| Wed 30 Apr 2008, 17:39 | | CRND - Central Rand Gold Limited - Annual Report R |
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CRD
CRD
CRND - Central Rand Gold Limited - Annual Report Release
Central Rand Gold Limited
("CRG" or "the Company")
(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: GG00B24HM601
Share code on LSE: CRND
Share code on JSE: CRD
Annual Report Release
Please note the AGM of the Company is to be held at the offices of Carey
Olsen, 7 New Street, St Peter Port, Guernsey, GY1 4BZ 11 a.m. (UK time) on June
19, 2008. Shareholders wishing to participate in the AGM, in Guernsey via video
link from London may do so at the offices of Hunton & Williams, 30 St Mary Axe,
London EC3A 8EP and Shareholders wishing to participate in the AGM via video
link from Johannesburg may do so at the offices of Taback and Associates
(Proprietary) Limited, 13 Eton Road, Parktown, Johannesburg.
Highlights
Central Rand Gold has recorded some significant highlights during 2007/8. These
include:
Primary listing on the London Stock Exchange and secondary listing on the
Johannesburg Stock Exchange on November 8, 2007
Highly successful public participation program and public meetings with
residents of the local communities
Lodging of the Environmental Impact Assessment study on February 4, 2008
Upgrade of an additional 1.8 million ounces of indicated and inferred
resources to 35.6 million ounces
Identification of the first three slots for initial surface mining
Chairman`s report
In this the company`s maiden annual report to shareholders, it is a privilege
for me to reflect on the initial steps of Central Rand Gold`s journey towards
bringing gold mining back to the heart of Johannesburg, a city that was founded
on gold in the 1880`s and is still headquarters to several of the world`s major
gold mining companies.
From the outset, Central Rand Gold has been based on a multifaceted vision: to
return gold mining to "Egoli" (the City of Gold), but in a way that minimises
the impact on the environment, maximises the benefit to local communities,
utilises the most modern and efficient mining methods, and aspires to the
highest
levels of corporate governance and operational excellence.
Essentially, we see ourselves as a small, entrepreneurial company that
incorporates the management practices, professionalism, information systems and
mining standards and methods of a much larger company. Our rationale, mindset
and conduct is not speculative, it is mainstream, strategic and farsighted,
based on a real desire to mine substantial unmined deposits that will bring
rewards to all of our stakeholders, Johannesburg and South Africa at large. By
applying the highest standards of environmental, mining and social
responsibility, we are confident we will deliver a wide range of tangible
improvements to the landscape, the economy and the people in the areas where
our projects are situated.
The reception the company has received so far in its journey has been
exceptional, especially in London where approximately GBP100 million
(equivalent to around ZAR1.5 billion) was raised up to and including the
company`s listings on the main boards of the LSE and the JSE on November 8,
2007. This was a strong vote of confidence in Johannesburg, South Africa and
Central Rand Gold itself.
The company`s recent share price performance has been disappointing,
notwithstanding a high gold price since the IPO. Nevertheless, with a market
capitalisation of around GBP220 million towards the end of April, the company
was ranked in the top 130 companies on the JSE in terms of market
capitalisation. I am confident that as we move towards gold production in
2009, we can expect a re-rating of our prospects in the investor community
with a positive impact on the company`s share price.
While shareholders have provided the company with a robust balance sheet
through which it has been able to carry out its comprehensive exploration
activities, upgrade its mineral resources, apply for the right to mine, and
gradually build up to operational and mining readiness, much of the credit for
the company being where it is today must go to Morris and Richard Viljoen, the
geological academics on whose thesis Central Rand Gold`s business case is
based.
As Emeritus professors at the University of the Witwatersrand, they developed
the notion of considerable unmined reefs remaining within the previously mined
gold mining areas of Johannesburg. It is wonderful and encouraging to have them
as shareholders of the company as we progress along the exploration curve to
becoming a fully fledged gold mining entity.
With exploration drilling covering more than 46,500 metres to date - at a cost
of more than GBP15 million (over ZAR200 million) - we have already demonstrated
ourtotal commitment to resuscitating gold mining in Johannesburg. By any
standards
anywhere in the world, this initial drilling phase is incredibly comprehensive
and shows how committed management, staff and shareholders are to making
Central Rand Gold a successful gold miner.
As our CEO has stated in his report, we have defined our first three surface
mining targets based on drilling, analytical conversion and empirical
observations refined. This represents a very tangible step forward in our goal
of becoming a fully fledged mining company in the very near future. Ongoing
exploration and underground sampling is also continuing apace to ensure that we
have a strong pipeline when we enter into our operational mining phase.
