30th Apr 2008 16:47
Central Rand Gold Limited30 April 2008 Immediate Release 30 April 2008 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: GG00B24HM601 Share code on LSE: CRND Share code on JSE: CRD Annual Report Release Please note the AGM of the Company is to be held at the offices of Carey Olsen,7 New Street, St Peter Port, Guernsey, GY1 4BZ 11 a.m. (UK time) on June 19,2008. Shareholders wishing to participate in the AGM, in Guernsey via video linkfrom London may do so at the offices of Hunton & Williams, 30 St Mary Axe,London EC3A 8EP and Shareholders wishing to participate in the AGM via videolink from Johannesburg may do so at the offices of Taback and Associates(Proprietary) Limited, 13 Eton Road, Parktown, Johannesburg. Highlights Central Rand Gold has recorded some significant highlights during 2007/8. Theseinclude: • Primary listing on the London Stock Exchange and secondary listing on theJohannesburg Stock Exchange on November 8, 2007 • Highly successful public participation program and public meetings with residents of the local communities • Lodging of the Environmental Impact Assessment study on February 4, 2008 • Upgrade of an additional 1.8 million ounces of indicated and inferred resources to 35.6 million ounces • Identification of the first three slots for initial surface mining Chairman's report In this the company's maiden annual report to shareholders, it is a privilegefor me to reflect on the initial steps of Central Rand Gold's journey towardsbringing gold mining back to the heart of Johannesburg, a city that was foundedon gold in the 1880's and is still headquarters to several of the world's majorgold mining companies. From the outset, Central Rand Gold has been based on a multifaceted vision: toreturn gold mining to "Egoli" (the City of Gold), but in a way that minimisesthe impact on the environment, maximises the benefit to local communities,utilises the most modern and efficient mining methods, and aspires to thehighest levels of corporate governance and operational excellence. Essentially, we see ourselves as a small, entrepreneurial company thatincorporates the management practices, professionalism, information systems andmining standards and methods of a much larger company. Our rationale, mindsetand conduct is not speculative, it is mainstream, strategic and farsighted,based on a real desire to mine substantial unmined deposits that will bringrewards to all of our stakeholders, Johannesburg and South Africa at large. Byapplying the highest standards of environmental, mining and socialresponsibility, we are confident we will deliver a wide range of tangibleimprovements to the landscape, the economy and the people in the areas where ourprojects are situated. The reception the company has received so far in its journey has beenexceptional, especially in London where approximately GBP100 million (equivalentto around ZAR1.5 billion) was raised up to and including the company's listingson the main boards of the LSE and the JSE on November 8, 2007. This was a strongvote of confidence in Johannesburg, South Africa and Central Rand Gold itself. The company's recent share price performance has been disappointing,notwithstanding a high gold price since the IPO. Nevertheless, with a marketcapitalisation of around GBP220 million towards the end of April, the companywas ranked in the top 130 companies on the JSE in terms of marketcapitalisation. I am confident that as we move towards gold production in 2009,we can expect a re-rating of our prospects in the investor community with apositive impact on the company's share price. While shareholders have provided the company with a robust balance sheet throughwhich it has been able to carry out its comprehensive exploration activities,upgrade its mineral resources, apply for the right to mine, and gradually buildup to operational and mining readiness, much of the credit for the company beingwhere it is today must go to Morris and Richard Viljoen, the geologicalacademics on whose thesis Central Rand Gold's business case is based. As Emeritus professors at the University of the Witwatersrand, they developedthe notion of considerable unmined reefs remaining within the previously minedgold mining areas of Johannesburg. It is wonderful and encouraging to have themas shareholders of the company as we progress along the exploration curve tobecoming a fully fledged gold mining entity. With exploration drilling covering more than 46,500 metres to date - at a costof more than GBP15 million (over ZAR200 million) - we have already demonstratedour total commitment to resuscitating gold mining in Johannesburg. By anystandards anywhere in the world, this initial drilling phase is incrediblycomprehensive and shows how committed management, staff and shareholders are tomaking Central Rand Gold a successful gold miner. As our CEO has stated in his report, we have defined our first three surfacemining targets based on drilling, analytical conversion and empiricalobservations refined. This represents a very tangible step forward in our goalof becoming a fully fledged mining company in the very near