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19 Aug 2013 07:00
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 2007/0192231/10) ISIN: GG00B92NXM24 LSE share code: CRND JSE share code: CRD ("Central Rand Gold" or the "Company" or the "Group")
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2013 Interim Report Release
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Central Rand Gold, the South African gold mining and exploration holding company, today announces its unaudited Interim Results for the six months ended 30 June 2013 ("period under review").
Highlights:
· Gold production at 6,097 ounces (First half 2012: 8,246 and second half 2012: 5,463 ounces);
· Total mining production increased 9% to 130,216 tonnes;
· Cash and cash equivalents of US$1.3 million at 30 June 2013 (31 December 2012: US$4.5 million);
· The circular to shareholders, dated 2 August 2013, regarding the proposed raising of US$7.25 million (gross) through the issue of Loan Notes and the grant of Warrants to Redstone Capital Limited ("Redstone Capital") to fund further capital expenditure required to upgrade production facilities, further develop underground mining and for general working capital purposes; and
· The proposed cancellation of the listing of the Company's Ordinary Shares on the Official List and trading on the Main Market of the LSE and admission to trading of the Ordinary Shares on the Alternative Investment Market ("AIM") and the subsequent transfer from the Main Board of the JSE to the Alternative Exchange ("AltX").
The full set of results and Interim Report is available on the Company's website: www.centralrandgold.com.
For further information, please contact:
Central Rand Gold +27(0) 87 310 4400
Johan du Toit / Patrick Malaza
Charles Stanley Securities Limited +44 (0) 20 7149 6478
Marc Milmo / Mark Taylor
Merchantec Capital +27 (0) 11 325 6363
Monique Martinez / Marcel Goncalves
Buchanan Communications Limited +44 (0) 20 7466 5000
Bobby Morse / Louise Mason
Jenni Newman Public Relations (Proprietary) Limited +27 (0) 11 506 7351
Jenni Newman
19 August 2013
Johannesburg
Chief Executive Officer's report
Overview
There is no doubt that the first half of the 2013 financial year was a tough six months for the Company, with overall performance being negatively impacted by continued low metallurgical plant availability, lower mined grade and a depressed gold price. The Company has partially offset the impact of these challenges by strong results from underground mining and excellent second quarter improvements were made in the Mine Call Factor ("MCF")1, factors which are key to the sustainability of our business.
1. The mine call factor is the ratio, expressed as a percentage, of the total quantity of recovered and unrecovered mineral product after processing with the amount estimated in the ore based on sampling.
This report outlines operational activities that took place during the period - including safety, water, underground and surface mining, metallurgy, processing and exploration - and the financial position at the end of June 2013.
In addition, it also covers a major post balance sheet event which - subject to shareholder approval - will lead to the recapitalisation of the Company.
Proposed Loan Note Investment to raise US$7.25 million
As set out in the circular to shareholders dated 2 August 2013 and using the terms defined therein unless otherwise stated, shareholders were notified of the Company having entered into a conditional agreement with Hong Kong-based Redstone Capital to raise US$7.25 million (gross) through the issue of Loan Notes and the grant of Warrants to fund the further capital expenditure required to upgrade the Company's production facilities, further develop its underground mining and for general working capital purposes.
The Loan Note Instrument and the Warrant Agreement, if approved by shareholders, may result in Redstone Capital (assuming full conversion of the Loan Notes and Warrants) being interested in a maximum of 81,273,654 Ordinary Shares representing 71.8% of the Enlarged Issued Share Capital. As a result of holding more than 30% of the Enlarged Issued Share Capital, Redstone Capital would be required under Rule 9 of the Takeover Code to make a mandatory offer for the whole of the Issued Share Capital of Central Rand Gold not already held by it, unless a waiver of that obligation is granted by the Takeover Panel and approved by Independent Shareholders passing the Whitewash Resolution, on a poll, at the General Meeting. The Board of Directors (the "Board") is therefore seeking shareholder approval of the Whitewash Resolution at the General Meeting to be held on 19 August 2013.
If shareholders approve the investment by Redstone Capital at the General Meeting, US$3.325 million of the US$7.25 million available under the Loan Note Investment will be drawn down immediately to improve and replace the existing crushing circuit and Bateman Mill, and also to increase both the plant availability and plant capacity to between 20,000 - 25,000 tonnes per month ("tpm") from the current 16,500 tpm capacity. The costs for the upgrade are anticipated to be approximately US$2 million. The remaining US$1.325 million will be utilised for the Company's working capital requirements. The balance of US$3.75 million (gross) available under the Loan Note Investment will be drawn down by 31 October 2013 to enable Central Rand Gold to acquire additional underground equipment to develop and expand its underground mining operations at CMR West and CMR East.
Share capital reorganisation
Over the last year, the share price of the Company has been trading below the nominal value of the Company's ordinary shares, being £0.01. Although the Companies (Guernsey) Law, 2008 (as amended) allows the Company to issue shares at a discount to the nominal value of its shares, the Board considered that the perception of Central Rand Gold as a penny stock is not beneficial to the Company. In the light of this, it was proposed to increase the market value of the issued ordinary shares by way of a share capital reorganization.
At the Annual General Meeting of 7 June 2012, shareholders approved, inter alia, the proposed share reorganisation which effectively reduced the issued number of ordinary shares from 1,599,682,990 of £0.01 each to 31,993,443 ordinary shares of £0.01 each.