What is particularly gratifying is the enthusiasm with which our public
participation initiatives have been embraced and received by leaders and
members of local communities who are keen to become involved in our projects,
work on our mines, supply goods and services to our mines and generally raise
their standards of living as a result of us doing what we are doing. In a
country such as South Africa, which still has huge income inequalities and a
major unemployment problem, our significant investments and our ongoing mining
presence will bring enormous direct and indirect financial relief to thousands
of people.
Over the longer term, our shareholders will benefit, but it is vital to ensure
that throughout the lifetime of our exploration and mining in the area, the
environment and the local inhabitants are better off and not worse off as a
result of our activities.
Though there is still much to be done before we are in gold mining mode and
ramping up towards our optimal ore treatment rate, it is fitting to reflect on
the achievements and progress to date and the foundation that has been laid for
the future.
The recent 1.8 million ounce upgrade of our mineral resources to 35.6 million
ounces of gold is a significant achievement, especially as around 30% of the
increased resource is between the surface and 200 metres below the surface, in
line with our objective of gaining access to early cash flows once we have
received our mining right.
With a strong shareholder funded balance sheet and good internal resources to
be able to continue doing what we have done so successfully to date, an
excellent foundation has certainly been laid for future development and growth.
On Tuesday April 29, the directors formally welcomed Michael McMahon to
the board as a non-executive director. A previous chairman of Impala Platinum,
he is currently a non-executive director on the boards of Impala Platinum,
Gold Fields and Murray & Roberts. His wealth of technical experience in the
gold and platinum mining industries strengthens the CRG board and will prove
extremely valuable as we move into the mining phase of our operations.
Rams Ramokgopa, an original board member of the Central Rand Gold group,
announced
his retirement at the end of April. He was instrumental in introducing Puno
Gold Investments as our BEE partner and has played a valuable role in our
operating company`s affairs. I would like to thank him for his efforts and wish
him well in his retirement and future activities.
When it comes to thanks, there are three specific groups of people to whom I
would like to extend my sincere gratitude:
my fellow non executive directors - Nick Farr-Jones, Robert Kirkby and Miklos
Salamon-who were instrumental in Central Rand Gold achieving its listings in
London
and Johannesburg. They worked tirelessly to reach this goal;
management and staff, under the leadership of our CEO, Greg James, who have
worked diligently to get our projects to such an advanced stage; and
our BEE partners, Puno Gold Investments, who have played an important role in
our progress to date.
It has been a pleasure working with all of our people who have put in an
enormous amount of work towards realising the vision that we all share.
There is certainly much to look forward to as we work together towards ensuring
that our company takes its place among South Africa`s gold producers and
brings gold mining back to the vibrant city of Johannesburg.
Alastair Walton
Chairman
Chief Executive Officer`s Report
Overview
It is indeed a great pleasure to be able to report back to shareholders on the
first year of Central Rand Gold`s operations and to provide some further
insight into where the company is heading in these exciting times for the gold
industry in South Africa and around the world.
Through the unstinting efforts of a small team of dedicated professionals, a
tremendous amount has been achieved to date, establishing the foundations for a
bright future for all stakeholders in Central Rand Gold.
From the outset, our intention has been to be a mining company with a
difference - and we are confident that we are well on the way towards achieving
this objective.
Central to this is our strong involvement with the communities in which our
mining projects are situated. Constant consultation and regular meetings with
community members and leaders have ensured a high level of "buy-in" from
people living in our mining-focused areas.
Community leaders and members are particularly enthused by the fact that t he
company will be bringing many important benefits to areas in which mining has
been dormant for many years - such as skills development, training and
employment that will favourably impact living standards.
This community focus formed an important part of our Environmental Impact
Assessment report which was submitted to the Department of Minerals and Energy
on February 4, 2008.
A database of potential employees has been created and is constantly being
updated to ensure that at peak production, when staff will number around 4,000,
as many people as possible will be drawn from the local community living in
close proximity to our mining operations.
Corporate Progress
While most of our emphasis to date has been on exploration, excitement is
building up as we move closer to becoming a mining company. If all goes
according to plan, our first mining activity should take place in early 2009.
Importantly, Central Rand Gold remains on track to meet its forecast of
producing its first 100,000 ounces of gold in 2009, achieving a production rate
of 250,000 ounces of gold a year by 2010 and a production rate of one million
ounces a year by 2012.
A huge amount of effort has gone into getting the company to its current
position - from exploration to assay work, to community involvement, to Black
Economic Empowerment, to our comprehensive Environmental Impact Assessment, to
health and safety, to our Social and Labour Plan, to studying and fine-tuning
world-class mining practices that will be implemented on our sites.