future. Ongoingexploration and underground sampling is also continuing apace to ensure that wehave a strong pipeline when we enter into our operational mining phase. What is particularly gratifying is the enthusiasm with which our publicparticipation initiatives have been embraced and received by leaders and membersof local communities who are keen to become involved in our projects, work onour mines, supply goods and services to our mines and generally raise theirstandards of living as a result of us doing what we are doing. In a country suchas South Africa, which still has huge income inequalities and a majorunemployment problem, our significant investments and our ongoing miningpresence will bring enormous direct and indirect financial relief to thousandsof people. Over the longer term, our shareholders will benefit, but it is vital to ensurethat throughout the lifetime of our exploration and mining in the area, theenvironment and the local inhabitants are better off and not worse off as aresult of our activities. Though there is still much to be done before we are in gold mining mode andramping up towards our optimal ore treatment rate, it is fitting to reflect onthe achievements and progress to date and the foundation that has been laid forthe future. The recent 1.8 million ounce upgrade of our mineral resources to 35.6 millionounces of gold is a significant achievement, especially as around 30% of theincreased resource is between the surface and 200 metres below the surface, inline with our objective of gaining access to early cash flows once we havereceived our mining right. With a strong shareholder funded balance sheet and good internal resources to beable to continue doing what we have done so successfully to date, an excellentfoundation has certainly been laid for future development and growth. On Tuesday April 29, the directors formally welcomed Michael McMahon to theboard as a non-executive director. A previous chairman of Impala Platinum, he iscurrently a non-executive director on the boards of Impala Platinum, Gold Fieldsand Murray & Roberts. His wealth of technical experience in thegold and platinum mining industries strengthens the CRG board and will proveextremely valuable as we move into the mining phase of our operations. Rams Ramokgopa, an original board member of the Central Rand Gold group,announced his retirement at the end of April. He was instrumental in introducingPuno Gold Investments as our BEE partner and has played a valuable role in ouroperating company's affairs. I would like to thank him for his efforts and wishhim well in his retirement and future activities. When it comes to thanks, there are three specific groups of people to whom Iwould like to extend my sincere gratitude: • my fellow non executive directors - Nick Farr-Jones, Robert Kirkby and Miklos Salamon- who were instrumental in Central Rand Gold achieving its listings in London and Johannesburg. They worked tirelessly to reach this goal; • management and staff, under the leadership of our CEO, Greg James, who have worked diligently to get our projects to such an advanced stage; and • our BEE partners, Puno Gold Investments, who have played an important role in our progress to date. It has been a pleasure working with all of our people who have put in anenormous amount of work towards realising the vision that we all share. There is certainly much to look forward to as we work together towards ensuringthat our company takes its place among South Africa's gold producers and bringsgold mining back to the vibrant city of Johannesburg. Alastair WaltonChairman Chief Executive Officer's Report Overview It is indeed a great pleasure to be able to report back to shareholders on thefirst year of Central Rand Gold's operations and to provide some further insightinto where the company is heading in these exciting times for the gold industryin South Africa and around the world. Through the unstinting efforts of a small team of dedicated professionals, atremendous amount has been achieved to date, establishing the foundations for abright future for all stakeholders in Central Rand Gold. From the outset, our intention has been to be a mining company with a difference- and we are confident that we are well on the way towards achieving thisobjective. Central to this is our strong involvement with the communities in which ourmining projects are situated. Constant consultation and regular meetings withcommunity members and leaders have ensured a high level of "buy-in" from peopleliving in our mining-focused areas. Community leaders and members are particularly enthused by the fact that thecompany will be bringing many important benefits to areas in which mining hasbeen dormant for many years - such as skills development, training andemployment that will favourably impact living standards. This community focus formed an important part of our Environmental ImpactAssessment report which was submitted to the Department of Minerals and Energyon February 4, 2008. A database of potential employees has been created and is constantly beingupdated to ensure that at peak production, when staff will number