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CRD
CRD
CRD - Central Rand Gold Limited - Annual report release
Central Rand Gold Limited
("CRG" or the "Company" or the "Group")
(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
Highlights
Central Rand Gold has recorded some significant highlights during 2008. These
include:
- Receipt of the First New Order Mining Right
- Commencement of trial mining
- Commissioning of first crushing and concentrating plant
- One million injury free man hours achieved
- First gold pour
- Targeting an exit rate of 100,000oz of gold per annum by 2009 year end
Chairman`s Report
Please note the Annual General Meeting ("AGM") of the Company is to be held
at the offices of Carey Olsen, Carey House, Les Banques, St Peter Port,
Guernsey, GY1 4BZ at 11 a.m. on 21 May 2009. 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.
For the Company Profile, Directors` 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.
Contact:
Johan du Toit +27 (0) 11 551 4000
Wayne Epstein +27 (0) 11 551 4000
Enquiries:
Evolution Securities Limited +44 (0) 20 7071 4300
Simon Edwards / Chris Sim / Neil Elliot
Macquarie First South Advisers (Pty) Ltd
+27 (0) 11 583 2000
Thato Morojele / Annerie Britz / Melanie de Nysschen
Buchanan Communications Limited +44 (0) 20 7466 5000
Bobby Morse / Ben Willey
Jenni Newman Public Relations (Pty) Ltd +27 (0) 11 772 1033
Jenni Newman / Megann Outram
Chairman`s Report
It is my pleasure to report to shareholders on the significant progress made
by Central Rand Gold during 2008 and to provide some insight into the
continued advances the Company expects to make in 2009 and beyond.
Before I do this, it is worth reflecting on the fact that the Company started
out less than three years ago as a small exploration entity with a large
vision. With just 10 employees and few technical and financial resources,
bringing commercial gold mining back to Johannesburg was indeed a big and
bold vision, but one that is now much closer to realisation.
Tracking the plan laid out in the IPO prospectus issued at the time of the
Company`s IPO (the "Prospectus"), the Company achieved three major milestones
during 2008:
- Receipt of our first New Order Mining Right on September 17 from South
Africa`s Department of Minerals and Energy ("DME");
- Commencement of our trial mining phase on October 1, utilising the plant
imported from Gekko Systems; and
- Pouring our first gold at Rand Refinery Limited on December 4.
Throughout our Mining Right application process the DME gave us prompt and
useful feedback, and I must thank them for the speedy and professional manner
in which our Mining Right was considered and ultimately awarded. This is a
positive message for investment in South Africa at a time when there is a
global shortage of capital as a result of the financial meltdown which
continues into 2009.
In terms of receiving our first Mining Right, I would like to acknowledge the
support of the following groups that gave us solid backing through this
exacting process: Umkhonto we Sizwe Military Veterans` Association; Youth in
Minerals and Energy; the Congress of South African Students; and the Affected
Community Elected Representatives.
Community Focus
Without doubt, the substantial forward momentum achieved during 2008 is
testimony to the quality of our management team and the efforts of every
member of the expanding CRG family. Importantly, the strides we have taken so
far have also been made possible by the communities within which we operate.
Their support, their cooperation and their enthusiasm - demonstrated by more
than 20,000 people attending our various community meetings and workshops -
has been critical to our success to date.
In my previous Chairman`s Report, I placed a strong emphasis on the vital
nature of our relationship with our communities and this has certainly proved
to be the case. Our focus on communities sets us apart from many of our peers
in the global mining industry and lays the foundation for our future.
As a company operating in an urban environment, we have major obligations to
our communities and are committed to embracing them in a variety of ways
which will create employment, improve skills levels, uplift standards of
living and create wealth. Of our 259 employees at the end of 2008, no fewer
than 109 come from the communities surrounding our operations and
approximately 90% come from the historically disadvantaged sectors of South
African society.
During 2009, several of the initiatives laid out in our Social and Labour
Plan will get underway, adding value in a sustainable, meaningful and
practical manner to our communities.
