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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Central Rand | LSE:CRND | London | Ordinary Share | GG00B92NXM24 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.425 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMCRND
RNS Number : 7206T
Central Rand Gold Limited
16 October 2017
Hot Features
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Central Rand Gold Limited
(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 2007/019223/10)
ISIN: GG00B92NXM24
LSE share code: CRND JSE share code: CRD
("Central Rand Gold" or the "Company" or the
"Group")
----------------------------------------------------
Annual Results and Annual Report Release
----------------------------------------------------
Central Rand Gold today announces its annual results for the year ended 31 December 2016.
Full copies of the Company's Annual Report and Accounts, including the Company Profile, Chairman's Report, Corporate Governance, Sustainable Development Report, Company Secretarial Confirmation, Remuneration Committee Report, Directors' Report, Auditor's Report and full Financial Statements, will be available on the Company's website www.centralrandgold.com on 16 October 2017.
For further information, please contact:
Central Rand Gold +27(0) 87 310 4400
Lola Trollip
ZAI Corporate Finance Ltd - Nominated Adviser +44 (0) 20 7060 2220
John Treacy
Peterhouse Corporate Finance Limited - Broker +44 (0) 20 7469 0930
Lucy Williams / Fungai Ndoro
Merchantec Capital - JSE Sponsor +27 (0) 11 325 6363
Marcel Goncalves / Monique Martinez
Chairman's report
Dear Shareholder
I write in the slightly unusual circumstances of not having served as your Company's Chairman for the financial year under review in these financial statements, but I am able to provide an overview of the principal matters involving the Company since the end of that financial year.
OUTGOING DIRECTORS
Shareholders will have noted the departure of Nathan Taylor as interim Non-executive Chairman and Mark Austin as Non-executive Director in January 2017. Lola Trollip has tendered her resignation as the Company's Chief Executive Officer and as a Director of the companies in the Group. We are agreeing her final departure date.
ADVISER APPOINTMENTS
We appointed new advisers, Brandon Hill Capital and ZAI Corporate Finance Limited, post year end as our broker and nominated adviser respectively. Their assistance and wise advice has been invaluable and I should like to thank them for accepting their respective appointments and for their input since their appointments. Brandon Hill assisted us with a fundraising in very difficult circumstances and their advice and input was much appreciated. We have subsequently appointed Peterhouse Corporate Finance Limited as broker in the light of the Company's possible change to an AIM Rule 15 cash shell as described in Rule 15 of the AIM Rules for Companies, as foreshadowed by the Company's announcement this month about its financial and operational position. This appointment is no reflection on Brandon Hill, whose input was invaluable. Our nominated adviser, ZAI Corporate Finance Limited, shall cease nomad operations on 19 October 2017 and we are in discussions with a potential replacement nominated adviser.
FINANCING
We were significantly supported during the period by three principal funders, the Wang family, Redstone Capital Limited and Bergen Global Limited. I am very grateful to each of these funders for their crucial support for the Company. We have also been supported by a placing of new shares arranged by Brandon Hill Capital. Without their support, the Company would have been unlikely to find any alternative sources of funding and most likely therefore would have been unable to continue its existence. The Company announced earlier this month that the capital requirement it faces is inconsistent with the Company's ability to remain as a listed mining business and the Board has taken the difficult decision to implement the steps described in that announcement, to move towards disposing of the Company's mining operations and to become an AIM Rule 15 cash shell.
OPERATIONS
The Company has faced a number of challenges and has been, frankly, very unlucky indeed in relation to the serious issues which it has had to face. The period under review, and since, has been in many respects a case of one step forward and two steps back. I refer you to the financial update in the Chief Executive Officer's Report on page 12 of this Annual Report. It is not a cliché to describe the convergence of the events and circumstances as a "perfect storm", but that has been the effect.
The Company, and therefore shareholders, has had to bear the brunt of the following:
-- adverse weather conditions which have materially adversely affected production operations; -- labour relations issues; -- significant operational difficulties; -- difficulties in materials processing; and
-- a continued lack of co-operation from the operating subsidiary's Black Empowerment Partner, Puno.
I explain each of the above in more detail below.
On the face of it, the Company has made meaningful operational progress since the end of the financial year. Unfortunately, such progress as has been made is insufficient to justify the continued expenditure required, which the Company simply cannot afford. The Company's efforts and progress have been hampered and interrupted by the following matters:
Puno Gold Investments Proprietary Limited
Relations at the operating subsidiary, Central Rand Gold SA, with a Black Empowerment Partner, Puno Gold Investments Proprietary Limited ("Puno"), are poor. In June 2017, Puno lost a High Court case brought against it by each of the companies, Central Rand Gold SA and Central Rand Gold SA's immediate parent company, in respect of a cash call under the shareholders agreement relating to Central Rand Gold SA, which has resulted in an order for Puno to pay to Central Rand Gold SA the sum of R72 326 573.47 plus the legal costs incurred by the applicants. The Board of Central Rand Gold SA finds Puno a difficult and obstructive partner, which seems to be something of a loose term in that context. The management time and legal costs involved in having to deal with Puno are, in my view, whilst necessary to protect the interests of shareholders, largely attributable to the conduct of Puno.
Feed material
The feed material in 2016 from the tolling company was inappropriate in that the materials supplied differed from those sampled, and as a result, materials from the Mine Waste Dumps acquisition were used. This, however, was too expensive to economically extract in this fashion as the grade of the material is too low, and the requirement for additional chemicals in order to extract the gold from the material is not economical. Since year end, the majority of feed has been the Company's own material.
Open pit
The Company has commenced small scale open pit mining, in slot 4 of the Kimberley reef. Materials from those operations are being processed and the Company is also processing third party materials on a tolling basis.
iProp motion
No sooner than the Company commenced open pit operations than iProp Proprietary Limited ("iProp") lodged a motion with the court to have the settlement agreement entered into in 2009 ratified by Court order to, in effect, compel the parties to implement the terms of the settlement agreement. Following negotiations between the parties, iProp withdrew its motion and discussions between the parties continue. This process has taken a considerable amount of management attention and has required the expenditure of legal fees which the Company would obviously have preferred not to have had to incur.
In October 2017, iProp issued a claim to the Company's subsidiary, regarding the recovery of outstanding leases and rentals. The claim includes late penalty charges and interest, which have not been accrued in these consolidated financial statements. This matter is with the Company's legal advisors.
Concentrator circuit
The Company has also progressed its strategy of procuring centrifugal concentrators. These will be used to semi-process 40,000 tonnes per month of sand and slimes reclaim material, and then to metallurgically treat only a small percentage of the result, which will accordingly be richer in gold. The concentrator circuit arrived in South Africa in September 2017, after some delays, and is currently in the design phase for construction. It is anticipated that concentrator circuit will be installed and commissioned in December 2017, and will be fully operational in January 2018.
Labour dispute
11 days of post year end production has been lost due to industrial action under which the unionised workforce declared a dispute regarding the implementation of wage increases. The parties settled at the CCMA with the result that 50% of each employee's monthly salary shall be paid in the form of a "13(th) cheque" in December 2017. This dispute involved picketing of the site and "no work, no pay"; the additional payment agreed and the effect of the strike did not result in additional cost to the Company although the management distraction, the downtime and the additional cost has been unwelcome to say the least. I would like to thank management and the employees for reaching the agreement they did.
