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)
LSE share code: CRND JSE share code: CRD
("Central Rand Gold" or the "Company")
Operational and Strategic Investment Update
Intended Board Changes
Intention to Disapply Pre-emption Rights
Further to the announcements dated 29 July 2016 and 22 August 2016, the board of directors of Central Rand Gold is pleased to provide the following update to shareholders.
1. Current Trading and Market Update
Mining and Metallurgical Update
With the water level at approximately 153.46 metres below surface ("mbs"), underground mining remains suspended. As announced in June 2016, the Company has discontinued open pit mining operations and is now focussing on the Joint Venture Tolling Agreement ("Tolling Joint Venture") with a third party supplier of gold bearing material.
As previously announced, the Company continues to receive and process gold bearing material under the Tolling Joint Venture. The Tolling Joint Venture partner is delivering at rates of up to 5,000 tonnes per week to the Company's metallurgical plant. This rate of weekly delivery will increase in the coming weeks, allowing the Tolling Joint Venture parties to achieve their stated objective of processing an average of 19,000 tonnes per month which will be achieved in the fourth quarter of 2016. The anticipated deliveries and processing rates are conditional upon the Company having sufficient working capital to fund operations.
The Company is working closely with the Tolling Joint Venture partner. The Company, in consultation with the Tolling Joint Venture partner, has conducted survey, sampling and metallurgical testwork programmes (together the "Testwork Programme") on the rock dump source currently being processed ("Rock Dump"). Through the Testwork Programme, the Company has confirmed an average head grade of 1.8g/t with no contaminants identified. Further, the Testwork Programme has confirmed that there is approximately 6 million tonnes of gold-bearing material in the Rock Dump, which is expected to be processed under the Tolling Joint Venture. Consequently, the Tolling Joint Venture has the potential to maintain the operations of the Company's metallurgical plant for many years.
The refurbishment of Mill 1 has been completed. As previously stated, the Company will primarily treat the gold bearing material through Mills 1 and 3, and will utilise Mill 2 as additional capacity as and when required.
Additional Tailings Deposit Joint Venture Opportunity
The Company is progressing discussions with the owner of a tailings deposit located in close proximity to the Company's metallurgical plant ("Target Tailings Deposit"). The Target Tailings Deposit is considered to host several million tonnes of gold bearing material. The Company has conducted testwork on the Target Tailings Deposit material and is expected to be in a position to announce these testwork results, along with the final commercial terms of the agreement relating to the Target Tailings Deposit, in the short term. The Company is contemplating a transaction structure that will allow both the existing Tolling Joint Venture and the Target Tailings Deposit to operate concurrently however the Board highlights that no assurances can be given with respect to the Target Tailings Deposit at this stage.
Since the beginning of July 2016, Central Rand Gold has seen a gradual decrease in the water table and a reduction of approximately 11 metres has been reported to date, with the current water level at approximately 153.46 mbs. Whilst the rate of de-watering is slow, the gradual decrease in the water table is encouraging as it illustrates that the Central Basin can be de-watered. The Board will continue to monitor the underground water levels, so that it can establish when it can re-commence underground operations.
2. Intended Board Changes
The Board of Directors will be re-compositioned over the coming weeks due to external changes in the professional working arrangements of Nathan Taylor and Mark Austin.
Nathan Taylor has accepted an executive role at a financial institution in Sydney, Australia that will require him to relinquish all public company directorships in the very near term. Mr. Taylor will remain an indirect shareholder of the Company through his shareholding of Redstone Capital Limited, which is a significant shareholder of the Company and the holder of the US$7.25m Senior Secured Convertible Note.
Mark Austin has indicated his intention to resign in the short term due to a potential conflict of interest with one of his clients. Whilst Mark will relinquish his directorship, the Company will retain his ongoing geological services via a consulting agreement.
The Board of Directors has identified and invited two individuals to join the Board as Non-Executive Directors as soon as the necessary on-boarding paperwork has been completed. The two individuals have strong mining backgrounds as well as financial experience.
Further announcements will be made as soon as possible in regards the formal resignations of Mr. Taylor and Mr. Austin and of the anticipated Board appointments.
3. Strategic Investment Update
As at 1 September 2016, the Company had cash reserves of approximately £0.44 million (unaudited). As previously announced, the Company has been pursuing discussions with a number of sources over the availability of both debt and equity funding to provide working capital and funding for growth initiatives such as the Tolling Joint Venture and the Target Tailings Deposit.
In particular, the Company is presently pursing a transaction with one existing shareholder of the Company for an investment of up to US$4,000,000 (the "Strategic Investment"). The Strategic Investment currently envisages the investment into the Company's wholly owned immediate subsidiary Central Rand Gold (Netherlands Antilles) N.V. ("CRG NV"). The final terms and structure of the Strategic Investment. which remain subject to amendment, will be announced to shareholders as soon as finalised, however the Company expects that the Strategic Investment will result in the Company retaining a majority shareholding (in excess of 50 per cent. of the issued shares) and the full management control of CRG NV and that the Group will continue to fully consolidate the Company's subsidiaries and operations. The Board highlights that the Strategic Investment remains subject to agreement and compliance with applicable rules and regulations and that no assurances can be given with respect to the Strategic Investment at this stage.
4. Background to and reasons for the Intended Disapplication of Pre-emption Rights
In addition to the Strategic Investment, the Company has identified an opportunity to raise additional equity from third party investors who have expressed interest in investing capital into the Company. However, the Company presently does not have any pre-emptive authority remaining. Further, the potential third party investors have indicated that they would not be prepared to provide this funding without a pre-approval by the Company's Shareholders to disapply the pre-emption rights. Consequently, the Directors will be issuing a Circular to disapply the pre-emption rights in the near term.
The renewed authorities will enable the Directors to raise urgently required additional working capital to remain trading as a going concern. The Directors also believe that, in the context of the current capital market environment, along with the variety of growth opportunities the Company is pursuing, such as the Target Tailing Deposit, the ability to rapidly access equity funding is essential and in the best interests of Shareholders.
The Circular is presently with the regulators for approval and will be released to Shareholders as soon as regulatory approval has been received.
For further information, please contact:
Central Rand Gold +27(0) 87 310 4400
Lola Trollip / Nathan Taylor
Panmure Gordon (UK) Limited - Nominated Adviser & Broker +44 (0) 20 7886 2977
Adam James / James Greenwood
Merchantec Capital - JSE Sponsor +27 (0) 11 325 6363
Monique Martinez / Marcel Goncalves
Mark Austin, Non-Executive Director of the Company with over thirty five years' experience in the exploration and mining industry, has read and approved the geological disclosure in this regulatory announcement. Mr Austin holds a B.Sc. Hons. in Geology, is a registered Natural Scientist ('SACNASP') and a Fellow of the Geological Society of South Africa and is currently serving on the Steering Committees of the South African Code for the Reporting of Exploration Results, Mineral Resources And Mineral Reserves ('SAMREC') and the South African Code for the Reporting of Mineral Asset Valuation ('SAMVAL').
12 September 2016
The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014 ("MAR").
This information is provided by RNS