JOHANNESBURG (miningweekly.com) – Negotiations for the sale of dual-listed Central Rand Gold’s (CRG’s) Netherlands Antilles (CRGNV) subsidiary and a possible investment in CRG itself were expected to be concluded soon.

Talks with the two remaining Asian suitors Hiria Group and Huili Resources were ongoing, with the focus now on concluding the talks within the next few months.

The two suitors had completed a due diligence process by June.

CRG had initially entered into nonbinding memoranda of understanding with four potential buyers to acquire CRGNV for $150-million.

However, CRG, in June, terminated negotiations with two of the suitors Beijing Ankong Investment and Shengbang Jiabo Consulting Company.

The South African gold mining and exploration holding company said on Tuesday that various attractive commercial structural alternatives emerging from discussions with Hiria were now being considered.

“The discussions have largely progressed along the lines of a significant initial strategic investment in CRG . . . which will provide the company with the ability to increase its production capacity, upgrade its resource base and recapitalise the balance sheet,” CRG CEO Johan du Toit said in an announcement of the group’s interim financial results.

The alternative was expected to provide CRG a “real opportunity” to maximise the extraction of its vast resource base, he added.

Meanwhile, discussions with the second potential buyer Huili remained ongoing with a range of commercial issues and technical matters, largely focused on the continued dewatering of the Central basin, under discussion.

CRG suspended underground mining activities in September 2014, owing to rising water levels, which had precipitated a dramatic shift in the mining operations.

The company had initially shifted from opencast mining to target the higher-grade underground orebody, with the subsequent “shift back” to surface mining impacting CRG significantly.

“Openpit mining was stepped up and additional reclamation sources of ore were sourced, evaluated and exploited. The company’s aim was to secure sufficient resource base to enable the surface operations to continue, while dewatering of the underground mine occurred,” Du Toit explained.

While the rate of dewatering indicated a possible restart of underground operations within 18 months, sufficient surface material had been identified and evaluated to compensate for cessation of underground mining.

During the six months to June, CRG had produced 3 679 oz of gold, a drop on the 4 149 oz produced in the prior corresponding period.

However, the internal gold production of 3 435 oz for the first half of the year under review increased 7% on the corresponding half-year in 2014, with the average grade drop from 1.77g/t to 1.45g/t offset by higher tonnage throughput of recent plant upgrades.

“The benefit of the plant upgrades is an improvement in plant performance with 18 532 wet tonnes being processed through the plant in August,” CRG pointed out.

The aim was to reach 20 000 t by end October 2015.

FINANCIAL RESULTS
During the six months to June, CRG posted a loss before interest, taxes and depreciation of $700 000, an improvement on the prior corresponding period’s reported loss of $2.6-million.

The company’s overall loss for the period narrowed to $1.2-million in the first half of the year, from $2.8-million loss during the first half of 2014.

Overall revenue was down, from $5.8-million in the six months to June 2014, to $4.3-million for the period under review, owing to less material sent for toll treatment by Mintails and the reduction in gold price.

On the back of significant restructuring to realign the business to its new focus on surface mining, CRG had achieved a 40% cut in its cost base through the elimination of underground mining costs, as well as the renegotiation of key contracts, an improvement in operational processes and the elimination of inefficiencies in consumables use.

Cash and cash equivalents as at June 30 was $1.1-million.