Central Rand Gold Regulatory News (CRND)

Central Rand Gold Limited

(Incorporated as a company with limited liability under the laws of Guernsey,

Company Number 45108)

(Incorporated as an external company with limited liability under the laws of South Africa,

Registration number 2007/019223/10)

ISIN: GG00B92NXM24

LSE share code: CRND JSE share code: CRD

("Central Rand Gold" or the "Company" or the "Group")

Annual Results and Annual Report Release

Type of injury

Year ended

31 December 2016

Year ended

31 December 2015

Dressing cases

2

-

Lost time injuries

4

3

Fatalities

-

-

Location

Viable Strike

Length

(m)

Tonnes

(t)

Estimated

Grade

(g/t)

Average Thickness

(cm)

Estimated Ounces

Reef Package

Slot 1

338

35,395

1.60

124

1,308

Kimberley

N1 Bypass

1,380

77,764

1.40

84

3,496

Bird

Slot 6

450

85,068

2.17

113

5,929

Kimberly

Slot 5 Nasrec

120

13,191

1.35

72

572

Bird

Slot 5 CW Road

1,300

130,317

1.29

72

5,405

Bird

Slot 10

460

89,050

1.98

123

5,669

Kimberley

Slot 11 West

820

288,302

1.98

360

18,311

Bird

Slot 11 East

345

125,491

1.98

131

7,970

Bird

Slot 11 A west

650

70,589

1.98

131

4,483

Bird

Slot 11 A east

470

130,188

1.98

47

8,288

Bird

Slot 12

460

90,283

1.29

123

3,747

Kimberley

Slot 4

836

60,162

2.09

132

4,043

Kimberley

Slot 5

406

49,015

2.12

92

3,342

Bird

Slot 7

1,964

150,708

2.23

189

10,786

Bird

31 December 2016

Tonnes (t)

31 December 2015

Tonnes (t)

Variance

Tonnes (t)

Underground

-

-

-

Surface

33,424

204,916

(171,492)

Reclamation

36,892

-

36,892

Total

70,316

204,916

(134,600)

2016

2015

January

to December

January

to December

Internal

Tonnes processed (t)

48,938

183,761

Built up head grade (g/t)

1.49

1.69

Fine gold produced (Oz)

1,394

7,017

External (Toll treatment)

Tonnes processed (t)

65,979

-

Delivered grade (g/t)

1.37

-

Fine gold produced (Oz)

1,740

-

Total tonnes processed (t)

114,917

183,761

Total gold produced (Oz)

3,134

7,017

Statement of Financial Position

as at 31 December 2016

Group

Restated

Restated

2016

2015

2014

Notes

 US$'000

 US$'000

 US$'000

ASSETS

Non-current assets

Plant and equipment

1,354

2,146

3,409

Intangible assets

1,430

1,691

2,830

Security deposits and guarantees

52

46

191

Environmental guarantee investment

2,659

2,584

3,177

Loans receivable

7,706

6,164

7,513

13,201

12,631

17,120

Current assets

Security deposits and guarantees

29

26

65

Prepayments and other receivables

361

444

1,239

Inventories

28

120

76

Cash and cash equivalents

489

556

914

Derivative asset

-

-

720

907

1,146

3,014

Total assets

14,108

13,777

20,134

EQUITY

Attributable to equity holders of the parent

Share capital

9

28,372

26,617

26,490

Share premium

9

225,289

224,037

222,963

Share-based compensation reserve

28,238

28,238

28,238

Treasury shares

(6)

(6)

(6)

Foreign currency translation reserve

(27,234)

(27,921)

(29,597)

Accumulated losses

(266,189)

(261,713)

 (261,715)

(11,530)

(10,748)

(13,627)

Non-controlling interest

-

-

-

Total equity

(11,530)

(10,748)

(13,627)

