Source - RNS
RNS Number : 0007L
Central Rand Gold Limited
28 September 2016
 

 

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")

 

2016 Interim Report

Central Rand Gold today announces its unaudited Interim Results for the six months ended 30 June 2016 ("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 

Lola Trollip / Nathan Taylor

 

Panmure Gordon (UK) Limited - Nominated Adviser & Broker                    +44 (0) 20 7886 2500

Adam James / James Greenwood 

 

Merchantec Capital - JSE Sponsor                                                         +27 (0) 11 325 6363

Monique Martinez / Marcel Goncalves

 

28 September 2016

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.

 



 

Non-executive Chairman's report

 

Introduction

The Company had three key objectives during the first six months of 2016, namely to:

·    continue necessary capital works in relation to the Company's metallurgical plant, in particular the repair of Mill No 1;

·    stabilise the operations of the Company; and

·    progress discussions with capital providers.

 

Key salient features during the first six months of the year

·      Loss before interest, tax and depreciation of US$1.9 million (2015: US$0.7 million) for the period;

·      The rate of dewatering has stabilised, and the levels underground are gradually reducing;

·      A Toll Treatment Agreement was concluded with a third party; and

·      Post the period end and as previously announced, the Company have identified opportunities to raise additional funding from a number of parties in order to pursue growth opportunities identified and to continue as a going concern.

 

Safety

 

Safety statistics

Type of injury

Six months ended

30 June 2016

Six months ended

30 June 2015

Dressing cases

2

-

Lost-time injuries

3

2

Fatalities

-

-

 

Safety remains a key focus for the Company, irrespective of the environment in which it is operating. There were two dressing cases in the six months ended 30 June 2016 compared to zero for the same period in 2015 and three lost-time injuries in the six months ended 30 June 2016 compared to two for the same period in 2015. The Company has embarked on a number of safety campaigns to invigorate the safety culture in the Company.

 

Acid Mine Drainage ("AMD")

The High Density Sludge ("HDS") plant, operated by the Trans Caledon Tunnel Authority ("TCTA"), 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 following table:

 

Month

Average daily pumping rate

(mlpd)

Water level below surface (mbs)

January 2016

35

143.57

February 2016

33

141.40

March 2016

70

143.20

April 2016

66

145.13

May 2016

65

147.92

June 2016

65

148.60

July 2016

65

147.58

August 2016

59

152.48

 

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 2016. As the pumps are imported, and a standby pump was not available, a replacement submersible pump, from another pump station, was installed at the end of February 2016, 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 11 vertical meters since the end of February 2016.

 

Various projects are being undertaken by the Company in order to evaluate the possibility of expediting the water pumping, and of mining underground, using different mine plans and methodologies.

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. Consequently, the Company focussed its attention and resources on exploiting lower grade open cast mining and surface dumps, which had a significant impact on the Company.

 

The below table provides the current surface areas available for mining:

 

Location

Viable strike length

Tonnes

Estimated grade

Average thickness

Estimated ounces

Reef

package


(m)

(t)

(g/t)

(cm)

(oz)


Slot 1

420

35,310

1.52

124

1,721

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

1.29

72

548

Bird

Slot 5 CW Road

1,300

130,317

0.54

72

2,247

Bird

Slot 10

460

89,050

-

123

-

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

0.18

47

771

Bird

Slot 12

460

90,283

1.29

123

3,747

Kimberley

Slot 4

836

60,162

1.83

132

3,540

Kimberley

Slot 5

406,000

49,015

2.12

92

3,342

Bird

Slot 7

190,460

150,708

2.23

189

10,786

Bird

 

The quantity and grade described above has been derived from historical sampling data, together with current information gathered and verified by both the Mining Engineer, and the Geologists at Central Rand Gold.

 

The above table does not include surrounding sand and slimes resources which the Company has sourced, and earmarked for Research and Developmental projects together with the Zhejiang Golden Machinery Plant ("ZGMP") in China.

