Central Rand Gold (CRG) barred journalists from its first annual general meeting

Central Rand Gold

Posted: Fri, 11 Jan 2008

[miningmx.com] -- CENTRAL Rand Gold (CRG) barred journalists from its first annual general meeting on 9 January, Business Report said on Friday.

This came two months after its listing on the JSE and in London, during which time the company lost R1bn or one fifth of its debut market value on the local bourse.

CRG, which is looking to mine gold from abandoned leases south of Johannesburg, was on Thursday quoted 20% off its 8 November high of £1.49 (R20.17) in London. On the JSE the stock had a market value of R3.9bn, down by R1bn from its debut.

The company's waning fortunes stood in sharp contrast to the gold price, which is at its highest level in history.

JSE rates old city gold

Michael Coulson
Posted: Fri, 30 Nov 2007

[miningmx.com] -- A MARKET capitalisation of more than R4bn may sound heady for a would-be gold miner whose projects are based on geological information produced at least 50 years ago – with much of it considerably older – which doesn’t yet hold mining rights. But that’s the market assessment of Central Rand Gold (CRG), which listed on the main boards of both the London and Jo’burg markets on 8 November. And CEO Greg James is confident that it will be justified.

The intention is to go back and apply modern mining methods to three venerable properties – known for short as the three Cs – whose full names will be familiar to all readers of a certain generation: Crown Mines, City Deep and Consolidated Main Reefs. They closed in the mid-Seventies, leaving behind a legacy of mine dumps and jumbled industrial areas now mostly owned by iFour, as successor to Rand Mines Properties.

With the removal and retreatment of those dumps, substantial areas have been freed for investigation, in addition to which the original mining operations focused mainly on the Main Reef Leader and didn’t fully exploit the numerous other reefs in the Witwatersrand complex.

In 2003 an Australian group, Rand Quest Syndicate, decided to investigate whether changed economic and technical conditions warranted taking a look at those properties. As well as being granted prospecting rights over the Three Cs, Rand Quest and its associates also hold prospecting rights over the old Langlaagte, Village Main and Simmer & Jack mines (the last-mentioned, confusingly, no longer having any connection with the listed company of that name).

Rand Quest raised around £2m that year by issuing shares at 3p or 4p. Subsequent issues were at progressively higher prices, including 50p in December 2006 and 75p in April 2007, while this month’s listing was preceded by a placement at 125p – or R16.94 – taking total capital raised to date to around £100m.

But few shares were taken up in South Africa, and on 8 November 25 million shares traded in London before the first deal was recorded in mid-afternoon in Johannesburg. Initial trade was probably boosted by some of the first investors cashing in on their enormous profits and the share has now settled down at around R16 in Johannesburg.

James is adamant that information gleaned from the published reports of the defunct mines – covering no fewer than 21,000 maps and plans – gives CRG a sound base. He says the accuracy of that data has been confirmed by extensive drilling. CRG has so far spent £17m on drilling 36,000 metres, which yielded 74,000 assay samples. He concedes that the biggest risk is converting the resource (currently stated as 21.4 million oz gold indicated, 12.4 million oz inferred) into reserves but is confident that reserves of 1 million to 2 million oz will be established by next April.

That’s also when James hopes to have a bankable feasibility study with a view to starting production at 100,000 oz/year in first quarter 2009, reaching 250,000 oz in 2010. There’s enough cash to reach that stage. The next step will be a prefeasibility study to build production up to 1 million oz/year and, further ahead, there’s blue sky in an application already lodged for prospecting rights for the Southern Deep area – not to be confused with Gold Field’s South Deep – which extends over 400sq km immediately south of the Three Cs.

CRG has a broad-based black empowerment partner in Puno Gold Investments, which has a 26% interest in the operating company and entitled to appoint two directors to the main board. Rams Ramokgopa is executive director, corporate affairs. James is confident that with those credentials and the work it’s done, CRG will have no difficulty obtaining new order mining rights.

He also draws confidence from the appointment as non-executive directors of the likes of Robert Wynne Kirby, a retired executive president of BHP Billiton, and Mike Salamon, a veteran of Anglo American, Gencor and BHP Billiton.

If all goes as planned, a novel mining method for the Witwatersrand is contemplated. The old shaft systems are too dangerous to use, except for investigation, and it would be prohibitive to rehabilitate them. What’s envisaged is to drive incline shafts to relatively shallow depths and crush the ore underground. James says underground crushers are a proven technology: they’re only about 4 metres by 6 metres in size and he says that by the time production reaches 1 million oz there could be 12 or 15 of those units at work. Crushed ore would then be brought to surface for further processing at a site yet to be determined.

Initial projections are for a mining cost of R135/t, processing cost of R45/t and a grade of 4g/t. That could be conservative, given that the grade of the indicated resource is 8.9g/t, but it’s always better to err on that side.

CRG’s achievements to date are impressive, but the proof of the pudding will only come when it can show that it can produce gold at the projected grade and costs. Until then it must be considered speculative. Moreover, it’s unlikely to pay dividends until production reaches 1 million oz, further limiting its investment appeal.