On November 11, 2008, I was privileged to give the keynote address at a
function to commemorate the official signing of our first New Order Mining
Right. I used this occasion to stress the need for a broadening of our Black
Economic Empowerment ("BEE") ownership structure to ensure that our
communities become stakeholders. The board has taken action on this front and
the 26% BEE stake in our South African operating company is being
restructured to more directly benefit our communities. A stock exchange
announcement to this effect was made on February 16, 2009 outlining the
intended recall of shares in the operating subsidiary, CRGSA, from Puno Gold
Investments (Proprietary) Limited to be placed in a trust, pending the
outcome of the restructure geared towards new, more broadly-based, BEE
participation.
In this regard, it is important to note that the project is of great
importance to the Johannesburg and Gauteng region, as it will create a whole
new generation of mining and associated businesses in the area. It has always
been CRG`s strategy to maximise the considerable opportunities for the local
communities which this project will bring. As such, we are committed to
ensuring that our Broad-Based Black Economic Empowerment ("BBBEE") is
precisely what it is meant to be - broad based and for the benefit of the
communities and all the stakeholders involved in this exciting project.
First gold pour
On December 4, 2008, I attended Central Rand Gold`s first gold pour at Rand
Refinery Limited in Germiston, South Africa, which was certainly a meaningful
milestone for everyone involved with the Company.
The occasion of the gold pour was certainly a time for reflection and an
opportunity to put our progress into context: what had started out as a
concept 3 years earlier had now directly translated into gold output; an
outfit that started out with less than 10 people had now transformed into a
gold exploration and mining company employing over 250 people with many more
employed by our contractors.
Tributes
It was indeed fitting that Greg James, the Company`s first Chief Executive
Officer, chose the day after the initial gold pour to announce that he would
be standing down from his leadership role. It had always been Greg`s
intention to get CRG to the gold production stage, and he achieved this
within the timeline indicated at the time of the IPO. He took on this
important job in 2006 and professionally and sensitively guided the Company
through its sometimes difficult formative phase, which has seen CRG transform
from an explorer to a miner.
The spirit that he infused into the Company continues, as do the strong
relationships that he built internally and externally. My thanks, and those
of the Board, go to him for his significant contribution to the Company.
Our thanks also go to Riccardo Vittino who played an important role in the
early stages of the Company and was our Financial Director until mid-2008.
Johan du Toit, who succeeded Riccardo as Financial Director in August 2008,
was appointed by the Board to succeed Greg as Chief Executive Officer with
effect from December 2008. Johan, who held a senior management position with
BHP-Billiton before joining CRG, has moved seamlessly into his new role. His
major task during 2009 will be to guide the Company into commercial
production.
I would like to thank each and every member of the Board for the huge amount
of effort they have put into, and continue to contribute, assisting our
management team in the ongoing development of the Company.
Looking ahead
As outlined in the IPO prospectus, the original intention of the Company was
to undertake a comprehensive exploration programme that would lead to our
first commercial gold production taking place during 2009. We are on track to
produce our first commercial gold by mid-2009, gradually building up towards
an annualised production rate of 100,000 ounces by the end of 2009.
During 2009, we will be involved in a major capital expenditure programme as
part of our objective to reach an annualised rate of 100,000 ounces by the
end of the year. Importantly, the cash for this capital expenditure will be
funded from the cash that was raised at the time of the IPO in November 2007
and from revenue earned during the course of 2009. Significantly, we are also
on track to convert a portion of our Resources to Reserves, another sign of
the Company`s rapid transformation from explorer to miner.
It promises to be an extremely meaningful year as all the hard work that was
channelled into receiving our Mining Right and commencing trial mining will
now manifest itself in the return of commercial gold mining to the Central
Rand Goldfield.
After reaching a low in 2008, in line with adverse investor sentiment towards
mining stocks, our share price has been somewhat re-rated, and this process
should continue as we deliver on our targets and begin to realise the
potential that undoubtedly exists in our operations.
With a strong and dedicated management team and an efficient and motivated
workforce, I am confident that Central Rand Gold and all the Company`s
stakeholders can look forward to another notable year in 2009.
Alastair Walton
Chairman
Chief Executive Officer`s Report
Overview
The past year has been hugely significant for Central Rand Gold and has laid
the foundation for the Company to become a meaningful employer and gold
producer in the southern Johannesburg area.
