29th Jan 2009 07:00
|
Immediate release |
29 January 2009 |
Central Rand Gold Limited ("CRG" or the "Company")
(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: GG00B248M601
Share code on LSE: CRND
Share code on JSE: CRD
OPERATIONAL UPDATE
29 January 2009 - London and Johannesburg listed Central Rand Gold ("CRG" or "the Company") is pleased to announce an operational update following the conclusion of the operating plan for 2009.
Highlights
Trial mining results to date are in line with management expectations
Cash position as at 31 December 2008 - approximately US$ 70 million
2009 budget and production profile approved by the Board to achieve a self-funding, sustainable business by 2010
Reserve statement expected by March 2009
Concentrator and Flotation modules operating efficiently
First portal and decline excavation is progressing according to target
With the execution of the New Order Mining Right in November 2008, the commissioning of the 20tph Gekko Plant and the first gold pour in December 2008, CRG has confirmed its plan to push ahead with trial mining in the Slot 8 area as the next step in its path to sustainable commercial production.
2009 Budget and Operating plan
Overview
In December 2008, the CRG Limited Board ("the Board") approved the operational plan for 2009. Prior to approval, an extensive review process was undertaken by the Board which included consideration on various options available to the Company in terms of production and cash spend. In light of the current global financial difficulties, the Board has focussed balancing cash conservation with investment in infrastructure.
The primary objective of CRG for 2009 is to ensure that our first target of producing at an annualised rate of 100,000oz per annum is achieved in the form of a sustainable and self-funding business. During this period, CRG will focus on managing and reducing non essential expenses by limiting headcount growth and use of on external consultants.
Importantly, the Company does not anticipate that it will require additional funding during 2009 to achieve the targeted production rate.
As a result, management has decided to prioritise its efforts in converting resources to reserves, with the first announcement anticipated in late March 2009. Snowden Mining Consultants has been contracted to complete this exercise.
The upscaling of production targets beyond 2009 will be set by the Board based on the results of the trial mining, successful execution of the mine plan and the status of the world financial markets.
Production Profile
CRG plans to have the following crushing and concentrating plants ("CC plants") commissioned during 2009.
|
Plant |
Annualised Plant Capacity |
Anticipated Annualised Au Production |
Cost |
Expected Commissioning |
|
20tph Gekko Concentrator Plant |
144 000t |
14 000 oz |
Purchased in 2008 |
Fully commissioned |
|
30tph Bateman Concentrator Plant |
216 000t |
20 000 oz |
ZAR 50 million (US$ 5 million) - approximately 30% paid in 2008 |
May 2009 |
|
50tph Gekko Concentrator Plant with ancillaries* |
360 000t |
34 000 oz |
AUD$ 9 - 12 million (US$ 6 - 8 million) |
End of Q3 2009 |
|
50tph Gekko Concentrator Plant with ancillaries* |
360 000t |
34 000 oz |
AUD$ 9 - 12 million (US$ 6 - 8 million) |
Q4 2009 |
*CRG has already entered into advanced discussion with Gekko Systems for the supply of the two additional 50tph plants detailed above. These will be based on the same platform as the 20tph Gekko CC plant that is currently being utilised. CRG expects to place the order for the two 50tph Gekko CC plants by the end of February 2009. The above CC plants will provide CRG with a production capability of approximately 90 000 tpm.
The CC plants will produce a concentrate of approximately 10% of the ore inputted that will then be treated by a Carbon in Leach plant detailed in the table below:
|
Plant |
Annualised Plant Capacity |
Cost |
Expected Commissioning |
|
Carbon in Leach Concentrate Treatment Plant |
120 000t of concentrate |
ZAR 48 million (US$ 4.8 million) approximately 35% paid in 2008. |
April 2009 |
The Company expects to produce between approximately 40 000 and 50 000 oz of gold as it ramps up to the target annualised production rate of 100 000oz per annum by the end of 2009.
Budgeted Spend
The Company has budgeted gross cash spend of approximately US$103 million in 2009 to be funded by existing cash reserves as well as from revenues generated by gold sales. The economic assumptions set are as follows:
|
Indicator |
Assumption |
|
Average Gold Price |
US$850 per oz |
|
ZAR:US$ |
10:1 |
The breakdown in spend is detailed in the table below:
|
Department |
% of Spend |
|
Plant and Equipment, Decline Development, Mining, Rehabilitation and Metallurgy |
62% |
|
Geological Support, Exploration and Shaft Reaccess |
21% |
|
Other Mining Support Services |
3% |
|
Environmental Support, Social and Labour Plan and Corporate Social Investment |
4% |
|
Administrative Overheads |
10% |
|
|
100% |
As described in the table above, 90% of spend is to be spent in the operational aspects of the business.
