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CRG to raise operating cash through new placing

CRG to raise operating cash through new placing

Photo by Megan van Wyngaardt

20th May 2015

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – To strengthen its balance sheet, while providing working capital to undertake continued surface mining operations and a programme of plant upgrades and efficiency processes, dual-listed gold producer Central Rand Gold (CRG) will seek to raise £600 000 through the placing of 2.55-million new ordinary shares and the subscription of 3.46-million new ordinary shares at a price of 10p apiece.

The cash-strapped company, which currently had a cash balance of $700 000, on Wednesday said the placing would also repay trade creditor balances relating to the closure of its underground mining operations, following the delay in the full commissioning of its high-density sludge plant (HDSP) and a rising water table.

Further, the funding would assist CRG to complete the disposal of its Central Rand Gold Netherlands Antilles (CRGNV) subsidiary.

Over the past 15 months, the Johan du Toit-led company had, through marketing campaigns, entered into four separate nonbinding memoranda of understanding with Huili Resources, Hiria Group, Beijing Ankong Investment and Shengbang Jiabo.

These were all on substantively consistent terms and contemplated the potential disposal of 100% of the shares held by CRG in CRGNV for $150-million.

OPERATIONS
The company, meanwhile, noted that its openpit mining operations performed in line with its expectations in the first quarter.

During the first three months of the year, 36 000 t were mined from the openpits with a further 5 600 t provided from viable old slime and rock dumps on CRG’s tenement areas. 

Overall, an average mined grade of 2 g/t was achieved with a mine call factor of 85% in the first quarter.

Meanwhile, CRG said its low-grade joint tolling venture with ASX-listed Mintails was “progressing well”. This arrangement allowed both companies to monetise low-grade material within rock dumps on the CRG property that would otherwise be uneconomical to process.

In the first quarter, 5 600 t at an average landed grade of 0.9 g/t were processed. The maintenance and upgrades to the plant, following the January maintenance block, were successful with availability increasing to 91%.

In March, 47 000 t, including toll treating, were processed. Owing to improved metallurgical processes and recoveries and despite the feed grade being about 40% lower than the prior year period, gold production, excluding toll production, was 48% higher year-on-year at 1 501 oz in the first quarter of this year.

ACID MINE DRAINAGE
CRG, which faced the acid mine drainage legacy problems of mining on the southern outskirts of Johannesburg, said its interim HDSP solution allowed for an increase in daily pumping to about 70 Mℓ a day.

“This level of pumping was only anticipated to be achieved once the permanent solution had been implemented in June. Since the beginning of March, we have seen a steady decrease in the water table and a reduction of about 4 m has been reported to date, with the current water level at about 144 m below surface from a maximum of 140 m below surface in February.

“This is very encouraging as it once again proves that the Central Basin can be dewatered even during the typical ‘rainy season’. We will continue to monitor the underground water levels, so that we can establish when we can restart underground operations,” CRG said in a statement.

Further, it noted that given that the HDSP upgrade was not anticipated to be completed until the end of the first half of next year, underground mining was aimed to restart during the latter part of 2016.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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