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15 Sep 2015 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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2015 Interim Report |
Central Rand Gold, the South African gold mining and exploration holding company, today announces its unaudited condensed consolidated Interim Results for the six months ended 30 June 2015 ("period under review"). The full set of results 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 / Nathan Taylor
Panmure Gordon (UK) Limited +44 (0) 20 7886 2500
Mark Taylor
Merchantec Capital +27 (0) 11 325 6363
Monique Martinez / Marcel Goncalves
15 September 2015
Johannesburg
Forward-looking statements
This Interim Report contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Central Rand Gold Group. The words "intend", "aim", "project", "anticipate", "estimate", "plan", "believe", "expect", "may", "should", "will", or similar expressions, commonly identify such forward-looking statements. Examples of forward-looking statements in this Interim Report include those regarding estimated Ore Reserves, anticipated production or construction dates, costs, outputs and productive lives of assets or similar factors. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors set forth in this Interim Report that are beyond the Group's control. For example, future Ore Reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, demand for our products, the effect of foreign currency exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political uncertainty.
In light of these risks, uncertainties and assumptions, actual results could be materially different from any future results expressed or implied by these forward-looking statements, which speak only as at the date of this Interim Report. Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, or future events. The Group cannot guarantee that its forward-looking statements will not differ materially from actual results.
Chief Executive Officer's report
Introduction
The Company had two key objectives during the first six months of 2015, namely to continue with discussions with the various investors for the acquisition of Central Rand Gold (Netherlands Antilles) N.V. and to stabilise the operations of the Company.
Key salient features during the first six months of the year
· Negotiations continued with Asian suitors regarding a potential transaction with Central Rand Gold and a conclusion is expected shortly;
· Loss before interest, tax and depreciation reduced in the period to US$0.7 million (2014: US$2.6 million);
· Significant reduction in cost structure for the Central Rand Group, with overall costs reducing by 40%;
· The rate of dewatering suggests that underground operations could resume in approximately 18 months; and
· Sufficient surface material identified and evaluated to compensate for cessation of underground mining.
Safety
Safety Statistics
Type of injury | Six months ended 30 June 2015 | Six months ended 30 June 2014 |
Dressing cases | - | 6 |
Lost-time injuries | 2 | 4 |
Fatalities | - | 1 |
Safety remains a key focus for the Company, irrespective of the environment in which it is operating. Positively the Company posted a reduction in all levels of safety incidents, with two lost-time injuries incurred versus four for the previous period.
Potential sale of Central Rand Gold (Netherlands Antilles) N.V.
Following a sustained period of marketing in Asia during 2014, the Company was able to engage in the discussions with four Asian Companies to acquire 100% of the share capital of Central Rand Gold (Netherlands Antilles) N.V.("CRGNV"). The four Asian Companies are Hiria Group Company Limited ("Hiria"), Beijing Ankong Investment ("Ankong"), Shengbang Jiabo (Beijing) Consulting Company Limited ("Shengbang") and Huili Resources Group Limited ("Huili"). All parties signed a similar Memorandum of Understanding ("MOU"), which set out the timing and terms for the negotiations and due diligence process. Huili's MOU includes a unique provision which entitles Huili to the right of first purchase within 21 days of a third party offer being received for the subsidiary.
Extensive desk top due diligence coupled with various site visits assisted in the due diligence process largely being completed by the end of June 2015. On 15 June 2015, the Company announced the decision to discontinue discussions with both Ankong and Shengbang. The Board is focused on ensuring that any transaction presented to shareholders must be as free from conditions as possible and be in a form which can be delivered on and be completed timeously. These considerations remain guiding principles of the Board, which will be applied when considering the various alternatives.
Discussions with Hiria and its financial partner, Hangzhou Everbright Private Equity Investment Management ("Hangzhou Everbright") are ongoing with various commercial structural alternatives being considered. The discussions have largely progressed along the lines of a significant initial strategic investment in Central Rand Gold Limited. This investment will provide the Group with the ability to increase its production capacity, upgrade its resource base and to re-capitalise the balance sheet. The Board believes that this alternative will provide the Company with a real opportunity to maximise the extraction of its vast resource base, thereby enhancing future shareholder return and value.
