| Tue 19 May 2009, 12:51 | | CRD - Central Rand Gold Limited - Interim management statement |
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CRD
CRD
CRD - Central Rand Gold Limited - Interim management statement
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
Interim Management Statement
May 19, 2009 - London and Johannesburg listed Central Rand Gold ("CRG") is
pleased to provide an operational update on the development of CRG`s assets in
southern Johannesburg. Highlights include:
* Resource to Reserve
* Decline development
* Delivery and commissioning of metallurgical plants
* Exploration
* Water table and CBEC
* Black Economic Empowerment
* Corporate Social Investment projects
* The Company is now targeting to produce at annualised rate of 100,000oz of
gold in early 2010 dependant upon the rate of underground development and
the commissioning of the new 50tph Gekko plants
Johan du Toit, CRG`s Chief Executive Officer stated:
Johan du Toit, CRG`s Chief Executive Officer stated, "CRG is continuing to make
considerable progress in building a substantial low cost gold mine. We have
commenced trial slot mining and should begin underground mining during August.
In parallel, processing of bulk samples via our Gekko 20tph trial crushing and
concentrating plant has demonstrated the capabilities of this plant. The months
ahead will see CRG build up trial production from underground stopes accessed
from the Slot 8 decline, whilst continuing to build surface infrastructure with
a view to achieving commercial gold production late in the second half of this
year".
For photos of the operations, please refer to the document published on Central
Rand Gold`s website: www.centralrandgold.com
Conference Call & Webcast for the AGM - CRG will host a conference call on
Thursday 21 May 2009 at 11:00 a.m. (London, GMT) and 12:00pm (Johannesburg) to
provide an update for investors and analysts on its operational progress.
Participants may join the call by dialling one of the two following numbers,
approximately 10 minutes before the start of the call.
From the UK: (toll free) 0800 496 0440
From outside the UK: +1 647 723 3976
Participant pass code: 2205709#
Other international dialling codes are available on:
http://www.readytalk.com/an.php?tfnum=8772948214
A live audio webcast of the call and a replay (available from 4:00pm London UK
time) will be available on:
http://mediaserve.buchanan.uk.com/2009/cg210509/registration.asp
Contact:
Johan du Toit + 27 (0) 11 551 4000
Wayne Epstein + 27 (0) 11 551 4000
info@centralrandgold.com
Enquiries:
Evolution Securities Limited + 44 (0) 20 7071
Simon Edwards/Chris Sim/Neil Elliot 4300
Macquarie First South Advisers + 27 (0) 11 583 2000
(Pty) Ltd
Thato Morojele/Annerie
Britz/Melanie de Nysschen
Buchanan Communications Limited + 44 (0) 20 7466
Bobby Morse/Ben Willey 5000
Jenni Newman Public Relations (Pty)
Ltd +27 (0) 11 772 1033
Jenni Newman/Megann Outram/Lerato
Tlatlane
Operational Update
Operationally there are four areas of focus:
* conversion of Resources into Reserves;
* surface infrastructure;
* decline development; and
* the implementation and operation of metallurgical processing plants.
Resource to Reserve Update
As announced on April 3, 2009, a Reserve statement is currently being
compiled by Snowden Mining Consultants ("Snowden"). This process involved
the audit of elements referred to as "modifying factors" (factors affecting
extraction, including mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors). Snowden has undertaken
rigorous internal reviews of the information presented to them. After having
performed the reviews, it was established that further clarification and
alterations of certain modifying factors were necessary before a Reserve
statement can be released. Specifically, the modifying factors requiring
additional information relate to mining methods and capital and operating
cost estimates. Snowden has indicated that this statement should be released
around mid 2009. This initial Reserve statement is focussing on the Main Reef
of the Consolidated Main Reef ("CMR") tenement to a depth of 300m below surface.
Once the Reserve conversion approach and methodology have been established,
this process will be replicated and applied below 300m and to other tenements.
Surface Infrastructure
Slot 8 is located on the CMR tenement and was selected as the site for the
first decline to access the Main Reef. Trial mining commenced in October 2008
through trench mining and processing of bulk samples. Surface infrastructure
development began in early 2009. A surface plot plan, in strict accordance with
the Company`s Environmental Management Plan, was developed optimising material
flow from underground and through the processing plants. Further, the surface
layout has been configured to accommodate all of the concentrator plants above
ground until the appropriate timing to move these units underground. The
appropriate timing will depend on production demands, underground development
progress, ore grades and underground infrastructure.