around 4,000,as many people as possible will be drawn from the local community living inclose proximity to our mining operations. Corporate Progress While most of our emphasis to date has been on exploration, excitement isbuilding up as we move closer to becoming a mining company. If all goesaccording to plan, our first mining activity should take place in early 2009. Importantly, Central Rand Gold remains on track to meet its forecast ofproducing its first 100,000 ounces of gold in 2009, achieving a production rateof 250,000 ounces of gold a year by 2010 and a production rate of one millionounces a year by 2012. A huge amount of effort has gone into getting the company to its currentposition - from exploration to assay work, to community involvement, to BlackEconomic Empowerment, to our comprehensive Environmental Impact Assessment, tohealth and safety, to our Social and Labour Plan, to studying and fine-tuningworld-class mining practices that will be implemented on our sites.Significantly, our staff and management complement is strongly representative ofSouth Africa's vibrant multi-racial society. In line with South Africa's Mining Charter and Black Economic Empowermentlegislation, 26% of Central Rand Gold SA (Proprietary) Limited is owned by PunoGold Investments (Proprietary) Limited, chaired by Monk Goocin. Althoughgenerally matters have been progressing as expected with our BEE partner Puno,there has recently arisen a dispute relating to technical breaches of the CRGSAshareholders agreement. The dispute surrounds the allocation of intercompany loans which fund the budget and work programme and the incurring of, and level of, certain costs. We have tried to settle any disagreements amicably, but so far without success. The next step, if so required, is for the parties to refer the matter to arbitration pursuant to the dispute resolution mechanism under the shareholders agreement. We believe that ultimately our position will prevail. The Directors believe that this will not have any material consequences in respect of the consolidated accounts of the Group. Notwithstanding this position, we have pending the outcome of any dispute allocated 100% of the intercompany funding since execution of the shareholders' agreement directly through from the Company to CRGSA. This additional 26% of intercompany debt excluding interest amounts to ZAR29.5 million (US$4.3 million) between June 2007 and December 31, 2007 and ZAR12.2million (US$1.6 million) between January 1, 2008 and March 31, 2008. Our attitude has been and will continue to be that there are no short-cuts:everything we undertake has a methodology, a purpose and an end result. To this end, we have been extremely thorough in everything we have undertaken -from our public participation process, to our environmental and health andsafety initiatives, to our exhaustive exploration exercises and procedures. There can be few mining companies that have engaged as closely as we have withcommunities while still in the exploration phase - every meeting has beenworthwhile, ensuring that we can proceed with our projects in a spirit ofparticipation and inclusiveness rather than separation and alienation. Exploration Activity/Resource Upgrade From an exploration point of view, the company's geological team has been veryactive in the field since October 2006, assembling an impressive array of drillresults from more than 45,600 metres of drilling - 10,000 metres of which weredrilled between October 2007 and February 2008. Up until April 20 this year, no fewer than 167 diamond drill holes had beencompleted (including geotechnical holes), most of them with depths of 60-100metres. No fewer than 2,102 reverse circulation holes (including soil sampling)had been completed, most of them with depths of up to 60 metres. Over the same timeframe, a total of 89,575 assays had been sent for analysis andresults for 69,893 had been received. Importantly, this showed a welcome rise in the numbers of assay results receivedto 78% of the total submitted compared to the level of 50% stated in ourprospectus. This has resulted in the purchasing of our own analytical assaylaboratory being unnecessary at the moment. The company's primary focus was to access the underground workings in order toratify the paper resource generated from the desktop studies, ascertain theexisting ground conditions in the old workings and embark on a major undergroundsampling programme in targeted areas to convert existing resources into mineableresources. The company has located four shafts in good condition, and is in the process ofequipping and accessing the old level developments. An underground samplingprogramme is currently underway, and early results are proving to beencouraging. From a mineral resources point of view, a major milestone for the company wasreached at the end of February 2008 when we were able to announce a significantupgrade of our indicated and inferred resources. In our initial statement, we declared an indicated resource of 21.4 millionounces of gold and an inferred resource of 12.4 million ounces of gold, making atotal of 33.8 million ounces. On