LIABILITIES

Non-current liabilities

Environmental rehabilitation

3,281

3,676

4,904

Loan payable

7,706

6,164

13,285

10,987

9,840

18,189

Current liabilities

Trade and other payables

6,767

6,939

6,947

Royalties taxation payable

188

140

177

Loan payable

6

7,522

6,959

-

Derivative liability

6

174

647

8,448

14,651

14,685

15,572

Total liabilities

25,638

24,525

33,761

Total equity and liabilities

14,108

13,777

20,134

Statement of Profit or Loss and Other Comprehensive Income

for the year ended 31 December 2016

Group

Restated

2016

2015

Notes

 US$'000

 US$'000

Revenue

4,825

8,093

Production costs

(1,684)

(6,079)

Employee benefits expense

(2,071)

(2,252)

Directors' emoluments

(254)

(468)

Operating lease expense

(1,252)

(872)

Operational expenses

(443)

(469)

Other expenses

(2,388)

(1,072)

Other income and gains

169

305

Foreign exchange transaction losses

(49)

(75)

Loss before interest, tax, depreciation and impairment

(3,147)

(2,889)

Depreciation and amortisation charge

(698)

(925)

Impairment of assets

(1,380)

(1,418)

Fair value movement in embedded derivative

6

1,194

7,081

Finance and investment income

1,205

1,149

Finance costs

(1,650)

(2,996)

(Loss)/profit before income tax

(4,476)

2

Income tax expense

-

-

(Loss)/profit for the year

(4,476)

2

(Loss)/profit is attributable to:

Non-controlling interest

-

-

Equity holders of the parent

(4,476)

2

(4,476)

2

(Loss)/earnings per share for loss attributable to the equity holders during the year (expressed in US cents per share)

Basic (loss)/earnings per share

(3.06)

-

Diluted loss per share

(3.05)

(2.79)

Statement of Profit or Loss and Other Comprehensive Income (continued)

for the year ended 31 December 2016

Group

Restated

2016

2015

 US$'000

 US$'000

(Loss)/profit for the year

(4,476)

2

Other comprehensive (loss)/income:

Item that may be reclassified subsequently to profit or loss

Exchange differences on translating foreign operations

687

1,676

Other comprehensive (loss)/income for the period, net of tax

687

1,676

Total comprehensive (loss)/income for the period

(3,789)

1,678

Total comprehensive (loss)/income is attributable to:

Non-controlling interest

-

-

Equity holders of the parent

(3,789)

1,678

(3,789)

1,678

Statement of Cash Flow

for the year ended 31 December 2016

Group

Restated

2016

2015

Notes

 US$'000

 US$'000

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss)/profit before tax

(4,476)

2

Adjusted for :

Depreciation and amortisation

698

925

Loss/(profit) on disposal of plant and equipment

892

(146)

Profit on disposal of shares

(3)

-

Impairment of assets

1,380

1,418

Revaluation of investment

(54)

-

Net loss on foreign exchange

49

75

Finance income

(1,205)

(1,149)

Finance costs

1,650

2,996

Fair value movement in embedded derivative

6

(1,194)

(7,081)

Changes in working capital

Decrease in prepayments and other receivables

84

795

Decrease/(increase) in inventory

92

(44)

Decrease in trade and other payables

(172)

(8)

Decrease in provisions

(1,294)

-

Cash flows used in operations

(3,553)

(2,217)

Finance income received

195

783

Net cash used in operating activities

(3,358)

(1,434)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of plant and equipment

(9)

(92)

Proceeds from disposal of plant and equipment

-

180

Increase in environmental guarantee deposit

-

65

Withdrawal of capital on guarantee investment

422

-

Net cash from investing activities

413

153

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares for cash

9

3,185

1,261

Cost relating to the issue of shares

9

(178)

(60)

Net cash from financing activities

3,007

1,201

Net decrease in cash and cash equivalents

62

(80)

Cash and cash equivalents at 1 January

556

914

Effects of exchange rate fluctuations on cash balances

(129)

(278)

Cash and cash equivalents at 31 December

489

556

Notes to the Annual Financial Statements

1. General information

Central Rand Gold Limited ("Central Rand Gold") is a Guernsey incorporated company and it is also registered in South Africa as an external company. One of its subsidiaries, Central Rand Gold (Netherland Antilles) N.V. ("CRGNV"), was incorporated in the Netherlands Antilles. Central Rand Gold's operating subsidiary is Central Rand Gold South Africa Proprietary Limited ("Central Rand Gold SA"). Central Rand Gold has a primary listing on the London Stock Exchange ("LSE") and a secondary listing on JSE Limited ("JSE").

