| Fri 19 Nov 2010, 9:00 | | 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
CRG the gold mining company with assets in Southern Johannesburg, is pleased
to announce the following update:
- Total underground development for the year is 2,496m with 372 metres
being reported for the month of October 2010. This development will
enable the Company to commence underground stoping in January 2011.
- The long-hole drill rig has arrived in South Africa. On site delivery is
expected in mid-December 2010.
6,809 ounces have been produced in the current year to date.
- 2010 annual production target reduced to 9,000ounces - 11,000ounces, as
a result of the delayed start to underground production (as per guidance
given on 12 October 2010)
- The combined surface Exploration Target material discovered in the
immediate vicinity of the decline is estimated at between 36,400tonnes
and 86,700tonnes with an average grade of between 4.4g/t and 4.6g/t.
Geology
Underground Drilling
During September and October an evaluation exercise was undertaken to
duplicate face sampling results using an underground diamond drill. To this
end a 20 metre long stretch of previously sampled reef development was
drilled from the footwall tunnels immediately below the sampled reef at a
depth of approximately 110m below surface. Previous face sampling of the 1581
reef development returned an average grade of 16g/t over 55 centimetres over
the length of the reef development.
A conventional Kempe high torque underground diamond drill rig was used to
drill 16 AX sized diamond drill holes toward the 1581 reef drive, aiming to
intersect the Main Reef approximately one metre up-dip from the reef drive.
Of the 16 holes drilled, four intersected Main Reef voids, one encountered
poor ground conditions and the remaining 11 holes intersected thin, but high
grade Main Reef as tabulated below:
BH No. Corr.Width Grade Content
(cm) (g/t) (cmg/t)
PH01 38 16.38 622
PHO2B 48 10.02 481
PH03 54 16.38 885
PH04B 48 10.65 511
PH05 59 13.8 814
PH06 50 9.94 497
PH07 54 10.58 571
PH08 66 11.5 759
PH11 38 13.58 516
PH12 32 23.24 744
PH13 44 20.3 893
Average 48 13.74
The average drilled grade of 13.74g/t over 48centimetre very closely
approximates the face sampled grade of 16g/t over 55centimetre for the same
20metre stretch. This suggests that both techniques can be used for grade
control purposes, allowing for a degree of flexibility in areas where ground
conditions preclude on reef development.
The Company is now exploring avenues of mechanising the diamond drill rig to
match the underground mining and development cycle.
Surface Exploration Target Material
The combined Surface Exploration Target material identified by means of
opening up of additional trenches and ongoing lithologically controlled
channel sampling and subsequent fire assaying for gold from the Main Reef and
Main Reef Leader conglomerates is estimated at between 36,400t and 86,700t
with an average grade of between 4.4g/t and 4.6g/t and is made up as follows:
- An additional Exploration Target was identified in the Central Pit area
increasing the potential to between 11,000tonnes and 21,000tonnes at
grades of between 3.2g/t and 3.8 g/t.
- The Exploration Target potential at New Unified is estimated at between
9,500tonnes and 13,700tonnes at grades averaging between 2.9g/t and
4g/t.
- The stripping of the first 2.5metre cut at the New Unified Extension Pit
showed a considerable number of double voids (areas where both Main Reef
Leader and Main Reef have been historically mined), within the
previously identified high grade area. Re-sampling and re-evaluation of
the remaining material within this area have returned a downgraded
inventory of Exploration Target material of between 15,850tonnes and
52,000tonnes at grades averaging at around 5.3g/t.
Note: The potential quantity and grade described by the term "Exploration
Target" is conceptual in nature and there has been insufficient exploration
to define a Mineral Resource and 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 ore body continuity, mineability, dilution and throughput
characteristics.
Exploration and Expansion
The Company`s growth strategy initiatives remain on track and include:
- Independent Scoping studies into the feasibility of developing CMR East
are currently underway and results are expected by the end of this
calendar year.
- CRG has also commissioned initial planning and scheduling studies to
investigate the economics of the City Deep and Village Main mining
projects.
- Tender processes have commenced for surface diamond drilling at the new
Crown Mines site. It is expected that this drilling programme will
ultimately lead to an upgraded Resource Statement and allow for the
development of Crown Mines as the next major CRG operation, which will
enable the Company to leverage its fixed cost base. Drilling is expected
to begin late 2010/early 2011 and will run for most of 2011.