As our Chairman has already noted, our progress to date would not have been
possible without the single-minded dedication of our management and staff,
widespread support from our local communities, and the efficiency and
professionalism of the South African DME.
Receiving our First New Order Mining Right was undoubtedly the highlight of
the past year, enabling us to effectively put into place the operational
plans we have been working on since 2006. Beginning trial mining and pouring
our first gold were also highly meaningful achievements, paving the way for
our full transition to commercial gold production during 2009.
Operational Progress
Trial mining began on October 1, 2008 at Slot 8 of our Consolidated Main Reef
tenement, utilising a 20 tonnes per hour (12,000 tonnes per month) plant
imported from Gekko Systems in Australia. From the outset, the intention was
to process 100-500 tonne parcels of ore through the plant to test ore grades
and recoveries.
Through this trial mining initiative, we will be able to convert Resources
into Reserves by affirming our mining and metallurgical processes, physically
testing our mining and backfilling techniques, and refining our metallurgical
processes and equipment.
While initial ore throughputs were lower than expected due to a proliferation
of clay material, this improved after December 30 2008, when a flotation unit
was commissioned, enabling the recovery rate to increase dramatically. Once
the Carbon In Leach ("CIL") plant has been commissioned, it is expected that
total recoveries will rise to around 80%.
The CIL plant, which has the capacity to treat 10,000 tonnes of concentrate
per month, has been purchased, and design work has been undertaken to enable
commissioning of the plant to take place in April 2009. Similarly, an
additional 30 tonnes per hour crushing and concentrating (18,000 tonnes per
month) plant has been ordered and is expected to be commissioned during May
2009.
Sampling of trial mining is underway, including analysis of the various size
fractions and flotation test work on the tailings. Following several months
of surface trial mining, it is anticipated that underground trial mining will
commence in the second quarter of 2009, at a rate of around 12,000 tonnes of
ore per month.
The principal reasons for this exercise are to confirm that the drift and
fill method is practical for the orebody, to confirm that dilution can be
controlled, to confirm that backfilling methodology is cost effective and
appropriate, and to confirm that our underground support design is effective.
Exploration
From an exploration point of view, 2008 was particularly satisfying and
meaningful, providing the foundation for some exciting work going forward as
CRG continues to gain momentum as a mining company.
Seven shafts were re-accessed and reconnaissance sampling and mapping was
completed over the Consolidated Main Reef, Crown Mines and Langlaagte
tenements. Preliminary mapping was also carried out on the City Deep tenement
area.
Significantly, there was confirmation of un-mined mineralised reefs and
pillars through a comprehensive underground surveying and sampling programme.
Reconnaissance drilling also took place on pyritic quartzites at the Village
Main and City Deep tenements.
On February 29, 2008, we upgraded our Indicated Resources by 932,000 ounces
to 22.4 million ounces, and our Inferred Resources by 828,000 ounces to 13.2
million ounces. Our total Resource was upgraded by 1.8 million ounces to 35.6
million ounces. An important feature of this resource upgrade was that an
additional 530,000 ounces of the total was identified between the surface and
200 metres below the surface.
Through our concentrated exploration programme, several initial production
slots and surface targets were identified during the year - including slots
2, 3, 4, 5, 7, 8, 9 and 14. Slot 8 at the Consolidated Main Reef tenement was
chosen as the site for our first trial mining exercise.
As a result of ongoing reconnaissance mapping and trenching, un-mined
sections of the North Reef and Main Reef were identified and un-mined
duplicated sections of the Bird and Kimberley Reefs - due to faulting - were
also identified. Large sections of un-worked Elsburg Reef were located
towards the southern boundary of the CMR, Crown Mines and City Deep ("3C`s")
tenement areas.
Importantly, this all adds up to good potential for additional tonnages
through the discovery of mineralised halos in the hanging wall and footwall
of conglomerate bands found in the Main Reef package. There is also leaching
potential.
In addition, exploration activity has established that there are viable
grades in the soils, that there is uncomplicated mineralogy in the ore
bodies, and that gold bearing ore exists outside of the reef horizons in
disseminated pyrite, mineralised halos and grit bands, boosting the potential
for an increase in mineable resources.