Significantly, our staff and management complement is strongly representative
of South Africa`s vibrant multi-racial society.
In line with South Africa`s Mining Charter and Black Economic Empowerment
legislation, 26% of Central Rand Gold SA (Proprietary) Limited is owned by Puno
Gold Investments (Proprietary) Limited ("Puno"), chaired by Monk Goocin.
Although generally matters have been progressing as expected with our BEE
partner Puno, there has recently arisen a dispute relating to
technical breaches of the CRGSA shareholders agreement. The
dispute surrounds the allocation of intercompany loans which fund the budget
and work programme and the incurring of, and level of, certain costs. We have
tried to settle any disagreements amicably, but so far without success. The
next step, if so required, is for the parties to refer the matter to
arbitration pursuant to the dispute resolution mechanism under the shareholders
agreement. We believe that ultimately our position will prevail. The Directors
believe that this will not have any material consequences in respect of the
consolidated accounts of the Group. Notwithstanding this position, we have
pending the outcome of any dispute allocated 100% of the
intercompany funding since execution of the shareholders` agreement from the
Company to CRGSA. This
additional 26% of intercompany debt excluding interest amounts to ZAR29.5
million (US$4.3 million)
between June 2007 and December 31, 2007 and ZAR12.2million (US$1.6
million) between January 1, 2008 and March 31, 2008.
Our attitude has been and will continue to be that there are no short-cuts:
everything we undertake has a methodology, a purpose and an end result.
To this end, we have been extremely thorough in everything we have undertaken -
from our public participation process, to our environmental and health and
safety initiatives, to our exhaustive exploration exercises and procedures.
There can be few mining companies that have engaged as closely as we have with
communities while still in the exploration phase - every meeting has been
worthwhile, ensuring that we can proceed with our projects in a spirit of
participation and inclusiveness rather than separation and alienation.
Exploration Activity/Resource Upgrade
From an exploration point of view, the company`s geological team has been very
active in the field since October 2006, assembling an impressive array of drill
results from more than 45,600 metres of drilling - 10,000 metres of which were
drilled between October 2007 and February 2008.
Up until April 20 this year, no fewer than 167 diamond drill holes had been
completed (including geotechnical holes), most of them with depths of 60-100
metres. No fewer than 2,102 reverse circulation holes (including soil sampling)
had been completed, most of them with depths of up to 60 metres.
Over the same timeframe, a total of 89,575 assays had been sent for analysis
and results for 69,893 had been received.
Importantly, this showed a welcome rise in the numbers of assay results
received to 78% of the total submitted compared to the level of 50% stated in
our prospectus. This has resulted in the purchasing of our own analytical assay
laboratory being unnecessary at the moment.
The company`s primary focus was to access the underground workings in order to
ratify the paper resource generated from the desktop studies, ascertain the
existing ground conditions in the old workings and embark on a major
underground sampling programme in targeted areas to convert existing resources
into mineable resources.
The company has located four shafts in good condition, and is in the process of
equipping and accessing the old level developments. An underground sampling
programme is currently underway, and early results are proving to be
encouraging.
From a mineral resources point of view, a major milestone for the company was
reached at the end of February 2008 when we were able to announce a significant
upgrade of our indicated and inferred resources.
In our initial statement, we declared an indicated resource of 21.4 million
ounces of gold and an inferred resource of 12.4 million ounces of gold, making
a total of 33.8 million ounces.
On February 29, we upgraded the indicated resource by 932,000 ounces to 22.4
million ounces and the inferred resource by 828,000 ounces to 13.2 million
ounces. Our total mineral resource rose by 1.8 million ounces to 35.6 million
ounces. Importantly, of this increase, 530 000 ounces have been identified
between surface and 200 metres below surface.
This upgrade underpins the confidence we have in the viability and
sustainability of our exploration projects and supports the optimism we have in
our ability to become a world-class, low-cost gold producer in the near
future.
More significantly, we also confirmed our first three mining targets from which
our first gold will come once we receive our mining right. We refer to these as
slots 4, 8 and 9. In our prospectus we had identified nine slots, so this is
further evidence that we have refined our exploration understanding in order to
maximise our early cash flows and test our mining concepts.
Our drilling programme is continuing, coupled with underground sampling, across
all nine slots with the aim of further enhancing the current resource base in
the Central Rand Goldfield.