- Studies are also underway to investigate the economic potential of
subsidiary mineral assets such as the auriferous Kimberley and White
Reef packages. These largely unexploited and underexplored reefs are
developed over a continuous strike distance of more than 25 kilometres
and remain a very substantial part of the CRG portfolio.
Mining
Key Mining Statistics
Year To Date Actual Prospectus
October 2010
Tons(t)/ Grade(g/t) Tons(t)/ Grade
Metres(m) Metres(m) (g/t)
Decline sinking 785 669
(m)
Waste development 991 420
(m)
Footwall 365 -
development (m)
Reef development 355 2,008
(m)
Total (m) 2,496 3,097
Trial stoping (t) 6,073 2.6 23,752 3.80
Reef development 39,924 1.7 77,202 1.80
(t)
Surface mining 119,728 3.0 31,041 4.40
(t)
Total (t) 165,725 2.67 131,995 2.77
Underground Mining Operations
Pending receipt of the Long-Hole Drilling Rig (required for stoping)
underground mining efforts have focused on footwall development. Monthly
development has continued at a good rate, with 372 metres being achieved for
the month of October 2010.
Good progress and pre-stoping preparation have meant that the targeted 45,000
ounces (annualised) production rate by year end 2013 remains on track.
The Long Hole Rig has been delivered to the Atlas Copco site in South Africa
and delivery on CRG`s site is expected by mid December 2010, enabling the
mining operations to commence underground stoping in early 2011.
The December delivery of the Long Hole Rig has short-term production
implications in that the production forecast contained in the prospectus
published by the Company on 4 June 2010 (the "Prospectus") anticipated
significant higher grade underground ore to be available before the end of
the year. This delay in delivery of underground ore has been partially
mitigated by extension of the surface exploration and surface mining to
supplement gold production.
Surface Mining
Year to date 119,728 tonnes of surface ore has been mined from the following
pits.
- Central Pit - this pit has yielded 27,105 reef tonnes at a mill head
grade of 4.24g/t.
- Pit 2 (New Unified) - this open pit has yielded 57,535 reef tonnes at a
mill head grade of 3.64g/t.
- Pit 3 (New Unified extension) - this pit has yielded 4,000 reef tonnes
at a mill head grade of 5.94g/t.
- West Pit - this pit has yielded 16, 028 reef tons at a mill head grade
of 4.8g/t.
Metallurgy
Gold production achieved between 01 January 2010 and the end October 2010, is
6,809 ounces. Tonnes processed for the last three months remained relatively
stable at around 23 kilotonnes per month; however improvements were made on
plant availability and most significantly on recovery.
In October 2010, and following plant improvements the Bateman concentrator
availability increased to 71%, above the YTD average of 60%.
The comminution upgrade initiated in October 2010 focuses primarily on the
Bateman Concentrator with the objectives of increasing throughput to
45Kilotonnes per month and achieving an 83% availability while eliminating
stockpiles and unwanted material handling within the plant. This upgrade is
in the detail design phase with long lead procurement packages being
expedited to minimise any delays. Current planning schedules the upgrade to
be commissioned in May 2011. CIP plant availability has been maintained on
average at 85% throughout the year.
Lower than anticipated surface oxide ore grade from the newly opened surface
slots eroded upside potential in September and October 2010, however,
increased plant grade assays evident in early November 2010 could increase
Gold production above the 1,100 ounces per month record if sustained to end
December 2010. Anticipated annual production remains above the 9,000 ounces
range.
The optical ore sorter implementation has further progressed with the
commencement of site infrastructure erection in October 2010.
The Commodas Optical Sorter unit is expected in South Africa mid December
2010 with on site commissioning taking place in January 2011 coinciding with
the ramp up of underground production which will feed this unit.
WATER TABLE
As mentioned in previous releases the South African Government has appointed
an inter-ministerial task team to review the problem of Acid Mine Drainage
("AMD") for the Greater Johannesburg Area. It is the Company`s understanding
that the task team submitted a report to the Department of Water Affairs, in
mid October 2010. The recommendations from the report have not been made
public. The Department has announced that it will present the findings to
Cabinet by mid December 2010.
CRG will continue to support the interim solution, which requires the
construction of a submersible pump station 400 metres below surface and the
refurbishment of an existing high density sludge ("HDS") plant. CRG is not
aware of any other solution that can halt and treat the rising water table
level.