Central Rand Gold complies with the company laws of its place of incorporation being Guernsey and the company laws of the place of its external registration being South Africa. One of its subsidiaries, CRGNV, is incorporated in the Netherlands Antilles, therefore the Group is also impacted by the company laws of the Netherlands Antilles.

The financial information for the year ended 31 December 2016 set out in this announcement does not constitute the Company's statutory accounts. These financial statements included in the announcement have been extracted from the Group annual financial statements for the year ended 31 December 2016. The financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards adopted for use in the European Union. However, this announcement does not itself contain sufficient information to comply with IFRS.

The auditor has issued his opinion on the Group's financial statements for the year ended 31 December 2016 which is qualified and contains an emphasis of matter paragraph in respect of the matters referred to under note 2 'Going concern' and is available for inspection at the Company's registered address and will be posted to the Group's website.

The basis for the qualified opinion is presented below:

With respect to plant and equipment amounting to US$1.35 million at 31 December 2016, evidence available to us was limited because we were unable to carry out sufficient physical testing of items and verification into the Group's fixed asset register. Owing to the nature of the Group's accounting books and records, we were unable to obtain sufficient audit evidence regarding the valuation, existence and completeness of plant and equipment by using other audit procedures.

The emphasis of matter paragraph is presented below:

Emphasis of matter - Going concern

In forming our opinion on the consolidated financial statements, we have considered the adequacy of the disclosures made in note 2 to the consolidated financial statements concerning the Group's ability to continue as a going concern. The Group incurred a net loss of US$4.48 million during the year ended 31 December 2016 and, at that date, the Group's net current liabilities amounted to US$13.6 million. These conditions, along with the other matters explained in note 2 to the consolidated financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The consolidated financial statements do not include adjustments that would result if the Group was unable to continue as a going concern.

2. Basis of preparation

The consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU"). However, this announcement does not itself contain sufficient information to comply with IFRS. The Company will publish full financial statements that comply with IFRS on 16 October 2017.

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 is the US Dollar. The functional currency of its principal subsidiary, Central Rand Gold SA is the South African Rand ("ZAR" or "Rand").

Going concern

The Group had net current liabilities at 31 December 2016 of US$13.6 million, including US$7.7 million of loan notes (and interest), with Redstone Capital Limited and Mr Wang, and US$6.8 million of trade and other payables. The ability of the Group to continue as a going concern is dependent on the Group securing access to sufficient additional funding and extending the repayment terms of existing loan notes or the loan note holders converting the loan notes into equity, to support the Group's cash flow projections.

In April 2016, following the decision of the High Court of South Africa to uphold the Company's appeal with costs in relation the dispute with Puno Gold Investments Proprietary Limited ("Puno"), Puno submitted an application to wind up the Group's South African operating subsidiary. As previously announced, the Board believes this to be the latest strategy from Puno to frustrate the operations of the Company and considers the application to be without merit. The Company has engaged legal advisers to defend the action and has submitted its legal rejection of the application. The time period for Puno to file their replying affidavit lapsed on 22 June 2016. Puno's opportunity to file further affidavits has now lapsed and the Company awaits Puno's confirmation whether they intend to persist in their application. In May 2017, the Company applied for the abandonment of the liquidation application, and was successful. This resulted in the liquidation application being rendered null and void.

In May 2016, the Group ceased open pit mining operations and will instead temporarily focus on toll treatment operations under a binding tolling agreement with a third party which is expected to be cash flow generative. The open pit was recommenced in March 2017, and various other tolling agreements were entered into. This has created flexible income streams, and has also reduced the risk of scarcity of material for feeding the plant.