Update on negotiations with Puno Gold Investments (Proprietary) Limited ("Puno")
On 27 November 2012, the Deputy Judge President issued a directive letter to both Puno and Central Rand Gold setting out certain requirements for the further prosecution of the matter, including but not limited to, the date upon which Puno was required to serve and file its heads of argument, being 15 April 2013.
On or about 10 April 2013, five days before the 15 April 2013 deadline set by the Deputy Judge President, Puno chose to terminate the mandate of its then attorneys of record. This was followed on 12 April 2013 by a request to the office of the Deputy Judge President seeking an indulgence for the late filing of Puno's heads of argument, on 19 April 2013.
On 19 April 2013 and again on 25 April 2013, Puno filed further affidavits introducing new defences, factual content and additional new information. Despite wanting to avoid a delay and initially expressing their endeavour to reply before the hearing, the Company did not have sufficient time to deal with the series of new issues contained in the new affidavits. The amount of new information introduced by Puno's own admission, very late in the day, required such additional detailed research and investigation on the part of Central Rand Gold that the Company was left with no option but to apply for the postponement of the scheduled 9 May 2013 hearing.
The Company is awaiting the Deputy Judge President to make a special allocation of a further hearing date of the application in order to expedite the matter.
Geology
Mineral Resources
In January 2013, Dr Carina Lemmer, acting as an Independent Competent Person for Mineral Resources, undertook the annual re-estimation of the Main Reef Resources underlain by the current Consolidated Main Reef ("CMR") mining operations. This incorporated additional sampling captured subsequent to the previous Resource update and also discounted the ore tonnage extracted during 2012.
SAMREC Compliant Mineral Resources
June 2013 | February 2012 | ||||||
Area | Category | Tonnes (Mt) | Grade (g/t) | Content (Moz) | Tonnes (Mt) | Grade (g/t) | Content (Moz) |
CMR | Measured | 1.33 | 3.57 | 0.15 | 1.47 | 3.60 | 0.16 |
Indicated | 12.13 | 4.30 | 1.68 | 23.98 | 6.93 | 5.34 | |
Inferred | 4.34 | 5.60 | 0.78 | 2.62 | 8.78 | 0.74 | |
Exploration Target | 15.86 | 8.49 | 4.33 | - | - | - | |
Crown | Indicated | 2.58 | 5.67 | 0.47 | 20.29 | 9.18 | 5.99 |
Inferred | 2.77 | 7.19 | 0.64 | 9.41 | 8.79 | 2.66 | |
Exploration Target | 24.34 | 9.61 | 7.52 | - | - | - | |
City | Indicated | 0.78 | 7.58 | 0.19 | 15.68 | 9.64 | 4.86 |
Inferred | 0.70 | 8.00 | 0.18 | 8.82 | 9.27 | 2.63 | |
Exploration Target | 22.95 | 9.66 | 7.13 | - | - | - | |
Village | Indicated | 0.53 | 5.87 | 0.10 | 11.50 | 9.80 | 3.62 |
Inferred | 0.17 | 14.64 | 0.08 | 2.77 | 13.22 | 1.18 | |
Exploration Target | 13.57 | 10.57 | 4.61 | - | - | - | |
Simmers | Indicated | 0.73 | 8.10 | 0.19 | 8.59 | 10.03 | 2.77 |
Inferred | 0.15 | 8.29 | 0.04 | 1.84 | 10.48 | 0.62 | |
Exploration Target | 9.55 | 10.29 | 3.16 | - | - | - | |
Other | Indicated | - | - | - | 5.10 | 2.44 | 0.40 |
Inferred | - | - | - | 32.80 | 5.24 | 5.52 | |
Exploration Target | 33.67 | 8.34 | 5.41 | - | - | - | |
Total | Measured Resource | 1.33 | 3.57 | 0.15 | 1.47 | 3.57 | 0.16 |
Total | Indicated Resource | 16.75 | 4.88 | 2.63 | 85.14 | 8.40 | 22.98 |
Total | Inferred Resource | 8.13 | 6.58 | 1.72 | 58.26 | 7.13 | 13.35 |
Total | Exploration Target | 119.94 | 8.34 | 32.16 | - | - | - |
Grand Total* | 146.15 | 7.80 | 36.66 | 144.87 | 7.83 | 36.49 | |
\* Totals are based on additional decimal points resulting in minor total discrepancies.
The main year-on-year change in Mineral Resources was the downgrading of substantial Indicated and Inferred Resources on the advice of Independent Competent Persons, Venmyn-Deloitte, to reflect only ore material above 450 metres below surface as falling into the Resource category as contemplated by SAMREC. The material below this level (which represents the current pumping capacity of the AMD pumping solution), retains the same inherent level of confidence in its gold content, with only the eventual economic extraction requiring further demonstration. This can be achieved through additional capital and other costing studies to demonstrate pumping below this level will be broadly economical and thereby allow for the re-instatement of these downgraded resources.
Execution of the Simmer and Jack Prospecting Right
The Simmer and Jack Prospecting Right ("Right") was executed on 5 June 2013 following a lengthy administrative delay. This Right covers a SAMREC-compliant shallow Main Reef Leader Resource of 0.19 million ounces of Indicated Resource and 0.04 million ounces of Inferred Resource, as well as a SAMREC-compliant Main Reef Leader Exploration Target of 3.16 million ounces.
In addition to the aforementioned detailed and established Resource base, considerable untested and un-mined potential exists in the Kimberley and White Reef horizons located in this area, which offers excellent targets for further development.