Currently the water level at the South Western Vertical Shaft, the area where
the new pumping station will be situated, is at approximately 540 metres
below surface as compared to the approximate level of 570 metres below
surface in the Consolidated Main Reef area currently being mined.
Furthermore the water level is currently rising at 0.3metres per day which is
on the low end of the expected rate of rise of between 0.3metres and
0.9metres per day.
FINANCIAL UPDATE
Cash and cash equivalents for the four months ended 30 October 2010 increased
from US$3.9 million at 30 June 2010 to US$25.9 million as a result of the
following items:
- net proceeds from recent capital raising of US$36.5 million;
- revenue from the sale of 3,461 ounces of gold processed from surface
mining;
- refund of the deposit on cancellation of the order for the processing
plant of US$2.3 million; and
- later than anticipated purchases of underground mining equipment.
Cash and cash equivalents were reduced by expenditure required to continue
development of the mine and surface mining operations, more specifically:
- underground mine development expenditure of US$5.2 million;
- procurement of mining fleet and other equipment of US$1.4 million;
- prepayment and civil works for the optical ore sorter and submersible
water pump;
- mining of nearby surface materials as an additional source of gold while
the underground mining fleet is being procured; and
- payment of voluntary retrenchment packages for 46 head office and
support staff, in a long term cost-cutting effort.
Set out below is an abridged cash flow for the four months to October 2010.
US$ (million)
Cash and cash equivalents at 1 July 2010 3.9
Gold Sales 4.2
Cash used in operations (10.8)
Mine development (5.2)
Mine property, plant and equipment (1.4)
Prepayments and deposits (3.0)
Net Proceeds from shares issue 36.5
Interest Received 0.1
Effect of exchange movement on cash balances 1.6
Cash and cash equivalents at 30 October 2010 25.9
The Company`s prospectus (issued 4 June 2010) assumed that its mining fleet
would be finance through debt. To date it has been unable to secure asset
finance and has utilised its own cash reserves to secure its fleet.
Negotiations continue with various local finance houses, to fund its current
and future fleet requirements.
BLACK ECONOMIC EMPOWERMENT
- Puno Gold Investments (Pty) Limited`s ("Puno") failed to launch
arbitration proceedings with the Arbitration Foundation of South Africa
("AFSA"). As such, Central Rand Gold Netherlands Antilles N.V. ("CRGNV")
sought to expedite such arbitration proceedings by bringing the
application to AFSA in its capacity as respondent to the proceedings.
At the pre-arbitration meeting held between Puno, Central Rand Gold SA
(Pty) Limited ("CRGSA") and CRGNV the appointed arbitrator ruled that,
despite being properly appointed by the Arbitration Foundation of South
Africa, he was unable to hear the matter as it had been brought before
him by the respondent in the case and not by the applicant.
CRGNV will now amend the plea that it lodged in the first instance and
file this amended document before AFSA in the form of a statement of
claim and thus bring the application to AFSA as an applicant (claiming
that it is in fact entitled to exercise a call over Puno`s entire
shareholding and setting out the circumstances which entitle it to make
this call).
- In regard to the successful opposing of the application brought by Puno
to halt mining operations, the Company`s cost order awarded against Puno
has been taxed and the sum of ZAR300,000 (c. US$43,000) is now due and
is expected to be paid to the Company by mid to late November.
NOTE
1) The information in this statement relating to Mineral Resources and
geology has been reviewed and approved by Mr. Keith Matier, BSc (Hons), GDE,
Pr Sci Nat, who is a competent person in terms of the SAMREC and JORC codes.
2) Mr. Matier is Geology Manager of Central Rand Gold South Africa (Pty) Ltd
and has over 17 years experience in precious metal exploration, mineral
resource management and evaluation
19 November 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
For further information, please contact:
Central Rand Gold +27 (0) 11 674 2304
Johan du Toit / Patrick Malaza
Evolution Securities Limited +44 (0) 20 7071 4300
Simon Edwards / Chris Sim / Neil Elliot
Macquarie First South Advisers (Pty) +27 (0) 11 583 7000
Ltd
Annerie Britz /Melanie de Nysschen /
Yvette Labuschagne
Buchanan Communications +44 (0) 20 7466 5000
Bobby Morse / Katharine Sutton
Jenni Newman Public Relations (Pty) +27 (0) 11 772 1033
Ltd
Jenni Newman
Date: 19/11/2010 09:00:01 Produced by the JSE SENS Department.
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