Since the year end, the Group has raised US$1.6 million (net) through share placements and drawn down US$0.6 million of bridge finance under a convertible loan note facility ('CLN') with Bergen Global Opportunity Fund, LP ('Bergen') for working capital purposes. Under the terms of the agreement, the Group can draw down up to US$4.0 million subject to agreement by both parties.

Whilst CRGSA's operations have by and large stabilised operationally in 2017, the financial and operational positions remain fragile and there is a very thin working capital position at the operating company level with a negative position within the Company, as mentioned above. The Company's production for the period January 2017 to 30 June 2017 was 2 320 Troy Ounces. The Company's overall financial position is accordingly negative and the Directors are now actively exploring urgent financing options. In order to remain a listed, operational mining group, in steady state and with a view to achieving medium term profitability, the Directors consider a cash injection of not less than US$ 20 million would be required to be made. The Directors consider that this is unlikely to be forthcoming in the near future or at all. Accordingly the Directors are actively pursuing options which would involve retaining its listings but the disposal of the Company's interests in its immediate subsidiary company, Central Rand Gold (Netherlands Antilles) BV, unless it is able to secure sufficient alternative finance at the required level in the very near future.

The Group's Senior Secured Loan Notes of US$7.25 million principal ('the Notes'), held by the Group's largest shareholder Redstone Capital Limited ('Redstone'), fell due for maturity in September 2016. Redstone has provided a written undertaking to extend the maturity of the Notes to at least December 2018 subject to concluding negotiations regarding revisions to the terms of conversion in the coming months. The Directors, based on discussions with representatives of Redstone, fully expect that the Notes will ultimately be converted rather than called for payment.

The Directors have prepared cash flow forecasts for a period of at least 12 months from the date these financial statements were approved, which show that the Group is able to meet its liabilities as they fall due. However, the cash flow forecasts are dependent upon the Group successfully concluding the sale of the operating listed entity, and, by novating the loans to the operating entities, privatising those operations.

The Directors have concluded that the above circumstances give rise to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, after taking account of the Group's plans to sell off some of the assets, and having considered the risks and uncertainties associated with the forecasts, the Directors have a realistic expectation that the Group will have adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements. For these reasons, the Directors continue to prepare the financial statements on a going concern basis, and the financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

3. Accounting policies

These results have been prepared on a basis that is consistent with the accounting policies applied by the Group in its audited consolidated financial statements for the year ended 31 December 2015 and which will form the basis of the 2016 annual report.

(a) New and amended standards adopted by the Group

In 2016 the Group adopted the amendments to IFRS 7 'Financial Instruments: Disclosures', IFRS 10 'Consolidated Financial Statements', IAS 1 'Presentation of Financial Statements', IAS 16 'Property, Plant and Equipment, IAS 19 'Defined Benefit Plans: Employee Contributions and IAS 38 'Intangible Assets'. These have had no significant impact on the Group's results.

(b) New standards, amendments and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2016, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early.

The amendments to IFRS 2 'Share-based Payment', IFRS 12 'Disclosure of Interests in Other Entities', IFRS 15 'Revenue from Contracts with Customers', IAS 7 'Statement of Cash Flows' and IAS 12 'Income Taxes' are effective for accounting periods beginning on or after 1 January 2017 but with early adoption permitted. The amendments to IFRS 15 'Revenue from Contracts with Customers' is effective for accounting periods beginning on or after 1 January 2018 but with early adoption permitted. Management is still evaluating the effect of the adoption of IFRS 15 'Revenue from Contracts with Customers' to the operating results of the entity. The amendments to IFRS 16 'Leases' is effective for accounting periods beginning on or after 1 January 2019 but with early adoption permitted. The adoptions are not expected to have a significant impact upon the Group's net results, net assets or disclosures.