It is important to note that while our initial mineral resource statement was
based primarily on the Main Reef and Main Reef Leader sequences, our updated
mineral resource (validated by independent competent persons Snowden Mining
Industry Consultants and Dr Carina Lemmer in accordance with the JORC and
SAMREC codes) is based on a wider area including the Bird Reef and Kimberley
Reef packages.
Summary
While much has been achieved in a short space of time, much still needs to be
done before we become a fully-fledged mining company, producing gold on a
sustainable, long-term basis.
With a strong balance sheet and a strong project pipeline, we can look to the
future with confidence. As at December 31, our cash balance was US$151.3
million, compared to the US$135.6 million projected in our prospectus, most of
the increase coming from our decision not to purchase our own assay laboratory.
As a budding gold producer, it is also worth noting the current state of the
gold and currency markets which have moved quite dramatically in recent months.
At the time our company was conceptualising its projects and activities, the
gold price was at around US$650/ounce and the exchange rate was ZAR7=US$1. In
mid
- March, 2008, the gold price nudged above US$1,000 for the first time and the
exchange rate had gone back above ZAR8=US$1.
My sincere thanks must go to everyone who has played a part in Central Rand
Gold`s exciting journey thus far.
With the continued commitment of all of our stakeholders - directors,
management, staff, shareholders, BEE partners, suppliers and community members
- I am confident that the company is well on the way to realising its undoubted
potential.
Greg James
Chief Executive Officer
For the Company Profile, Director s` Report, Corporate Governance and
Sustainable Development Report. Directors` Responsibility Statement, Company
Secretarial Confirmation, Auditor`s Report and full Financial Statements,
please refer to the company`s website: www.centralrandgold.com
CENTRAL RAND GOLD LIMITED GROUP
Balance Sheet as at 31 December 2007 and 31 December 2006
Group
2007 2006
Note USD USD
NON CURRENT ASSETS
Property, plant and equipment 3 045 316 2 128 321
Investment in subsidiaries - -
Loans receivable 2 6 279 167 -
9 324 483 2 128 321
CURRENT ASSETS
Prepayments and other receivables 1 139 639 893 963
Cash and bank balances 149 194 757 7 529 622
Security deposits and guarantees 2 072 757 277 908
152 407 153 8 701 493
TOTAL ASSETS 161 731 636 10 829 814
EQUITY AND LIABILITIES
Share Capital 5 017 375 -
Share Premium 191 405 973 -
Share-based Compensation Reserve 18 152 511 -
Treasury Shares (31 120) -
Foreign Currency Translation
Reserve (9 311 702) 704 673
Merger Reserve - 20 533 209
Accumulated Losses (52 711 338) (10 667 195)
152 521 699 10 570 687
Minority Interest in equity - -
TOTAL EQUITY 152 521 699 10 570 687
NON CURRENT LIABILITIES
Borrowings 105 271 -
Operating lease liability 38 226 -
143 497 -
CURRENT LIABILITIES
Trade and other payables 2 534 315 259 127
Loan payable 6 279 167 -
Provisions 125 212 -
Taxation payable 92 066 -
Borrowings 35 680 -
9 066 440 259 127
TOTAL LIABILITES 9 209 937 259 127
TOTAL EQUITY AND LIABILITIES 161 731 636 10 829 814
Income Statement for the years ended 31 December 2007 and 31
December 2006
Group
2007 2006
Note USD USD
Other income and gains 414 588 -
Employee benefits expense (4 048 968) (1 209 846)
Directors` emoluments (10 083 856) (2 643 058)
Other share-based payments (10 957 934) -
Depreciation (525 007) (135 973)
Operating lease payments (621 9 52) (160 521)
Exploration expenditure (14 627 369) (2 840 584)
Other expenses (5 880 416) (1 720 574)
Operating loss (46 330 913) (8 710 556)
Interest received 2 333 192 323 298
Finance costs (494 776) -
Loss before income tax (44 492 497) (8 387 258)
Income tax expense (92 066) -
Loss for the year (44 584 563) (8 387 258)
Loss is attributable to:
Minority interest (38) -
Equity holders of the parent (44 584 525) (8 387 258)
(44 584 563) (8 387 258)
Loss per share for loss attributable
to the equity holders during the year
(expressed in US cents per
share)
Basic loss per share 3 (24.64) (6.26)
Diluted loss per share 3 (24.48) (6.25)
Basic headline loss per share 3 (24.43) (6.26)
Diluted headline loss per share 3 (24.27) (6.25)
Statement of Changes in Equity for the years ended 31 December 2007 and 31
December 2006
Attributable to equity holders of the Company
Ordinary Share Premium Merger
Share Capital Reserve
Group
USD USD USD
Balance at 31 December 2005 - - 2 925 820
Shares issued by subsidiary
during the year - - 14 879 489