The Company is pursuing a permanent power supply from City Power and is in
design and enquiry stage at present with construction work expected to start
in July 2009. Electrical power is currently supplied via diesel generators,
most of which have been procured to act as backup power should the permanent
City Power installation experience an outage. The Company has arranged for a
2MVA supply of power from Crown Gold Recoveries to replace some of the more
expensive power produced by the generators. A permanent Rand Water connection
has been installed. This will accommodate all potable water requirements at
Slot 8.
The balance of surface infrastructure activities related to offices, roads,
workshops, explosive and emulsion bays are ongoing. Security is also a focal
point in the design of surface infrastructure.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Slot 8 site
Decline Development
The work on the Slot 8 boxcut was commenced in November 2008 and, despite
difficult ground conditions, was completed to the portal face in February 2009.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Slot 8 Portal
A group of contractors have been contracted to sink the decline and took
over the portal face in March, commencing drilling and blasting. The Mining
contractors include Grinaker-LTA Mining, an established mining contracting
group. Initial decline development was limited to roughly one metre per blast
due to poor ground conditions near surface. The use of Becker Arch sets has
also been necessary owing to these poor conditions. The decline has now
advanced approximately 75 metres (approximately 30 metres below surface) into
largely competent hard rock quartzites. The requirement for Becker sets stopped
at approximately 25 metres below surface and support thereafter has been
provided by mechanical roofbolts.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Decline development on the Slot 8 decline
A new Double Boom Drill Rig is now operational on site with each boom
capable of drilling a hole in excess of 3m in less than 2 minutes thereby
enabling decline development at a rate of 4m to 6m per day depending upon
ground conditions.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Double boom drill rig
Metallurgical Plant Update
The trial 20 tons per hour Gekko crushing and concentrating plant was
commissioned in October 2008 and the flotation circuit was added and
commissioned in January 2009. This unit is modularised on skids and
specifically designed to be moved underground in the 6m x 5m decline tunnel.
The plant was originally designed for the treatment of hardrock from
underground. The surface oxidised material that is initially being fed through
the plant was therefore not optimal and therefore initially, the plant was
unable to reach the maximum throughput. Debottlenecking and upgrading of the
system was systematically undertaken from commissioning (as described below)
and the plant is now capable of troughput in excess of the nameplate 20 tons
per hour. Optimisation in terms of availability to be able to reach the
required 12,000 tonnes per month of capacity utilisation is ongoing.
During January 2009 the total tonnage treated was approximately 3,800
tonnes. The major upgrade to the plant in January was the introduction of the
flotation circuit which allowed for better recoveries to approximately 68%,
although continuing to process sub-optimal surface oxidised material. With
plant upgrading being conducted, 2,500 tonnes were processed in February with
a recovery of approximately 68%. March 2009 saw the end of the upgrading of
the plant to accommodate the oxidised material and focus was placed on
planned shutdowns and a reduction of backlog maintenance. Total tonnage
treated - 5,267 tonnes with approximately 69% recovery. April Production
reached a total of 10,013 tonnes with a 69% recovery, decreasing downtime
and increasing production availability up to 90% with full optimal usage.
Planned shutdowns took place accordingly reducing backlog and planned
maintenance. Additional spares were accommodated which increased production.
It is anticipated that the Gekko crushing and concentrating plant`s stated
throughput of 12,000 tonnes per month will be reached within the next two
months.
The concentrate is largely being stockpiled to be treated by the
Carbon-In-Leach ("CIL") concentrate treatment plant. The CIL plant, capable
of treating 10,000 tons per month of concentrate, commenced civil work on site
in February, 2009. This fast track erection has been undertaken by Time Mining
with a predominantly pre-built plant containerised originally for export.
Commissioning is planned to commence by the end of May 2009. This plant will
provide relief for the stockpiled concentrate generated by the trial mining
activities to date. Included in this plant is a smelt house facility which will
enable CRG to produce Bullion bars (88%-90% Gold) which will be transported to
Rand Refinery Limited for final refinement and sale. The anticipated first
smelt on site is scheduled for June 2009.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Carbon-In-Leach concentrate treatment plant
A Bateman 30 ton per hour concentrator ordered in 2008 was delivered in
April 2009 and is being erected during May 2009. Civil work to accommodate
this plant commenced in April 2009.
(For photo, please refer to Central Rand Gold`s website:
www.centralrandgold.com)
Bateman 30tph crushing and concentrating plant
Two further Gekko plants, each with 50 tons per hour capacities, ("Python
500`s") were ordered in the period. This followed extensive interrogation and
refinement of design work based on experience on the existing 20 tons per hour
Gekko crushing and concentrating unit. The Python 500s are expected to be
delivered to site in Q3 and Q4 2009.