 

Production statistics


30 June 2016

tonnes

30 June 2015

tonnes

Variance

Underground

-

-

-

Surface

33,424

62,856

(29,432)

Reclamation

36,892

33,356

3,536

Total

70,316

96,212

(25,896)

 

Surface mining was largely focused at slots 5, 7 and 4. Current pits have been mined down to a depth of approximately 30 metres. The average belt grade for these pits to date is 1.94g/t. The pits were put on care and maintenance in April 2016, until the mining strategy has been revised. Focus is now being put on to the rehabilitation of open and mined out pits.

 

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. A project has been undertaken with ZGMP to test a metallurgical process, on the slimes/sands, and the outcome of this test work is anticipated to ultimately result in a larger plant being built at Central Rand Gold SA, which will then be able to process the dump material expediently.

 

Metallurgy

 

Production statistics


2016

2015

-      

January

to June

January

to June

-       Internal



-       Tonnes processed (t)

18,824

87,895

-       Built up head grade (g/t)

2.12

1.45

-       Fine gold produced (oz)

1,394

3,435




External (Toll treatment)



-       Tonnes processed (t)

-

6,721

-       Delivered grade (g/t)

-

1.04

-       Fine gold produced (oz)

-

244

Total tonnes processed (t)

18,824

94,616

Total gold produced (oz)

1,394

3,679

 

Internal gold production for 2016 H1 was below that of 2015, being that the Mill No 1 was irreparable after a breakdown, and the Company had to source another Mill. The Company also took the opportunity to cleanse the full circuit, in preparation of the new Toll-milling contract. A second-hand Mill was purchased, repaired and installed in September 2016. The aim is to reach an average throughput of 20,000 tonnes per month, by the end of October 2016 (the updated deadline). The anticipated deliveries and processing rates are conditional upon the Company having sufficient working capital to fund operations.

 

Financial update

 

Results

The loss before interest, tax and depreciation for the period under review amounted to US$1.9 million, which is higher than the prior year period operational loss of US$0.7 million. The increase in loss is largely attributed to the cessation of open pit mining in March 2016. As a result, internal gold production decreased by 23% to 2,637 ozs (2015: 3,435 ozs) and overall revenue decreased from US$4.4 million to US$1.8 million. The Company entered into a Tolling Agreement in July 2016 with a third party, Nikkel Mining, who will provide product to be treated through the plant. The Tolling agreement is in the form of a value per tonne of throughput in the plant, which is anticipated to raise income for Central Rand Gold SA. This in turn will assist in the Company being right-sized and refocused. Cash and cash equivalents at 30 June 2016 was US$0.4 million.

 

There remains a material uncertainty in respect of the Company's ability to continue as a going concern. For further consideration, please refer to the basis of preparation set out in note 2 of the financial statements.

 

Looking forward

The focus over the next six months is to:

·    finalise the US$4 million investment from an existing shareholder of the Company;

·    continue to toll treat material through the Company's metallurgical plant;

·    process additional surface material, which the Company has sourced, through a Third Party metallurgical plant;

·    ensure that the Research and Developmental test work is successful for the acquisition of further gold bearing surface material which is proximal to the Company's existing metallurgical plant; and

·    commence rehabilitation of the Company's mined out open pit areas.

 

Various opportunities have been brought to the attention of Central Rand Gold, and project and task teams have been formed to evaluate each one, and make recommendations to the Board for possible Joint Ventures, Mergers and/or Mining opportunities.

 

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 at the Company.

 

The Company is presently pursing a transaction with one existing shareholder of the Company for an investment of 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. As part of the Strategic Investment, the Company is engaged in discussions with Redstone Capital Limited to extend the expiry date of the US$7.25m Senior Secured Convertible Loan Notes.

 

The future period will also see board renewal at Central Rand Gold Limited.  The Company's Board will be re-compositioned over the coming weeks due to external changes in the professional working arrangements of myself and Mark Austin.  The Board 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.

 

 

Nathan Taylor

Non-executive Chairman

 

 

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').

 

The information communicated in this document is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014 ("MAR").