Suspension of trading
The Company could not guarantee that it will be able to meet its financial obligations as they fall due and as a result, the Company requested a suspension in trading in its shares on 11 May 2017. The Board is considering a number of solutions to ensure the Company meets its financial obligations. As at the date of this report, the Company's shares remain suspended, pending further developments. The Company announced this month the possibility of the disposal of its mining and exploration assets (and related debt) and to become an AIM Rule 15 cash shell. Proposals are likely to be put to shareholders shortly, which would involve a recapitalisation.
Mill downtime
The excessive rainfall in the region in the first quarter of 2017 adversely affected the running of the mills (mill 1, 2 and 3) which struggled to cope with crushing significantly cloggier and muddier feed materials than had been contemplated. This resulted in a significant reduction in processing output.
The instability of the power grid in the region, combined with the electrical storms resulting from the adverse weather, resulted in a number of power outages on site, which materially affected production in Q1 of this year. A generator has been ordered for the proposed Concentrator Circuit, in order to avoid future power outages.
Perversely, the excessive rainfall had been preceded by a drought which resulted in water use restrictions being imposed throughout Gauteng; the Company invested in a reticulation system to enable production to continue - this required additional expenditure for which the Company had not budgeted.
CONCLUSION
I would like to thank shareholders for their patience and resilience during this very difficult and unsatisfactory period for the Company. It has not showed the results I had hoped to see and has not turned out to be the Company I expected to chair.
Cash flows have been significantly lower than forecast. Accordingly, demands for finance have increased. Such finance as has been available, has inevitably been more expensive than ideally would be the case.
Please be assured the Board is committing a significant amount of time, much of which is unremunerated, to seek to deliver an outcome for shareholders which will provide what the Board considers is the best long term result for shareholders in the context of the Company's current capital base and very limited free capital. Had the Company been better capitalised, some of the difficulties could have been avoided or mitigated but funding has simply not been available to address the barrage of issues the Company has faced.
The Company's financial position has been and remains very challenging and the balance sheet is under significant strain.
We shall continue to keep shareholders informed of all material developments and matters which affect the Company. It has disclosed to the market its latest financial and operational status, with the likely outcome being a complete disposal of its mining operations, the disposal also of its debt obligations and its reclassification into an AIM Rule 15 cash shell.
I very much regret that I have been unable to deliver a positive message for you but I hope to deliver a more favourable outcome in due course.
Simon Charles
Independent Non-executive Chairman
Chief Executive Officer's report
INTRODUCTION
The Company had three key objectives during the first six months of 2016, namely:
-- to repair and replace Mill No 1 that broke down in January 2016; -- to create a positive cash flow going forward; and -- to stabilise operations.
The objective for the second half of 2016 was to toll treat third party material through the Central Rand Gold SA metallurgical processing plant, as per the agreement concluded with Nikkel Mining.
KEY SALIENT FEATURES DURING 2016
-- The loss before interest, tax, depreciation and impairment for the 2016 financial year amounted to US$3.1 million (2015: US$2.9 million (restated)).
-- The rate of dewatering of the underground workings increased and the water table measured approximately 160 metres below surface ("mbs") in October 2016. However, the water levels increased to approximately 133 mbs at the end of 2016 as a result of heavy rains. The pumping station is being managed by Trans Caledon Tunnel Authority ("TCTA"), a government company.
-- The Mill No 1 was successfully replaced by a refurbished Mill and operations were temporarily halted in order to reduce expenditure during the maintenance period.
-- Excess labour issues were challenging for Central Rand Gold SA. This was resolved by embarking on a process to right-size the workforce according to the operational requirements. The process was successfully concluded, resulting in only four employees being retrenched.
SAFETY
Safety statistics
Type of injury Year ended Year ended
31 December 31 December
2016 2015
---------------- ------------- -------------
Dressing cases 2 -
---------------- ------------- -------------
Lost time
injuries 4 3
---------------- ------------- -------------
Fatalities - -
---------------- ------------- -------------
Safety remains a key focus for the Company, irrespective of the environment in which it operates. The Company has embarked on a number of safety campaigns to invigorate the safety culture in the Company. The impact of the safety campaigns has resulted in 164 lost time injury free days as at 22 June 2017, which is a record for Central Rand Gold SA to date.
ACID MINE DRAINAGE ("AMD")
The High Density Sludge ("HDS") plant is owned by a government entity, TCTA, and has been operational since mid-2014. The Company continues to monitor the water level at its mining operations as well as the daily discharge pumped out of the Central Basin from the HDS plant. The Company has observed that when the flow rate is maintained at approximately 60 million litres per day ("mlpd"), which equates to approximately 80% of nameplate capacity, a reduction in the water level occurs. The water levels dropped considerably to 160 mbs in October 2016. However, once the rainy season started again during November 2016, the water increased once again, to 133 mbs in December 2016.
Central Rand Gold SA visited the plant and had discussions with the personnel operating the plant. The observation reached is that there are various areas where there is further ingress of water along the Central Basin, and therefore alternate pumping methods need to be considered in addition to the AMD plant.
Various projects are being undertaken by the Company in order to evaluate the possibility of expediting the water pumping, and of mining underground, using different mine plans and methodologies.
MINING UPDATE
Mineral Resources
In August 2016, the application for the renewal of the Mining Rights was compiled and submitted to the DMR in South Africa. Since the submission, no further correspondence has been received from the DMR, and Central Rand Gold has continued operations.
The Mineral Resources remain unchanged from the previous year, due to the cessation of underground workings. Surface operations are classified as 'Exploration Target' in terms of the SAMREC code.
The temporary cessation of underground mining in September 2014, due to the rising water levels, precipitated a dramatic shift in the mining operations. The Company started moving away from open pit mining to target the higher grade underground ore body. The shift back to surface did have a significant impact on the Company.
The below table provides the current surface areas available for mining:
Viable
Strike Estimated Average
Length Tonnes Grade Thickness Estimated
Location (m) (t) (g/t) (cm) Ounces Reef Package
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 1 338 35,395 1.60 124 1,308 Kimberley
----------- -------- --------- ---------- ----------- ---------- -------------
N1 Bypass 1,380 77,764 1.40 84 3,496 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 6 450 85,068 2.17 113 5,929 Kimberly
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 5
Nasrec 120 13,191 1.35 72 572 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 5
CW Road 1,300 130,317 1.29 72 5,405 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 10 460 89,050 1.98 123 5,669 Kimberley
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 11
West 820 288,302 1.98 360 18,311 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 11
East 345 125,491 1.98 131 7,970 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 11
A west 650 70,589 1.98 131 4,483 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 11
A east 470 130,188 1.98 47 8,288 Bird
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 12 460 90,283 1.29 123 3,747 Kimberley
----------- -------- --------- ---------- ----------- ---------- -------------
Slot 4 836 60,162 2.09 132 4,043 Kimberley
----------- -------- --------- ---------- ----------- ---------- ------------- Slot 5 406 49,015 2.12 92 3,342 Bird ----------- -------- --------- ---------- ----------- ---------- ------------- Slot 7 1,964 150,708 2.23 189 10,786 Bird ----------- -------- --------- ---------- ----------- ---------- -------------
The quantity and grade described above has been derived from historical sampling data, together with current information gathered and verified by both the Mining Engineer (J Ramabaleha), and the Geologist (S Ngcobo) at Central Rand Gold.