Exploration Update
Exploration activities to date have focussed on the use of diamond drilling
and reverse circulation drilling to obtain confidence in geological structure,
identify ore that can be targeted and extracted from surface and obtain
geotechnical information to be used in mine design.
225 diamond drill holes have been undertaken from the start of the exploration
program to date, covering targeted pre-mining areas over the entire 40km strike
length. These holes have resolved areas of structural complexity and have
allowed for the creation of three dimensional models upon which to conduct mine
planning and design.
Of these 225 holes, 46 were drilled specifically to determine ground conditions
ahead of the Slot 8 decline. The balance of the drilling focussed on identifying
Resources on the Kimberley and Bird Reefs in addition to the current Main Reef
and Main Reef Leader Resources already quantified.
A total of 552 reverse circulation holes have been completed. These short
percussion type holes were principally employed to evaluate areas where
potential surface mining could occur and have allowed for the seamless
transition from bulk sampling to slot mining at Slot 8 in December 2008. They
have also provided the basis of the in-house evaluation of new additional
surface deposits with the potential to provide plant feed during the
metallurgical commissioning phase. The reverse circulation drilling programme
was completed in the last quarter of 2008.
This philosophy of improving geological understanding across the entire strike
length over all of the known reef horizons has continued through the first
quarter of 2009, where diamond drilling has focussed in four separate areas,
namely Slot 8 Main Reef on the CMR tenement, Slot 5 Bird Reef on the Crown Mine
tenement, Slot 4 Kimberley Reef on the CMR tenement and Slot 11 Pyritic
Quartzite on the City Deeps tenement. In total, nine diamond drill holes were
undertaken during the first quarter of 2009.
Slot 8 (Main Reef Package)
Five diamond drill holes were undertaken in the immediate vicinity of the
decline, primarily to test the rock stability and ground conditions ahead of the
decline. They also confirmed the expected wide reef conditions in the immediate
area and returned grades of between 2.42g/t and 3.70g/t over widths of between
143cm and 157cm respectively.
Slot 4 (Kimberley Reef Package)
Two diamond drill holes were positioned in the unmined area of the Kimberley
Reefs between Slot 1 and Slot 4 to test the structural and lithological
continuity between these two target areas. Whilst assay results are still
outstanding, continuity between these two areas has been adequately demonstrated
and will be incorporated into the existing digital model.
Slot 5 (Bird Reefs)
During this quarter a single diamond drill hole completed the long running
drilling programme in this area. Initial results from this slot confirm
that gold grades in the Bird Reef zone are concentrated in the conglomerate
of the White Reef itself. Grades are variable and tend to the low side (0.5 to
1.5 g/t range over 3m) across the 1,500m strike length immediately available
for surface exploitation, however an approximate 200m long portion of the
strike in the central part of the slot shows a continuous stretch of relatively
high grades (4 to 5g/t range over a 3m width). This will be further investigated
using surface sampling techniques.
Slot 11 (Pyritic Quartzite)
The Pyritic Quartzites are part of a well documented Erosion Channel that cuts
through the Main Reef succession starting generally below the Main Reef Leader.
A single, deep hole was drilled in the City Deep lease area (Slot 11) to test
the down dip extent of the City Deep Erosion Channel. The mother hole, with its
5 deflections, was designed to provide stratigraphic information on all reefs
within the lease area as well as provide initial information of the auriferous
Pyritic Quartzite channel.
Both South Reef and Main Reef Leader return predictably high values over
relatively wide corrected widths of 2.63g/t over 127cm and 5.19g/t over 173cm,
respectively.
The Pyritic Quartzite was intersected immediately beneath the Main Reef Leader
as expected. Assay information from the deflections is outstanding but the
mother hole returned a continuous zone of pyritic quartzite grading 1.65g/t over
7.4m. This hole will be fully assessed once the remaining deflections have been
logged and assayed.
Underground Drilling (Main Reef Zone)
Underground exploration drilling has continued at the recently reopened East
Shaft with the drilling of 22 underground holes targeting the Main Reef, Main
Reef Leader and South Reefs as well as investigating the gold content of the
middlings between these known reefs. Results have confirmed the existence of low
grade zones of mineralisation outside of the Main Reef, South Reef and Main Reef
Leader horizons. Drilling has also confirmed the position of pillars and other
unmined areas in the East Shaft area.