Exploration during 2009 will focus on a variety of activities, including
surface drilling (grade control and resource drilling), pyritic quartzites,
underground drilling, bulk sampling, regional mapping and ground geophysics,
all of which play a vital role in assisting us to build up a strong and
sustainable resource base for the future.
Significantly, we are in the process of converting Resources into Reserves
and we expect to release our first reserve statement by the beginning of
April 2009.
Water
As a member of the Central Basin Environmental Corporation - which also
comprises DRDGold Limited and West Wits Mining Limited with the Government of
South Africa being an interested party - CRG will be contributing towards the
building of a pumping station, which is expected to be located around 600
metres below surface. This is largely the result of DRDGold`s decision to
stop pumping water (due to two fatalities at its East Rand Proprietary Mines`
South West Vertical Shaft 1), as from early October last year.
Work on the new pumping station will begin in early 2009 and is expected to
be completed in late 2010. As a result of the pumping station, water levels
in CRG`s affected tenements, will be maintained at levels of 400-500 metres
below the surface, enabling our operations to be conducted normally and
safely for the next few years.
We have also begun investigating installing a pump station in other areas
that will assist in dropping the water levels further.
Safety
Since the Company`s inception in 2006, we at CRG have placed a major emphasis
on safety in everything that we do throughout our operations. There is never
room for complacency, and we are always striving to maintain an accident and
injury free environment in an industry which is more dangerous than most.
It was thus with great pride that we achieved an important safety milestone
in December 2008 - one million man hours without any lost time injuries.
Significantly, this notable safety achievement occurred during a period when
we were heavily involved in re-accessing and re-equipping shafts -
potentially dangerous and hazardous work - and comprehensive drilling and
exploration operations.
We are extremely gratified to have achieved this milestone as the safety of
our employees and contractors is the Group`s paramount objective. Maintaining
safety at our operations will continue to be at the heart of all of our
activities, as we move into our commercial mining phase.
Granting of New Order Prospecting Rights
On February 25, 2009, CRGSA received notification from the DME that
applications for transfers of New Order Mining and Prospecting Rights in
terms of Section 11 of South Africa`s Minerals and Petroleum Resources
Development Act, 2002, had been approved for seven of the Group`s exploration
tenements.
This is a significant step forward for us as the contiguous nature of the
Rights granted will enable us to optimise the development and production
schedules over the entire area.
Summary
Just as 2008 was a momentous year for the Company, 2009 should be equally
important, as it will test our mining techniques and herald our arrival as a
viable and sustainable commercial producer of gold.
As stated in the Prospectus, our aim is to be producing gold at an annualised
rate of 100,000 ounces by the end of 2009. This aim will be aided by the
acquisition of additional crushing and concentrating plants, which will take
our ore processing and crushing capacity to around 150 tonnes per hour, by
the end of the year.
In line with the economic slowdown and credit crunch that has impacted world
financial markets, we have realigned the business to ensure that our current
financial resources will be able to support a sustainable cash positive
situation at a production rate of 100,000 ounces per year without us having
to seek further capital.
CRG has come a long way in a short space of time in gold mining terms and
during 2009 we expect to make considerable progress towards laying the
foundation for growing in the years that lie ahead.
It is worth noting that at the time the Company was conceptualising its
projects and activities, the gold price was approximately US$650 an ounce and
the exchange rate was ZAR7=US$1. In the middle of February 2009, the gold
price was around US$970 an ounce while the exchange rate was above
ZAR10=US$1.
Thanks
I would in particular like to pay tribute to my predecessor, Greg James, for
the huge role he played in getting CRG to the vital production stage. He has
left a very strong legacy and created a strong foundation from which the
Company can build its future. A special mention must also be made of Riccardo
Vittino, who was our Financial Director until the middle of 2008, and who
also contributed significantly to CRG`s progress. My sincere thanks must go
to everyone - staff, shareholders, contractors, community members and other
stakeholders - who has played a role in getting the Company and the rest of
the Group to where they are today.