February 29, we upgraded the indicated resource by 932,000 ounces to 22.4million ounces and the inferred resource by 828,000 ounces to 13.2 millionounces. Our total mineral resource rose by 1.8 million ounces to 35.6 millionounces. Importantly, of this increase, 530 000 ounces have been identifiedbetween surface and 200 metres below surface. This upgrade underpins the confidence we have in the viability andsustainability of our exploration projects and supports the optimism we have inour ability to become a world-class, low-cost gold producer in the near future. More significantly, we also confirmed our first three mining targets from whichour first gold will come once we receive our mining right. We refer to these asslots 4, 8 and 9. In our prospectus we had identified nine slots, so this isfurther evidence that we have refined our exploration understanding in order tomaximise our early cash flows and test our mining concepts. Our drilling programme is continuing, coupled with underground sampling, acrossall nine slots with the aim of further enhancing the current resource base inthe Central Rand Goldfield. It is important to note that while our initial mineral resource statement wasbased primarily on the Main Reef and Main Reef Leader sequences, our updatedmineral resource (validated by independent competent persons Snowden MiningIndustry Consultants and Dr Carina Lemmer in accordance with the JORC andSAMREC codes) is based on a wider area including the Bird Reef and KimberleyReef packages. Summary While much has been achieved in a short space of time, much still needs to bedone before we become a fully-fledged mining company, producing gold on asustainable, long-term basis. With a strong balance sheet and a strong project pipeline, we can look to thefuture with confidence. As at December 31, our cash balance was US $151.3million, compared to the US $135.6 million projected in our prospectus, most ofthe increase coming from our decision not to purchase our own assay laboratory. As a budding gold producer, it is also worth noting the current state of thegold and currency markets which have moved quite dramatically in recent months.At the time our company was conceptualising its projects and activities, thegold price was at around US$650/ounce and the exchange rate was ZAR7=US$1. Inmid-March, 2008, the gold price nudged above $1,000 for the first time and theexchange rate had gone back above ZAR8=US$1. My sincere thanks must go to everyone who has played a part in Central RandGold's exciting journey thus far. With the continued commitment of all of our stakeholders - directors,management, staff, shareholders, BEE partners, suppliers and community members- I am confident that the company is well on the way to realising its undoubtedpotential. Greg JamesChief Executive Officer For the Company Profile, Director s' Report, Corporate Governance andSustainable Development Report. Directors' Responsibility Statement, CompanySecretarial Confirmation, Auditor's Report and full Financial Statements, pleaserefer to the company's website: www.centralrandgold.com Contact:Greg JamesRic VittinoWayne Epstein(011) 551 [email protected] Enquiries:Buchanan Communications Limited +44 (0) 20 7466 5000Ben Willey Evolution Securities Limited +44 (0) 20 7071 4300Simon Edwards/Chris Sim/Neil Elliot Macquarie First South Corporate Finance + 27 11 343 2307Amanda Markman Jenni Newman Public Relations (Pty) Ltd + 27 11 772 1033 Jenni Newman +27 82 882 [email protected] Outram +27 83 320 7577 CENTRAL RAND GOLD LIMITED GROUPBalance Sheet as at 31 December 2007 and 31 December 2006 Group 2007 2006 Note US$ US$ NON CURRENT ASSETSProperty, plant and equipment 3 045 316 2 128 321Investment in subsidiaries - -Loans receivable 2 6 279 167 - ------------ ----------- 9 324 483 2 128 321 ------------ ----------- CURRENT ASSETSPrepayments and other receivables 1 139 639 893 963Cash and bank balances 149 194 757 7 529 622Security deposits and guarantees 2 072 757 277 908 ------------ ----------- 152 407 153 8 701 493 ------------ ----------- ------------ -----------TOTAL ASSETS 161 731 636 10 829 814 ============ =========== EQUITY AND LIABILITIES Share Capital 5 017 375 -Share Premium 191 405 973 -Share-based Compensation Reserve 18 152 511 -Treasury Shares (31 120) -Foreign Currency Translation Reserve (9 311 702) 704 673Merger Reserve - 20 533 209Accumulated Losses (52 711 338) (10 667 195) ------------ ----------- 152 521 699 10 570 687Minority Interest in equity - - ------------ -----------TOTAL EQUITY 152 521 699 10 570 687 ------------ ----------- NON CURRENT LIABILITIESBorrowings 105 271 -Operating lease liability 38 226 - ------------ ----------- 143 497 - ------------ ----------- CURRENT LIABILITIESTrade and other payables 2 534 315 259 127Loan payable 6 279 167 -Provisions 125 212 -Taxation payable 92 066 -Borrowings 35 680 - ------------ ----------- 9 066 440 259 127 ------------ ----------- ------------ -----------TOTAL LIABILITES 9 209 937 259 127 ------------ ----------- ------------ -----------TOTAL EQUITY AND LIABILITIES 161 731 636 10 829 814 ============ =========== Income Statement for