IFRS 9 'Financial Instruments' replaces IAS 39 Financial Instruments: Recognition and Measurement. The standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. It uses a single approach, based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets, to determine whether a financial asset is measured at amortised cost or at fair value. It requires a single impairment method to be used, replacing the numerous impairment methods in IAS 39 that arose from the different classification categories. It also removes the requirement to separate embedded derivatives from financial asset hosts. The standard introduces new requirements for an entity choosing to measure a liability at fair value to present the portion of the change in its fair value due to changes in the entity's own credit risk in the other comprehensive income section of the statement of comprehensive income, rather than within profit or loss. This new standard may impact the classification and measurement of financial assets and the Group is in the process of assessing the impact. The standard is effective for year ends beginning on or after 1 January 2018.

4. Directorate

During the financial period under review, the composition of the Board of Directors was as follows:

1 Mr Allen Phillips resigned from the Board and its committees on

 6 June 2016.

5. 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.

6. Loans payable - Redstone Capital Limited

Debt

Warrant

Redstone's debt conversion option

Central Rand Gold's debt conversion option

Total

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

At 1 January 2015

5,772

2,383

6,065

(720)

13,500

Fair value (gain)/loss

-

(1,905)

(5,896)

720

(7,081)

Interest

1,767

-

-

-

1,767

Cash paid

(580)

-

-

-

(580)

At 31 December 2015

6,959

478

169

-

7,606

Fair value (gain)/loss

(618)

-

5

-

(613)

Derivative lapsed

-

(478)

-

-

(478)

Interest

582

-

-

-

582

At 31 December 2016

6,923

-

174

-

7,097

7. Related party transactions

On 19 August 2013, shareholders of the Company approved the issue to Redstone, of US$7.25 million convertible loan note instruments bearing 8% p.a. coupon interest payable on a quarterly basis and repayable on 19 August 2016. The repayment terms were amended and extended to 31 December 2018. In addition to this, the Company entered into an agreement to issue to Redstone warrants equivalent to 50% of the Convertible Loan Note and an Option Agreement that, in the event that the Company undertook an open offer, Redstone will have an option to subscribe for such additional number of Ordinary Shares to ensure that its percentage holding of the issued share capital of the Company would remain unchanged (assuming the full conversion of the Loan Notes) following any such open offer. All warrants lapsed on 19 August 2016.

8. Share-based payments

During the year, no further share options were granted to employees.

9. Share capital and share premium

Number of shares

Issued and

fully paid up shares

Share premium

Total

US$ '000

US$ '000

US$ '000

At 1 January 2015

87,180,808

26,490

222,963

249,453

Issue of shares for cash

8,015,000

127

1,134

1,261

Cost of share issue

-

-

(60)

(60)

At 31 December 2015

95,195,808

26,617

224,037

250,654

Issue of shares for cash

43,811,340

627

1,430

2,057

Shares issued in respect of convertible securities

68,743,550

1,128

-

1,128

Cost of share issue

-

-

(178)

(178)

At 31 December 2016

207,750,698

28,372

225,289

253,661

On 5 February 2016, the Company issued 14,279,371 new Ordinary Shares of £0.01 each at a price of 3.5 pence per Ordinary Share, which raised gross proceeds of approximately US$0.72 million (£0.50 million).

On 7 March 2016, the Company issued 20,719,644 new Ordinary Shares of £0.01 each at a price of 3.5 pence per Ordinary Share, which raised gross proceeds of approximately US$1.05 million (£0.72 million).

On 7 June 2016, the Company issued 4,620,005 new Ordinary Shares of £0.01 each at a price of 3.0 pence per Ordinary Share, which raised gross proceeds of approximately US$0.2 million (£0.14 million).

On 7 June 2016, the Company entered into a convertible securities issuance deed ("Bergen Funding Agreement") with Bergen Global Opportunity Fund, LP ("Bergen"), an institutional investment fund managed by Bergen Asset Management, LLC, a New York asset management firm, in connection with an issuance by the Company of zero coupon convertible securities (the "Convertible Securities"). The Convertible Securities were (subject to the satisfaction of certain customary conditions) issued in tranches and as at 31 December 2016 the Convertible Securities were fully converted into 72,935,870 new Ordinary Shares.