The execution of this Right, which marks the start of a new five-year exclusive prospecting term, grants the Company, on the back of positive prospecting results, the sole right to apply for a mining licence during this term.
NOTE: The information in this statement relating to Mineral Resources and geology has been reviewed and approved by Mr Keith Matier, BSc (Hons), GDE, PrSci Nat, who is a Competent Person in terms of the SAMREC code. Mr Matier is the Geology Manager of CRGSA and has over 19 years' experience in exploration, mineral resource management and mineral evaluation.
Safety
Safety statistics
Type of injury | Six months ended 30 June 2013 | 12 months ended 31 December 2012 | Six months ended 30 June 2012 |
Dressing cases | 4 | 6 | 5 |
Lost-time injuries | 12 | 13 | 2 |
The number of incidents during the period under review was disappointing with 12 lost-time injuries occurring.
The safety department has also been reorganised in order to give more attention to safety issues across the mine. There is continued focus on and commitment to safety in the mining operations.
Mining
30 June 2013 tonnes | 30 June 2012 tonnes | Variance to 2012 | |
Underground | 72,956 | 44,966 | 27,990 |
Surface | 57,260 | 74,238 | (16,978) |
Total | 130,216 | 119,204 | 11,012 |
Underground mining
Underground mining production continued to perform well. The Company continues to grow in confidence in its ability to mine the underground ore body, using traditional South African conventional mining techniques. Whilst the key focus remains on improving processes, significant progress has already been made with underground throughput and competitive sourcing with the average mining cash operating costs improving to US$51/tonne compared to US$71/tonne reported in 2012.
Underground grades dropped off during February, March and April 2013 as expected, with an average in-situ grade of 2.83 g/t measured on the face. This localised drop in grade was anticipated in the mine planning and was linked to an inter-channel thinning of the Main Reef in the various working panels. This trend was reversed in late May 2013 with the average June 2013 in-situ grade averaging 3.32 g/t and continuing through July 2013 with a grade of 3.69 g/t on the face. The Main Reef channel widths also increased from 58 cm in April 2013 to 82 cm in July 2013 mirroring the increasing grade trend.
Significantly, the western dyke has successfully been accessed in order to open up ground towards the west of the current mining area. Strategies are being put together to open up the area below 210 metres, the lowest point on the main decline. This will provide additional face length in the short-term.
It is anticipated that underground tonnage will be maintained at 14,000 tpm for the remainder of 2013.
Surface mining
Surface production performed well in the first and second quarters of 2013. Currently, Nasrec Pit 1 is being mined at a production target of 10,000 tpm. The Company has carefully managed its surface mining cash operating costs at US$24/tonne, which is in line with 2012 levels. The prospects for additional surface mining resources are being studied.
Mine Call Factor
The MCF continued to show steady improvement throughout the first four months of 2013, with operations in the month of June 2013 retaining a solid 77% of gold from working face to gold pour. This improved MCF has been brought about by continuous improvements in the stockpile management and ore handling process, as well as adjustments to the blasting and sorting routines required when handling the thin channel high grade ore, which has become a feature of production since late February 2013.
Metallurgy
Production update
Metallurgical production, during the period under review, struggled to achieve the levels of production seen during the first half of 2012, with planned and unplanned downtime experienced during the latter part of 2012 extending through the first quarter of 2013. A drop in mined grades from underground, coupled with the decrease in plant availability, negatively impacted gold production during the period under review. Toll treatment of ore was stepped up to compensate for the plant milling and crushing issues. However, this too suffered as a direct result of the lower overall mining grade.
Year-on-year plant operating statistics
2013 | 2012 | |||
January to June | January to June | July to December | Total | |
Tonnes processed internally (t) | 77,791 | 93,526 | 77,584 | 171,110 |
Built up head-grade (g/t) | 1.91 | 2.15 | 1.96 | 2.06 |
Fine gold produced (oz) | 4,246 | 6,076 | 4,167 | 10,243 |
Plant recovery (%) | 90 | 95 | 93 | 94 |
CIL availability (%) | 77 | 93 | 82 | 88 |
Tonnes processed externally (t) | 32,979 | 28,119 | 20,145 | 48,264 |
Landed grade (g/t) | 1.87 | 2.31 | 2.14 | 2.24 |
Fine gold produced (oz) | 1,851 | 2,170 | 1,296 | 3,466 |
Total fine gold produced (oz) | 6,097 | 8,246 | 5,463 | 13,709 |
The plant availability issues stem from two distinct sources. The crushing circuit commissioned in the first quarter of 2012 proved unable to handle the very hard quartzite reef in the required quantities, creating a mill feed bottleneck. Continuous failures of the gearbox and drive train configuration of the Bateman 7' x 10' ball mill caused significant milling downtime, resulting in the reported decrease in processed tonnes.
Current modifications to the Bateman Mill appear to have resolved many of these issues, but this situation will remain under constant review. Procurement inquiries to source an additional larger 9' x 12' ball mill are underway to ultimately replace the smaller Bateman Mill.
An agreement has been signed to lease a gyratory cone crusher with a 100 tonne per hour crushing capacity. Pilot test-work has shown that the crushing rate experienced using this technology is more than sufficient to feed the current milling configuration on a single shift basis. The crushed product is superior to the previous Vertical Shaft Impactor product and it is expected that this will allow for an increase in milling throughput.