The above table does not include surrounding sand and slimes resources which the Company has sourced and secured for the Concentrator Plant, which was purchased in 2017 and will be operational by January 2018.
Production statistics
31 December 31 December Variance
2016 2015 Tonnes (t)
Tonnes (t) Tonnes (t)
------------- ------------ ------------ ------------
Underground - - -
------------- ------------ ------------ ------------
Surface 33,424 204,916 (171,492)
------------- ------------ ------------ ------------
Reclamation 36,892 - 36,892
------------- ------------ ------------ ------------
Total 70,316 204,916 (134,600)
------------- ------------ ------------ ------------
Surface mining was largely focused at Slots 4, 5 and 7 during 2016. Pits at Slots 5 and 7 have been mined down to a depth of approximately 30 metres. The average belt grade for these pits to date is 1.94g/t. In March 2016, the pits were put onto Care and Maintenance as Mill Number 1 was structurally damaged and the Company had to source a new mill. The mining strategy was revised and commenced once again at Slot 4 in the first quarter of 2017. Focus is now on the rehabilitation of previously mined-out pits.
With over 100 years of significant mining in the Johannesburg region, there remains a significant amount of old rock and slime dumps, which surround the Company's metallurgical plant. Various owners of these dumps have approached Central Rand Gold to sell or enter into a joint venture with them for the extraction of gold from the materials.
To this extent, drilling and sampling operations have been undertaken. Where economical grades have been identified and with the consent of the resource owners, the Company has removed this material and processed it through its metallurgical plant. This activity has an added benefit of rehabilitating the surrounding area. A project was undertaken in partnership with Zhejiang Golden Machinery Plant ("ZGMP") to test a concentrator pilot plant. The material used is reclaimed slimes/sands, with below 1g/t grades. The outcome of the test work was positive and the concentrator plant was sourced from China. The concentrator plant was delivered to site in September 2017 and is currently in the design phase for construction. It is anticipated that the concentrator plant will be installed and commissioned in December 2017, and will be fully operational in January 2018. Central Rand Gold will then be able to process the reclaimed slimes/sands dump material economically.
METALLURGICAL UPDATE
Production statistics
2016 2015
--------------------------- ------------- -------------
January January
to December to December
--------------------------- ------------- -------------
Internal
--------------------------- ------------- -------------
Tonnes processed (t) 48,938 183,761
--------------------------- ------------- -------------
Built up head grade
(g/t) 1.49 1.69
--------------------------- ------------- -------------
Fine gold produced
(Oz) 1,394 7,017
--------------------------- ------------- -------------
External (Toll treatment)
--------------------------- ------------- -------------
Tonnes processed (t) 65,979 -
--------------------------- ------------- -------------
Delivered grade (g/t) 1.37 -
--------------------------- ------------- -------------
Fine gold produced 1,740 -
(Oz)
--------------------------- ------------- -------------
Total tonnes processed
(t) 114,917 183,761
--------------------------- ------------- -------------
Total gold produced
(Oz) 3,134 7,017
--------------------------- ------------- -------------
Internal gold production for 2016 was less than that of 2015 due to the fact that Mill Number 1 was irreparable after a breakdown and consequently, the Company had to source another mill. A second-hand mill was purchased, installed and commissioned in October 2016, with full production capacity being reached in November 2016.
All production was halted at the end of May 2016, and a total plant clean up and shut down maintenance was undertaken. Production commenced in August 2016, with the tolling of a third party's material for the remainder of the year.
FINANCIAL UPDATE
Results
The loss before interest, tax, depreciation and impairment for the period under review amounted to US$3.1 million, considerably higher than that of 2015 at US$2.9 million (restated).
Revenue realised from the sale of gold, derived from mining activities for the year pertaining to internal gold production, decreased to 3,134 ounces (2015: 7,017 ounces), which is as a direct result of halting operations in May 2016 and then commencing only with toll treatment for the remainder of the period. The gold recovered from the tolled material is not recognised as income for Central Rand Gold, and is attributed to the third party; only the tolling fee is recognised as income. Overall revenue in US Dollar terms (being from gold sales as well as toll treatment) decreased by 41% from US$8.1 million in 2015 to US$4.8 million in 2016, which is as a result of the down-time of operations.
Significant restructuring occurred within the Company to realign the business to its new focus on toll treatment, with significant job reductions, as well as changes to the management team and structure. At the end of 2015, the executive team exited from the organisation and apart from the CEO position, the vacancies were not filled. The operations were managed empowering the current personnel. The Chief Executive Officer of Central Rand Gold SA managed both the roles of Chief Financial Officer and Chief Executive Officer of the Group during 2016. This trend is positive and the key focus remains to move the organisation into sustainable cash generation as well as into a profit making position.
Cash generated from fundraising and through the subscription of new ordinary shares was used throughout the year in order to sustain the operations, and for the replacement and repairs of critical equipment. Since the suspension of the trading of shares, the operations have managed to fund their own cash flows from production.
During the financial period, the Group discovered a number of accounting errors relating to transactions and balances that had not been recorded during the year ended 31 December 2015. Please refer to note 35 of the Annual Financial Statements for details of these prior period errors.
LOOKING FORWARD
The focus over the next year is to continue to toll treat material through the plant, to mine a small open pit operation and to purchase, install and commission a concentrator plant so that the Company can diversify its risk. This diversification will enable the Company to respond to the market conditions which may negatively affect the ability of the Company to actively generate an income. Central Rand Gold SA will also focus on the rehabilitation of the mined out areas.
Various opportunities have been brought to the attention of Central Rand Gold, and project and task teams have been formed to evaluate each one, and make recommendations to the Board for possible joint ventures, mergers and/or mining opportunities. Despite none of the opportunities being deemed as viable, capital raising efforts are continuing. To that end, in September 2017 the Company appointed Peterhouse Corporate Finance Limited as its brokers, with a view to the Company undertaking a recapitalisation. Work is underway in relation to that process, in the context of the Company putting proposals to shareholders for the necessary authority to enable any such recapitalisation to occur and subsequent proposals to restructure the Company to divest itself of its mining interests and related indebtedness but retaining its listings.