 

Condensed Group Statement of Financial Position

as at 30 June 2016




30 June


31 December


30 June

 



2016


2015


2015

 


Notes

 US$ '000


 US$ '000


 US$ '000

 



(Unaudited)


(Audited)


(Unaudited)

 

ASSETS







 

Non-current assets







 

Property, plant and equipment

5

2,194


  2,271


3,172

 

Intangible assets


2,219


  2,114


2,669

 

Security deposits and guarantees


49


  46


59

 

Environmental guarantee investment


2,712


  2,584


3,119

 

Loans receivable

6

8,071


  7,236


8,619

 



15,245


  14,251


17,638

 

Current assets







 

Security deposits and guarantees


26


  26


32

 

Prepayments and other receivables


508


  480


712

 

Inventories

7

79


  120


112

 

Cash and cash equivalents


435


  556


1,177

 

Derivative asset


-


-


720

 



1,048


  1,182


2,753

 








 

Total assets


16,293


  15,433


20,391

 








 

EQUITY







 

Attributable to equity holders of the parent







 

Share capital

8

27,283


  26,617


26,617

 

Share premium

8

225,255


  224,037


224,048

 

Share-based compensation reserve


28,238


  28,238


28,187

 

Treasury shares


(6)


  (6)


(6)

 

Foreign currency translation reserve


(29,097)


  (28,993)


(29,433)

 

Accumulated losses


(262,484)


  (260,117)


(262,743)

 



(10,811)


  (10,224)


(13,330)

 

Non-controlling interest


-


  -


-

 

Total equity


(10,811)


  (10,224)


(13,330)

 








 

LIABILITIES







 

Non-current liabilities







 

Environmental rehabilitation


3,858


  3,676


4,622

 

Loan payable

9

8,071


  7,236


14,392

 



11,929


  10,912


19,014

 

Current liabilities







 

Trade and other payables


6,981


  6,999


6,078

 

Royalties taxation payable


147


  140


181

 

Loan payable

9

7,400


6,959


-

 

Derivative liability


647


647


8,448

 



15,175


  14,745


14,707

 








 

Total liabilities


27,104


  25,657


33,721

 








 

Total equity and liabilities


16,293


  15,433


20,391

 




Condensed Group Statement of Profit or Loss

for the six months ended 30 June 2016




Six months


12 months


Six months

 



ended


ended


ended

 



30 June


31 December


30 June

 



2016


2015


2015

 


Notes

 US$ '000


 US$ '000


 US$ '000

 



(Unaudited)


(Audited)


(Unaudited)

 








 

Revenue

10

  1,765


8,093


  4,352

 

Production costs

11

  (1,553)


(6,079)


  (2,776)

 

Employee benefits expense


  (907)


(2,252)


  (1,293)

 

Directors' emoluments

12

  (124)


(468)


  (103)

 

Operating lease expense


  (285)


(872)


  (250)

 

Operational expenses

13

  (138)


(505)


  (174)

 

Other expenses

14

  (665)


(1,098)


  (560)

 

Other income and gains

15

  5


305


  107

 

Foreign exchange transaction gains/(losses)


  16


(75)


  (16)

 

Loss before interest, tax and depreciation


  (1,886)


(2,951)


  (713)

 

Depreciation


  (192)


(425)


  (229)

 

Impairment of assets


  -


(346)


  -

 

Fair value movement in embedded derivative


  -


7,081


  -

 

Finance and investment income


  463


1,149


  546

 

Finance costs


  (752)


(3,066)


  (788)

 

(Loss)/profit before income tax


  (2,367)


1,442


  (1,184)

 

Income tax expense

16

  -


-


  -

 

(Loss)/profit for the period


  (2,367)


1,442


  (1,184)

 








 

(Loss)/profit for the period is attributable to:







 

Non-controlling interest


  -


-


  -

 

Equity holders of the parent


  (2,367)


1,442


  (1,184)

 



  (2,367)


1,442


  (1,184)

 








 

Shares in issue


  141,400,341


95,195,808


  95,195,808

 

Weighted average number of ordinary shares in issue


109,517,964


91,501,233


95,195,808

 

Fully diluted weighted average number of ordinary shares in issue


110,121,964


258,689,069


95,195,808

 

Basic (loss)/earnings per share (US cents per share)

18

  (2.16)