Water
In January 2013, Trans Caledon Tunnel Authority ("TCTA"), via its appointed contractors, began the construction of the new Acid Mine Drainage ("AMD") plant that will contribute towards dewatering the Central Basin below the Environmentally Critical Level ("ECL"). It is expected that the construction phase will be completed by the end of October 2013 and that the pumping and dewatering facility will become fully operational in early 2014. The Ritz pumps purchased by the Company will be utilised as part of the ongoing dewatering solution, illustrating Central Rand Gold's commitment to maintaining AMD levels below ECL on a regular basis.
Financial review
Net attributable loss for the period under review is reported at US$4.87 million (June 2012: US$1.62 million), translating to a basic loss per share of 15.22 cents (June 2012: 5.06 cents - restated). The US$3.25 million increase in losses is mainly attributed to:
· A 26% decrease in gold production to 6,097 ounces (2012: 8,246 ounces) on the back of poor plant availability, lower realised in-situ grades and MCF especially in the first quarter of 2013.
· Higher than expected repair costs for plant and aging mobile underground mine equipment.
· Higher external toll treatment costs to mitigate lost internal processing capacity.
· Reduced by profit realised on sale of redundant plant and waste rock sales.
The outcome of the above is lower economies of scale, in a predominantly fixed cost environment, resulting in higher than benchmark all-in cash operating costs per ounce of US$2,236 (June 2012: US$1,695). With improved underground mining and ore sorting protocols expected when the upgraded process plant is commissioned, production and economies of scale are expected to normalise to benchmark levels.
As at 30 June 2013, the net cash position of the Company is reported at approximately US$1.3 million (December 2012: US$4.5 million).
Proposed move to AIM from the Main Market of the LSE and subsequent transfer from the Main Board of the JSE to AltX
After consulting with advisers, it has been decided that it would be preferable for the Company to move its listing to AIM from the Main Board of the LSE.
In conjunction with the move to AIM, the Board is intending to seek approval from the JSE, the Company's secondary listing regulator, subject to obtaining shareholder approval at the General Meeting of the Delisting and Admission, as required by the Company's primary listing regulator, to transfer the listing of the Ordinary Shares from the Main Board of the JSE to the AltX.
As set out in the circular to shareholders dated 2 August 2013 and, using the terms defined therein unless otherwise stated, it is expected that the last day of dealings in the Ordinary Shares on the Main Market will be 17 September 2013. Cancellation of the listing of Ordinary Shares on the Official List will take effect on 18 September 2013. Admission is expected to take place and dealings in Ordinary Shares are expected to commence on AIM on 18 September 2013. It is anticipated that the date of transfer of listing of Ordinary Shares from the Main Board of the JSE to AltX will be on 18 September 2013.
The Board believes that a move to AIM and AltX will provide a market and environment more suited to the Company's current size and strategic intent to enhance shareholder value through the further development of its production capabilities, development of its underground mining operations and future utilisation of its mining rights. In addition, it believes that the Company and its shareholders would benefit significantly from the lower transactional costs and simpler administration and regulatory requirements of AIM and AltX. Given the Company's strategy, the Board believes that the move is likely to be of significant benefit to the Company, going forward.
The Way Forward
The Company recognises it has got through a very tough six months, with the lower mined grade, a depressed gold price and an unreliable metallurgical plant all putting pressure on its financial position.
The Company can, however, report a number of positives from the period under review:
· Certain initiatives that were implemented earlier in the year are beginning to prove successful.
· The MCF process improvement has continued to pay dividends through the year with a steady increase in face to pour gold recovery realising a high of 77% in June 2013, which is in line with the South African industry average of between 75% - 77%. The Company believes it can further improve this measure with the reduction of ore handling processes.
· The overall crushing circuit that has become such a production bottleneck is in the process of being replaced. The Company plans to acquire a primary crushing and screening circuit, which if funding is made available, can be fully commissioned by the end of September 2013. A new secondary crushing circuit has been commissioned and is currently undergoing final modifications and should be fully operational by the end of August 2013. Once the secondary crushing circuit is fully operational it will provide the Company with a crushing capacity of up to 30,000 tpm and will eliminate the need to use external crushing contractors, which will provide significant operational savings for the Company.
· The Company is currently in the procurement process of sourcing an additional larger capacity and mechanically simpler 9' x 12' foot ball mill.
· The Company recognises that there are scale issues with the current cost structure which puts the Company under strain in the current depressed gold market. In response to this, the Company is currently undertaking a full review of the existing cost structure with the aim of managing down costs where possible, with a particular emphasis on outsourced and rental contracts.
It is pleasing to note that the lower grades encountered underground during the first few months of the year have steadily increased to upwards of 3.5 g/t. Whilst this low grade area was anticipated and incorporated into the mid-term planning, it came at a time when the gold price took an unexpected downturn, putting the operation under pressure.
Finally, the additional funding by Redstone Capital, if approved by shareholders, will allow for further upgrades to the gold process plant, allowing gold production to match mine production. These funds will also be used to kick-start underground development to access additional mining areas and provide a greater amount of mining flexibility and will enable the continued strategy of seeking opportunities to fully maximise our current Mining Right area, creating value for our shareholders.