Lola Trollip
Chief Executive Officer
Statement of Financial Position
as at 31 December 2016
Group
-------------------------------------- --------------------------------
Restated Restated
2016 2015 2014
Notes US$'000 US$'000 US$'000
ASSETS
Non-current assets
Plant and equipment 1,354 2,146 3,409
Intangible assets 1,430 1,691 2,830
Security deposits and
guarantees 52 46 191
Environmental guarantee
investment 2,659 2,584 3,177
Loans receivable 7,706 6,164 7,513
13,201 12,631 17,120
--------- --------- ----------
Current assets
Security deposits and
guarantees 29 26 65
Prepayments and other
receivables 361 444 1,239
Inventories 28 120 76
Cash and cash equivalents 489 556 914
Derivative asset - - 720
907 1,146 3,014
--------- --------- ----------
Total assets 14,108 13,777 20,134
========= ========= ==========
EQUITY
Attributable to equity
holders of the parent
Share capital 9 28,372 26,617 26,490
Share premium 9 225,289 224,037 222,963
Share-based compensation
reserve 28,238 28,238 28,238
Treasury shares (6) (6) (6)
Foreign currency translation
reserve (27,234) (27,921) (29,597)
Accumulated losses (266,189) (261,713) (261,715)
--------- --------- ----------
(11,530) (10,748) (13,627)
Non-controlling interest - - -
Total equity (11,530) (10,748) (13,627)
--------- --------- ----------
LIABILITIES
Non-current liabilities
Environmental rehabilitation 3,281 3,676 4,904
Loan payable 7,706 6,164 13,285
10,987 9,840 18,189
--------- --------- ----------
Current liabilities
Trade and other payables 6,767 6,939 6,947
Royalties taxation payable 188 140 177
Loan payable 6 7,522 6,959 -
Derivative liability 6 174 647 8,448
14,651 14,685 15,572
--------- --------- ----------
Total liabilities 25,638 24,525 33,761
--------- --------- ----------
Total equity and liabilities 14,108 13,777 20,134
========= ========= ==========
Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2016
Group
-------------------------------------------- --------------- --------
Restated
2016 2015
Notes US$'000 US$'000
Revenue 4,825 8,093
Production costs (1,684) (6,079)
Employee benefits expense (2,071) (2,252)
Directors' emoluments (254) (468)
Operating lease expense (1,252) (872)
Operational expenses (443) (469)
Other expenses (2,388) (1,072)
Other income and gains 169 305
Foreign exchange transaction losses (49) (75)
-------- --------
Loss before interest, tax, depreciation
and impairment (3,147) (2,889)
Depreciation and amortisation
charge (698) (925)
Impairment of assets (1,380) (1,418)
Fair value movement in embedded
derivative 6 1,194 7,081
Finance and investment income 1,205 1,149
Finance costs (1,650) (2,996)
-------- --------
(Loss)/profit before income tax (4,476) 2
Income tax expense - -
-------- --------
(Loss)/profit for the year (4,476) 2
-------- --------
(Loss)/profit is attributable
to:
Non-controlling interest - -
Equity holders of the parent (4,476) 2
(4,476) 2
-------- --------
(Loss)/earnings per share for
loss attributable to the equity
holders during the year (expressed
in US cents per share)
Basic (loss)/earnings per share (3.06) -
Diluted loss per share (3.05) (2.79)
Statement of Profit or Loss and Other Comprehensive
Income (continued)
for the year ended 31 December 2016
Group
-------------------------------------------- ------------------
Restated
2016 2015
US$'000 US$'000
(Loss)/profit for the year (4,476) 2
-------- --------
Other comprehensive (loss)/income:
Item that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations 687 1,676
Other comprehensive (loss)/income
for the period, net of tax 687 1,676
-------- --------
Total comprehensive (loss)/income
for the period (3,789) 1,678
-------- --------
Total comprehensive (loss)/income
is attributable to:
Non-controlling interest - -
Equity holders of the parent (3,789) 1,678
--------
(3,789) 1,678
-------- --------
Statement of Changes in Equity
for the year ended 31 December 2016
Attributable to equity holders of the Group
---------------------------------------------------------------------
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Total
capital premium reserve shares reserve losses equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
------------------ -------- -------- ------------ -------- ----------- ------------ ---------
Balance at
1 January 2015
- previously
reported 26,490 222,963 28,238 (6) (29,534) (261,559) (13,408)
Adjustments -
prior period
errors - - - - (63) (156) (219)
-------- -------- ------------ -------- ----------- ------------ ---------
Balance at
1 January 2015
- restated 26,490 222,963 28,238 (6) (29,597) (261,715) (13,627)
Total
comprehensive
income for the
year
Profit for the
year - restated - - - - - 2 2
Other
comprehensive
income
Foreign currency
adjustments - - - - 1,676 - 1,676
Transactions with
owners, recorded
directly in equity
Issue of shares:
Capital raising 127 1,074 - - - - 1,201
Balance at
31 December 2015
- as restated 26,617 224,037 28,238 (6) (27,921) (261,713) (10,748)
-------- -------- ------------ -------- ----------- ------------ ---------
Attributable to equity holders of the Group
---------------------------------------------------------------------
Foreign
Ordinary Share-based currency
share Share compensation Treasury translation Accumulated Total
capital premium reserve shares reserve losses equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
------------------ -------- -------- ------------ -------- ----------- ------------ ---------
Balance at
31 December 2015
- previously
reported 26,617 224,037 28,238 (6) (28,993) (260,117) (10,224)
Adjustments -
prior period
errors - - - - 1,072 (1,596) (524)
Balance at
31 December 2015
- restated 26,617 224,037 28,238 (6) (27,921) (261,713) (10,748)
Total
comprehensive
income for the
year
Loss for the year - - - - - (4,476) (4,476)
Other
comprehensive
expense
Foreign currency
adjustments - - - - 687 - 687
Transactions with
owners, recorded
directly in equity
Issue of shares:
Capital raising 1,755 1,252 - - - - 3,007
-------- -------- ------------ -------- ----------- ------------ ---------
Balance at
31 December 2016 28,372 225,289 28,238 (6) (27,234) (266,189) (11,530)
-------- -------- ------------ -------- ----------- ------------ ---------
Statement of Cash Flow
for the year ended 31 December 2016
Group
------------------------------------------ --------------- ----------
Restated
2016 2015
Notes US$'000 US$'000
------------------------------------------- ----- -------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before tax (4,476) 2
Adjusted for :
Depreciation and amortisation 698 925
Loss/(profit) on disposal of plant
and equipment 892 (146)
Profit on disposal of shares (3) -
Impairment of assets 1,380 1,418
Revaluation of investment (54) -
Net loss on foreign exchange 49 75
Finance income (1,205) (1,149)
Finance costs 1,650 2,996
Fair value movement in embedded
derivative 6 (1,194) (7,081)
Changes in working capital
Decrease in prepayments and other
receivables 84 795
Decrease/(increase) in inventory 92 (44)
Decrease in trade and other payables (172) (8)
Decrease in provisions (1,294) -
-------- --------
Cash flows used in operations (3,553) (2,217)
Finance income received 195 783
Net cash used in operating activities (3,358) (1,434)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment (9) (92)
Proceeds from disposal of plant
and equipment - 180
Increase in environmental guarantee
deposit - 65
Withdrawal of capital on guarantee
investment 422 -
-------- --------
Net cash from investing activities 413 153
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares for
cash 9 3,185 1,261
Cost relating to the issue of shares 9 (178) (60)
Net cash from financing activities 3,007 1,201
-------- --------
Net decrease in cash and cash equivalents 62 (80)
Cash and cash equivalents at 1 January 556 914
Effects of exchange rate fluctuations
on cash balances (129) (278)
-------- --------
Cash and cash equivalents at 31
December 489 556
======== ========
Notes to the Annual Financial Statements
1. General information
Central Rand Gold Limited ("Central Rand Gold") is
a Guernsey incorporated company and it is also registered
in South Africa as an external company. One of its
subsidiaries, Central Rand Gold (Netherland Antilles)
N.V. ("CRGNV"), was incorporated in the Netherlands
Antilles. Central Rand Gold's operating subsidiary
is Central Rand Gold South Africa Proprietary Limited
("Central Rand Gold SA"). Central Rand Gold has a primary
listing on the London Stock Exchange ("LSE") and a
secondary listing on JSE Limited ("JSE").