On 21 July 2016, the Company issued 4,192,320 new Ordinary Shares of £0.01 each at a price of 1.3 pence per Ordinary Share, which raised gross proceeds of approximately US$0.09 million (£0.05 million).

10. Dividends

No dividends were declared or paid during the year under review.

11. Reconciliation between (loss)/earnings and headline (loss)/earnings attributable to equity holders of the Group

Headline (loss)/earnings are specific disclosures defined and required by the Johannesburg Stock Exchange and are non-GAAP financial measures.

Group

2016

2015

US$'000

US$'000

(Loss)/profit attributable to equity holders of the Group

(4,476)

2

Add: Loss on disposal of plant and equipment

892

-

Less: Profit on disposal of plant and equipment

-

(146)

Headline (loss)/earnings

(3,584)

(144)

12. Contingent liability

Thin capitalisation

The tax legislation with regards to thin capitalisation changed with effect from 1 April 2012 and is applicable in respect of years of assessment commencing on or after that date. The safe harbour ratio of 3:1 included in the previous legislation was replaced with the concept of "arm's length." In instances where the loans are considered not to be on an arm's length basis all or part of the interest charged could be disallowed as a deduction. Any interest not allowed as a deduction will be treated as an adjustment in terms of Section 31 of the Income Tax Act. In terms of Section 31(3) of the Income Tax Act, any adjusted amount for transfer pricing and thin capitalisation purposes, prior to 1 January 2015, constituted a deemed loan. As per the amended law, should this amount, plus interest deemed to have accrued on it, not have been repaid to the taxpayer by the relevant non-resident connected person by 31 December 2014, the outstanding "deemed loan" must "be deemed to be a dividend consisting of a distribution of an asset in specie, that was declared and paid by that resident to that other person on 1 January 2015". Such deemed dividend will be subject to Dividends Withholding Tax ("DWT"), at a rate of 15%.

In prior years, management obtained a legal opinion, based on which they concluded that there is no deemed loan. In further assessing the impact of the amendments on its intercompany loans, management concluded that due to the lack in industry guidance pertaining to the application of the "arm's length" concept, management will be unable to confirm their conclusion without finalising a full Transfer Pricing benchmarking study applying OECD (Organisation for Economic Co-operation and Development) principles.

Open tax years

Central Rand Gold SA has entered into an Alternative Dispute Resolution with the South African Revenue Service relating to income tax returns submitted for the years of assessments 2010 to 2012.

iProp claim

iProp, the landowner of various mining sites, has lodged a claim for outstanding rentals and leases. The amounts claimed are currently being reconciled, in order to quantify the position.

13. Events occurring after reporting date

Operating

Feed material

The feed material provided by the tolling company was inappropriate in that the materials supplied differed from those sampled and as a result materials from the Mine Waste Dumps acquisition was used. This, however, was too expensive to economically extract in this fashion as the grade of the material was too low, and the requirement for additional chemicals in order to extract the gold from the material was not economical. Since the year end, the majority of feed has been the Company's own material.

Open pit

The Company has commenced small scale open pit mining, in slot 4 of the Kimberley reef. Materials from those operations are being processed and the Company is also processing third party materials on a tolling basis.

Concentrator circuit

The Company has progressed its strategy of procuring centrifugal concentrators. These will be used to semi-process 40,000 tonnes per month of sand and slimes reclaim material, and then to metallurgically treat only a small percentage of the result, which will accordingly be richer in gold.

Labour dispute

11 days of post year end, production was lost due to industrial action under which the unionised workforce declared a dispute regarding the implementation of wage increases. The parties settled at the CCMA with the result that 50% of each employee's monthly salary shall be paid in the form of a "13th cheque" in December 2017.

Suspension of trading

The Company cannot guarantee that it will be able to meet its financial obligations as they fall due and as a result, the Company requested a suspension in trading in its shares on 11 May 2017. The Board is considering a number of solutions to ensure the Company meets its financial obligations. As at the date of this report, the Company's shares remain suspended, pending further developments

Mill downtime

The drought experienced resulted in water use restrictions being imposed throughout Gauteng. The Company invested in a reticulation system to enable production to continue, which required additional expenditure for which the Company had not budgeted.