Johan du Toit
Chief Executive Officer
Condensed Group Statement of Financial Position |
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as at 30 June 2013 |
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30 June | 31 December | 30 June | |||
2013 | 2012 | 2012 | |||
Notes | US$ '000 | US$ '000 | US$ '000 | ||
(Unaudited) | (Audited) | (Unaudited) | |||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment | 5 | 3,570 | 4,485 | 2,761 | |
Intangible assets | 3,326 | 3,874 | - | ||
Security deposits and guarantees | 225 | 262 | 268 | ||
Environmental guarantee investment | 6 | 3,507 | 4,003 | 4,034 | |
Loans receivable | 8 | 8,641 | 9,560 | 9,284 | |
19,269 | 22,184 | 16,347 | |||
Current assets | |||||
Security deposits and guarantees | 70 | 79 | 151 | ||
Prepayments and other receivables | 1,239 | 952 | 5,239 | ||
Inventories | 9 | 1,029 | 1,241 | 2,387 | |
Cash and cash equivalents | 1,311 | 4,512 | 6,386 | ||
Non-current assets held-for-sale | 7 | - | - | 2,536 | |
3,649 | 6,784 | 16,699 | |||
Total assets | 22,918 | 28,968 | 33,046 | ||
EQUITY | |||||
Attributable to equity holders of the parent | |||||
Share capital | 10 | 25,604 | 25,604 | 25,604 | |
Share premium | 10 | 213,377 | 213,377 | 213,377 | |
Share-based compensation reserve | 28,176 | 28,176 | 28,020 | ||
Treasury shares | (6) | (6) | (6) | ||
Foreign currency translation reserve | (29,675) | (28,658) | (28,121) | ||
Accumulated losses | (236,370) | (231,499) | (228,610) | ||
1,106 | 6,994 | 10,264 | |||
Non-controlling interest | - | - | - | ||
Total equity | 1,106 | 6,994 | 10,264 | ||
LIABILITIES | |||||
Non-current liabilities | |||||
Environmental rehabilitation and other provisions | 11 | 5,842 | 6,223 | 6,669 | |
Loan payable | 8,641 | 9,560 | 9,284 | ||
14,483 | 15,783 | 15,953 | |||
Current liabilities | |||||
Trade and other payables | 7,235 | 6,081 | 5,057 | ||
Taxation payable | 94 | 110 | 1,761 | ||
Operating lease liability | - | - | 11 | ||
7,329 | 6,191 | 6,829 | |||
Total liabilities | 21,812 | 21,974 | 22,782 | ||
Total equity and liabilities | 22,918 | 28,968 | 33,046 | ||
Condensed Group Statement of Financial Performance | ||||
for the six months ended 30 June 2013 | ||||
Six months | 12 months | Six months | ||
ended | ended | ended | ||
30 June | 31 December | 30 June | ||
2013 | 2012 | 2012 | ||
Notes | US$ '000 | US$ '000 | US$ '000 | |
(Unaudited) | (Audited) | (Unaudited) | ||
Other income and gains | 12 | 9,281 | 23,208 | 13,852 |
Employee benefits expense | (2,080) | (4,387) | (2,151) | |
Directors' emoluments | 13 | (436) | (959) | (436) |
Depreciation and amortisation | (433) | (589) | (756) | |
Inventory write-down | (169) | (1,010) | (265) | |
Impairment of assets | - | (1,218) | (528) | |
Operating lease expense | (280) | (1,006) | (227) | |
Mining costs | 14 | (8,934) | (13,723) | (8,574) |
Operational expenses | 15 | (631) | (4,211) | (957) |
Other expenses | 16 | (1,274) | (2,582) | (1,631) |
Operating loss | (4,956) | (6,477) | (1,673) | |
Finance income | 581 | 1,331 | 615 | |
Finance costs | (469) | (1,019) | (540) | |
Foreign exchange transaction losses | (27) | (38) | (20) | |
Loss before income tax | (4,871) | (6,203) | (1,618) | |
Income tax expense | 17 | - | 1,696 | - |
Loss for the period | (4,871) | (4,507) | (1,618) | |
Loss is attributable to: | ||||
Non-controlling interest | - | - | - | |
Equity holders of the parent | (4,871) | (4,507) | (1,618) | |
(4,871) | (4,507) | (1,618) | ||
Shares in issue | 31,993,443 | 1,599,682,990 | 1,599,682,990 | |
Weighted average number of ordinary shares in issue | 31,993,443 | 1,599,682,990 | 1,599,682,990 | |
Fully diluted weighted average number of ordinary shares in issue | 31,993,443 | 1,599,682,990 | 1,599,682,990 | |
Basic loss per share (US cents per share) | 19 | (15.22) | (0.28) | (0.10) |
Diluted loss per share (US cents per share) | 19 | (15.22) | (0.28) | (0.10) |
Condensed Group Statement of Comprehensive Income | |||
for the six months ended 30 June 2013 | |||
Six months | 12 months | Six months | |
ended | ended | ended | |
30 June | 31 December | 30 June | |
2013 | 2012 | 2012 | |
US$ '000 | US$ '000 | US$ '000 | |
(Unaudited) | (Audited) | (Unaudited) | |
Loss for the period | (4,871) | (4,507) | (1,618) |
Other comprehensive (loss)/income: | |||
Items that may be reclassified subsequently to profit or loss | |||
Exchange differences on translating foreign operations | (1,017) | (336) | 201 |
Other comprehensive (loss)/income for the period, net of tax | (1,017) | (336) | 201 |
Total comprehensive loss for the period | (5,888) | (4,843) | (1,417) |
Total comprehensive loss is attributable to: | |||
Non-controlling interest | - | - | - |
Equity holders of the parent | (5,888) | (4,843) | (1,417) |
(5,888) | (4,843) | (1,417) | |
Condensed Group Statement of Changes in Equity |
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for the six months ended 30 June 2013 |
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Attributable to equity holders of the Group |
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Notes | Ordinary share capital | Share premium | Share-based compensation reserve | Treasury shares |
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US$ '000 | US$ '000 | US$ '000 | US$ '000 |
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Balance at 31 December 2011 | 25,604 | 213,377 | 28,018 | (6) |
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Total comprehensive income for the period ended 30 June 2012 |
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Loss for the period | - | - | - | - |
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Other comprehensive income |
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Foreign currency adjustments | - | - | - | - |
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Transactions with owners, recorded directly in equity |
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Employee Share Option Scheme: |
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Share-based payments: Employees' and Directors' shares and options | - | - | 2 | - |
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Balance at 30 June 2012 | 25,604 | 213,377 | 28,020 | (6) |
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Balance at 31 December 2012 | 25,604 | 213,377 | 28,176 | (6) |
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Total comprehensive income for the period ended 30 June 2013 |
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Loss for the period | - | - | - | - |
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Other comprehensive income |
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Foreign currency adjustments | - | - | - | - |
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Transactions with owners, recorded directly in equity |
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Employee Share Option Scheme: |
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Share-based payments: Employees' and Directors' shares and options | 21 | - | - | - | - |
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Balance at 30 June 2013 | 25,604 | 213,377 | 28,176 | (6) |
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Attributable to equity holders of the Group | ||||||
Notes | Foreign currency transla- tion reserve | Accumu- lated losses | Total | Non- contro- lling interest | Total equity | |
US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||
Balance at 31 December 2011 | (28,322) | (226,992) | 11,679 | - | 11,679 | |
