| Thu 29 Jan 2009, 9:00 | | CRD - Central Rand Gold Limited - Operational Update |
|
CRD
CRD
CRD - Central Rand Gold Limited - Operational Update
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: GG00B248M601
Share code on LSE: CRND
Share code on JSE: CRD
OPERATIONAL UPDATE
29 January 2009 - London and Johannesburg listed Central Rand Gold ("CRG" or
"the Company") is pleased to announce an operational update following the
conclusion of the operating plan for 2009.
Highlights
- Trial mining results to date are in line with management expectations
- Cash position as at 31 December 2008 - approximately US$ 70 million
2009 budget and production profile approved by the Board to achieve a
self-funding, sustainable business by 2010
- Reserve statement expected by March 2009
- Concentrator and Flotation modules operating efficiently
- First portal and decline excavation is progressing according to target
With the execution of the New Order Mining Right in November 2008, the
commissioning of the 20tph Gekko Plant and the first gold pour in December
2008, CRG has confirmed its plan to push ahead with trial mining in the Slot
8 area as the next step in its path to sustainable commercial production.
2009 Budget and Operating plan
Overview
In December 2008, the CRG Limited Board ("the Board") approved the
operational plan for 2009. Prior to approval, an extensive review process was
undertaken by the Board which included consideration on various options
available to the Company in terms of production and cash spend. In light of
the current global financial difficulties, the Board has focussed balancing
cash conservation with investment in infrastructure.
The primary objective of CRG for 2009 is to ensure that our first target of
producing at an annualised rate of 100,000oz per annum is achieved in the
form of a sustainable and self-funding business. During this period, CRG will
focus on managing and reducing non essential expenses by limiting headcount
growth and use of on external consultants.
Importantly, the Company does not anticipate that it will require additional
funding during 2009 to achieve the targeted production rate.
As a result, management has decided to prioritise its efforts in converting
resources to reserves, with the first announcement anticipated in late March
2009. Snowden Mining Consultants has been contracted to complete this
exercise.
The upscaling of production targets beyond 2009 will be set by the Board
based on the results of the trial mining, successful execution of the mine
plan and the status of the world financial markets.
Production Profile
CRG plans to have the following crushing and concentrating plants ("CC
plants") commissioned during 2009.
Plant Annualised Anticipated Cost Expected
Plant Annualised Commissioning
Capacity Au
Production
20tph Gekko 144 000t 14 000 oz Purchased in Fully
Concentrator 2008 commissioned
Plant
30tph 216 000t 20 000 oz ZAR 50 May 2009
Bateman million (US$
Concentrator 5 million) -
Plant approximately
30% paid in
2008
50tph Gekko 360 000t 34 000 oz AUD$ 9 - 12 End of Q3
Concentrator million (US$ 2009
Plant with 6 - 8
ancillaries* million)
50tph Gekko 360 000t 34 000 oz AUD$ 9 - 12 Q4 2009
Concentrator million (US$
Plant with 6 - 8
ancillaries* million)
*CRG has already entered into advanced discussion with Gekko Systems for the
supply of the two additional 50tph plants detailed above. These will be based
on the same platform as the 20tph Gekko CC plant that is currently being
utilised. CRG expects to place the order for the two 50tph Gekko CC plants by
the end of February 2009. The above CC plants will provide CRG with a
production capability of approximately 90 000 tpm.
The CC plants will produce a concentrate of approximately 10% of the ore
inputted that will then be treated by a Carbon in Leach plant detailed in the
table below:
Plant Annualised Cost Expected
Plant Commissioning
Capacity
Carbon in Leach 120 000t of ZAR 48 April 2009
Concentrate concentrate million (US$
Treatment Plant 4.8 million)
approximately
35% paid in
2008.
The Company expects to produce between approximately 40 000 and 50 000 oz of
gold as it ramps up to the target annualised production rate of 100 000oz per
annum by the end of 2009.
Budgeted Spend
The Company has budgeted gross cash spend of approximately US$103 million in
2009 to be funded by existing cash reserves as well as from revenues
generated by gold sales. The economic assumptions set are as follows:
Indicator Assumption
Average Gold Price US$850 per oz
ZAR:US$ 10:1
The breakdown in spend is detailed in the table below:
Department % of Spend
Plant and Equipment, Decline Development, 62%
Mining, Rehabilitation and Metallurgy
Geological Support, Exploration and Shaft 21%
Reaccess
Other Mining Support Services 3%
Environmental Support, Social and Labour Plan 4%
and Corporate Social Investment
Administrative Overheads 10%
100%
As described in the table above, 90% of spend is to be spent in the
operational aspects of the business.
Besides for the capital equipment to be purchased as described above, other
highlights include:
- Approximately 13 000 metres of stoping and decline development to be
performed
- Approximately 400 000 to 450 000 tonnes of ore to be treated
Capital Resources
The Board identified that in 2009, the vast bulk of capital and operating
expenditure would be in South African Rand and Australian Dollars. Following
the Initial Public Offering in November 2007, the Company has maintained its
capital resources in the form of Sterling bank deposits. With the recent
currency volatility, the Board decided it would be prudent to match the
Company`s currency reserves with its operating and capital requirements for
2009. Consequently, in January 2009, the Company converted its Sterling
reserves in ZAR and AUD$ to match fund the budgeted spend. Assuming that
revenues from gold sales and operating and capital spend are consistent with
the 2009 budget, the Company anticipates that it will have sufficient cash
resources to operate comfortably in 2010 at a production rate of 100 000 oz
per annum without additional financing.