Johan du Toit
Chief Executive Officer
Group and Company Balance Sheets as at 31 December 2008
Group Company
2008 2007 2008 2007
Note US$`000 US$`000 US$`000 US$`000
s
NON CURRENT
ASSETS
Property, 2 10,458 3,045 - -
plant and
equipment
Investment in - - 8,174 5,348
subsidiaries
Loans 3 5,205 6,279 84,350 41,834
receivable
15,663 9,324 92,524 47,182
CURRENT
ASSETS
Security 4 6,095 2,073 576 860
deposits and
guarantees
Prepayments 5,332 1,140 152 905
and other
receivables
Inventories 732 - - -
Cash and cash 69,601 149,195 66,089 147,881
equivalents
81,760 152,408 66,817 149,646
TOTAL ASSETS 97,423 161,732 159,341 196,828
EQUITY
Equity
attributable
to holders of
the parent
Share capital 5 5,023 5,017 5,023 5,017
Share premium 191,406 191,406 191,406 191,406
Share-based 26,429 18,153 26,429 18,153
compensation
reserve
Treasury 6 (4) (31) - -
shares
Foreign (42,900 (9,312) (66,203 (8,014)
currency ) )
translation
reserve
Accumulated (92,490 (52,711 2,391 (10,574
losses ) ) )
87,464 152,522 159,046 195,988
Minority - - - -
interest in
equity
TOTAL EQUITY 87,464 152,522 159,046 195,988
NON CURRENT
LIABILITIES
Environmental 244 - - -
rehabilitatio
n and other
provisions
Operating 41 28 - -
lease
liability
Borrowings 46 105 - -
331 133 - -
CURRENT
LIABILITIES
Trade and 3,758 2,660 295 840
other
payables
Loan payable 5,205 6,279 - -
Environmental 324 - - -
rehabilitatio
n and other
provisions
Taxation 310 92 - -
payable
Operating 2 11 - -
lease
liability
Borrowings 29 35 - -
9,628 9,077 295 840
TOTAL 9,959 9,210 295 840
LIABILITIES
TOTAL EQUITY 97,423 161,732 159,341 196,828
AND
LIABILITIES
Group and Company Income Statement for the years ended 31 December 2008 and
31 December 2007
Group Company
2008 2007 2008 2007
Notes US$`000 US$`000 US$`000 US$`000
Other 252 415 6,093 1,242
income and
gains
Employee 10 (7,809) (4,049) - -
benefits
expense
Directors` 7, 10 (9,830) (10,084) (4,576) (4,849)
emoluments
Other share- - (10,958) - (8,442)
based
payments
Depreciatio (1,210) (525) - -
n
Operating (809) (622) (189) (101)
lease
payments
Exploration (20,310) (14,628) (200) (55)
expenditure
Other (6,043) (5,880) (3,089) (2,559)
expenses
Operating (45,759) (46,331) (1,961) (14,764
loss )
Interest 7,051 2,333 14,926 4,190
receivable
Finance (853) (495) - -
costs
Loss before (39,561) (44,493) 12,965 (10,574
income tax )
Income tax (218) (92) - -
expense
Loss for (39,779) (44,585) 12,965 (10,574
the year )
Loss is
attributabl
e to:
Minority - -
interest
Equity (39,779) (44,585)
holders of
the parent
(39,779) (44,585)
Shares in 246,919,65 246,599,650
issue 0
Weighted 245,387,15 180,935,078
average 0
number of
ordinary
shares in
issue
Basic loss (16.21) (24.64)
per share
(cents)
Headline (16.21) (24.43)
loss per
share
(cents)
Diluted (16.21) (24.64)
loss per
share
(cents)
Group and Company Statement of Changes in Equity for the years ended 31
December 2008 and 31 December 2007
Attributable to equity holders of the Parent Company
Ordinary Share Merger Share- Treasury
Share Premium Reserve based shares
Capital Compensa
tion
Reserve
US$`000 US$`000 US$`000 US$`000 US$`000
Balance at - - 20,533 - -
31 December
2006
Shares - - 9,869 - -
issued by
subsidiaries
during the
year
Share-based - - 2,606 - -
payments by
subsidiary -
consulting
fees
Shares and - - - 18,153 -
options
issued to
employees
and
directors of
subsidiary
Corporate 3,392 29,452 (33,008) - (12)
reorganisati
on
Foreign - - - - -
currency
translation
Net income 3,392 29,452 - 18,153 (12)
recognised
directly in
equity
Loss for the - - - - -
year
Total 3,392 29,452 - 18,153 (12)
recognised
income and
expense for
the period
Shares 245 18,110 - - -
issued
during the
year
Shares 1,262 143,844 - - -
issued on
listing
Treasury 118 - - - (118)
shares
issued to
Employee
Share Trust
Treasury - - - - 99
shares
issued to
directors
and
employees
Balance at 5,017 191,406 - 18,153 (31)
31 December
2007
Shares and - - - 8,276 -