1.58


  (1.24)

 

Diluted loss per share (US cents per share)

18

  (2.15)


(2.23)


  (1.24)

 




Condensed Group Statement of Comprehensive Income

for the six months ended 30 June 2016




Six months


12 months


Six months

 



ended


ended


ended

 



30 June


31 December


30 June

 



2016


2015


2015

 



 US$ '000


 US$ '000


 US$ '000

 



(Unaudited)


(Audited)


(Unaudited)

 








 

(Loss)/profit for the period


  (2,367)


1,442


  (1,184)

 

Other comprehensive (loss)/income:







 

Item that may be reclassified subsequently to profit and loss







 

Exchange differences on translating foreign operations


  (104)


541


  101

 

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


  (104)


541


  101

 

Total comprehensive (loss)/income for the period


  (2,471)


1,983


  (1,083)

 








 

Total comprehensive (loss)/income is attributable to:







 

Non-controlling interest


  -


-


  -

 

Equity holders of the parent


  (2,471)


1,983


  (1,083)

 



  (2,471)


1,983


  (1,083)

 


 


Condensed Group Statement of Changes in Equity

 

for the six months ended 30 June 2016

 




Attributable to equity holders of the Group

 


Notes

Ordinary share capital


Share premium


Share-based compensation reserve


Treasury shares


Foreign currency translation reserve


Accumulated losses


Total


Non-controlling interest


Total equity

 



 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000

 




















 

Balance at 31 December 2014


  26,490


  222,963


  28,238


  (6)


  (29,534)


  (261,559)


  (13,408)


  -


  (13,408)

 

Total comprehensive income for the period ended 30 June 2015



















 

Loss for the period


  -


  -


  -


  -


  -


  (1,184)


  (1,184)


  -


  (1,184)

 

Other comprehensive income



















 

Foreign currency adjustments

  -


  -


  -


  -


  101


  -


  101


  -


  101

 

Transactions with owners, recorded directly in equity



















 

Issue of Shares:



















 

Capital raising

8

127

1,085


-


-


-


-


1,212


-


1,212

 

Employees' and Directors' shares-based payments

20

  -


  -


 (51)


  -


  -


  -


  (51)


  -


  (51)

 

Balance at 30 June 2015


  26,617


  224,048


  28,187


  (6)


  (29,433)


  (262,743)


  (13,330)


  -


  (13,330)

 




















 




 




 




 



Attributable to equity holders of the Group

 


Notes

Ordinary share capital


Share premium


Share-based compensation reserve


Treasury shares


Foreign currency translation reserve


Accumulated losses


Total


Non-controlling interest


Total equity

 



 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000


 US$ '000

 




















 

Balance at 31 December 2015


  26,617


  224,037


  28,238


  (6)


  (28,993)


  (260,117)


  (10,224)


  -


  (10,224)

 

Total comprehensive income for the period ended 30 June 2016



















 

Loss for the period

  -


  -


  -


  -


  -


  (2,367)


  (2,367)


  -


  (2,367)

 

Other comprehensive income



















 

Foreign currency adjustments


  -


  -


  -


  -


  (104)


  -


  (104)


  -


  (104)

 

Transactions with owners, recorded directly in equity



















 

Issue of Shares:



















 

Capital raising

8

  666


  1,218


  -


  -


  -


  -


  1,884


  -


  1,884

 

Balance at 30 June 2016


  27,283


  225,255


  28,238


  (6)


  (29,097)


  (262,484)


  (10,811)


  -


  (10,811)

 


 

 


Condensed Group Statement of Cash Flow

 

for the six months ended 30 June 2016

 


 



Six months


12 months


Six months

 



ended


ended


ended

 



30 June


31 December


30 June

 



2016


2015


2015

 



 US$ '000


 US$ '000


 US$ '000

 



(Unaudited)


(Audited)


(Unaudited)

 








 

CASH FLOWS FROM OPERATING ACTIVITIES

Notes






 

(Loss)/profit before tax


  (2,367)


1,442


  (1,184)

 

Adjusted for :







 

Depreciation


  192


425


  229

 