Besides for the capital equipment to be purchased as described above, other highlights include:
Approximately 13 000 metres of stoping and decline development to be performed
Approximately 400 000 to 450 000 tonnes of ore to be treated
Capital Resources
The Board identified that in 2009, the vast bulk of capital and operating expenditure would be in South African Rand and Australian Dollars. Following the Initial Public Offering in November 2007, the Company has maintained its capital resources in the form of Sterling bank deposits. With the recent currency volatility, the Board decided it would be prudent to match the Company's currency reserves with its operating and capital requirements for 2009. Consequently, in January 2009, the Company converted its Sterling reserves in ZAR and AUD$ to match fund the budgeted spend. Assuming that revenues from gold sales and operating and capital spend are consistent with the 2009 budget, the Company anticipates that it will have sufficient cash resources to operate comfortably in 2010 at a production rate of 100 000 oz per annum without additional financing.
Trial Mining
Slot 8 is located on the Consolidated Main Reef tenement and covers a strike length of approx 2 kilometres of the Main Reef package. Exploration work, availability of open land and availability of utilities made the slot an ideal area to start operations.
Surface exposures of Main Reef and Main Reef Leader are currently being extracted on Slot 8 while a decline will be developed in the footwall to access ore underground. The method utilised is referred to as the "slot and undercut" method. The "undercut" extraction method employed will be drift and fill where backfilling is completed immediately after mining. Initial surface trials have begun with mining and processing of oxidized slot ore material to approximately 5 to 10 metres deep.
The objectives of the first phase of the trial mining process was as follows:
Test efficiency of grade control techniques
Test surface mining techniques
Test metallurgical processes and equipment relating to the surface oxidized material and where possible fresh underground rock
Geological input on trial mining first focused on grade control drilling and trenching which identified mineable reef which then allowed the excavation and exposure of the Main Reef package to a depth of 10m. The Main Reef package consisted of a block of approximately 150m along strike to a depth of 10m giving an approximate available tonnage of 8 100 tonnes at an estimated in situ grade of 4.85g/t. The targeted reef was exposed by stripping the overburden utilising backhoe excavators and 30t articulated dump trucks in two phases - from zero to five metres below surface and from five to ten metres below surface. Ore was then measured, sampled, extracted and transported to the Gekko CC plant stockpile. It is important to note that the mine material was extracted utilising free digging and no blasting was required. Reconciliations of predicted and actual grades and tonnages have been computed and the results are in line with expectation. During the trial mining period 15 November 2008 to 15 January 2009 approximately 5 920 tonnes of this block was mined of which 5 120 tonnes has been processed.
For the trial milling period from 15 November to 30 December only gravity concentrate was extracted from the Gekko CC plant. From 31 December to 15 January, plant extraction employed both gravity and flotation concentration with the flotation circuit having been commissioned on 30 December 2008.
Sufficient information is available to show that the flotation component of the extraction is operating close to expectations i.e. no fundamental flaws or process threatening operating conditions were encountered even with the heavily oxidized surface (lower density) ore processed.
Estimated final operating recoveries have proven to be in line with predictions of 70% to 80% in the heavily oxidized surface material.
On 16 January 2008, a speed trial of 1.5 hours on the Gekko CC plant was conducted using screened fresh hardrock material of ore from the surrounding old plant site. The CC plant proved that it could operate at 20 tonne per hour, with the maximum throughput achieved for a one hour period being 21.3 tonnes. A test is planned to take place shortly to have a two day operation on the competent rock to verify that the plant can process at a sustained rate of 20 tonnes per hour.
The remaining trial objectives still to be concluded include:
Testing the backfilling, reconsolidation and surface rehabilitation techniques
Testing of the CIL plant component
Trial stoping underground
Testing of the plant in an underground environment
Current Developments
Portal Excavation and Decline Development
The portal excavation for the main decline is nearing completion. Upon completion, the development of the decline will commence which is to be set at 8°.The first level will be developed at 25 metres below surface. This level will be utilised as a ventilation access level and for the development of water storage dams. The second level will be cut at 75 metres below surface. The trial CC plant site will be cut 50 metres below surface.
The trial stoping sites will be positioned between 25 and 50 metres below surface.
Underground Water Level
The Company has calculated that DRD Gold Limited's decision to suspend ERPM's operations and the decision to stop pumping at its South West Vertcal Shaft will have no short or medium term effects on its own mining operations.
The Company is currently in negotiations through the Central Environmental Basin Corporation (a not for profit company of which all effected mining companies in the Central Rand area are shareholders) to establish a pump station at the South West Vertical Shaft at a depth of 600 metres. The installation process is estimated to take approximately 18 months to complete
Commenting on the advancement to date, Johan du Toit, CRG's CEO stated:
"Following the granting of the mining right, the commencement of trial mining and early-stage gold production in late 2008 our understanding of this vast ore body deepens with every passing day. We have also been encouraged by the results so far from trial mining, with no significant discrepancies from our original modeling of the asset so far. We remain confident of reaching an exit rate production of 100,000 ounces per annum by the end of this year. We also recognise the importance of maintaining a strong balance sheet during the current difficulties associated with global capital markets and will maintain flexibility on how we ramp up production over the next 2 years or so. We look forward to announcing further progress on our trial mining and to starting commercial production within the next few months."
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Related Shares:
Central Rand Gold