Total comprehensive income for the period ended 30 June 2012 | ||||||
Loss for the period | - | (1,618) | (1,618) | - | (1,618) | |
Other comprehensive income | ||||||
Foreign currency adjustments | 201 | - | 201 | - | 201 | |
Transactions with owners, recorded directly in equity | ||||||
Employee Share Option Scheme: | ||||||
Share-based payments: Employees' and Directors' shares and options | - | - | 2 | - | 2 | |
Balance at 30 June 2012 | (28,121) | (228,610) | 10,264 | - | 10,264 | |
Balance at 31 December 2012 | (28,658) | (231,499) | 6,994 | - | 6,994 | |
Total comprehensive income for the period ended 30 June 2013 | ||||||
Loss for the period | - | (4,871) | (4,871) | - | (4,871) | |
Other comprehensive income | ||||||
Foreign currency adjustments | (1,017) | - | (1,017) | - | (1,017) | |
Transactions with owners, recorded directly in equity | ||||||
Employee Share Option Scheme: | ||||||
Share-based payments: Employees' and Directors' shares and options | 21 | - | - | - | - | - |
Balance at 30 June 2013 | (29,675) | (236,370) | 1,106 | - | 1,106 | |
Condensed Group Cash Flow Statement | ||||
for the six months ended 30 June 2013 | ||||
Six months | 12 months | Six months | ||
ended | ended | ended | ||
30 June | 31 December | 30 June | ||
2013 | 2012 | 2012 | ||
US$ '000 | US$ '000 | US$ '000 | ||
(Unaudited) | (Audited) | (Unaudited) | ||
CASH FLOWS FROM OPERATING ACTIVITIES | Notes | |||
Loss before tax | (4,871) | (6,203) | (1,618) | |
Adjusted for : | ||||
Depreciation and amortisation | 433 | 589 | 756 | |
Employment benefit expenditure (share-based payments) | - | 158 | 95 | |
Profit on disposal and scrapping of property, plant and equipment | (457) | (54) | (92) | |
Impairment of inventory | 9 | 169 | 595 | 265 |
Impairment of assets | - | 1,218 | 528 | |
Net loss on foreign exchange | 27 | 38 | 20 | |
Decrease in operating lease liability | - | (11) | - | |
Sundry income | 12 | (26) | (380) | (141) |
Finance income | (581) | (1,331) | (615) | |
Finance costs | 469 | 1,019 | 540 | |
Changes in working capital | ||||
(Increase)/decrease in prepayments and other receivables | (287) | 401 | (12) | |
Decrease/(increase) in inventory | 43 | 470 | (346) | |
Increase in trade and other payables | 1,154 | 1,699 | 675 | |
(Decrease)/increase in provisions | (381) | 185 | 22 | |
Cash flows (used in)/from operations | (4,308) | (1,607) | 77 | |
Finance income | 114 | 324 | 114 | |
Finance costs | (1) | (13) | (10) | |
Sundry income | 26 | 380 | 141 | |
Net cash (used in)/from operating activities | (4,169) | (916) | 322 | |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchases of property, plant and equipment | 5 | (61) | (227) | (26) |
Proceeds from disposal of property, plant and equipment | - | 287 | - | |
Decrease in security deposits | - | - | 435 | |
Net cash (used in)/from investing activities | (61) | 60 | 409 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Net cash used in financing activities | - | - | - | |
Net (decrease)/increase in cash and cash equivalents | (4,230) | (856) | 731 | |
Cash and cash equivalents at 1 January | 4,512 | 5,376 | 5,376 | |
Effects of exchange rate fluctuations on cash balances | 1,029 | (8) | 279 | |
Cash and cash equivalents at end of period | 1,311 | 4,512 | 6,386 | |
Notes to the Condensed Interim Group Financial Statements |
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for the six months ended 30 June 2013 |
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1. Basis of preparation |
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This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual Financial Statements of the Group are prepared in accordance with International Financial Reporting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU"). The Condensed Interim Group Financial Statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2012 except for the changes described in note 2. |
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The condensed interim Group financial statements are presented in United States Dollars ("US$" or "US Dollar") and rounded to the nearest thousand. The functional currency of the parent company, Central Rand Gold Limited, is British Pound Sterling ("£") and the functional currency of its principal subsidiary, CRGSA is South African Rand ("ZAR" or "Rand"). |
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Going concern |
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The condensed financial statements have been prepared using the going concern assumption on the basis that a positive outcome is expected in the shareholder vote on the proposed Convertible Loan Note investment to raise US$7.25 million. If the shareholders reject the investment by Redstone Capital at the General Meeting on 19 August 2013 then the Group will need to approach its current shareholders for funding, if this also proves unsuccessful, then the Group may not be a going concern. This represents a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. The condensed financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. |
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2. Accounting policies |
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Except as described below, the accounting policies applied by the Group in these condensed interim Group financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2012, as described in those consolidated financial statements. |
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The Group has adopted the following standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2013: · Presentation of Items of Other Comprehensive Income - amendment to IAS1 (see below) · IFRIC 20 - Stripping costs · Disclosures - Offsetting Financial Assets and Liabilities - amendments to IFRS 7 · IFRS 13 - Fair Value Measurement · Improvements to IFRS: IAS1, IAS34, IAS16, IAS32 |
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The nature and effect of the material changes as a result of the adoption of the new standards are further explained below: |
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Presentation of Items of Other Comprehensive Income - amendment to IAS1: As a result of the amendment to IAS 1, the Group has modified the presentation of items of other comprehensive income to present separately items that would be reclassified to profit or loss in the future from those that would never be. The adoption of this amendment to IAS1 has no impact on the recognised assets, liabilities and comprehensive income of the Group. |
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Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings. |
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3. Estimates and judgements |
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The preparation of condensed interim Group financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. |
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In preparing this condensed interim Group financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated annual financial statements as at and for the year ended 31 December 2012. |
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4. Financial risk management |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated annual financial statements as at and for the year ended 31 December 2012. |
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Fair value |