Employment benefit expenditure (share-based payments)


  -


-


  (51)

 

Profit on disposal and scrapping of property, plant and equipment


  -


(146)


  (9)

 

Impairment of assets


  -


346


  -

 

Net (gain)/loss on foreign exchange


  (16)


75


  16

 

Finance income


  (463)


(1,149)


  (546)

 

Finance costs


  752


3,066


  788

 

Fair value movement in embedded derivative


-


(7,081)


-

 

Changes in working capital







 

(Increase)/decrease in prepayments and other receivables


  (28)


689


  527

 

Decrease/(increase) in inventory


  41


(44)


  (36)

 

(Decrease)/increase in trade and other payables


  (18)


173


  (833)

 

Decrease in provisions


  -


-


  (282)

 

Cash flows used in operations


  (1,907)


(2,204)


  (1,381)

 

Finance income


  4


203


  66

 

Finance costs


  (289)


580


  -

 

Net cash used in operating activities


  (2,192)


(1,421)


  (1,315)

 








 

CASH FLOWS FROM INVESTING ACTIVITIES







 

Purchases of property, plant and equipment

5

  -


(92)


  (5)

 

Proceeds from disposal of property, plant and equipment


  -


180


  -

 

Increase in environmental guarantee deposit


  -


65


  (17)

 

Net cash from/(used in) investing activities


  -


153


  (22)

 








 

CASH FLOWS FROM FINANCING ACTIVITIES







 

Proceeds from issue of shares for cash


2,062


1,261


1,260

 

Cost relating to the issue of shares


(178)


(60)


(48)

 

Net proceeds from issue of convertible notes


441


-


-

 

Net cash from financing activities


2,325


1,201


1,212

 








 

Net increase/(decrease) in cash and cash equivalents


  133


(67)


  (125)

 

Cash and cash equivalents at 1 January


  556


914


  914

 

Effects of exchange rate fluctuations on cash balances


  (254)


(291)


  388

 

Cash and cash equivalents at end of period


  435


556


  1,177

 








 


 


 


 


 

Notes to the Condensed Interim Group Financial Statements

 

for the six months ended 30 June 2016

 


 

1. Basis of preparation

 

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual Financial Statements of the Group are prepared in accordance with International Financial Reporting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU"). The condensed interim Group financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2015 except for the changes described in note 2.

 


 

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

 


 

The interim financial information for the six months to 30 June 2016 and 30 June 2015 is unaudited and does not constitute statutory financial information. The comparatives for the full year ended 31 December 2015 are not the Group's full statutory accounts for that year. It does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2015 Annual Report. The auditor's report on those accounts was (i) unqualified, (ii) included an emphasis of matter in respect of going concern and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 


 

Going concern

REQUESTED FROM PATRICK. PER PATRICK, THIS ALL DEPENDS ON THE REVISED

 

The Board has prepared the condensed interim Group financial statements on the going concern basis notwithstanding net current liabilities at 30 June 2016 of US$14.1 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 2015 year end, 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 to Central Rand Gold SA. The Group has also raised a further US$1.9 million from share placements that took place during the period under review. Furthermore, the Company have identified opportunities to raise additional funding from a number of parties and expect to enter into binding documentation shortly.

 


 

Central Rand Gold entered into an agreement with Redstone Capital Limited to extend both the maturity of the Loan Notes and the expiry date of the Warrants to 31 October 2016 which will enable the Company to continue to progress the capital raising work stream. All other terms of the Loan Notes and Warrants remained the same.

 


 

The Board has prepared cash flow projections until 30 September 2017 that reflect the current toll treating plan adopted by the Directors. This updated plan is based on a contract concluded with Nikkel Mining, and is valid for a period of one year, with an option to extend the contract and terms beyond that period. The tolling plan incorporates the upgrade to Mill number 1, and is based on an average capacity of 19,000 tonnes per month, as from October 2016. The Company is presently pursing a transaction with one existing shareholder of the Company for an investment of US$4,000,000 (the "Strategic 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 have not been finalised yet. There are current fund-raising initiatives within the Group, and the Board will direct the monies to various projects, as well as to the working costs of the Group. Some of the material uncertainties that existed as at 31 December 2015 have been addressed during the period under review, while others still exist. Therefore, there still is doubt on the Group's ability to continue as a going concern. Nevertheless, after taking account the Group's cash flow projections, 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 Board has prepared the condensed interim Group financial statements on a going concern basis.