Discussions with Huili remain ongoing with a range of commercial issues and technical matters, largely focused on the continued dewatering of the Central Basin, being discussed and progressed.
The Company continues to caution that there can be no certainty that the discussions with both Huili or Hiria will lead to a binding agreement being entered into by either party, nor that the potential sale of Central Rand Gold (Netherlands Antilles) N.V., or any other transaction will be completed.
Acid Mine Drainage ("AMD")
The High Density Sludge ("HDS") plant has been operational since mid-2014. The Company continues to monitor the water level at its mining operations as well as the daily discharge pumped out of the Central Basin from the HDS plant. The Company has observed that when the flow rate is maintained at approximately 60 million litres per day ("mlpd"), which equates to approximately 80% of nameplate capacity, a reduction in the water level occurs, as indicated in the table below:
Month | Average daily pumping rate (mlpd) | Water level below surface (metres below surface) |
January 2015 | 35 | 144 |
February 2015 | 33 | 140 |
March 2015 | 70 | 142 |
April 2015 | 66 | 143 |
May 2015 | 65 | 145 |
June 2015 | 65 | 149 |
July 2015 | 65 | 151 |
August 2015 | 59 | 153 |
The above table provides an overview of the average daily pumping rate and the resultant impact on the water table. Due to maintenance on one of the Ritz submersible pumps, pumping was limited to only one pumping station during January and February 2015. A replacement submersible pump was installed at the end of February 2015, and an immediate drop in the water table was observed. Since then the submersible pumps have been pumping at a rate exceeding 60 mlpd, which has resulted in the water table dropping by approximately 13 vertical meters since the end of February 2015.
Based on the current performance, and taking into account the potentially faster dewatering during the dry winter months, it is believed that the underground mining areas will become accessible between September 2016 and February 2017.
Mining
Mineral Resources
The Mineral Resources remain unchanged as of June 2015 due to the cessation of underground workings. Surface operations are classified as 'Exploration Target' in terms of the SAMREC code.
The temporary cessation of underground mining in September 2014, due to the rising water levels, precipitated a dramatic shift in the mining operations. The Company started moving away from open cast mining to target the higher grade underground ore body. The shift back to surface did have a significant impact on the Company.
Open pit mining was stepped up and additional reclamation sources of ore were sourced, evaluated and exploited. The Company's aim was to secure sufficient resource base to enable the surface operations to continue, whilst dewatering of the underground mine occurred.
There has been a considerable amount of work undertaken to identify sufficient surface material for processing. The below table provides the current surface target areas:
Slot | Target area | Reef | Dip | V. Depth | Tonnage range (t) | Approximate grade |
Slot 5 | Pits 1 to 3 | White | 40 deg | 30m | 64 000 to 125 900 | 2.8g/t |
Slot 7 | Main Pit | White | 45 deg | 30m | 60 000 to 174 000 | 2.7g/t |
Slot 4 | K7 Top | Kimberly | 45 deg | 10m | 5 000 to 22 000 | 1.7g/t |
Slot 4 | K7 Middle | Kimberly | 45 deg | 10m | 5 000 to 20 000 | 1.8g/t |
Slot 4 | K7 Bottom | Kimberly | 45 deg | 10m | 5 000 to 15 000 | 1.7g/t |
NASREC | Pits 1, 2 and 3 | Main | 45 deg | 40m | 30 000 to 37 800 | 2.7g/t |
170 000 to 395 000 | 2.6g/t |
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.
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 Central Rand Gold South Africa (Pty) Limited and has over 21 years' experience in exploration, mineral resource management and mineral evaluation.
The Company considers the above table to be a conservative estimate of available material and is presently conducting testwork to determine if the Exploration Target can be increased. Further, the above table does not include surrounding sand and slimes resources which the Company has sourced.
Production statistics
30 June 2015 tonnes | 30 June 2014 tonnes | Variance | |
Underground | - | 66 085 | (66 085) |
Surface | 62 856 | 22 076 | 40 780 |
Reclamation | 33 356 | - | 33 356 |
Total | 96 212 | 88 161 | 8 051 |
Surface mining was largely focused at slots 5 and 7. Current pits have been mined down to a depth of approximately 15 metres. The average belt grade for these pits to date is 2.13g/t. It is believed that conventional drilling and cushion blasting will allow the existing pits to be further pushed back allowing mining at twice the current operating depths.