Central Rand Gold complies with the company laws of
its place of incorporation being Guernsey and the company
laws of the place of its external registration being
South Africa. One of its subsidiaries, CRGNV, is incorporated
in the Netherlands Antilles, therefore the Group is
also impacted by the company laws of the Netherlands
Antilles.
The financial information for the year ended 31 December
2016 set out in this announcement does not constitute
the Company's statutory accounts. These financial statements
included in the announcement have been extracted from
the Group annual financial statements for the year
ended 31 December 2016. The financial statements have
been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting
Standards adopted for use in the European Union. However,
this announcement does not itself contain sufficient
information to comply with IFRS.
The auditor has issued his opinion on the Group's financial
statements for the year ended 31 December 2016 which
is qualified and contains an emphasis of matter paragraph
in respect of the matters referred to under note 2
'Going concern' and is available for inspection at
the Company's registered address and will be posted
to the Group's website.
The basis for the qualified opinion is presented below:
With respect to plant and equipment amounting to US$1.35
million at 31 December 2016, evidence available to
us was limited because we were unable to carry out
sufficient physical testing of items and verification
into the Group's fixed asset register. Owing to the
nature of the Group's accounting books and records,
we were unable to obtain sufficient audit evidence
regarding the valuation, existence and completeness
of plant and equipment by using other audit procedures.
The emphasis of matter paragraph is presented below:
Emphasis of matter - Going concern
In forming our opinion on the consolidated financial
statements, we have considered the adequacy of the
disclosures made in note 2 to the consolidated financial
statements concerning the Group's ability to continue
as a going concern. The Group incurred a net loss of
US$4.48 million during the year ended 31 December 2016
and, at that date, the Group's net current liabilities
amounted to US$13.6 million. These conditions, along
with the other matters explained in note 2 to the consolidated
financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about
the Group's ability to continue as a going concern.
The consolidated financial statements do not include
adjustments that would result if the Group was unable
to continue as a going concern.
2. Basis of preparation
The consolidated financial statements have been prepared
in accordance with the recognition and measurement
criteria of International Financial Reporting Standards
and Interpretations (collectively "IFRS") issued by
the International Accounting Standards Board ("IASB")
as adopted by the European Union ("EU"). However, this
announcement does not itself contain sufficient information
to comply with IFRS. The Company will publish full
financial statements that comply with IFRS on 16 October
2017.
The consolidated financial statements are presented
in United States Dollars ("US$" or "US Dollar") and
rounded to the nearest thousand. The functional currency
of the parent company is the US Dollar. The functional
currency of its principal subsidiary, Central Rand
Gold SA is the South African Rand ("ZAR" or "Rand").
Going concern
The Group had net current liabilities at 31 December
2016 of US$13.6 million, including US$7.7 million of
loan notes (and interest), with Redstone Capital Limited
and Mr Wang, and US$6.8 million of trade and other
payables. The ability of the Group to continue as a
going concern is dependent on the Group securing access
to sufficient additional funding and extending the
repayment terms of existing loan notes or the loan
note holders converting the loan notes into equity,
to support the Group's cash flow projections.
In April 2016, following the decision of the High Court
of South Africa to uphold the Company's appeal with
costs in relation the dispute with Puno Gold Investments
Proprietary Limited ("Puno"), Puno submitted an application
to wind up the Group's South African operating subsidiary.
As previously announced, the Board believes this to
be the latest strategy from Puno to frustrate the operations
of the Company and considers the application to be
without merit. The Company has engaged legal advisers
to defend the action and has submitted its legal rejection
of the application. The time period for Puno to file
their replying affidavit lapsed on 22 June 2016. Puno's
opportunity to file further affidavits has now lapsed
and the Company awaits Puno's confirmation whether
they intend to persist in their application. In May
2017, the Company applied for the abandonment of the
liquidation application, and was successful. This resulted
in the liquidation application being rendered null
and void.
In May 2016, the Group ceased open pit mining operations
and will instead temporarily focus on toll treatment
operations under a binding tolling agreement with a
third party which is expected to be cash flow generative.
The open pit was recommenced in March 2017, and various
other tolling agreements were entered into. This has
created flexible income streams, and has also reduced
the risk of scarcity of material for feeding the plant.
Since the year end, the Group has raised US$1.6 million
(net) through share placements and drawn down US$0.6
million of bridge finance under a convertible loan
note facility ('CLN') with Bergen Global Opportunity
Fund, LP ('Bergen') for working capital purposes. Under
the terms of the agreement, the Group can draw down
up to US$4.0 million subject to agreement by both parties.
Whilst CRGSA's operations have by and large stabilised
operationally in 2017, the financial and operational
positions remain fragile and there is a very thin working
capital position at the operating company level with
a negative position within the Company, as mentioned
above. The Company's production for the period January
2017 to 30 June 2017 was 2 320 Troy Ounces. The Company's
overall financial position is accordingly negative
and the Directors are now actively exploring urgent
financing options. In order to remain a listed, operational
mining group, in steady state and with a view to achieving
medium term profitability, the Directors consider a
cash injection of not less than US$ 20 million would
be required to be made. The Directors consider that
this is unlikely to be forthcoming in the near future
or at all. Accordingly the Directors are actively pursuing
options which would involve retaining its listings
but the disposal of the Company's interests in its
immediate subsidiary company, Central Rand Gold (Netherlands
Antilles) BV, unless it is able to secure sufficient
alternative finance at the required level in the very
near future.
The Group's Senior Secured Loan Notes of US$7.25 million
principal ('the Notes'), held by the Group's largest
shareholder Redstone Capital Limited ('Redstone'),
fell due for maturity in September 2016. Redstone has
provided a written undertaking to extend the maturity
of the Notes to at least December 2018 subject to concluding
negotiations regarding revisions to the terms of conversion
in the coming months. The Directors, based on discussions
with representatives of Redstone, fully expect that
the Notes will ultimately be converted rather than
called for payment.
The Directors have prepared cash flow forecasts for
a period of at least 12 months from the date these
financial statements were approved, which show that
the Group is able to meet its liabilities as they fall
due. However, the cash flow forecasts are dependent
upon the Group successfully concluding the sale of
the operating listed entity, and, by novating the loans
to the operating entities, privatising those operations.
The Directors have concluded that the above circumstances
give rise to a material uncertainty that may cast significant
doubt on the Group's ability to continue as a going
concern and it may therefore be unable to realise its
assets and discharge its liabilities in the normal
course of business. Nevertheless, after taking account
of the Group's plans to sell off some of the assets,
and having considered the risks and uncertainties associated
with the forecasts, the Directors have a realistic
expectation that the Group will have adequate resources
to continue in operational existence for at least 12
months from the date of approval of these financial
statements. For these reasons, the Directors continue
to prepare the financial statements on a going concern
basis, and the financial statements do not include
any adjustments that would result from the going concern
basis of preparation being inappropriate.