the years ended 31 December 2007 and 31December 2006 Group 2007 2006 Note US$ US$ Other income and gains 414 588 -Employee benefits expense (4 048 968) (1 209 846)Directors' emoluments (10 083 856) (2 643 058)Other share-based payments (10 957 934) -Depreciation (525 007) (135 973)Operating lease payments (621 952) (160 521)Exploration expenditure (14 627 369) (2 840 584)Other expenses (5 880 416) 1 720 574) ------------- ------------Operating loss (46 330 913) (8 710 556)Interest received 2 333 192 323 298Finance costs (494 776) - ------------- ------------Loss before income tax (44 492 497) (8 387 258)Income tax expense (92 066) - ------------- ------------Loss for the year (44 584 563) (8 387 258) ------------- ------------ Loss is attributable to:Minority interest (38) -Equity holders of the parent (44 584 525) (8 387 258) ------------- ------------ (44 584 563) (8 387 258) ------------- ------------ Loss per share for loss attributable to the equity holders during the year(expressed in US cents per share)Basic loss per share 3 (24.64) (6.26)Diluted loss per share 3 (24.48) (6.25)Basic headline loss per share 3 (24.43) (6.26)Diluted headline loss per share 3 (24.27) (6.25) Statement of Changes in Equity for the years ended 31 December 2007 and 31 December 2006 Attributable to equity holders of the Company --------------------------------- -----------Group Ordinary Share Share Premium Merger Reserve Foreign Share based Capital Currency compensation Translation Reserve Reserve US$ US$ US$ US$ US$ Balance at 31December 2005 - - 2 925 820 (54 174) - Shares issuedby subsidiaryduring theyear - - 14 879 489 - - Foreigncurrencyadjustments - - - 758 847 - Share basedpayments bysubsidiary -consultingfees - - 2 727 900 - - Loss for the - - - - -year --------- ---------- ---------- ---------- ----------- Balance at 31December 2006 - - 20 533 209 704 673 - Shares issuedbysubsidiariesduring theyear - - 9 869 165 - - Foreigncurrencyadjustments - - - (10 016 375) - Share basedpayments bysubsidiary -consultingfees - - 2 606 250 - - Shares issuedduring theyear 245 135 18 110 090 - - - Corporatereorganisation 3 392 223 29 452 262 (33 008 624) - - Shares issuedon listing 1 262 340 143 843 621 - - - Treasuryshares issuedto EmployeeShare Trust 117 677 - - - - Treasury - - - - -shares issuedto directorsandemployees Shares andOptions issuedto employeesand directorsof subsidiary - - - - 18 152 511 Loss for the - - - - -year --------- ---------- ---------- ---------- ----------- Balance at 31December 2007 5 017 375 191 405 973 - (9 311 702) 18 152 511 --------- ---------- ---------- ---------- ----------- Statement of Changes in Equity for the years ended 31 December 2007 and 31 December2006 continued Attributable to equity holders of the Company --------------------------Group Treasury Shares Accumulated Total Minority Total Losses interest US$ US$ US$ US$ US$ (2 279 937) 591 709 - 591 709Shares issuedby subsidiaryduring theyear - - 14 879 489 - 14 879 489 Foreigncurrencyadjustments - - 758 847 - 758 847 Share basedpayments bysubsidiary -consultingfees - - 2 727 900 - 2 727 900 Loss for theyear - (8 387 258) (8 387 258) - (8 387 258) ---------- ---------- ---------- --------- ------------Balance at 31December 2006 - (10 667 195) 10 570 687 - 10 570 687 Shares issuedbysubsidiariesduring theyear - - 9 869 165 - 9 869 165 Foreigncurrencyadjustments - - (10 016 375) - (10 016 375) Share based - - - - -payments -employees anddirector'soptions Share basedpayments bysubsidiary -consultingfees - - 2 606 250 - 2 606 250 Share based - - - - -payments -employees anddirector'soptions fromsubsidiary Shares issued - - - - -to directors Share based - - - - -payments -employees anddirector'soptions Shares issuedduring theyear - - 18 355 225 - 18 355 225 Corporatereorganisation (12 067) 2 540 382 2 364 176 38 2 364 138 Shares issuedon listing - - 145 105 961 - 145 105 961 Shares issued - - - - -to directors Treasuryshares issuedto EmployeeShare Trust (117 677) - - - - Treasuryshares issuedto directorsand employees 98 624 - 98 624 - 98 624 Shares andOptions issuedto employeesand directorsof subsidiary - - 18 152 511 - 18 152 511 Loss for theyear - (44 584 525) (44 584 525) (38) (44 584 563) ---------- ---------- ---------- --------- ------------Balance at 31December 2007 (31 120) (52 711 338) 152 521 699 - 152 521 699 ---------- ---------- ---------- --------- ------------ Cash Flow Statement for the years ended 31 December 2007 and 31 December 2006 Group 2007 2006 US$ US$ CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (44 492 497) (8 387 258)Adjusted for :Depreciation 525 007 135 973Employment benefit expenditure (Share basedpayments) 20 708 141 2 727 900Loss on disposal of fixed assets 375 259 -Net (gain)/loss on foreign exchange (315 618) 299 942Other income (4 027) -Interest received (2 333 192) (323 298)Interest paid 494 776 - Changes in working capitalIncrease in receivables (245 676) (821 652)Increase in provisions 125 212Increase/(Decrease) in trade and otherpayables 2 275 188 (193 622) ----------- -----------Cash flows used in operations (22 887 427) 6 562 015)Interest received 2 333 