options
issued to
employees
and
directors of
subsidiary
Foreign - - - - -
currency
translation
Net income 5,017 191,406 - 26,429 (31)
recognised
directly in
equity
Loss for the - - - - -
year
Total 5,017 191,406 - 26,429 (31)
recognised
income and
expense for
the period
Treasury 6 - - - (6)
shares
issued to
Employee
Share Trust
Treasury - - - - 33
shares
issued to
directors
and
employees
Balance at 5,023 191,406 - 26,429 (4)
31 December
2008
Attributable to equity holders of the
Parent Company
Foreign Accumulated Total Minority Total
Currency Losses Interest Equity
Translation
Reserve
US$`000 US$`000 US$`000 US$`000 US$`000
Balance at 704 (10,667) 10,570 - 10,570
31 December
2006
Shares - - 9,869 - 9,869
issued by
subsidiaries
during the
year
Share-based - - 2,606 - 2,606
payments by
subsidiary -
consulting
fees
Shares and - - 18,153 - 18,153
options
issued to
employees
and
directors of
subsidiary
Corporate - 2,541 2,365 - 2,365
reorganisati
on
Foreign (10,016) - (10,016) - (10,016)
currency
translation
Net income (9,312) (8,126) 33,547 - 33,547
recognised
directly in
equity
Loss for the - (44,585) (44,585) - (44,585)
year
Total (9,312) (52,711) (11,038) - (11,038)
recognised
income and
expense for
the period
Shares - - 18,355 - 18,355
issued
during the
year
Shares - - 145,106 - 145,106
issued on
listing
Treasury - - - - -
shares
issued to
Employee
Share Trust
Treasury - - 99 - 99
shares
issued to
directors
and
employees
Balance at (9,312) (52,711) 152,522 - 152,522
31 December
2007
Shares and - - 8,276 - 8,276
options
issued to
employees
and
directors of
subsidiary
Foreign (33,588) - (33,588) - (33,588)
currency
translation
Net income (42,900) (52,711) 127,210 - 127,210
recognised
directly in
equity
Loss for the - (39,779) (39,779) - (39,779)
year
Total (42,900) (92,490) 87,431 - 87,431
recognised
income and
expense for
the period
Treasury - - - - -
shares
issued to
Employee
Share Trust
Treasury - - 33 - 33
shares
issued to
directors
and
employees
Balance at (42,900) (92,490) 87,464 - 87,464
31 December
2008
Group and Company Cash Flow Statement for the years ended 31 December 2008
and 31 December 2007
Group Company
2008 2007 2008 2007
US$`000 US$`000 US$`000 US$`000
CASH FLOWS FROM
OPERATING
ACTIVITIES
(Loss)/Profit (39,561) (44,493) 12,965 (10,574)
before tax
Adjusted for:
Depreciation 1,210 525 - -
Employment 8,769 20,708 3,755 12,718
benefit
expenditure
(Share-based
payments)
Loss on 1 375 - -
disposal of
property, plant
and equipment
Net gain on (165) (316) (6,040) (989)
foreign
exchange
Increase in 18 38 - -
operating lease
liability
Sundry income - (4) - -
Interest (6,225) (2,333) (5,847) (4,190)
receivable
Finance costs 27 495 - -
Changes in
working capital
(Increase)/decr (5,144) (246) 646 (906)
ease in
prepayments and
other
receivables
Increase in (852) - - -
inventory
Increase/(decre 2,107 2,402 (402) (840)
ase) in trade
and other
payables
Increase in 660 - - -
provisions
Cash flows used (39,155) (22,849) 5,077 (4,781)
in operations
Interest 6,225 2,333 5,847 4,190
receivable
Finance costs (27) (495) - -
Sundry income - 4 - -
Net cash (used (32,957) (21,007) 10,924 (591)
in)/from
operating
activities
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchases of (10,856) (1,902) - -
property, plant
and equipment
Proceeds from 18 132 - -
disposal of
property, plant
and equipment
Increase in - - (69,219) (16,306)
loans
receivable
Net cash used (10,838) (1,770) (69,219) (16,306)
in investing
activities
CASH FLOWS FROM
FINANCING
ACTIVITIES
Proceeds from - 141 - -
borrowings
Repayment of (30) - - -
borrowings
(Increase)/decr (5,347) (1,795) 60 (860)
ease in
security
deposits
Proceeds from 2 172,431 6 172848
issuance of
shares
Net cash (used (5,375) 170,777 66 171,,988
in)/from
financing
activities
Net (49,170) 148,000 (58,229) 155,091
(decrease)/incr
ease in cash
and cash
equivalents
Cash and cash 149,195 7,530 147,881 -
equivalents at