3. Accounting policies
These results have been prepared on a basis that is
consistent with the accounting policies applied by
the Group in its audited consolidated financial statements
for the year ended 31 December 2015 and which will
form the basis of the 2016 annual report.
(a) New and amended standards adopted by the Group
In 2016 the Group adopted the amendments to IFRS 7
'Financial Instruments: Disclosures', IFRS 10 'Consolidated
Financial Statements', IAS 1 'Presentation of Financial
Statements', IAS 16 'Property, Plant and Equipment,
IAS 19 'Defined Benefit Plans: Employee Contributions
and IAS 38 'Intangible Assets'. These have had no significant
impact on the Group's results.
(b) New standards, amendments and interpretations not
yet adopted
A number of new standards, amendments to standards
and interpretations are effective for annual periods
beginning after 1 January 2016, and have not been applied
in preparing these consolidated financial statements.
Those which may be relevant to the Group are set out
below. The Group does not plan to adopt these standards
early.
The amendments to IFRS 2 'Share-based Payment', IFRS
12 'Disclosure of Interests in Other Entities', IFRS
15 'Revenue from Contracts with Customers', IAS 7 'Statement
of Cash Flows' and IAS 12 'Income Taxes' are effective
for accounting periods beginning on or after 1 January
2017 but with early adoption permitted. The amendments
to IFRS 15 'Revenue from Contracts with Customers'
is effective for accounting periods beginning on or
after 1 January 2018 but with early adoption permitted.
Management is still evaluating the effect of the adoption
of IFRS 15 'Revenue from Contracts with Customers'
to the operating results of the entity. The amendments
to IFRS 16 'Leases' is effective for accounting periods
beginning on or after 1 January 2019 but with early
adoption permitted. The adoptions are not expected
to have a significant impact upon the Group's net results,
net assets or disclosures.
IFRS 9 'Financial Instruments' replaces IAS 39 Financial
Instruments: Recognition and Measurement. The standard
includes requirements for recognition and measurement,
impairment, derecognition and general hedge accounting.
It uses a single approach, based on how an entity manages
its financial instruments (its business model) and
the contractual cash flow characteristics of the financial
assets, to determine whether a financial asset is measured
at amortised cost or at fair value. It requires a single
impairment method to be used, replacing the numerous
impairment methods in IAS 39 that arose from the different
classification categories. It also removes the requirement
to separate embedded derivatives from financial asset
hosts. The standard introduces new requirements for
an entity choosing to measure a liability at fair value
to present the portion of the change in its fair value
due to changes in the entity's own credit risk in the
other comprehensive income section of the statement
of comprehensive income, rather than within profit
or loss. This new standard may impact the classification
and measurement of financial assets and the Group is
in the process of assessing the impact. The standard
is effective for year ends beginning on or after 1
January 2018.
4. Directorate
During the financial period under review, the composition
of the Board of Directors was as follows:
Name Position
--------------------- -----------------------
Mr Nathan Taylor Non-executive Chairman
--------------------- -----------------------
Mr Jason Hou Non-executive Director
--------------------- -----------------------
Mr Allen Phillips(1) Non-executive Director
--------------------- -----------------------
Mr Mark Austin Non-executive Director
--------------------- -----------------------
(1) Mr Allen Phillips resigned from the Board and its
committees on
6 June 2016.
5. Segment reporting
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenues and incur expenses, whose operating results
are regularly reviewed by the entity's chief operating
decision maker to make decisions about resources to
be allocated to the segment and assess its performance,
and for which discrete financial information is available.
The entity's chief operating decision maker reviews
information in one operating segment, being the acquisition
of mineral rights and data gathering in the Central
Rand Goldfield of South Africa, therefore management
has determined that there is only one reportable segment.
Accordingly, no analysis of segment revenue, results
or net assets has been presented. No corporate or other
assets are excluded from this segment.
6. Loans payable - Redstone Capital Limited
Central
Redstone's Rand Gold's
debt conversion debt conversion
Debt Warrant option option Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
At 1 January
2015 5,772 2,383 6,065 (720) 13,500
Fair value (gain)/loss - (1,905) (5,896) 720 (7,081)
Interest 1,767 - - - 1,767
Cash paid (580) - - - (580)
--------- --------- ----------------- ----------------- ---------
At 31 December
2015 6,959 478 169 - 7,606
Fair value (gain)/loss (618) - 5 - (613)
Derivative lapsed - (478) - - (478)
Interest 582 - - - 582
At 31 December
2016 6,923 - 174 - 7,097
========= ========= ================= ================= =========
7. Related party transactions
On 19 August 2013, shareholders of the Company approved
the issue to Redstone, of US$7.25 million convertible
loan note instruments bearing 8% p.a. coupon interest
payable on a quarterly basis and repayable on 19 August
2016. The repayment terms were amended and extended
to 31 December 2018. In addition to this, the Company
entered into an agreement to issue to Redstone warrants
equivalent to 50% of the Convertible Loan Note and
an Option Agreement that, in the event that the Company
undertook an open offer, Redstone will have an option
to subscribe for such additional number of Ordinary
Shares to ensure that its percentage holding of the
issued share capital of the Company would remain unchanged
(assuming the full conversion of the Loan Notes) following
any such open offer. All warrants lapsed on 19 August
2016.
8. Share-based payments
During the year, no further share options were granted
to employees.
9. Share capital and share premium
Issued
and
Number fully paid
of shares up shares Share premium Total
US$ '000 US$ '000 US$ '000
At 1 January 2015 87,180,808 26,490 222,963 249,453
Issue of shares
for cash 8,015,000 127 1,134 1,261
Cost of share issue - - (60) (60)
----------------------- ----------- ------------------------- --------------------
At 31 December
2015 95,195,808 26,617 224,037 250,654
Issue of shares
for cash 43,811,340 627 1,430 2,057
Shares issued in
respect of convertible
securities 68,743,550 1,128 - 1,128
Cost of share issue - - (178) (178)
----------------------- ----------- ------------------------- --------------------
At 31 December
2016 207,750,698 28,372 225,289 253,661
======================= =========== ========================= ====================
On 5 February 2016, the Company issued 14,279,371
new Ordinary Shares of GBP0.01 each at a price of
3.5 pence per Ordinary Share, which raised gross
proceeds of approximately US$0.72 million (GBP0.50
million).
On 7 March 2016, the Company issued 20,719,644 new
Ordinary Shares of GBP0.01 each at a price of 3.5
pence per Ordinary Share, which raised gross proceeds
of approximately US$1.05 million (GBP0.72 million).
On 7 June 2016, the Company issued 4,620,005 new
Ordinary Shares of GBP0.01 each at a price of 3.0
pence per Ordinary Share, which raised gross proceeds
of approximately US$0.2 million (GBP0.14 million).