192 323 298Interest paid (494 776) -Other income received 4 027 ----------- -----------Net cash used in operating activities (21 044 984) (6 238 717) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property, plant & equipment (1 901 596) (2 191 171)Proceeds from disposal of property, plantand equipment 131 594 -Increase in operating lease liability 38 226 -Increase in investment in subsidiaries - -Increase in loans receivable - - ----------- -----------Net cash (used in) investing activities (1 731 776) (2 191 171) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings 140 952 -Increase in security deposits (1 794 849) (277 908)Proceeds from issuance of shares 172 431 236 14 879 489 ----------- -----------Net cash generated from financing activities 170 777 339 14 601 581 ----------- ----------- Net increase/(decrease) in cash and cashequivalents 148 000 579 6 171 693Cash and cash equivalents at beginning ofyear 7 529 622 749 201Effects of exchange rate movement on cashbalances (6 335 444) 608 728 ----------- -----------Cash and cash equivalents at end of year 149 194 757 7 529 622 =========== =========== Selected Notes to the Financial Statements 1. Selected Significant Accounting Policies Basis of Preparation Pursuant to a corporate reorganisation on June 15, 2007, the company became theparent company of Central Rand Gold SA (Proprietary) Limited (''CRGSA''), acompany incorporated in the Republic of South Africa, through a newly formedintermediate holding company, Central Rand Gold (Netherlands Antilles) N.V.(''CRGNV''), a company incorporated in the Netherlands Antilles. On this date, CRGSA acquired the mineral rights and all other assets andliabilities of its former parent company, Rand Quest Syndicate Limited(''RQS''), and certain mineral rights from Central Rand Australia (Proprietary)Limited, (''CRA''), a wholly-owned subsidiary of RQS subject to Section 11Applications, for the right to proceed with mining activities, being granted.Both RQS and CRA are incorporated in Australia. The consideration for theacquisitions was settled by inter-company loans payable by CRGSA to RQS and CRAwhich were then assigned by RQS and CRA to the company in exchange for RQSreceiving 168,666,648 shares in the company. Under the provisions of IFRS 3:''Business Combinations'', the abovementioned corporate reorganisation involvesentities and businesses under common control, which are ultimately owned by thesame parties both before and after and whose rights remained unchanged.Accordingly, the reorganisation is considered to be outside the scope of IFRS 3and the group has applied the pooling of interests method, as described in thebasis of consolidation, to prepare the consolidated financial statements. Accounts have also been prepared under IFRS for the periods ended June 30, 2005,2006 and 2007 for the purposes of the company's listing Prospectus. No otheraccounts have been prepared for previous periods. As the Johannesburg StockExchange regulations require the company accounts to be prepared on a calendaryear, the financial statements have been prepared for the year ended 31 December2007 and audited comparatives figures have been prepared for the previous 12months. Group 2007 2006 US$ US$2. Loans receivable Central Rand Gold (Netherlands Antilles) N.V. - -Puno Gold Investments (Proprietary) Limited 6 279 167 - ----------- --------- 6 279 167 - ----------- --------- On 15 June 2007, as part of the restructuring, the group advanced a loan of ZAR111,196,279 (US$ 16,457,049) to Central Rand Gold SA (Proprietary) Limited(''CRGSA'') and a further loan of ZAR 39,068,963 (US$ 5,782,207) to Puno GoldInvestments (Proprietary) Limited (''Puno''). The loan bears interest at SouthAfrican prime lending rate plus 2% and is payable on demand as and when freecash flows as determined by the board of CRGSA are available. Although generally matters have been progressing as expected with our BEEpartner Puno, there has recently arisen a dispute relating to proceduralbreaches of the CRGSA shareholders agreement. The dispute surrounds theallocation of intercompany loans which fund the budget and work programme andthe incurring of, and level of, certain costs. We have tried to settle anydisagreements amicably, but so far without success. The next step, if sorequired, is for the parties to refer the matter to arbitration pursuant to thedispute resolution mechanism under the shareholders agreement. We believe thatultimately our position will prevail. The directors believe that this will nothave any material consequences in respect of the consolidated accounts of thegroup. Notwithstanding this position, we have pending the outcome of any disputeallocated 100% of the intercompany funding since execution of the shareholdersagreement from the company to CRGSA. This additional 26% of intercompany debtexcluding interest amounts to ZAR 29,541,700 (US$4,278,795) between June 2007and December 31, 2007 and ZAR 12,161,285 (US$1,611,646) between January 1, 2008and March 31, 2008. 