and strategic partners throughout South Africa, London and
Asia with the view to attracting sufficient capital to better exploit
the Group's gold reserves and resources. This resulted in three Asian
based companies submitting non-binding memoranda of understanding in
Q4 2014. The memoranda of understanding contemplated Central Rand Gold
Limited selling 100% of its shares in Central Rand Gold Dutch Netherlands
Antilles. However, the highly probably criteria (as per IFRS 5 - Non-current
assets held for sale) was not met at 31 December 2014 as the memoranda
of understanding was still subject to certain conditions such as the
successful completion of due diligence and obtaining regulatory and
exchange approvals. In addition, shareholder approval for the transaction
will be required.
Issued on behalf of: Central Rand Gold Limited
Date: 30 June 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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