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The aggregate net fair values of all current financial assets and financial liabilities, as well as non-current receivables, instalment sales and finance leases approximate the carrying amounts at the financial reporting date. |
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Foreign currency rates |
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The US Dollar rates of exchange applicable to the year are as follows: |
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2013 | 2012 | 2012 |
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Six months to | Year ended | Six months to |
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30 June | 31 December | 30 June |
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| Closing Average | Closing Average | Closing Average |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
South African Rand | 0.10 0.11 | 0.12 0.12 | 0.12 0.13 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pound Sterling | 1.52 1.54 | 1.62 1.59 | 1.56 1.58 |
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5. Property, plant and equipment |
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During the six months ended 30 June 2013, the Group spent US$61,276 to purchase items of property, plant and equipment. In the six month period ending 30 June 2012, US$93,099 was spent on the purchase of items of property, plant and equipment. |
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The decrease in property, plant and equipment is due to the depreciation charge as well as the weakening of the South African Rand against the US Dollar during the period under review. |
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6. Environmental guarantee investment |
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The decrease in the environmental guarantee investment is due to the weakening of the South African Rand against the US Dollar during the period under review. |
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7. Non-current assets held-for-sale |
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No additional items were classified as held-for-sale during the six months ended 30 June 2013. |
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8. Loans receivable |
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Puno Gold Investments (Proprietary) Limited ("Puno") |
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Since the last report for the year ended 31 December 2012 there has been no resolution to the dispute relating to alleged procedural breaches of the CRGSA Shareholders' Agreement between CRGSA and its current Black Economic Empowerment shareholder, Puno. The dispute surrounds the allocation of intercompany loans which fund the budget and work programme and the incurring of, and level of, certain costs. |
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During the period under review, Puno filed further new defences, factual content and additional new information leaving Central Rand Gold with no option but to postpone the scheduled 9 May 2013 hearing. Subsequently, the Company submitted all answers to the abovementioned new material. The Company is now waiting for the allocation of a court date where it is hoped that this ongoing dispute will be finally resolved. |
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The Group still believes that ultimately their position will prevail. The Board is still of the opinion that this will not have any material consequences in respect of the consolidated accounts of the Group. |
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The loan payable to Puno contains the same allocations referred to above. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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9. Inventories |
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Consumables | 218 | 331 | 364 |
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Ore stockpiles | 811 | 909 | 2,023 |
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Stationery and office consumables on hand | - | 1 | - |
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Total inventories | 1,029 | 1,241 | 2,387 |
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The amount of the write-down of ore stockpiles to net realisable value and recognised as an expense is US$169,183 (2012: US$265,273). |
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10. Share capital and share premium |
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Central Rand Gold Limited underwent a share capital reorganisation during the six months ending 30 June 2013, whereby 49 of every 50 ordinary shares of £0.01 each in the capital of the Company (ordinary shares) were redesignated as deferred shares of £0.01 each. The share capital reorganisation resulted in a reduction of ordinary shares from 1,599,682,990 ordinary shares to 31,993,443 ordinary shares of £0.01 each. There has been no change in share capital and share premium during the period under review. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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11. Environmental rehabilitation and other provisions |
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Provisions consist of the following: |
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Non-current |
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Environmental rehabilitation | 5,842 | 6,223 | 6,669 |
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| 5,842 | 6,223 | 6,669 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The decrease in the environmental rehabilitation provision is due to the weakening of the South African Rand against the US Dollar during the period under review. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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12. Other income and gains |
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Sundry income1 | 483 | 434 | 233 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue2 | 8,798 | 22,774 | 13,619 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,281 | 23,208 | 13,852 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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1. Sundry income mainly relates to profit on the disposal of assets and waste rock sales. |
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2. The revenue relates to the sale of gold derived from surface and underground mining activities and the sale of carbon. 5,837 (30 June 2012: 8,199) ounces of gold were sold. |
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13. Directors' emoluments |
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During the period under review, there was no change in the composition and remuneration of the Board. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US$ '000 | US$ '000 | US$ '000 |
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14. Mining costs |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mining costs comprises the following items: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumables | 2,717 | 4,362 | 2,011 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilities | 1,050 | 1,599 | 869 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plant hire | 2,319 | 3,480 | 1,914 |
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Labour hire | - | 146 | (39) |
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Environmental rehabilitation provision | 1,789 | 752 | 1,839 |