With over 100 years of significant mining in the Johannesburg region, there remains a significant amount of old rock and slimes dumps, which surround the Company's metallurgical plant. Where economical grades have been identified and with the consent of the resource owners, the Company has removed this material and processed it through its metallurgical plant. This activity has an added benefit of rehabilitating the surrounding area.
Metallurgy
Production Statistics
2015 | 2014 | |
- | January to June | January to June |
- Internal | ||
- Tonnes processed (t) | 87 895 | 80 749 |
- Built up head grade (g/t) | 1.45 | 1.77 |
- Fine gold produced (oz) | 3 435 | 3 205 |
External (Toll treatment) | ||
- Tonnes processed (t) | 6 721 | 13 902 |
- Delivered grade (g/t) | 1.04 | 2.35 |
- Fine gold produced (oz) | 244 | 944 |
Total tonnes processed (t) | 94 616 | 94 651 |
Total gold produced (oz) | 3 679 | 4 149 |
Internal gold production for 2015 H1 was on par with 2014 H1 on a gold output context with the lower feed grade being compensated by higher tonnage throughput, as a result of recent plant upgrades The benefit of the plant upgrades have resulted in an improvement in plant performance with 18,532 wet tonnes being processed through the plant in August 2015. The aim is to reach 20,000 tonnes by end October 2015.The external tolling was impacted both by lower tonnage and lower delivered grades. This is a direct result of the new low grade Joint Venture entered into with neighbouring producer Mintails Proprietary Limited ("Mintails").
Mine Call Factor
During H1 2015, the Mine Call Factor ("MCF") continued on the same positive trajectory seen during 2014. The "face to pour" MCF reconciliation averaged at 81% for the period, with the belt MCF averaging 94%. This compares very favourably to the MCF industry average of 74%.
Date | Dry tonnes processed (t) | Belt MCF | Face to pour MCF |
January 2015 | 11 759 | 91% | 84% |
February 2015 | 15 300 | 93% | 77% |
March 2015 | 14 306 | 96% | 89% |
April 2015 | 14 634 | 101% | 78% |
May 2015 | 15 587 | 96% | 85% |
June 2015 | 16 309 | 90% | 70% |
Total | 87 895 | 94% | 81% |
Plant improvement
The focus remains on improving plant efficiency. One of the highlights of the first half of 2015 was the construction and commissioning of the new 243 m3 leach tank in June 2015. The new tank will increase the leach residence time from 14 hours to 22 hours, resulting in a significant drop in gold in tailings and corresponding increase in gold production.
Financial update
Results
The loss before interest, tax and depreciation for the period under review amounted to US$0.7m, which is a significant improvement on prior year period operational loss of US$2.6m. Revenue from internal gold production is up by 7% to 3 435 ozs (2014: 3 205 ozs), despite the average grade dropping from 1.77g/t to 1.45g/t. Overall revenue is down from US$5.8m to US$4.3m due to the Company sending less material for toll treatment by Mintails and the reduction in gold price. Significant restructuring occurred within the Company to realign the business to its new focus on surface mining resulting in a reduction of 40% in the Group's cost base. These savings were not only reported through the elimination of underground mining costs but also as a result of the re-negotiation of key contracts, improving operational processes and eliminating inefficiencies in consumable usage. A key example is the reduction in the average cost per tonne for surface mining reducing from US$19 per tonne to US$11 per tonne, a 42% improvement. Although the trend is positive the key focus remains to move the organisation into sustainable cash generative and profitable position. Cash and cash equivalents at 30 June 2015 was $1.1m. Cash generated from operations will be utilised to further upgrade the metallurgical plant and to further reduce the Company's net working capital position.
Looking forward
The focus over the next six months is to build on the momentum gained during the first half of 2015, with the following areas being the main focus for the Company:
· Finalise the negotiations with Hiria and Huili;
· Continue to identify and mine sufficient surface material until underground mining operations are recommenced; and
· Continual improvement of the Group's operational processes thereby ensuring the efficiency of spend.