 


 

The Board is optimistic about the future of the Company with agreements for tolling in place, as well as the various initiatives on acquisitions and joint venture projects. The Board believes that this will collectively improve the Company's position in the market.

 


 

2. Accounting policies

 

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 2015, as described in those consolidated financial statements.

 


 

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 2016:

 

• IFRS 5: Non-current Assets Held for Sale and Discontinued Operations

 

• IFRS 7: Financial Instruments: Disclosures

 

• IFRS 10: Consolidated Financial Statements

 

• IAS 1: Presentation of Financial Statements

 

• IAS 16: Property, Plant and Equipment

 

• IAS 19: Employee Benefits

 

• IAS 27: Separate Financial Statements

 

• IAS 34: Interim Financial Reporting

 

• IAS 38: Intangible Assets

 


 

The adoption of these Standards is not expected to have a significant impact upon the Group's net results, net assets or disclosures.

 


 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 


 

3. Estimates and judgements

 

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.

 


 

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 2015.

 


 

4. Financial risk management

 

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 2015.

 


 

Fair value

 

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.

 


 


 


 


 

Foreign currency rates

 

The US Dollar rates of exchange applicable to the period are as follows:

 


 


2016


2015


2015














Six months to


Year ended


Six months to














30 June


31 December


30 June













                                 

Closing  Average


Closing  Average


Closing  Average































South African Rand

   0.07       0.07


   0.08       0.08


   0.08       0.08













Pound Sterling

   1.34       1.43


   1.48       1.53


   1.57       1.52













Australian Dollar

   0.74       0.74


   0.73       0.75


   0.77       0.78














 

5. Property, plant and equipment

 

During the six months ended 30 June 2016, the Group did not purchase any items of property, plant and equipment (2015: US$5,280).

 


 

6. Loans receivable

 


 

Puno Gold Investments Proprietary Limited ("Puno")

 

Since the last report for the year ended 31 December 2015 there has been no resolution to the dispute relating to alleged procedural breaches of the Central Rand Gold SA Shareholders' Agreement between Central Rand Gold SA 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.

 


 

On 1 April 2016 judgment was handed down in the appeal and Central Rand Gold SA was successful in so far as the preliminary points were concerned. Costs in the appeal, including wasted costs pertaining to the preliminary points have been granted against Puno which are currently in the process of being 'taxed' legally before the taxing masters of the relevant courts and will be recovered from Puno. The remainder of the arguments pertaining to the merits of the matter need to be addressed by the court of first instance. Central Rand Gold SA took the necessary steps for the matter to be referred back to the Judge in order to give judgment on the remainder of the issues.

 


 

On 29 April 2016, Puno served on Central Rand Gold SA an application on the basis of sections 344(f) and 345 of the Companies Act 2008, (Act 71 of 2008), as amended, for an order to wind up (liquidation) Central Rand Gold SA. Upon advice from Central Rand Gold SA's legal advisors, Central Rand Gold SA is opposing the application and lodged answering affidavits. 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 Central Rand Gold SA awaits Puno's confirmation whether they intend to persist in their application. The Company is of the opinion that, as a subsidiary of a listed Company, it has sufficient support from the Holding Company to successfully trade out of the loss making situation.

 


 

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.

 


 

The loan payable to Puno contains the same allocations referred to above.

 


 


 


 

7. Inventories

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 







 

Consumables

42


29


39

 

Ore stockpiles

37


91


73

 

Total inventories

79


120


112

 


 

8. Share capital and share premium

 

The Company issued the following shares during the period under review:

 

·      A first share placement on 9 February 2016 of 14,279,371 new ordinary shares at 3.5 pence, which raised US$0.72 million (£0.50 million).

 

·      A second share placement on 9 March 2016 of 20,719,644 new ordinary shares at 3.5 pence, which raised US$1.05 million (£0.73 million).