The excessive rainfall in the region adversely affected the running of the mills and both mill 1 and mill 2 struggled to cope with crushing significantly cloggier and muddier feed materials than had been contemplated. This resulted in a reduction in processing capacity.

The instability of the power grid in the region, and the adverse weather which resulted in electrical storms, together resulted in a number of power outages on site which materially affected production in the first quarter of 2017.

Fundraising

In order to strengthen its working capital and to procure, ship, install and commission the Concentrator Circuit, the Company has subsequent to year-end completed the following fundraising:

· A new loan agreement ("the Loan Agreement") entered into on 9 January 2017 with Mr Jia Bang Wang ("Mr Wang") for funding in the amount of US$1 million ("Loan"). The loan bears interest at the UK prime lending rate plus 2% per annum and is repayable within six months from the date of entering into the Loan Agreement. In the circumstance where the Company would not be able to repay the Loan, the Loan Agreement stipulates that the Company is to inform Mr Wang of such circumstances. To date, the full value of the Loan had been received by the Company. The Loan became repayable on 9 July 2017 but the Company was not in a position to repay the Loan at that stage and accordingly informed Mr Wang as such.

· A share placement on 23 March 2017 of 60,000,000 new ordinary shares at 0.5 pence, which raised £0.30 million.

· A bridge funding (the "Bridge Funding") through a combined convertible securities with Bergen. The Bridge Funding raised US$240,000. The Convertible Securities were (subject to the satisfaction of certain customary conditions) issued in tranches and were fully converted into 26,946,257 new ordinary shares by 2 May 2017.

Financing

The Directors have been actively exploring urgent financing options. In order to remain a listed, operational mining group, in steady state and with a view to achieving medium-term profitability, the Directors consider that a cash injection of not less than US$ 20 million would be required. The Directors consider that this is very unlikely to be forthcoming in the near future or at all. Accordingly, the Directors have been actively pursuing options which would involve retaining its listings but would require the disposal of the Company's interests in its immediate subsidiary company, Central Rand Gold (Netherlands Antilles) NV, unless it is able to secure sufficient alternative finance at the required level in the very near future.

Puno dispute

On 13 June 2017, the High Court of South Africa, (Gauteng Division, Pretoria) ("the Court") handed down judgement under case number: 45200/2011, being the matter initiated by the Company, CRGNV and CRGSA against Puno on 25 November 2011. The judgement delivered was in favour of the Company, CRGNV and CRGSA. The Court upheld the views of these entities and rejected the defences proffered by Puno. This judgement has now definitively and positively pronounced on the validity and enforceability of the funding call, and found that such funding call was made in accordance with the overarching law and the Shareholders Agreement.

iProp claim

In October 2017, iProp issued a claim to the Company's subsidiary, regarding the recovery of outstanding leases and rentals. The claim includes late penalty charges and interest, which have not been accrued in these consolidated financial statements. This matter is with the Company's legal advisors.

Recapitalisation of the Company

In September 2017, the Company appointed Peterhouse Corporate Finance Limited as its brokers, with a view to the Company undertaking a recapitalisation. Work is underway in relation to that process at the time of approval of these consolidated financial statements, in the context of the Company putting proposals to shareholders for the necessary authority to enable any such recapitalisation to occur and subsequent proposals to restructure the Company, to divest itself of its mining interests and related indebtedness but retaining its listings.

Other

Subsequent to the appointment of Brandon Hill Capital Limited ("Brandon Hill") as the Company's broker on 23 January 2017, Central Rand Gold issued 936,330 ordinary shares in the Company as part consideration of their fee, in accordance with the terms of their engagement letter.

On 8 May 2017, the Company issued 4,200,000 ordinary shares to a creditor in lieu of a fee due by the Company.