Johan du Toit
Chief Executive Officer
Condensed Group Statement of Financial Position | |||||||
as at 30 June 2015 | |||||||
30 June | 31 December | 30 June |
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2015 | 2014 | 2014 |
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Notes | US$ '000 | US$ '000 | US$ '000 |
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(Unaudited) | (Audited) | (Unaudited) |
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ASSETS |
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Non-current assets |
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Property, plant and equipment | 5 | 3 172 | 3 592 | 4 763 |
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Intangible assets | 2 669 | 2 830 | 3 104 |
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Security deposits and guarantees | 59 | 191 | 210 |
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Environmental guarantee investment | 3 119 | 3 177 | 3 361 |
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Loans receivable | 6 | 8 619 | 8 646 | 8 961 |
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17 638 | 18 436 | 20 399 |
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Current assets |
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Security deposits and guarantees | 32 | 65 | 71 |
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Prepayments and other receivables | 712 | 1 239 | 1 004 |
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Inventories | 7 | 112 | 76 | 813 |
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Cash and cash equivalents | 1 177 | 914 | 4 389 |
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Non-current assets held-for-sale | 8 | - | - | - |
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Derivative asset | 720 | 720 | - |
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2 753 | 3 014 | 6 277 |
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Total assets | 20 391 | 21 450 | 26 676 |
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EQUITY |
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Attributable to equity holders of the parent |
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Share capital | 9 | 26 617 | 26 490 | 26 314 |
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Share premium | 9 | 224 048 | 222 963 | 218 630 |
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Share-based compensation reserve | 28 187 | 28 238 | 28 187 |
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Treasury shares | (6) | (6) | (6) |
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Foreign currency translation reserve | (29 433) | (29 534) | (29 348) |
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Accumulated losses | (262 743) | (261 559) | (249 133) |
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(13 330) | (13 408) | (5 356) |
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Non-controlling interest | - | - | - |
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Total equity | (13 330) | (13 408) | (5 356) |
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LIABILITIES |
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Non-current liabilities |
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Environmental rehabilitation | 4 622 | 4 904 | 5 904 |
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Loan payable | 10 | 14 392 | 14 418 | 19 336 |
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19 014 | 19 322 | 25 240 |
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Current liabilities |
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Trade and other payables | 6 078 | 6 911 | 6 792 |
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Taxation payable | 181 | 177 | - |
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Derivative liability | 8 448 | 8 448 | - |
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14 707 | 15 536 | 6 792 |
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Total liabilities | 33 721 | 34 858 | 32 032 |
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Total equity and liabilities | 20 391 | 21 450 | 26 676 |
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Condensed Group Statement of Profit or Loss | |||||||
for the six months ended 30 June 2015 | |||||||
Six months | 12 months | Six months |
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ended | ended | ended |
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30 June | 31 December | 30 June |
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2015 | 2014 | 2014 |
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Notes | US$ '000 | US$ '000 | US$ '000 |
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(Unaudited) | (Audited) | (Unaudited) |
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Revenue | 11 | 4 352 | 8 212 | 5 774 |
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Production costs | 12 | (2 776) | (9 844) | (4 856) |
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Employee benefits expense | (1 293) | (3 223) | (1 607) |
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Directors' emoluments | 13 | (103) | (717) | (434) |
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Inventory write-down | - | (705) | (40) |
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Operating lease expense | (250) | (787) | (304) |
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Operational expenses | 14 | (174) | (502) | (639) |
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Other expenses | 15 | (560) | (1 702) | (882) |
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Other income and gains | 16 | 107 | 543 | 131 |
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Foreign exchange transaction (losses)/gains | (16) | 129 | 261 |
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Loss before interest, tax and depreciation | (713) | (8 596) | (2 596) |
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Depreciation | (229) | (460) | (226) |
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Impairment of assets | - | (158) | - |
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Loss on fair value of convertible loan note | - | (5 108) | - |
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Finance income | 546 | 1 233 | 456 |
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Finance costs | (788) | (2 179) | (476) |
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Loss before income tax | (1 184) | (15 268) | (2 842) |
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Income tax expense | 17 | - | - | - |
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Loss for the period | (1 184) | (15 268) | (2 842) |
