| Wed 14 Apr 2010, 8:00 | | CRD - Central Rand Gold Limited - Operations and Board Update |
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CRD
CRD
CRD - Central Rand Gold Limited - Operations and Board Update
Central Rand Gold Limited
(Incorporated as a company with limited liability
under the laws of Guernsey, Company Number 45108)
(Incorporated as an external company with limited liability
under the laws of South Africa, registration number 2007/019223/10)
ISIN: GG00B24HM601
Share code on LSE: CRND
Share code on JSE: CRD
("CRG" or the "Company" or the "Group")
OPERATIONS AND BOARD UPDATE
CRG, the gold mining company with assets in Southern Johannesburg, is pleased
to announce the following update:
- Successful conclusion of trial mining;
- Mining methodology proven and ready to be used across CRG`s existing
mining right area;
- Release of updated Competent Persons Report ("CPR") to underpin CRG`s
first mine and next capital raising;
- 79% increase in Joint Ore Reserves Committee ("JORC") probable reserve
base to 482 000 ounces of gold;
- Average operational cash (include water pumping costs) and capital costs
of US$582/oz and US$173/oz respectively;
- Reconfigured metallurgical plants commissioned;
Report on current activity and short term production strategy; and
- Michael McMahon succeeds Alastair Walton as Chairman. Mr McMahon has 20
years` experience in senior board roles at Impala Platinum Holdings
Limited, Gencor Limited and Gold Fields Limited.
TRIAL MINING
Decline and reef development
A decline from a portal at Slot 8 is being developed to access the two
channelised areas associated with higher grades ("pay-shoots") in the initial
mining area at Consolidated Main Reef ("CMR"). Trial mining was conducted in
the first areas of reef that could be accessed from this decline and
consequently these areas were not chosen for grade. The objectives of trial
mining were to validate the mining method and provide real physical and
financial data for input into mine design, which have been achieved.
The Slot 8 decline is approximately 125 metres below surface with 810 metres
of decline development completed to date. In addition 440 metres of on reef
development and crosscuts have been developed.
In total 1,250 metres of development has been completed with a single double
boom jumbo. Since the appointment of a mining contractor, Australian Contract
Mining (Pty) Limited, rates of 240 metres per month have regularly been
achieved. This is in line with world`s best practice and significantly exceeds
South African norms.
Stoping
Three stopes have been successfully blasted and extracted using mechanised
long hole stoping and three cemented backfill support pillars (previous termed
cemented aggregate fill pillars) have been poured. This simple but highly
productive mechanised mining technique is common in Australia but new to the
Witwatersrand.
Hangingwall conditions experienced to date have been good and no abnormal roof
support structures have been required.
No damage occurred to cemented backfill support pillars or the hangingwall
after stope blasting and subsequent extraction of blasted material.
One of the stopes was successfully split-fired to separate low grade parting
from Main Reef and to extract these strata separately. The split-firing of
low grade parting ore from Main Reef ore provides flexibility on a stope-by-
stope basis to either split-fire or to take the entire package (Main Reef,
parting and the sweepings and vampings lying on the parting) depending upon
grade.
Trial mining has also demonstrated that:
- 90% of blasted stope material is recovered by the loader on the level
below. The 10% of broken stope ore left behind after blasting is
confirmed to be amenable to water jetting;
- Roof support using split-sets and mesh allows for safe and economic
mining.
This method of stoping and production avoids labour intensive and potentially
hazardous hand-held in-stope drilling. CRG has now confirmed that highly
mechanised mining methods common in Australia but new to the Witwatersrand
basin are appropriate and economical.
PROCESSING
It has been recognised that gold output is maximised by the most effective
utilisation of the 18,000 tonne per month Carbon-in-Pulp ("CIP") plant. To
improve recovery and reduce costs the plant has been reconfigured to separate
the feed into two streams, with the higher grade stream directed to an
upgraded CIP plant and the lower grade material directed to the existing
flotation plant. Optical sorting has also been trialled and will be added to
the plant-flow sheet.
Result of optical sorting trials
On reef development the optical sorter rejects 50% of the material fed to it
whilst recovering 85% of the reef, with a reduction in dilution resulting in
an uplift from an estimated 1.5 g/t to 3.0 g/t.
For stoped ore the optical sorter will be used to separate a high grade stream
to be sent directly to the CIP plant from the low grade flotation circuit
stream.