3. Loss per Share Reconciliation of loss used in calculatinglosses per share a) BasicBasic loss per share is calculated by dividing the loss attributable to equityholders of the group by the weighted average number of ordinary shares in issueduring the year. Group 2007 2006 US$ US$Loss attributable to ordinary equityholders of the group (44 584 525) (8 387 258)Weighted average number of ordinaryshares used calculating basic loss pershare 180 935 078 134 069 598Basic loss per share (US cents pershare) (24.64) (6.26) =========== =========== b) Diluted loss per shareDiluted loss per share is calculated by adjusting the weighted average numberof ordinary shares outstanding to assume conversion of all dilutive potentialordinary shares. The group has two categories of dilutive potential ordinaryshares: 1) Share options. For the share options, a calculation is done todetermine the number of shares that could have been acquired at fair value(determined as the average annual market share price of the group's shares)based on the monetary value of the subscription rights attached to outstandingshare options. The options were however anti-dilutive as the strike price ofthe options was higher than the average share price for the year. 2) Treasuryshares. For the treasury shares, no value is taken into account as the shareshold no rights. The weighted average of the shares is taken into account todetermine the dilution. Group 2007 2006 US$ US$Diluted loss per shareLoss attributable to ordinary equityholders of Central Rand Gold Limitedused to calculate basic loss per share (44 584 525) (8 387 258)Interest savings on treasury shares - - ----------- -----------Loss attributable to ordinary equityholders of Central Rand Gold Limitedused to calculate diluted loss pershare (44 584 525) (8 387 258) =========== =========== Number NumberWeighted average number of ordinaryshares used in calculating basic lossper share 180 935 078 134 069 598Adjustments for calculation of dilutedloss per share:- Treasury shares 1 214 192 55 890 ----------- -----------Weighted average number of ordinaryshares used in calculating diluted lossper share 182 149 270 134 168 228 =========== =========== Diluted loss per share (US cents pershare) (24.48) (6.25) =========== =========== c) Headline loss per shareHeadline loss per share is calculated by dividing the calculated headline lossof the group by the weighted average number of ordinary shares outstanding toassume conversion of all dilutive potential ordinary shares.. Group 2007 2006 US$ US$ Loss attributable to equity holders ofthe group (44 584 525) (8 387 258)Plus: Loss on disposal of property,plant and equipment 375 259 - ----------- --- -----------Loss used in calculating headline lossper share (44 209 266) (8 387 258) ----------- --- -----------Weighted average number of ordinary sharesused calculating headline loss per share 180 935 078 134 069 598Headline losss per share (US cents pershare) (24.43) (6.26) =========== =========== d) Diluted headline loss per shareDiluted headline eloss per share is calculated by dividing the calculatedheadline loss of the group by the weighted average number of ordinary shares inissue during the year. Group 2007 2006 US$ US$ Loss attributable to equity holders ofthe group (44 584 525) (8 387 258)Plus: Loss on disposal of property,plant and equipment 375 259 - ----------- --- -----------Profit used in calculating headlineloss per share (44 207 259) (8 387 258) ----------- --- -----------Weighted average number of ordinary sharesused in calculating diluted headline lossper share 182 149 270 134 168 228 Diluted headline loss per share (UScents per share) (24.27) (6.25) 4. Commitments a) Operating lease commitmentsThe group usually negotiates operating leases for a period of five years. Thegroup's minimum future lease rentals payable under non-cancellable operatingleases are as follows: Group 2007 2006 US$ US$Payable - Minimum LeasePayments- not laterthan 12 months 404 550 160 638- between 12months and 5years 557 863 701 474- greater than 5 years - - ---------- --------- 962 413 862 112 ---------- --------- Three month's notice was given in order to terminate the rental of the officesin London. The lease expires at the end of April 2008. The operating leasecommitments shown above have taken this into account. Group 2007 2006 US$ US$b) Purchase of shares incompanies Purchase price of FerreiraEstate and Investment CompanyLimited (''FEIC'') 1 000 000 - ---------- --------- 1 000 000 - ========== =========The Purchase of FEIC is further discussed in d) below. c) Rent payable on tenements for exploration activities Rent is payable on the following tenements for the year in order to continueexploration activities: Group 2007 2006 US$ US$No. 1 Shaft 7 897 -No. 2 Shaft 22 273 -East Shaft 8 343 - ---------- --------- 38 513 - ========== ========= The rentals are payable to Industrial Zone Limited. d) Various contractual feespayable Group 2007 2006 US$ US$Fees payableto iPropLimited forprospecting 500 000 -Option feespayable toGravelotteMines Limited 100 000 - ---------- --------- 600 000 - ========== ========= Fees payable to the Department of Minerals and Energy: Payable within Payable within Payable after 5 1 year 2 to 5 years years US$ US$ US$ 3C's 2 