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Loss is attributable to: |
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Non-controlling interest | - | - | - |
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Equity holders of the parent | (1 184) | (15 268) | (2 842) |
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(1 184) | (15 268) | (2 842) |
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Shares in issue | 95 195 808 | 87 180 808 | 75 180 808 |
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Weighted average number of ordinary shares in issue | 95 195 808 | 87 180 808 | 75 180 808 |
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Fully diluted weighted average number of ordinary shares in issue | 95 195 808 | 87 180 808 | 75 180 808 |
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Basic loss per share (US cents per share) | 19 | (1.24) | (17.51) | (3.78) |
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Diluted loss per share (US cents per share) | 19 | (1.24) | (17.51) | (3.78) |
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Condensed Group Statement of Comprehensive Income | |||||||
for the six months ended 30 June 2015 | |||||||
Six months | 12 months | Six months |
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ended | ended | ended |
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30 June | 31 December | 30 June |
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2015 | 2014 | 2014 |
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US$ '000 | US$ '000 | US$ '000 |
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(Unaudited) | (Audited) | (Unaudited) |
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Loss for the period | (1 184) | (15 268) | (2 842) |
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Other comprehensive income/(loss): |
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Item that may be reclassified subsequently to profit and loss |
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Exchange differences on translating foreign operations | 101 | (91) | 94 |
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Other comprehensive income/(loss) for the period, net of tax | 101 | (91) | 94 |
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Total comprehensive loss for the period | (1 083) | (15 359) | (2 748) |
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Total comprehensive loss is attributable to: |
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Non-controlling interest | - | - | - |
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Equity holders of the parent | (1 083) | (15 359) | (2 748) |
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(1 083) | (15 359) | (2 748) |
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Condensed Group Statement of Changes in Equity |
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for the six months ended 30 June 2015 |
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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 | Foreign currency translation reserve | Accumulated losses | Total | Non-controlling interest | Total equity |
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US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 |
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Balance at 31 December 2013 | 25 604 | 213 377 | 28 224 | (6) | (29 442) | (246 291) | (8 534) | - | (8 534) |
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Total comprehensive income for the period ended 30 June 2014 |
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Loss for the period | - | - | - | - | - | (2 842) | (2 842) | - | (2 842) |
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Other comprehensive income |
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Foreign currency adjustments | - | - | - | - | 94 | - | 94 | - | 94 |
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Transactions with owners, recorded directly in equity |
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Issue of Shares: |
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Capital raising | 710 | 5 253 | - | - | - | - | 5 963 | - | 5 963 |
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Employee Share Option Scheme: |
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Share-based payments: Employees' and Directors' shares and options | - | - | (37) | - | - | - | (37) | - | (37) |
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Balance at 30 June 2014 | 26 314 | 218 630 | 28 187 | (6) | (29 348) | (249 133) | (5 356) | - | (5 356) |
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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 | Foreign currency translation reserve | Accumulated losses | Total | Non-controlling interest | Total equity |
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US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 |
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Balance at 31 December 2014 | 26 490 | 222 963 | 28 238 | (6) | (29 534) | (261 559) | (13 408) | - | (13 408) |
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Total comprehensive income for the period ended 30 June 2015 |
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Loss for the period | - | - | - | - | - | (1 184) | (1 184) | - | (1 184) |
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Other comprehensive income |
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Foreign currency adjustments | - | - | - | - | 101 | - | 101 | - | 101 |
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Transactions with owners, recorded directly in equity |
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Issue of Shares: |
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Capital raising | 9 | 127 | 1 085 | - | - | - | - | 1 212 | - | 1 212 |
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Employee Share Option Scheme: |
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Share-based payments: Employees' and Directors' shares and options | 21 | - | - | (51) | - | - | - | (51) | - | (51) |
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Balance at 30 June 2015 | 26 617 | 224 048 | 28 187 | (6) | (29 433) | (262 743) | (13 330) | - | (13 330) |
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Condensed Group Statement of Cash Flow | |||||||
for the six months ended 30 June 2015 | |||||||
Six months | 12 months | Six months |
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ended | ended | ended |
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30 June | 31 December | 30 June |