 

·      A subscription of 4,620,005 new ordinary shares on 7 June 2016 at an issue price of 3 pence each, which raised US$0.20 million (£0.14 million).

 

·      6,585,513 new ordinary shares were issued to Bergen Global Opportunity Fund, LP on 7 June 2016 at par value, which raised US$0.09 (£0.07 million).

 


 

9. Loan payable

  2.61

  3.36

Net proceeds (USD million)

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 



 

Non-current


 

Current


 



 







 

Loan payable consists of the following:






 







 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 


 

Puno Gold Investments Proprietary Limited

8,071


7,236


8,620

 

Redstone Capital Limited

6,959


6,959


5,772

 

Bergen Global Opportunity Fund, LP

441


-


-

 


15,471


14,195


14,392

 


 

10. Revenue

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 







 

Gold sales

1,764


8,056


4,314

 

Other by-product sales

1


37


38

 


1,765


8,093


4,352

 


 


 

The revenue relates to the sale of gold derived from mining activities that take place in South Africa and the sale of other by-products. 1,417 (30 June 2015: 4,316) ounces of gold was sold.

 


 

11. Production costs

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 

Production costs comprise the following items:

 

- Consumables

 

- Utilities


 

- Plant hire

 

- Labour hire

 

- Toll treatment

 

- Environmental rehabilitation provision

 


 


 

12. Changes to the Board

 

During the period under review, Mr A Phillips resigned as a Director of the Group on 6 June 2016.

 


 

13. Operational expenses

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 

Operational expenditure comprises the following items:

 

- Assaying costs

41


196


98

 

- Consulting services

93


293


58

 

- Environmental costs

4


7


3

 

- Mineral property options paid

-


9


15

 


138


505


174

 


 

14. Other expenses

 


Group

 


June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 


 

Auditor's remuneration

 

Accounting fees

 

Corporate social investment

 

Legal costs

 

Travel and accommodation

 

Telecommunications

 

Other expenses

 


 


 


 


 

15. Other income and gains

 


Group












June


December


June

 


2016


2015


2015

 


 US$ '000


 US$ '000


 US$ '000

 







 

Sundry income

5


305


  107

 


 

16. Income tax expense

 

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 30 June 2016 is 0% (2015: 0%) due to assessable losses available to Central Rand Gold SA and the Guernsey resident status of Central Rand Gold resulting in 0% effective rates.

 


 

17. Commitments

 

There are no commitments outstanding at 30 June 2016.

 


 

18. Loss/earnings per share

 


Group

 


June


December


June

 


2016


2015


2015

 

Headline (loss)/earnings per share (US cents per share)

  (2.16)


  1.42


  (1.24)

 

Diluted headline loss per share (US cents per share)

  (2.15)


  (2.29)


  (1.24)

 







 

Reconciliation between loss attributable to the equity holders of the Group and the headline loss attributable to the equity holders of the Group:






 

(Loss)/profit attributable to equity holders of the Group (US$'000)

  (2,367)


1,442


  (1,184)

 

Less: Profit on disposal of property, plant and equipment (US$'000)

  -


  (146)


  (9)

 

(Loss)/profit used in calculating headline (loss)/earnings per share (US$'000)

  (2,367)


  1,296


  (1,193)

 


 

19. 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.

 


 

20. Share-based payments

 

No additional shares and share options in the Company were granted during the six months ended 30 June 2016.

 


 

21. Related parties

 

No disclosable related party transactions occurred during the period.

 


 


 

22. Contingent liability

 

During the previous financial year, the following contingent liability existed and still exists as at 30 June 2016:

 


 

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 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.

 


 

23. Events occurring after reporting date

 


 

Operating

 

The Company has subsequent to 30 June 2016:

 

·    Completed and executed the definitive documents which govern the Joint Venture Tolling Agreement ("Tolling Venture") with the third party supplier of gold bearing ore ("Ore Supplier"). The Company has received multiple deliveries of gold bearing ore from the Ore Supplier and has commenced processing the gold bearing ore.