On 7 June 2016, the Company entered into a convertible
securities issuance deed ("Bergen Funding Agreement")
with Bergen Global Opportunity Fund, LP ("Bergen"),
an institutional investment fund managed by Bergen
Asset Management, LLC, a New York asset management
firm, in connection with an issuance by the Company
of zero coupon convertible securities (the "Convertible
Securities"). The Convertible Securities were (subject
to the satisfaction of certain customary conditions)
issued in tranches and as at 31 December 2016 the
Convertible Securities were fully converted into
72,935,870 new Ordinary Shares.
On 21 July 2016, the Company issued 4,192,320 new
Ordinary Shares of GBP0.01 each at a price of 1.3
pence per Ordinary Share, which raised gross proceeds
of approximately US$0.09 million (GBP0.05 million).
10. Dividends
No dividends were declared or paid during the year
under review.
11. Reconciliation between (loss)/earnings and headline
(loss)/earnings attributable to equity holders of
the Group
Headline (loss)/earnings are specific disclosures
defined and required by the Johannesburg Stock Exchange
and are non-GAAP financial measures.
Group
2016 2015
US$'000 US$'000
(Loss)/profit attributable to
equity holders of the Group (4,476) 2
Add: Loss on disposal of plant
and equipment 892 -
Less: Profit on disposal of
plant and equipment - (146)
------------ ---------
Headline (loss)/earnings (3,584) (144)
============ =========
12. Contingent liability
Thin capitalisation
The tax legislation with regards to thin capitalisation
changed with effect from 1 April 2012 and is applicable
in respect of years of assessment commencing on or
after that date. The safe harbour ratio of 3:1 included
in the previous legislation was replaced with the
concept of "arm's length." In instances where the
loans are considered not to be on an arm's length
basis all or part of the interest charged could be
disallowed as a deduction. Any interest not allowed
as a deduction will be treated as an adjustment in
terms of Section 31 of the Income Tax Act. In terms
of Section 31(3) of the Income Tax Act, any adjusted
amount for transfer pricing and thin capitalisation
purposes, prior to 1 January 2015, constituted a
deemed loan. As per the amended law, should this
amount, plus interest deemed to have accrued on it,
not have been repaid to the taxpayer by the relevant
non-resident connected person by 31 December 2014,
the outstanding "deemed loan" must "be deemed to
be a dividend consisting of a distribution of an
asset in specie, that was declared and paid by that
resident to that other person on 1 January 2015".
Such deemed dividend will be subject to Dividends
Withholding Tax ("DWT"), at a rate of 15%.
In prior years, management obtained a legal opinion,
based on which they concluded that there is no deemed
loan. In further assessing the impact of the amendments
on its intercompany loans, management concluded that
due to the lack in industry guidance pertaining to
the application of the "arm's length" concept, management
will be unable to confirm their conclusion without
finalising a full Transfer Pricing benchmarking study
applying OECD (Organisation for Economic Co-operation
and Development) principles.
Open tax years
Central Rand Gold SA has entered into an Alternative
Dispute Resolution with the South African Revenue
Service relating to income tax returns submitted
for the years of assessments 2010 to 2012.
iProp claim
iProp, the landowner of various mining sites, has
lodged a claim for outstanding rentals and leases.
The amounts claimed are currently being reconciled,
in order to quantify the position.
13. Events occurring after reporting date
Operating
Feed material
The feed material provided by the tolling company
was inappropriate in that the materials supplied
differed from those sampled and as a result materials
from the Mine Waste Dumps acquisition was used. This,
however, was too expensive to economically extract
in this fashion as the grade of the material was
too low, and the requirement for additional chemicals
in order to extract the gold from the material was
not economical. Since the year end, the majority
of feed has been the Company's own material.
Open pit
The Company has commenced small scale open pit mining,
in slot 4 of the Kimberley reef. Materials from those
operations are being processed and the Company is
also processing third party materials on a tolling
basis.
Concentrator circuit
The Company has progressed its strategy of procuring
centrifugal concentrators. These will be used to
semi-process 40,000 tonnes per month of sand and
slimes reclaim material, and then to metallurgically
treat only a small percentage of the result, which
will accordingly be richer in gold.
Labour dispute
11 days of post year end, production was lost due
to industrial action under which the unionised workforce
declared a dispute regarding the implementation of
wage increases. The parties settled at the CCMA with
the result that 50% of each employee's monthly salary
shall be paid in the form of a "13th cheque" in December
2017.
Suspension of trading
The Company cannot guarantee that it will be able
to meet its financial obligations as they fall due
and as a result, the Company requested a suspension
in trading in its shares on 11 May 2017. The Board
is considering a number of solutions to ensure the
Company meets its financial obligations. As at the
date of this report, the Company's shares remain
suspended, pending further developments
Mill downtime
The drought experienced resulted in water use restrictions
being imposed throughout Gauteng. The Company invested
in a reticulation system to enable production to
continue, which required additional expenditure for
which the Company had not budgeted.
The excessive rainfall in the region adversely affected
the running of the mills and both mill 1 and mill
2 struggled to cope with crushing significantly cloggier
and muddier feed materials than had been contemplated.
This resulted in a reduction in processing capacity.
The instability of the power grid in the region,
and the adverse weather which resulted in electrical
storms, together resulted in a number of power outages
on site which materially affected production in the
first quarter of 2017.
Fundraising
In order to strengthen its working capital and to
procure, ship, install and commission the Concentrator
Circuit, the Company has subsequent to year-end completed
the following fundraising:
* A new loan agreement ("the Loan Agreement") entered
into on 9 January 2017 with Mr Jia Bang Wang ("Mr
Wang") for funding in the amount of US$1 million
("Loan"). The loan bears interest at the UK prime
lending rate plus 2% per annum and is repayable
within six months from the date of entering into the
Loan Agreement. In the circumstance where the Company
would not be able to repay the Loan, the Loan
Agreement stipulates that the Company is to inform Mr
Wang of such circumstances. To date, the full value
of the Loan had been received by the Company. The
Loan became repayable on 9 July 2017 but the Company
was not in a position to repay the Loan at that stage
and accordingly informed Mr Wang as such.
* A share placement on 23 March 2017 of 60,000,000 new
ordinary shares at 0.5 pence, which raised GBP0.30
million.
* A bridge funding (the "Bridge Funding") through a
combined convertible securities with Bergen. The
Bridge Funding raised US$240,000. The Convertible
Securities were (subject to the satisfaction of
certain customary conditions) issued in tranches and
were fully converted into 26,946,257 new ordinary
shares by 2 May 2017.
Financing
The Directors have been actively exploring urgent
financing options. In order to remain a listed, operational
mining group, in steady state and with a view to
achieving medium-term profitability, the Directors
consider that a cash injection of not less than US$
20 million would be required. The Directors consider
that this is very unlikely to be forthcoming in the
near future or at all. Accordingly, the Directors
have been actively pursuing options which would involve
retaining its listings but would require the disposal
of the Company's interests in its immediate subsidiary
company, Central Rand Gold (Netherlands Antilles)
NV, unless it is able to secure sufficient alternative
finance at the required level in the very near future.