beginning of
year
Effects of (30,424) (6,335) (23,563) (7,210)
exchange rate
movements on
cash balances
Cash and cash 69,601 149,195 66,089 147,881
equivalents at
end of year
Notes:
Basis of presentation and general information
1. General information
These are the non statutory financial statements, extracted from the Group
and Company annual financial statements for the year ended 31 December 2008.
Central Rand Gold Limited 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, was incorporated in the
Netherlands Antilles. CRG`s operating subsidiary is Central Rand Gold South
Africa. CRG has a primary listing on the London Stock Exchange (`LSE`) and a
secondary listing on JSE Limited (`JSE`).
Legally, Central Rand Gold Limited ("CRG Ltd") 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. By virtue of its LSE
listing, CRG Ltd experiences the impact of UK Company laws and because one of
its subsidiaries, Central Rand Gold (Netherlands Antilles) N.V. ("CRGNV"), is
incorporated in the Netherlands Antilles, the Group is also impacted by the
company laws of the Netherlands Antilles.
The Group and Company annual financial statements for the year ended 31
December 2008 were approved for issue on 24 March 2009. The auditor has
issued their unqualified auditors` opinions on the Group and Company
financial statements for the year ended 31 December 2008.
Accounting policies
The Group and Company annual financial statements have been prepared in
accordance with International Financial Reporting Standards (`IFRS`) and
Interpretations.
The accounting policies have been consistently applied to all years
presented.
Foreign currency rates
The US Dollar rates of exchange applicable to the period are as follows:
Period ended 31 Period ended 31
December 2008 December 2007
Closing Average Closing Average
South African Rand 0.10601 0.12327 0.14800 0.14435
(ZAR)
British Pound (GBP) 1.44792 1.85518 1.99730 2.02969
2. Property, plant and equipment
During the year, the Group spent US$10,856,280 on crushing and concentrating
plant and equipment, on renovations of the Head Office and computer equipment
and software to increase office capacity and on equipment to continue with
the shaft re-access programme.
3. Loan receivable
Puno Gold Investments (Proprietary) Limited
Since the last report for the interim results for the six months ended June
30, 2008 there has been no resolution to the dispute relating to procedural
breaches of the Central Rand Gold South Africa (Proprietary) Limited (`CRG
SA`) shareholders agreement between CRG SA and our BEE partner, Puno Gold
Investments (Proprietary) Limited. During 2007, the dispute arose between the
shareholders of CRG SA in regard to the allocation of intercompany loans
which fund the budget and work programme and the incurring of, and level of,
certain costs by CRG SA. As per the provisions of the shareholders agreement,
the Chief Executive Officers and subsequently the Chairmen of both Puno and
CRG SA met in an effort to amicably resolve the matter. These meetings have
unfortunately proven to be unsuccessful. On 16 February 2009, CRG NV, the
direct holding Company of CRG SA, exercised the call option granted to it in
terms of the shareholders agreement and gave Puno 90 days notice, to acquire
Puno`s entire interest in CRG SA. The Directors believe that this will not
have any material consequences in respect of the consolidated accounts of the
Group as the 26% shareholding will be held in trust pending the outcome of
discussions relating to new BEE arrangements. Notwithstanding this position,
we have pending the outcome of any dispute allocated 100% of the intercompany
balances directly through from the Company to CRG SA. This additional 26% of
intercompany debt excluding interest amounts to ZAR 114,139,770
(US$12,099,957) between 1 January and 31 December 2008 (ZAR 29,541,700
(US$4,278,795) between June 2007 and 31 December 2007).