Foreign currency
adjustments - - -
Share based payments by
subsidiary - consulting fees - - 2 727 900
Loss for the year - - -
Balance at 31 December 2006 - - 20 533 209
Shares issued by
subsidiaries during the year - - 9 869 165
Foreign currency
adjustments - - -
Share based payments by
subsidiary - consulting fees - - 2 606 250
Shares issued during the year 245 135 18 110 090 -
Corporate reorganisation 3 392 223 29 452 262 (33 008 624)
Shares issued on listing 1 262 340 143 843 621 -
Treasury shares issued to
Employee Share Trust 117 677 - -
Treasury shares issued to
directors and employees - - -
Shares and Options issued
to employees and directors
of subsidiary - - -
Loss for the year - - -
Balance at 31 December 2007 5 017 375 191 405 973 -
Foreign Share based
Currency compensation
Translation Reserve
Reserve
Group
USD USD
Balance at 31 December 2005 (54 174) -
Shares issued by subsidiary
during the year - -
Foreign currency adjustments 758 847 -
Share based payments by
subsidiary - consulting fees - -
Loss for the year - -
Balance at 31 December 2006 704 673 -
Shares issued by
subsidiaries during the year - -
Foreign currency
adjustments (10 016 375) -
Share based payments by
subsidiary - consulting fees - -
Shares issued during the year - -
Corporate reorganisation - -
Shares issued on listing - -
Treasury shares issued to
Employee Share Trust - -
Treasury shares issued to
directors and employees - -
Shares and Options issued
to employees and directors
of subsidiary - 18 152 511
Loss for the year - -
Balance at 31 December 2007 (9 311 702) 18 152 511
Statement of Changes in Equity for the years ended 31 December 2007 and 31
December 2006 continued
Attributable to equity holders of the Company
Treasury Accumulated Total
Shares Losses
Group
USD USD USD
Balance at 31 December 2005 - (2 279 937) 591 709
Shares issued by
subsidiary during the year - - 14 879 489
Foreign currency
adjustments - - 758 847
Share based payments by
subsidiary - consulting fees - - 2 727 900
Loss for the year - (8 387 258) (8 387 258)
Balance at 31 December 2006 - (10 667 195) 10 570 687
Shares issued by
subsidiaries during the year - - 9 869 165
Foreign currency adjustments - - (10 016 375)
Share based payments by
subsidiary - consulting fees - - 2 606 250
Shares issued during the year - - 18 355 225
Corporate reorganisation (12 067) 2 540 382 2 364 176
Shares issued on listing - - 145 105 961
Treasury shares issued to
Employee Share Trust (117 677) - -
Treasury shares issued to
directors and employees 98 624 - 98 624
Shares and Options
issued to employees and
directors of subsidiary - - 18 152 511
Loss for the year - (44 584 525) (44 584 525)
Balance at 31 December 2007 (31 120) (52 711 338) 152 521 699
Minority Total
interest
Group
USD USD
Balance at 31 December 2005 - 591 709
Shares issued by
subsidiary during the year - 14 879 489
Foreign currency
adjustments - 758 847
Share based payments by
subsidiary - consulting fees - 2 727 900
Loss for the year - (8 387 258)
Balance at 31 December 2006 - 10 570 687
Shares issued by
subsidiaries during the year - 9 869 165
Foreign currency adjustments - (10 016 375)
Share based payments by
subsidiary - consulting fees - 2 606 250
Shares issued during the year - 18 355 225
Corporate reorganisation 38 2 364 1 38
Shares issued on listing - 145 105 961
Treasury shares issued to
Employee Share Trust - -
Treasury shares issued to
directors and employees - 98 624
Shares and Options
issued to employees and
directors of subsidiary - 18 152 511
Loss for the year (38) (44 584 563)
Balance at 31 December 2007 - 152 521 699
Cash Flow Statement for the years ended 31 December 2007 and 31 December 2006
Group
2007 2006
USD USD
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (44 492 497) (8 387 258)
Adjusted for :
Depreciation 525 007 135 973
Employment benefit expenditure (Share based
payments) 20 708 141 2 727 900
Loss on disposal of fixed assets 375 259 -
Net (gain)/loss on foreign exchange (315 618) 299 942
Other income (4 027) -
Interest received (2 333 192) (323 298)
Interest paid 494 776 -
Changes in working capital
Increase in receivables (245 676) (821 652)
Increase in provisions 125 212
Increase/(Decrease) in trade and other payables 2 275 188 (193 622)
Cash flows (used in)
operations (22 887 427) (6 562 015)
Interest received 2 333 192 323 298
Interest paid (494 776) -
Other income received 4 027
Net cash used in operating activities (21 044 984) (6 238 717)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant & equipment (1 901 596) (2 191 171)
Proceeds from disposal of property, plant and