Puno dispute
On 13 June 2017, the High Court of South Africa,
(Gauteng Division, Pretoria) ("the Court") handed
down judgement under case number: 45200/2011, being
the matter initiated by the Company, CRGNV and CRGSA
against Puno on 25 November 2011. The judgement delivered
was in favour of the Company, CRGNV and CRGSA. The
Court upheld the views of these entities and rejected
the defences proffered by Puno. This judgement has
now definitively and positively pronounced on the
validity and enforceability of the funding call,
and found that such funding call was made in accordance
with the overarching law and the Shareholders Agreement.
iProp claim
In October 2017, iProp issued a claim to the Company's
subsidiary, regarding the recovery of outstanding
leases and rentals. The claim includes late penalty
charges and interest, which have not been accrued
in these consolidated financial statements. This
matter is with the Company's legal advisors.
Recapitalisation of the Company
In September 2017, the Company appointed Peterhouse
Corporate Finance Limited as its brokers, with a
view to the Company undertaking a recapitalisation.
Work is underway in relation to that process at the
time of approval of these consolidated financial
statements, in the context of the Company putting
proposals to shareholders for the necessary authority
to enable any such recapitalisation to occur and
subsequent proposals to restructure the Company,
to divest itself of its mining interests and related
indebtedness but retaining its listings.
Other
Subsequent to the appointment of Brandon Hill Capital
Limited ("Brandon Hill") as the Company's broker
on 23 January 2017, Central Rand Gold issued 936,330
ordinary shares in the Company as part consideration
of their fee, in accordance with the terms of their
engagement letter.
On 8 May 2017, the Company issued 4,200,000 ordinary
shares to a creditor in lieu of a fee due by the
Company.
14. Correction of prior period errors
During the financial period, the Group discovered
a number of accounting errors relating to transactions
and balances that had not been recorded during the
years ended 31 December 2014 and 31 December 2015.
Details are as follows:
1. An item of plant and equipment, being the dosing
tank, that was sold in 2014 was not recorded as such.
As a consequence, plant and equipment has been overstated
by US$464,243 and the loss on the disposal of the
asset has been understated by US$496,556 during the
year ended 31 December 2014. As a results of the
above, plant and equipment has been overstated by
US$334,725 and the depreciation and amortisation
charge has been overstated by US$14,743 during the
year ended 31 December 2015.
2. Interest on the Puno loan payable was incorrectly
calculated at prime plus 2% instead of at the prime
rate. As a consequence, the Puno loan balance at
31 December 2014 has been overstated by US$1,132,960
and the related interest expense has been overstated
by US$1,211,820. As a result of the above, the loan
payable has been overstated by US$1,071,656 and the
related interest expense has been overstated by US$70,245
during the year ended 31 December 2015.
3. Intangible assets, relating to the water pumps
previously donated to the Government, had not been
amortised during the year ended 31 December 2015
in accordance with IFRS and the Group's accounting
policies. As a consequence, intangible assets have
been overstated by US$422,889 and the related amortisation
expense has been understated by US$514,822.
4. Certain items of plant and equipment, being the
cone crusher, jaw crusher and electrical house, were
not capitalised during the 2014 year of assessment.
As a consequence, plant and equipment has been understated
by US$281,238, production costs have been overstated
by US$320,424, depreciation has been understated
by US$19,610, trade and other payables have been
understated by US$35,770 and the taxation expense
has been understated by US$38,259 during the year
ended 31 December 2014. As a result of the above,
plant and equipment has been understated by US$210,113
and trade and other payables have been understated
by US$26,723 during the year ended 31 December 2015.
5. The auditor's fees accrual during the 2015 financial
year was overstated in comparison with the actual
fee incurred. As a consequence, trade and other payables
have been overstated by US$57,701 and other expenses
have been overstated by US$70,245 during the year
ended 31 December 2015.
6. A prepayment in respect of insurance has been
overstated as the related expense was supposed to
be fully recognised in 2015. As a consequence, prepayments
and other receivables have been overstated by US$36,054
and other expenses have been understated by US$43,891
during the year ended 31 December 2015.
7. An outstanding debt payable past its collectable
date and that has been carried forward from previous
financial periods was written off. As a consequence,
trade and other payables have been overstated by
US$29,499 and the operational expense has been overstated
by US$35,911 during the year ended 31 December 2015.
8. Based on the current circumstances with Puno,
the net difference between the Puno loan receivable
and Puno loan payable should be provided for. As
a consequence, the Puno loan receivable was overstated
and the impairment expense was understated as at
31 December 2014 and 31 December 2015 by US$1,133,000
and US$1,071,653 respectively.
1. Consolidated Statement of Financial Position
Impact of correction of errors
Previously
stated Adjustments Restated
US$'000 US$'000 US$'000
1 January 2015
Non-current assets 18,436 (1,316) 17,120
Current assets 3,014 - 3,014
------------------------------- ------------ ---------
Total Assets 21,450 (1,316) 20,134
------------------------------- ------------ ---------
Non-current liabilities 19,322 (1,133) 18,189
Current liabilities 15,536 36 15,572
------------------------------- ------------ ---------
Total Liabilities 34,858 (1,097) 33,761
------------------------------- ------------ ---------
Total Equity (13,408) (219) (13,627)
=============================== ============ =========
31 December 2015
Non-current assets 14,251 (1,620) 12,631
Current assets 1,182 (36) 1,146
------------------------------- ------------ ---------
Total Assets 15,433 (1,656) 13,777
------------------------------- ------------ ---------
Non-current liabilities 10,912 (1,072) 9,840
Current liabilities 14,745 (60) 14,685
------------------------------- ------------ ---------
Total Liabilities 25,657 (1,132) 24,525
------------------------------- ------------ ---------
Total Equity (10,224) (524) (10,748)
=============================== ============ =========
2. Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Impact of correction of errors
Previously
stated Adjustments Restated
US$'000 US$'000 US$'000
31 December 2015
Profit 1,442 (1,440) 2
Item that may be reclassified
subsequently to profit
and loss
Exchange differences
on translating foreign
operations 541 1,135 1,676
------------------------------- ------------ ---------
Total comprehensive
income 1,983 (305) 1,678
=============================== ============ =========
3. Consolidated Statement of Cash Flow
Impact of correction of errors
Previously
stated Adjustments Restated
US$'000 US$'000 US$'000
31 December 2015
CASH FLOWS FROM OPERATING
ACTIVITIES
------------------------------- ------------ ---------
Net cash used in operating
activities (1,421) (13) (1,434)
------------------------------- ------------ ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
------------------------------- ------------ ---------
Net cash from investing
activities 153 - 153
------------------------------- ------------ ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
------------------------------- ------------ ---------
Net cash from financing
activities 1,201 - 1,201
------------------------------- ------------ ---------
Net decrease in cash
and cash equivalents (67) (13) (80)
Cash and cash equivalents
at 1 January 914 - 914
Effects of exchange
rate fluctuations
on cash balances (291) 13 (278)
------------------------------- ------------ ---------
Cash and cash equivalents
at 31 December 556 - 556
=============================== ============ =========
Issued on behalf of: Central Rand Gold Limited
Date: 16 October 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FFAFDMFWSESS
(END) Dow Jones Newswires
October 16, 2017 10:00 ET (14:00 GMT)
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