Strategy for next quarter
The focus of drilling for the next quarter will change somewhat, with the
increasing demands of the decline taking precedence. A single diamond drill rig
will be employed to drill holes of a geotechnical nature planned ahead of the
face, as the decline progresses. This rig will also be used to provide
additional confidence in Inferred Resource blocks with the aim of converting the
remaining shallow Inferred Resource to Indicated status. To this end, between
nine and twelve diamond drill holes are envisaged for the coming quarter.
Underground drilling will be restricted to decline cover drilling with the
imminent ramp up to underground production.
Black Economic Empowerment Update
On February 16, 2009, Central Rand Gold Netherlands Antilles ("CRGNV"), Central
Rand Gold`s wholly owned subsidiary company which directly holds 74% of the
shares in Central Rand Gold SA (Pty) Ltd ("CRGSA"), exercised the call option
granted to it in terms of the CRGSA Shareholders Agreement and gave the
requisite 90 days` notice to Puno Gold Investments (Pty) Ltd ("Puno"), CRG`s
Black Economic Empowerment partner to acquire its entire interest in CRGSA. This
was owing to Puno`s inability to provide funding as required in CRGSA`s
Shareholder Agreement.
On April 7, 2009, Puno instituted an urgent application with the South Gauteng
High Court, Johannesburg, to interdict CRGSA and CRGNV from proceeding with the
exercise of the call option pending the final determination by arbitration or a
court order of the validity and enforceability of:
* the funding call by CRGSA;
* the call option furnished by Puno in favour of CRGNV in respect of Puno`s
shares in CRGSA.
On May 13, 2009, CRGNV and Puno consensually agreed to refer the disputation
over the call to an arbitration process. CRGNV is the claimant in these
proceedings. CRG and Puno have agreed a timetable for the arbitration and the
final outcome will be made an order of the court and will be binding. By
agreeing to go through the arbitration process, there will be no further
opportunity to approach the South African courts on the substantive issues
between the parties and a final resolution will be obtained more quickly than
via the ordinary court process.
CRG is still fully compliant with the current legislation relating to Black
Economic Empowerment and has continuously kept South Africa`s Department of
Minerals and Energy abreast with all developments in this regard. CRG is firmly
committed to the principles of Broad Based Black Economic Empowerment.
Water table and the Central Basin Environmental Corporation ("CBEC")
As published in the Company`s 2008 annual report, CRG will be contributing to
the building of a pump station to maintain the underground water levels in the
Central Basin as part of the CBEC initiative. CBEC is comprised of CRG, DRDGold
Limited and West Wits Mining Limited.
Murray and Roberts was commissioned to provide cost estimates and time horizons
of this installation. Based on these studies, a final elevation underground and
shaft location has been determined as 600 metres below surface in DRDGold`s
South West Vertical One Shaft. While final timing, costing and respective
contribution for the water pumping station is expected in mid June 2009, the
costing is expected to total in the region of US$ 22.5 million.
Finance Update
As at April 30, 2009, the Company had approximately US$51 million in cash on
hand. Cash spend during 2009 has been primarily focussed on trial mining, the
development of the decline and on payments required for completion and delivery
of the metallurgical plants. The Company is currently undergoing a cost
management and reduction exercise as part of its continual drive to ensure that
cash resources are being spent effectively in maximising the Company`s
commercial activities at Slot 8.
Further development and financing
The Company is continuously making progress regarding the mine design and
stoping methods. Capex to date has been funded by shareholders` funds. CRG is
evaluating financing options relating to further expansion of the project
including the utilisation of corporate debt or asset financing.
Corporate Social Investment
As part of CRG`s Corporate Social Investment plans, CRG identified several
projects which could enrich the lives of the community members surrounding
CRG`s tenements.
Bursary Program
The Company entered into a partnership with South Africa`s Department of
Education ("DOE") who provided the Company with a list of the top students from
the poorest backgrounds who live in close proximity to the Company`s mining
tenements. CRG issued 13 full bursaries to these students including one bursary
to a child of a CRG employee. The bursaries include tuition, books,
accommodation close to Wits University and a stipend.
Weekend and Vacation School Project
As with the bursary project above, CRG partnered with the DOE and embarked on a
Weekend and Vacation School Project. This project aims to target the weakest
performing Grade 12 learners in the poorest performing schools to try and
achieve a 20% increase in pass rates in 2009.
Date: 19/05/2009 12:51:01 Produced by the JSE SENS Department.
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