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2015 | 2014 | 2014 |
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US$ '000 | US$ '000 | US$ '000 |
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(Unaudited) | (Audited) | (Unaudited) |
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CASH FLOWS FROM OPERATING ACTIVITIES | Notes |
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Loss before tax | (1 184) | (15 268) | (2 842) |
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Adjusted for : |
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Depreciation | 229 | 460 | 226 |
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Employment benefit expenditure (share-based payments) | (51) | 14 | (37) |
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(Profit)/loss on disposal and scrapping of property, plant and equipment | (9) | (17) | 9 |
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Impairment of inventory | 7 | - | 705 | 40 |
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Impairment of assets | - | 158 | - |
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Net loss/(gain) on foreign exchange | 16 | (129) | (261) |
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Finance income | (546) | (1 233) | (456) |
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Finance costs | 788 | 2 179 | 476 |
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Loss on fair value of convertible loan note | - | 5 108 | - |
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Changes in working capital |
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Decrease/(increase) in prepayments and other receivables | 527 | (325) | (90) |
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(Increase)/decrease in inventory | (36) | 129 | 57 |
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Decrease in trade and other payables | (833) | (60) | (179) |
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(Decrease)/increase in provisions | (282) | 809 | 258 |
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Cash flows used in operations | (1 381) | (7 470) | (2 799) |
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Finance income | 66 | 273 | - |
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Finance costs | - | - | (15) |
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Sundry income | - | (1 204) | - |
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Net cash used in operating activities | (1 315) | (8 401) | (2 814) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of property, plant and equipment | 5 | (5) | (1 049) | (2 022) |
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Proceeds from disposal of property, plant and equipment | - | 186 | - |
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Increase in environmental guarantee deposit | (17) | (53) | (54) |
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Net cash used in investing activities | (22) | (916) | (2 076) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issue of shares for cash | 1 260 | 4 254 | - |
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Cost relating to the issue of shares | (48) | (257) | - |
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Net proceeds from exercise of share options | - | 3 732 | - |
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Net proceeds from issue of share capital | - | - | 5 963 |
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Net cash from financing activities | 1 212 | 7 729 | 5 963 |
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Net (decrease)/increase in cash and cash equivalents | (125) | (1 588) | 1 073 |
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Cash and cash equivalents at 1 January | 914 | 2 475 | 2 475 |
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Effects of exchange rate fluctuations on cash balances | 388 | 27 | 841 |
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Cash and cash equivalents at end of period | 1 177 | 914 | 4 389 |
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Notes to the Condensed Interim Group Financial Statements |
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for the six months ended 30 June 2015 |
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1. Basis of preparation |
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This condensed set of consolidated financial statements have 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 2014 except for the changes described in note 2. |
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The consolidated 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, changed during the prior year from the British Pound to the US Dollar as its main source of funding is now the US Dollar. The functional currency of its principal subsidiary, Central Rand Gold South Africa Proprietary Limited ("CRGSA") is the South African Rand ("ZAR" or "Rand"). |
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Going concern REQUESTED FROM PATRICK. PER PATRICK, THIS ALL DEPENDS ON THE REVISED |
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The Directors have prepared the condensed interim Group financial statements on the going concern basis notwithstanding net current liabilities at 30 June 2015 of US$12.0 million, having considered the current operations, the current funding position and the projected funding requirements for the business for at least 12 months from the date of approval of the financial statements as detailed below. Since the 2014 year end the Group has continued with its surface mining operations and processing of third party ore and has also raised a further US$1.2 million from share placements in June 2015. |
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The Directors have prepared cash flow projections until December 2016 that reflect the current mine plan adopted by the Directors. The mine plan is based on surface mining only as the underground mine remains on care and maintenance until the water level reduces following the re-commissioning of the dewatering plant. The mining plan assumes that the upgrades will increase processing plant capacity from 16 000 tonnes per month to 20 000 tonnes per month from January 2016. These projections show that the Group has sufficient funding for at least the next 12 months from the date of approval of these condensed interim Group financial statements and hence the Directors have prepared the condensed interim Group financial statements on a going concern basis. |
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The Directors are optimistic about the future of the Company and the dewatering may give the Company improved access to deeper mining levels over time. However, the risks inherent in any single metal mining operation remain for the longer term. |