equipment 131 594 -
Increase in operating lease liability 38 226 -
Increase in investment in subsidiaries - -
Increase in loans receivable - -
Net cash (used in) investing activities (1 731 776) (2 191 171)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 140 952 -
Increase in security deposits (1 794 849) (277 908)
Proceeds from issuance of shares 172 431 236 14 879 489
Net cash generated from financing activities 170 777 339 14 601 581
Net increase/(decrease) in cash and cash
equivalents 148 000 579 6 171 693
Cash and cash equivalents at beginning
of year 7 529 622 749 201
Effects of exchange rate movement on
cash balances (6 335 444) 608 728
Cash and cash equivalents at end of year 149 194 757 7 529 622
Selected Notes to the Financial Statements
1. Selected Significant Accounting Policies
Basis of Preparation
Pursuant to a corporate reorganisation on June 15, 2007, the company became the
parent company of Central Rand Gold SA (Proprietary) Limited ("CRGSA "), a
company incorporated in the Republic of South Africa, through a newly formed
intermediate holding company, Central Rand Gold (Netherlands Antilles) N.V.
("CRGNV"), a company incorporated in the Netherlands Antilles.
On this date, CRGSA acquired the mineral rights and all other assets and
liabilities of its former parent company, Rand Quest Syndicate Limited
("RQS"), and certain mineral rights from Central Rand Australia (Proprietary)
Limited, ("CRA"), a wholly-owned subsidiary of RQS subject to Section 11
Applications, for the right to proceed with mining activities, being granted.
Both RQS and CRA are incorporated in Australia. The consideration for the
acquisitions was settled by inter-company loans payable by CRGSA to RQS and CRA
which were then assigned by RQS and CRA to the company in exchange for RQS
receiving 168,666,648 shares in the company. Under the provisions of IFRS 3:
"Business Combinations", the abovementioned corporate reorganisation involves
entities and businesses under common control, which are ultimately owned by the
same parties both before and after and whose rights remained unchanged.
Accordingly, the reorganisation is considered to be outside the scope of IFRS 3
and the group has applied the pooling of interests method, as described in the
basis of consolidation, to prepare the consolidated financial statements.
Accounts have also been prepared under IFRS for the periods ended June 30,
2005, 2006 and 2007 for the purposes of the company`s listing Prospectus. No
other accounts have been prepared for previous periods. As the Johannesburg
Stock Exchange regulations require the company accounts to be prepared on a
calendar year, the financial statements have been prepared for the year ended
31 December 2007 and audited comparatives figures have been prepared for the
previous 12 months.
Group
2007 2006
USD USD
2. Loans receivable
Central Rand Gold (Netherlands Antilles) N.V. - -
Puno Gold Investments (Proprietary) Limited 6 279 167 -
6 279 167 -
On 15 June 2007, as part of the restructuring, the group advanced a loan of
ZAR 111,196,279 (USD 16,457,049) to Central Rand Gold SA
(Proprietary) Limited ("CRGSA")and a further loan of ZAR 39,068,963 (USD
5,782,207) to Puno
Gold Investments (Proprietary) Limited ("Puno"). The loan bears interest at
South African prime lending rate plus 2% and is payable on demand as and when
free cash flows as determined by the board of CRGSA are available.
Although generally matters have been progressing as expected with our BEE
partner Puno, there has recently arisen a dispute relating to procedural
breaches of the CRGSA shareholders agreement. The dispute surrounds the
allocation of intercompany loans which fund the budget and work programme and
the incurring of, and level of, certain costs. We have tried to settle any
disagreements amicably, but so far without success. The next step, if so
required, is for the parties to refer the matter to arbitration pursuant to the
dispute resolution mechanism under the shareholders agreement. We believe that
ultimately our position will prevail. The Directors believe that this will not
have any material consequences in respect of the consolidated accounts of the
Group. Notwithstanding this position, we have pending the outcome of any
dispute allocated 100% of the intercompany funding since execution of the
shareholders agreement from the
Company to CRGSA. This additional 26% of intercompany debt excluding interest
amounts to ZAR 29,541,700 (USD4,278,795) between June 2007 and 31 December 2007
and ZAR 12,161,285 (USD 1,611,646) between 1 January 2008 and 31 March 2008.