14. Correction of prior period errors

During the financial period, the Group discovered a number of accounting errors relating to transactions and balances that had not been recorded during the years ended 31 December 2014 and 31 December 2015. Details are as follows:

1. An item of plant and equipment, being the dosing tank, that was sold in 2014 was not recorded as such. As a consequence, plant and equipment has been overstated by US$464,243 and the loss on the disposal of the asset has been understated by US$496,556 during the year ended 31 December 2014. As a results of the above, plant and equipment has been overstated by US$334,725 and the depreciation and amortisation charge has been overstated by US$14,743 during the year ended 31 December 2015.

2. Interest on the Puno loan payable was incorrectly calculated at prime plus 2% instead of at the prime rate. As a consequence, the Puno loan balance at 31 December 2014 has been overstated by US$1,132,960 and the related interest expense has been overstated by US$1,211,820. As a result of the above, the loan payable has been overstated by US$1,071,656 and the related interest expense has been overstated by US$70,245 during the year ended 31 December 2015.

3. Intangible assets, relating to the water pumps previously donated to the Government, had not been amortised during the year ended 31 December 2015 in accordance with IFRS and the Group's accounting policies. As a consequence, intangible assets have been overstated by US$422,889 and the related amortisation expense has been understated by US$514,822.

4. Certain items of plant and equipment, being the cone crusher, jaw crusher and electrical house, were not capitalised during the 2014 year of assessment. As a consequence, plant and equipment has been understated by US$281,238, production costs have been overstated by US$320,424, depreciation has been understated by US$19,610, trade and other payables have been understated by US$35,770 and the taxation expense has been understated by US$38,259 during the year ended 31 December 2014. As a result of the above, plant and equipment has been understated by US$210,113 and trade and other payables have been understated by US$26,723 during the year ended 31 December 2015.

5. The auditor's fees accrual during the 2015 financial year was overstated in comparison with the actual fee incurred. As a consequence, trade and other payables have been overstated by US$57,701 and other expenses have been overstated by US$70,245 during the year ended 31 December 2015.

6. A prepayment in respect of insurance has been overstated as the related expense was supposed to be fully recognised in 2015. As a consequence, prepayments and other receivables have been overstated by US$36,054 and other expenses have been understated by US$43,891 during the year ended 31 December 2015.

7. An outstanding debt payable past its collectable date and that has been carried forward from previous financial periods was written off. As a consequence, trade and other payables have been overstated by US$29,499 and the operational expense has been overstated by US$35,911 during the year ended 31 December 2015.

8. Based on the current circumstances with Puno, the net difference between the Puno loan receivable and Puno loan payable should be provided for. As a consequence, the Puno loan receivable was overstated and the impairment expense was understated as at 31 December 2014 and 31 December 2015 by US$1,133,000 and US$1,071,653 respectively.

1. Consolidated Statement of Financial Position

Impact of correction of errors

Previously stated

Adjustments

Restated

US$'000

US$'000

US$'000

1 January 2015

Non-current assets

18,436

(1,316)

17,120

Current assets

3,014

-

3,014

Total Assets

21,450

(1,316)

20,134

Non-current liabilities

19,322

(1,133)

18,189

Current liabilities

15,536

36

15,572

Total Liabilities

34,858

(1,097)

33,761

Total Equity

(13,408)

(219)

(13,627)

31 December 2015

Non-current assets

14,251

(1,620)

12,631

Current assets

1,182

(36)

1,146

Total Assets

15,433

(1,656)

13,777

Non-current liabilities

10,912

(1,072)

9,840

Current liabilities

14,745

(60)

14,685

Total Liabilities

25,657

(1,132)

24,525

Total Equity

(10,224)

(524)

(10,748)

2. Consolidated Statement of Profit or Loss and Other Comprehensive Income

Impact of correction of errors

Previously stated

Adjustments

Restated

US$'000

US$'000

US$'000

31 December 2015

Profit

1,442

(1,440)

2

Item that may be reclassified subsequently to profit and loss

Exchange differences on translating foreign operations

541

1,135

1,676

Total comprehensive income

1,983

(305)

1,678

3. Consolidated Statement of Cash Flow

Impact of correction of errors

Previously stated

Adjustments

Restated

US$'000