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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 2014, 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 2015: |
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• IFRS 9: Financial Instruments |
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The adoption of these standards is not expected to have a significant impact upon the Group's net results, net assets or disclosures. |
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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 2014. |
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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 2014. |
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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 period are as follows: |
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2015 | 2014 | 2014 | |||||||
Six months to | Year ended | Six months to | |||||||
30 June | 31 December | 30 June | |||||||
| Closing Average | Closing Average | Closing Average | ||||||
South African Rand | 0.08 0.08 | 0.09 0.09 | 0.09 0.09 | ||||||
Pound Sterling | 1.57 1.52 | 1.55 1.65 | 1.70 1.67 | ||||||
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5. Property, plant and equipment |
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During the six months ended 30 June 2015, the Group spent US$5 280 to purchase other items of property, plant and equipment. In the six month period ending 30 June 2014, the Group spent US$1 894 534 to upgrade the plant and US$127 634 to purchase other items of property, plant and equipment. |
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6. Loans receivable |
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Puno Gold Investments Proprietary Limited ("Puno") |
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Since the last report for the year ended 31 December 2014 there has been no resolution to the dispute relating to alleged procedural breaches of the Central Rand Gold South Africa (Proprietary) Limited ("CRGSA") Shareholders' Agreement between CRGSA and its current Black Economic Empowerment ("BEE") shareholder, Puno. The dispute surrounds the allocation of intercompany loans which fund the budget and work programme and the incurring of, and level of, certain costs. |
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During the previous financial year, the Company was granted the right to appeal the December 2013 ruling. |
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The Group still believes that ultimately their position will prevail. The Board is still of the opinion that this will not have any material consequences in respect of the consolidated accounts of the Group. |
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The loan payable to Puno contains the same allocations referred to above. |
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7. Inventories |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Consumables | 39 | 30 |
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Ore stockpiles | 73 | 46 |
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Total inventories | 112 | 76 |
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The amount of the write-down of ore stockpiles to net realisable value, and recognised as an expense is US$0 (2014: US$881 109). |
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8. Non-current assets held-for-sale |
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During the previous financial year, the Group disposed the flotation plant for US$168 265, resulting in a loss of US$9 220. No additional items were classified as held-for-sale during the period under review. |
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9. Share capital and share premium |
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On 17 June 2015, the Company allotted and issued 6 015 000 New Ordinary Shares at 10 pence, which raised US$0.94 million (£0.60 million). On 18 June 2015, the Company allotted and issued a further 2 000 000 New Ordinary Shares at 10 pence, which raised US$0.32 (£0.20 million). |
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10. Loan payable
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Loan payable consists of the following: |
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Puno Gold Investments Proprietary Limited | 8 620 | 8 646 |
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Redstone Capital Limited | 5 772 | 5 772 |
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14 392 | 14 418 |
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11. Revenue |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Gold sales | 4 314 | 7 840 |
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Other by-product sales | 38 | 372 |
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4 352 | 8 212 |
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The revenue relates to the sale of gold derived from surface and underground mining activities and the sale of other by-products. 4 316 (30 June 2014: 4 150) ounces of gold was sold. | |||||||||||||||||||
12. Production costs |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Production costs comprise the following items: |
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- Consumables | 791 | 2 930 |
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- Utilities | 404 | 1 739 |
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- Plant hire | 957 | 2 023 |
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- Labour hire | 199 | 2 066 |
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- Toll treatment | 425 | 1 161 |
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- Environmental rehabilitation provision | - | (75) |
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2 776 | 9 844 |
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13. Changes to the Board |
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During the period under review, there was no change in the composition of the Board. |
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14. Operational expenses |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Operational expenditure comprises the following items: |
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- Assaying costs | 98 | 337 |
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- Consulting services | 58 | 294 |
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- Environmental costs | 3 | (168) |