HIGHLIGHTS OF UPDATED CPR
The updated CPR has been carried out by Snowden Mining Industry Consultants (a
full copy of which is available on www.centralrandgold.com). Highlights
include:
- CMR (Slot 8) ore reserve increased by 79% to 3,73 million tonnes at 4.0
g/t which equates to 482,000 ounces of gold;
- An updated mine plan which will produce 476,190 ounces of gold over a
mine life of 12 years;
- Average operational cash (include water pumping costs) and capital costs
of US$582/oz and US$173/oz respectively;and
- Extensions of mineralised reef zones (partings), sweepings and vampings
and remnant reef pillars have been identified as other potential and
readily available sources of gold have not been included in the above.
Future strategy and fundraising
The Board believes that CRG`s mining and metallurgical methodologies can be
implemented across its entire tenement area, requiring, relatively minimal
adjustment to and re-testing of its mining methods to suit local conditions,
and in particular reef widths, before full-scale mine development can
commence.
The Company`s next target area for development is the western tract of the
historic Crown Mines area, contiguous with the eastern tract of CMR and
Langlaagte. The move to commence feasibility work at Crown Mines is expected
to result in further increases in CRG`s JORC reserve base.
In summary, management`s "vision" of developing and building a major economic
gold operation is intact. The upside potential of developing both the current
and future mining areas remains considerable.
The immediate target for the Group is to ramp-up production to create a
sustainable and cash positive mining operation. In order to fulfil this stage
of its strategy, CRG will be required to raise new equity finance. The Company
and its advisers are in the process of finalising a prospectus which is
expected to be published in the second half of May 2010.
CURRENT ACTIVITIES AND SHORT TERM PRODUCTION PLANS
With the completion of trial mining, underground activities are now
concentrated on decline and reef development in line with the mine plan
contemplated in the CPR in anticipation of a successful capital raising.
With the completion of the plant reconfiguration and until underground ore
becomes available, in steady-state production during the third quarter of
2010, the plant will process:
a) An estimated ore stockpile of approximately 23,000 tonnes at 3.9 g/t
sourced from underground development and trial mining; and
b) Accessible surface material, comprising tailings and oxide ore material
to be mined from Slots 8 and 9 on CMR:
- Systematic auger sampling in the tailings disposal area has
identified exploration target material* between 30,000 tonnes and
50,000 tonnes of tailings material at an estimated grade of between
2.2 g/t and 3.5 g/t.
- Previous and ongoing exploration for oxide ore in the Slot 8 and 9
areas identified an exploration target of between 15,000 tonnes and
30,000 tonnes at an anticipated in situ grade of between 2.4 g/t and
4.4 g/t. These figures are based on weighted average composite
sampling and gold assay of material obtained from systematic
trenching, reverse circulation drilling and diamond drilling.
*The potential quantity and grade of exploration target material is
conceptual in nature and there has been insufficient exploration to
define a Mineral Resource. It is uncertain if further exploration
will result in the definition of a Resource. Further exploration
work is ongoing, and includes trial mining and processing of this
shallow target to establish grade and orebody continuity,
mineability, dilution and throughput characteristics.
BOARD CHANGES
With the completion of trial mining and the release of the updated CPR the
future development of CRG has been underpinned. This is an appropriate moment
to bring forward the previously stated board changes detailed in the
announcement dated 22 January 2010, with Michael McMahon assuming the
chairmanship to lead the Company into the next phase. Accordingly, Alastair
Walton and Robert Kirkby resign from the board with immediate effect.
Commenting on the operations update and the Board changes, Johan du Toit,
Chief Executive, said:
"The trial mining has demonstrated that CRG has not only an economic mine, but
also a template to breathe new life into a vast area which has remained
dormant for decades. The Board of CRG thanks Alistair Walton and Robert
Kirkby for their significant contribution to the Company over the years - they
have both been instrumental in getting CRG to the point of starting commercial
gold production".
Johannesburg
14 April 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
For further information, please contact:
Central Rand Gold +27 (0) 11 551 4000
Johan du Toit / Patrick Malaza
Evolution Securities Limited +44 (0) 20 7071 4300
Simon Edwards / Chris Sim / Neil Elliot
Macquarie First South Advisers (Pty) Limited +27 (0) 11 583 2000
Thembeka Mgoduso / Annerie Britz /
Melanie de Nysschen / Manisha Ramlakhan
Buchanan Communications +44 (0) 20 7466 5000
Bobby Morse / Katharine Sutton
Jenni Newman Public Relations (Pty) Limited +27 (0) 11 506 7300
Jenni Newman / Megann Outram
Date: 14/04/2010 08:00:07 Produced by the JSE SENS Department.
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