3. Loss per Share
Reconciliation of loss used in calculating losses per share
a) Basic
Basic loss per share is calculated by dividing the loss attributable to equity
holders of the group by the weighted average number of ordinary shares in issue
during the year.
Group
2007 2006
USD USD
Loss attributable to ordinary equity
holders of the group (44 584 525) (8 387 258)
Weighted average number of ordinary
shares used calculating basic loss per share 180 935 078 134 069 598
Basic loss per share (US cents per share) (24.64) (6.26)
b) Diluted loss per share
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The group has two categories of dilutive potential ordinary
shares: 1) Share options. For the share options, a calculation is done to
determine the number of shares that could have been acquired at fair value
(determined as the average annual market share price of the group`s shares)
based on the monetary value of the subscription rights attached to outstanding
share options. The options were however anti-dilutive as the strike price of
the options was higher than the average share price for the year. 2) Treasury
shares. For the treasury shares, no value is taken into account as the shares
hold no rights. The weighted average of the shares is taken into account to
determine the dilution.
Group
2007 2006
USD USD
Diluted loss per share
Loss attributable to ordinary equity
holders of Central Rand Gold Limited
used to calculate basic loss per share (44 584 525) (8 387 258)
Interest savings on treasury shares - -
Loss attributable to ordinary equity
holders of Central Rand Gold Limited
used to calculate diluted loss per share (44 584 525) (8 387 258)
Number Number
Weighted average number of
ordinary shares used in calculating
basic loss per share 180 935 078 134 069 598
Adjustments for calculation of diluted
loss per share:
- Treasury shares 1 214 192 55 890
Weighted average number of
ordinary shares used in calculating
diluted loss per share 182 149 270 134 168 228
Diluted loss per share (US cents per
share) (24.48) (6.25)
c) Headline loss per share
Headline loss per share is calculated by dividing the calculated headline loss
of the group by the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares.
Group
2007 2006
USD USD
Loss attributable to equity holders of the group (44 584 525) (8 387 258)
Plus: Loss on disposal of property,
plant and equipment 375 259 -
Loss used in calculating headline loss per share (44 209 266) (8 387 258)
Weighted average number of ordinary shares used
calculating headline loss per share 180 935 078 134 069 598
Headline losss per share (US cents per share) (24.43) (6.26)
d) Diluted headline loss per share
Diluted headline loss per share is calculated by dividing the calculated
headline loss of the group by the weighted average number of ordinary shares in
issue during the year.
Group
2007 2006
USD USD
Loss attributable to equity holders of the group (44 584 525) (8 387 258)
Plus: Loss on disposal of property, plant
and equipment 375 259 -
Profit used in calculating headline loss per share (44 207 259) (8 387 258)
Weighted average number of ordinary shares used in
calculating diluted headline loss per share 182 149 270 134 168 228
Diluted headline loss per share (US cents per share) (24.27) (6.25)
4. Commitments
a) Operating lease commitments
The group usually negotiates operating leases for a period of five years. The
group`s minimum future lease rentals payable under non-cancellable operating
leases are as follows:
Group
2007 2006
USD USD
Payable - Minimum Lease Payments
- not later than 12 months 404 550 160 638
- between 12 months and 5 years 557 863 701 474
- greater than 5 years - -
962 413 862 112
Three month`s notice was given in order to terminate the rental of the offices
in London. The lease expires at the end of April 2008. The operating lease
commitments shown above have taken this into account.
Group
2007 2006
USD USD
b) Purchase of shares in companies
Purchase price of Ferreira Estate and
Investment Company Limited ("FEIC") 1 000 000 -
1 000 000 -
The Purchase of FEIC is further discussed in d) below.
c) Rent payable on tenements for exploration activities
Rent is payable on the following tenements for the year in order to continue
exploration activities:
Group
2007 2006
USD USD
No. 1 Shaft 7 897 -
No. 2 Shaft 22 273 -
East Shaft 8 343 -
38 513 -
The rentals are payable to Industrial Zone Limited.
d) Various contractual fees payable
Group
2007 2006
USD USD
Fees payable to iProp Limited for
prospecting 500 000 -
Option fees payable to Gravelotte
Mines Limited 100 000 -
600 000 -
Fees payable to the Department of Minerals and Energy:
Payable Payable within Payable after
within 1 year 2 to 5 years 5 years
USD USD USD
3C`s 2 453 6 746 -
Langlaagte 178 400 -
AngloGold Ashanti 1 040 2 860 -
Village Main 455 1 250 -
4 126 11 256 -
The prospecting rights over the Simmer and Jack and Western Areas A,B and E
have been granted but not formally notarised by South Africa`s Department of
Minerals and Energy. The company expects this notarisation to occur imminently.