Trial Mining
Slot 8 is located on the Consolidated Main Reef tenement and covers a strike
length of approx 2 kilometres of the Main Reef package. Exploration work,
availability of open land and availability of utilities made the slot an
ideal area to start operations.
Surface exposures of Main Reef and Main Reef Leader are currently being
extracted on Slot 8 while a decline will be developed in the footwall to
access ore underground. The method utilised is referred to as the "slot and
undercut" method. The "undercut" extraction method employed will be drift and
fill where backfilling is completed immediately after mining. Initial surface
trials have begun with mining and processing of oxidized slot ore material to
approximately 5 to 10 metres deep.
The objectives of the first phase of the trial mining process was as follows:
- Test efficiency of grade control techniques
- Test surface mining techniques
- Test metallurgical processes and equipment relating to the surface
oxidized material and where possible fresh underground rock
Geological input on trial mining first focused on grade control drilling and
trenching which identified mineable reef which then allowed the excavation
and exposure of the Main Reef package to a depth of 10m. The Main Reef
package consisted of a block of approximately 150m along strike to a depth of
10m giving an approximate available tonnage of 8 100 tonnes at an estimated
in situ grade of 4.85g/t. The targeted reef was exposed by stripping the
overburden utilising backhoe excavators and 30t articulated dump trucks in
two phases - from zero to five metres below surface and from five to ten
metres below surface. Ore was then measured, sampled, extracted and
transported to the Gekko CC plant stockpile. It is important to note that the
mine material was extracted utilising free digging and no blasting was
required. Reconciliations of predicted and actual grades and tonnages have
been computed and the results are in line with expectation. During the trial
mining period 15 November 2008 to 15 January 2009 approximately 5 920 tonnes
of this block was mined of which 5 120 tonnes has been processed.
For the trial milling period from 15 November to 30 December only gravity
concentrate was extracted from the Gekko CC plant. From 31 December to 15
January, plant extraction employed both gravity and flotation concentration
with the flotation circuit having been commissioned on 30 December 2008.
Sufficient information is available to show that the flotation component of
the extraction is operating close to expectations i.e. no fundamental flaws
or process threatening operating conditions were encountered even with the
heavily oxidized surface (lower density) ore processed.
Estimated final operating recoveries have proven to be in line with
predictions of 70% to 80% in the heavily oxidized surface material.
On 16 January 2008, a speed trial of 1.5 hours on the Gekko CC plant was
conducted using screened fresh hardrock material of ore from the surrounding
old plant site. The CC plant proved that it could operate at 20 tonne per
hour, with the maximum throughput achieved for a one hour period being 21.3
tonnes. A test is planned to take place shortly to have a two day operation
on the competent rock to verify that the plant can process at a sustained
rate of 20 tonnes per hour.
The remaining trial objectives still to be concluded include:
- Testing the backfilling, reconsolidation and surface rehabilitation
techniques
- Testing of the CIL plant component
- Trial stoping underground
- Testing of the plant in an underground environment
Current Developments
Portal Excavation and Decline Development
The portal excavation for the main decline is nearing completion. Upon
completion, the development of the decline will commence which is to be set
at 8?.The first level will be developed at 25 metres below surface. This
level will be utilised as a ventilation access level and for the development
of water storage dams. The second level will be cut at 75 metres below
surface. The trial CC plant site will be cut 50 metres below surface.
The trial stoping sites will be positioned between 25 and 50 metres below
surface.
Underground Water Level
The Company has calculated that DRD Gold Limited`s decision to suspend ERPM`s
operations and the decision to stop pumping at its South West Vertcal Shaft
will have no short or medium term effects on its own mining operations.
The Company is currently in negotiations through the Central Environmental
Basin Corporation (a not for profit company of which all effected mining
companies in the Central Rand area are shareholders) to establish a pump
station at the South West Vertical Shaft at a depth of 600 metres. The
installation process is estimated to take approximately 18 months to complete
Commenting on the advancement to date, Johan du Toit, CRG`s CEO stated:
"Following the granting of the mining right, the commencement of trial mining
and early-stage gold production in late 2008 our understanding of this vast
ore body deepens with every passing day. We have also been encouraged by the
results so far from trial mining, with no significant discrepancies from our
original modeling of the asset so far. We remain confident of reaching an
exit rate production of 100,000 ounces per annum by the end of this year. We
also recognise the importance of maintaining a strong balance sheet during
the current difficulties associated with global capital markets and will
maintain flexibility on how we ramp up production over the next 2 years or
so. We look forward to announcing further progress on our trial mining and
to starting commercial production within the next few months."
For further information please contact:
Johan du Toit
(011) 551 4000
Johan.dutoit@centralrandgold.com
Wayne Epstein
(011) 551 4000
wayne.epstein@centralrandgold.com
Enquiries:
Buchanan Communications Limited
+44 (0) 20 7466 5000
Bobby Morse / Ben Willey
Evolution Securities Limited
+44 (0) 20 7071 4300
Simon Edwards / Chris Sim / Neil Elliot
Jenni Newman Public Relations (Pty) Ltd
+27 (0) 11 772 1033
Jenni Newman / Megann Outram
Macquarie First South Advisers (Pty) Ltd
+27 (0) 11 583 2307
Thato Morojele / Annerie Britz / Melanie de Nysschen
Date: 29/01/2009 09:00:06 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