 

 

·    Continued to advance due diligence and negotiations with additional third parties regarding a variety of joint venture alternatives.

 

 

·    Completed the refurbishment of Mill 1.

 

 

·    Had discussions with the owner of a tailings deposit located in close proximity to the Company's metallurgical plant (the "Target Tailings Deposit"). The Target Tailings Deposit is considered to host several million tonnes of gold bearing material. The Company conducted test work on the Target Tailings Deposit material, the results of which are not yet available and the commercial terms of the agreement relating to the Target Tailings Deposit have not been finalised yet. The Company is contemplating a transaction structure that will allow both the Tolling JV 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.

 

 


 

Financing

 

The Company has subsequent to 30 June 2016:

 

·    Issued a total of 12,959,882 new ordinary shares ("Conversion Shares") in respect of a total of US$213,000 of convertible security pursuant to the convertible securities issuance deed entered into with Bergen Global Opportunity Fund, LP ("Bergen") on 7 June 2016.

 

·    Issued a total of 20,642,637 ordinary shares in respect of a partial exercise of the convertible securities previously entered into with Bergen.

 

 

·    Entered into an agreement with Redstone Capital to extend both the maturity of the Loan Notes and the expiry date of the Warrants to 31 October 2016 which will enable the Company to continue to progress the capital raising work stream. All other terms of the Loan Notes and Warrants remained the same.

 

·    Pursued 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 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 are still to be finalised.

 

 


 

Intended Board changes

 

It is intended that Nathan Taylor and Mark Austin will resign from the Board in the short term. The Board 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.

 



 

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.

 

Due to the flooding of the Central Basin, the Company suspended underground operations in October 2014 until the Central Basin water table reduces sufficiently to enable underground mining to recommence. The Company has subsequently focused on mining surface and open pit operations. However, due to the grade variability from the surface operations, the Company ceased open pit mining operations in May 2016 and its short term focus will be on the rehabilitation of opened up areas, as well as processing material under the Tolling Agreement (the "Tolling Agreement"), which commenced in July 2016, in order to maintain operations.

According to the Tolling Agreement, a third party supplier of ore will source and deliver gold-bearing material to Central Rand Gold's metallurgical plant for processing by Central Rand Gold. Under the Tolling Agreement, Central Rand Gold will receive a graduated fee for processing the material in accordance with the number of tonnes processed through the metallurgical plant.

 

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 the alternative exchanges of AIM in London and to the AltX in Johannesburg.

 

Mining Rights and Prospecting Rights

Previously, 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), Anglo Deep, Village Main and Robinson Deep and the defunct Simmer and Jack Gold Mine. The Prospecting Rights extended over an area from west to east of approximately 40 kilometres and north to south of approximately seven kilometres (the "Central Rand Project"). The Southern Deeps New Order Prospecting Right Application (the "Prospecting Application"), which has been pending a decision since 2007, was refused by the Department of Mineral Resources ("DMR") in 2015. A letter disputing reasons for the refusal has been lodged with the Deputy Director General of Mineral Regulations with no updates as yet. Central Rand Gold South Africa Proprietary Limited ("Central Rand Gold SA") has decided not to pursue the matter. The South Deep Prospecting Right renewal, that was rejected on a technicality issue by the DMR, is still under appeal with no outcome of the decision as yet.

 

Currently, there are five of the seven New Order Prospecting Rights that still remain active, namely the Western Areas A, B and E, Village Main and Robinson Deep and Simmer and Jack. The Western Areas A, B and E and Village Main and Robinson Deep Prospecting Rights are currently under renewal for an additional three year period. All Prospecting Rights, except for one, have since been transferred from Rand Quest Syndicate Limited ("RQS") to Central Rand Gold SA via Section 11 applications lodged with the DMR. A Section 11 application for the Simmer and Jack Prospecting Right has been lodged but is still pending approval by the DMR.

 

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, Crown Mines and City Deep tenements. The Company's current mining right renewal has been submitted to the DMR, using the SAMRAD online application system.  The renewal is for a period of 20 years. The Company has yet to receive notification in writing from the Regional Manager of Mineral Resources confirming the acceptance of the application.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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