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- Mineral property options paid | 15 | 39 |
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174 | 502 |
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15. Other expenses |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Auditor's remuneration | - | 232 |
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Corporate social investment | - | 8 |
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Legal costs | 40 | 208 |
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Travel and accommodation | 26 | 20 |
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Telecommunications | 174 | 113 |
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Other expenses | 320 | 1 121 |
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560 | 1 702 |
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16. Other income and gains |
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Group |
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June | December |
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2015 | 2014 |
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US$ '000 | US$ '000 |
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Sundry income | 107 | 543 |
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In 2015, sundry income included US$89 321 from Gravelotte Mine Limited for consumables, US$9 420 (2014: US$16 851) for profit on disposal of property, plant and equipment, US$0 (2014: US$308 438) for the sale of carbon, US$0 (2014: US$118 563) for a diesel refund claimed from the South African Revenue Service (SARS), US$5 194 (2014: US$52 269) for a royalty paid to Central Rand Gold by Goldplat Recovery Proprietary Limited for exploration work performed by Goldplat Recovery Proprietary Limited on the Company's site and US$3 331 (2014: US$46 772) for other sundry income. |
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17. Income tax expense |
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Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the period to 30 June 2015 is 0% (2014: 0%) due to assessable losses available to CRGSA and the Guernsey resident status of the Company resulting in 0% effective rates. |
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18. Commitments |
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Group |
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June | December |
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2014 | 2013 |
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US$ '000 | US$ '000 |
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Fees payable to Sekgwa Mining Services Proprietary Limited for underground mining services | - | - |
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Acquisition of tangible assets contracted for | - | - |
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- | - |
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June | December |
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2015 | 2014 |
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Headline loss per share (US cents per share) | (1.24) | (17.53) |
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Diluted headline loss per share (US cents per share) | (1.24) | (17.53) |
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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$'000) | (1 184) | (15 268) |
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Add: Loss on disposal of property, plant and equipment (US$ '000) | - | - |
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Less: Profit on disposal of property, plant and equipment (US$ '000) | (9) | (17) |
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Headline loss attributable to equity holders of the Group (US$ '000) | (1 193) | (15 285) |
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Company profile
Our business
Central Rand Gold Limited ("Central Rand Gold" or "the Company") is engaged in a gold mining and exploration project that aims to bring profitable and sustainable gold mining back to the City of Johannesburg, bringing many benefits to the City, the communities surrounding its mining operations, its staff, its shareholders and other stakeholders. The Company plans to extract all profitable gold from its resource base using appropriate mining, processing and environmentally friendly technologies. Once the mineralised areas are worked out, stabilised and rehabilitated, the land will become available for urban development.
History
Central Rand Gold is the holding company for a group of companies ("Group"). Central Rand Gold listed on the Official List of the UK Listing Authority and the Main Boards of both the London Stock Exchange ("LSE") and the JSE Limited ("JSE") in November 2007, after consolidating contiguous exploration permits covering approximately 138 square kilometres in the most prolific gold-producing area of the world - the Central Rand Goldfields on the southern outskirts of Johannesburg. On 18 September 2013, Central Rand Gold opted to transfer its listing to AIM in London and to the AltX in Johannesburg.
Mining Rights and Prospecting Rights
The Group acquired seven New Order Prospecting Rights which constitute from west to east, Western Areas A, B and E, the three Cs (one Prospecting Right for Consolidated Main Reef, Crown Mines and City Deep), Anglodeeps area, Village Main and Robinson Deep (one Prospecting Right) and the mining area of the defunct Simmer and Jack Gold Mine. The Prospecting Rights extend over an area from west to east of approximately 40 kilometres and north to south of approximately seven kilometres (the "Central Rand Project"). In addition, the Southern Deeps New Order Prospecting Right Application (the "Prospecting Application"), if granted, would extend the Central Rand Project by a further 13 kilometres to the south. On 27 February 2012, it was announced that the Prospecting Rights in respect of Western Areas A, B and E had been transferred from Rand Quest Syndicate Limited to CRGSA via Section 11 applications lodged with the South African Department of Mineral Resources ("DMR"). The Prospecting Application is still in the process of being transferred. The Anglodeeps Prospecting Right renewal was submitted to the DMR but was unfortunately rejected on a technicality. This is currently being taken on appeal.
The Company received its first New Order Mining Right from the DMR on 17 September 2008. This Mining Right, which was awarded 14 months after the initial application, enables Central Rand Gold to mine gold at its Consolidated Main Reef, Langlaagte and Crown Mines tenements.
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