453 6 746 -Langlaagte 178 400 -AngloGoldAshanti 1 040 2 860 -Village Main 455 1 250 - --------- ---------- --------- 4 126 11 256 - ========= ========== ========= The prospecting rights over the Simmer and Jack and Western Areas A,B and E havebeen granted but not formally notarised by South Africa's Department of Mineralsand Energy. The company expects this notarisation to occur imminently. The Southern Deeps area is still under application with the DME, however, shouldthis be granted and notarised, the fees for the first year of prospecting willtotal US$5,518 (ZAR37,284). Under the South African Mineral and Petroleum Resources Development Act 28 of2002, the group requires Ministerial consent in terms of Section 11 Applications(which consent is still outstanding) to: (i) the cession to Central Rand Gold SA (Proprietary) Limited ("CRGSA") of theprospecting rights held by Gravelotte Mines Limited (once the option isexercised) and AngloGold Ashanti Limited; (ii) the cession to CRGSA of the prospecting rights in respect of Village Main,Simmer & Jack and Western Areas; (iii) to confirm a change of control in the shareholding in Ferreira Estate andInvestment Company Limited; and (iv) the cession to CRGSA of the prospecting rights for Southern Areas oncegranted to RQS. The details of the groups currently explored tenements are: Three C's area This area covers the mining areas of the currently closed Consolidated Main Reef(''CMR''), Crown Mines and City Deep Goldmines, south of Roodepoort andJohannesburg. CRGSA has a contractual right to conduct exploration in this area. In return forconducting the exploration programme, CRGSA has an option to acquire the entireshareholding of Ferreira Estate and Investment Company Limited (''FEIC''), theregistered holder of the prospecting right from iProp Limited (''iProp''). CRGSA is required to spend not less than US$2,000,000 on exploration.Furthermore for a period of eight years following the effective date of theagreement, CRGSA shall pay to iProp a minimum amount of US$500,000 per annum,which shall reduce to US$100,000 per annum after the expiry of the eight yearperiod which payments shall continue for the remainder of the agreement. Thefirst payment was made on 29 March 2006. CRGSA shall be deemed to have exercised the option to acquire FEIC once anapplication for a mining right has been lodged with the DME, CRGSA has spent notless than US$2,000,000 on exploration and ministerial consent in terms ofsection 11 of the Mineral and Petroleum Resources Development Act has beenobtained to the change in shareholding in FEIC, whereupon CRGSA shall payUS$1,000,000 as consideration for the purchase of FEIC. A guarantee to thiseffect has already been put into place. As a further consideration for the acquisition of the shares in FEIC, once theproduction threshold as detailed in the applicable phase two work programme hasbeen reached, CRGSA shall pay to iProp US$8 per ounce of gold produced from thearea on a quarterly basis. Once all exploration expenditure and mine development and associated costs arerepaid by FEIC to CRGSA and the FEIC mining operations become profitable, CRGSAshall cease paying US$8 per ounce of gold and thereafter pay a quarterly netprofit interest of 10% for the remainder of the agreement. The various paymentsof US$500,000 and US$100,000 referred to above will be set off against the US$8and net profit interests referred to being payable to iProp above. Langlaagte area This area covers the area between the CMR and Crown Mines, near to the Three C'sArea. CRGSA has a contractual right to conduct prospecting over this area. A term ofthe prospecting contract is that CRGSA has the sole and exclusive option topurchase the prospecting right from Gravelotte Mines Limited, the registeredholder of the prospecting right. The purchase price for the prospecting right isUS$250,000 and the option period runs from November 4, 2005 to November 3, 2010.Option fees of US$100,000 per annum are payable for the duration of the option. In further consideration for the grant and exercise of the option, Central RandGold SA shall on a quarterly basis pay Gravelotte Mines Limited the sum of US$10per ounce of gold mined from the prospecting area. AngloGold Ashanti area This area covers various farm subdivisions in the central Witwatersrand area andsuburbs of Johannesburg, Germiston and Alberton. Central Rand Proprietary Limited, formerly a wholly owned subsidiary of RandQuest Syndicate Limited, concluded an agreement with AngloGold Ashanti Limited(''AngloGold'') under which AngloGold would apply for a prospecting right andCentral Rand Proprietary Limited would be entitled to take cession of theprospecting right once granted on payment of US$ 150,000 to recoup the costs ofthe application. Under the reorganisation of the group the agreement with AngloGold was assignedto CRGSA. If a decision to mine the area is taken and AngloGold and the parties agree thatAngloGold has no future role in the project then CRGSA shall be required to payUS$8 per ounce of gold recovered from the area. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Central Rand Gold