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Other | 1,059 | 3,384 | 1,980 |
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8,934 | 13,723 | 8,574 |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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15. Operational expenses |
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Operational expenditure comprises the following items: |
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Assaying costs | - | - | - |
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Consulting services | 341 | 900 | 462 |
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Environmental costs | - | 17 | - |
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Geological preparation and drilling | - | - | - |
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Mine development expense | - | 2,617 | 485 |
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Mineral property options paid | 491 | 470 | 10 |
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Consumables and small tools written off | - | 14 | - |
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Other expenses | (201) | 193 | - |
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631 | 4,211 | 957 |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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16. Other expenses |
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Auditor's remuneration | 128 | 243 | 417 |
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Corporate social investment | 8 | 70 | 61 |
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Legal costs | 44 | 168 | 37 |
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Travel and accommodation | 18 | 52 | 45 |
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Telecommunications | 53 | 132 | 71 |
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Other expenses | 1,023 | 1,917 | 1,000 |
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1,274 | 2,582 | 1,631 |
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17. Income tax expense |
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Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 30 June 2013 is 0% (2012: 0%) due to assessable losses available to CRGSA and the Guernsey resident status of CRG LTD resulting in 0% effective rates. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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US$ '000 | US$ '000 | US$ '000 |
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18. Commitments |
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Fees payable to iProp Limited for prospecting | - | 500 | - |
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Fees payable to Sekgwa Mining Services (Proprietary) Limited for underground mining services | - | 6,099 | - |
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Fees payable to Stallion Security (Proprietary) Limited for security services | - | 262 | - |
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Acquisition of tangible assets contracted for | - | - | 67 |
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- | 6,861 | 67 |
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The only commitments outstanding at 30 June 2013 are similar in nature to those disclosed at the 31 December 2012 year end and are those incurred in the normal course of business. |
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Group |
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June | December | June |
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2013 | 2012 | 2012 |
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19. Loss per share |
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Headline loss per share (US cents per share) | (15.22) | (14.26) | (3.70) |
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Diluted headline loss per share (US cents per share) | (15.22) | (14.26) | (3.70) |
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Reconciliation between loss attributable to the equity holders of the Group and the headline loss attributable to the equity holders of the Group: |
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Loss attributable to equity holders of the Group (US$'000) | (4,871) | (4,507) | (1,618) |
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Less: Profit on disposal of property, plant and equipment (US$'000) | - | (54) | (92) |
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Less: Reversal on measurement of assets to recoverable amount (US$'000) | - | - | 528 |
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Headline loss attributable to equity holders of the Group (US$'000) | (4,871) | (4,561) | (1,182) |
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If the effects of the share reorganisation were applied retrospectively, the restated comparative earnings per share would have been:
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December | June |
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2012 | 2012 |
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Basic loss per share (US cents per share) | (14.09) | (5.06) |
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Diluted loss per share (US cents per share) | (14.09) | (5.06) |
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Headline loss per share (US cents per share) | (14.26) | (3.70) |
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Diluted headline loss per share (US cents per share) | (14.26) | (3.70) |
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20. Segment reporting | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The entity's chief operating decision maker reviews information in one operating segment, being the acquisition of mineral rights and data gathering in the Central Rand Goldfield of South Africa, therefore management has determined that there is only one reportable segment. Accordingly, no analysis of segment revenue, results or net assets has been presented. No corporate or other assets are excluded from this segment. |
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21. Share-based payments |
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No additional shares and share options in the Company were granted during the six months ending 30 June 2013. |
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22. Related parties |
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No disclosable related party transactions occurred during the period. |
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23. Events occurring after reporting date |
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As per the circular published on 2 August 2013, the Company has, subject to Shareholder's approval at the forthcoming General Meeting of 19 August 2013:
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· Entered into a conditional agreement to raise US$7.25 million (gross) through the issue of Loan Notes to Redstone Capital. The capital is proposed to fund the Company's required upgrade to production facilities, further develop underground mining and for general working capital purposes.
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· Proposed that AIM, rather than the Main Market, would be more appropriate for the trading of Ordinary Shares in Central Rand Gold and in conjunction would propose to transfer the listing of Ordinary Shares from the Main Board of the JSE to the AltX. |
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