The loan payable to Puno Gold Investments (Proprietary) Limited contains the
same allocations referred to above.
4. Security Deposits and Guarantees
During the year, an additional guarantee of US$ 4,329,521 was issued to the
South African Department of Minerals as a guarantee for the rehabilitation of
land disturbed by mining operations.
5. Share Capital and share premium
During the year under review 320,000 shares were issued to the Employee Share
Trust at par value.
6. Treasury shares
During the year the Company issued 320,000 treasury shares at a value of
GBP0.01 per share to the Employee Share Trust. 100,000 shares to Mr M McMahon
vested on 19 June 2008 and 20,000 shares to Mr K Kunene vested on 9 May 2008.
The balance of the 200,000 shares for Mr M McMahon vest as follows: 100,000
will vest on 29 April 2009 and 100,000 on 29 April 2010.
On 1 November 2008, a further 1,535,000 shares were issued to directors and
senior management in accordance with the share scheme. The shares were issued
at US$ 0.01.
7. Director`s emoluments
Three directors of the Group, Mr S Ramokgopa, Mr REM Vittino and Mr G James,
resigned during the period.
Mr S Ramokgopa received a cash termination benefit of US$ 179,851 and
retained his share options granted to him on 31 October 2007. Due to his
resignation the future share options were recognised on the date of his
resignation. The value of the accelerated share-based payments for these
share options is US$ 1,076,293.
Mr REM Vittino received a cash termination benefit of US$ 157,474 and
retained the first and second tranches of his share options. The final
portion of his share options granted were forfeited (821,999 shares). Due to
his resignation the future share options were recognised on the date of his
resignation. The value of the accelerated share-based payments for these
share options is US$ 471,002.
Mr G James retained the first and second tranches of his share options. The
final portion of his share options granted were forfeited (1,643,998 shares).
Due to his resignation the future share options were recognised on the date
of his resignation. The value of the accelerated share-based payments for
these share options is US$ 503,117.
8. Commitments
Group
2008 2007
US$`000 US$`000
a) Purchase of shares in companies
Purchase price of Ferreira Estate and Investment
Company Limited (`FEIC`) 1,000 1,000
b) Various contractual amounts payable
Fees payable to iProp Limited for prospecting 500 500
Option fees payable to Gravelotte Mines Limited 100 100
Fees payable to the Department of Minerals and
Energy within one year 3 4
Plant and equipment contracted for 6,295 -
c) Donations payable
Donations payable to Umkhonto we Sizwe Military
Veterans Association (MKMVA) 83 -
9. Segment Reporting
The Group operates primarily in one business and geographical segment, being
the acquisition of mineral rights and data gathering in the Central Rand
goldfield of South Africa. Accordingly, no analysis of segment revenue,
results or net assets has been presented.
10. Share-based payments
Grant of options in the Company
During the year further share options were granted to selected employees. The
options granted are summarized below.
Vesting Strike Price Allocatio Number of share
n options granted
555,556 on the Exercise price Selected 1,666,667
first escalates in staff
anniversary of accordance with
admission being the vesting of
8 November tranches. One
2008, 555,556 third at
on the second Placing Price
anniversary of of GBP1.25, one
admission and third at 150%
the balance on of Placing
the third Price and one
anniversary of third at 200%
admission of Placing
Price
Grant of shares in the Company
During the year the Company granted the following shares to Directors and
Senior Managers of the Group.
Name Purchase Number of Purchas Release Period
Date shares e Price
Directors 100,000 on grant
date, 100,00 on
1st anniversary
of the
appointment date
and the
remainder on the
2nd anniversary
of the
appointment date
Mr M McMahon 27 June 300,000 GBP0.01
2008
Senior
Management
Mr K Kunene 9 May 2008 20,000 GBP0.01 20,000 on grant
date
Issued on behalf of: Central Rand Gold Limited
Date: 25 March 2009
Date: 25/03/2009 11:00:01 Produced by the JSE SENS Department.
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