The Southern Deeps area is still under application with the DME, however,
should this be granted and notarised, the fees for the first year of
prospecting will total USD5,518 (ZAR37,284).
Under the South African Mineral and Petroleum Resources Development Act 28 of
2002, the group requires Ministerial consent in terms of Section 11
Applications (which consent is still outstanding) to:
(i) the cession to Central Rand Gold SA (Proprietary) Limited ("CRGSA") of the
prospecting rights held by Gravelotte Mines Limited (once the option is
exercised) and AngloGold Ashanti Limited;
(ii) the cession to CRGSA of the prospecting rights in respect of Village Main,
Simmer & Jack and Western Areas;
(iii) to confirm a change of control in the shareholding in Ferreira Estate and
Investment Company Limited; and
(iv) the cession to CRGSA of the prospecting rights for Southern Areas once
granted to RQS.
The details of the groups currently explored tenements are:
Three C`s area
This area covers the mining areas of the currently closed Consolidated Main
Reef ("CMR"), Crown Mines and City Deep Goldmines, south of Roodepoort and
Johannesburg.
CRGSA has a contractual right to conduct exploration in this area. In return
for conducting the exploration programme, CRGSA has an option to acquire the
entire shareholding of Ferreira Estate and Investment Company Limited
("FEIC"), the registered holder of the prospecting right from iProp Limited
("iProp").
CRGSA is required to spend not less than USD2,000,000 on exploration.
Furthermore for a period of eight years following the effective date of the
agreement, CRGSA shall pay to iProp a minimum amount of USD500,000 per annum,
which shall reduce to USD100,000 per annum after the expiry of the eight year
period which payments shall continue for the remainder of the agreement. The
first payment was made on 29 March 2006.
CRGSA shall be deemed to have exercised the option to acquire FEIC once an
application for a mining right has been lodged with the DME, CRGSA has spent
not less than USD2,000,000 on exploration and ministerial consent in terms of
section 11 of the Mineral and Petroleum Resources Development Act has been
obtained to the change in shareholding in FEIC, whereupon CRGSA shall pay
USD1,000,000 as consideration for the purchase of FEIC. A guarantee to this
effect has already been put into place.
As a further consideration for the acquisition of the shares in FEIC, once the
production threshold as detailed in the applicable phase two work programme has
been reached, CRGSA shall pay to iProp USD8 per ounce of gold produced from the
area on a quarterly basis.
Once all exploration expenditure and mine development and associated costs are
repaid by FEIC to CRGSA and the FEIC mining operations become profitable, CRGSA
shall cease paying USD8 per ounce of gold and thereafter pay a quarterly net
profit interest of 10% for the remainder of the agreement. The various
payments of USD500,000 and USD100,000 referred to above will be set off against
the USD8 and net profit interests referred to being payable to iProp above.
Langlaagte area
This area covers the area between the CMR and Crown Mines, near to the Three
C`s Area.
CRGSA has a contractual right to conduct prospecting over this area. A term of
the prospecting contract is that CRGSA has the sole and exclusive option to
purchase the prospecting right from Gravelotte Mines Limited, the registered
holder of the prospecting right. The purchase price for the prospecting right
is USD250,000 and the option period runs from November 4, 2005 to November 3,
2010. Option fees of USD100,000 per annum are payable for the duration of the
option.
In further consideration for the grant and exercise of the option, Central
Rand Gold SA shall on a quarterly basis pay Gravelotte Mines Limited the sum of
USD10 per ounce of gold mined from the prospecting area.
AngloGold Ashanti area
This area covers various farm subdivisions in the central Witwatersrand area
and suburbs of Johannesburg, Germiston and Alberton.
Central Rand Proprietary Limited, formerly a wholly owned subsidiary of Rand
Quest Syndicate Limited, concluded an agreement with AngloGold Ashanti Limited
("AngloGold") under which AngloGold would apply for a prospecting right and
Central Rand Proprietary Limited would be entitled to take cession of the
prospecting right once granted on payment of USD 150,000 to recoup the costs of
the application.
Under the reorganisation of the group the agreement with AngloGold was assigned
to CRGSA.
If a decision to mine the area is taken and AngloGold and the parties agree
that AngloGold has no future role in the project then CRGSA shall be required
to pay USD8 per ounce of gold recovered from the area.
Date: 30/04/2008 17:39:02 Produced by the JSE SENS Department.
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