JOHANNESBURG (miningweekly.com) – Dual-listed Central Rand Gold (CRG) has widened its net loss for the year from $4.5-million in fiscal 2012 to $13.3-million, or 37.6c a share, for the year ended December 31, 2013, stating on Friday that this was on the back of subdued gold revenue and swelling costs.

This came as the miner reported a 34% reduction in gold revenue to $14.26-million on the back of lower throughput owing to poor plant availability, a lower-than-expected mine call factor, lower tail end surface grades and lower realised average gold prices.

Higher than anticipated plant and mine mobile equipment repair costs, combined with attendant plant hire costs and higher utility and diesel fuel costs also dented the company’s 12-month margins.

These factors were, however, partially mitigated by the impact of the weaker rand:dollar exchange rate.

While the company had been expecting to make a modest profit and be cash-positive over the year, CRG chairperson Michael McMahon said the reality was an all-in operating cost that was $447/oz higher than last year, at $2 425/oz.

In addition, significant capital expenditure on metallurgical plant upgrades and the operating shortfall had been accommodated by an inflow of new funds, leaving the company at a “reasonable” year-end cash balance of $2.5-million.

CAPITAL INJECTION

Meanwhile, as a result of an injection of funds by Redstone Capital, McMahon said the company now found itself in a “far stronger” position than last year.

“Without doubt, the main highlight of 2013 was attracting Redstone Capital as our cornerstone investor, enabling the company to significantly upgrade plant and equipment towards making a meaningful improvement in production in 2014.

“Announced in August 2013, this transaction raised $7.25-million through the issue of convertible loan notes to Redstone Capital, which is a special purpose Hong Kong-registered investment company focusing on gold investment opportunities in sub-Saharan Africa,” explained CEO Johan du Toit.

The funds raised enabled CRG to upgrade vital plant and equipment, focus on further development of underground mining and boost general working capital reserves.

“It is evident that we are building surplus milling and crushing capacity to cater for future needs. This spare capacity will lessen the current pressure on the existing milling circuit, enabling more proactive and effective maintenance, thus, ensuring improved uptime.

“The increased milling capacity and availability will also lessen the company's reliance on external tolling, which will improve both revenue generation and operating margins,” Du Toit commented.

PRODUCTION

Underground mining production increased by 35% to 150 987 t for the period under review, largely owing to newly opened stoping areas.

Some 241 841 t of ore was still available and would only require minimal waste and on-reef development to improve the efficiency of its recovery.

“These tonnes will provide around 17 months of production at current target levels,” he said.

Openpit production increased by 14% over the year to 103 992 t on the back of the company’s newly opened Nasrec pit, in Gauteng. The mined grade did, however, drop during the year by 0.46 g/t to 2.64 g/t.

PLANT, EQUIPMENT UPGRADES

In the first quarter of 2013, major modifications to the vertical shaft impactor crushing circuit were undertaken with the aim of replacing the existing open crushing configuration, which required external mobile jaw crushers with a self-contained closed-circuit crushing train.

The modifications were intended to improve the efficiency of tramming, eliminate external crushing costs and, most importantly, reduce fine-gold losses during the primary crushing stage.

“The Redstone Capital funding enabled the company to procure and install a suitable primary jaw crusher and screening circuit that has a crushing and screening capacity in excess of 30 000 t/m.

“This primary jaw crusher is able to reduce hard underground sulphide ore from a run-of-mine feedstock of 700 mm to a secondary crusher feedstock of 90 mm, while simultaneously screening the high-grade 10 mm fine fraction,” noted Du Toit.

Commissioned at the end of 2013, the use of this primary jaw crusher was expected to result in a reduction in primary crushing costs from R24/t to an estimated R12/t in 2014.

CRG also procured an additional ball mill that would effectively increase milling capacity by 12 000 t/m.

This strategy followed the overall metallurgical plant philosophy of ensuring full redundancy and assuring maximum total plant availability.

“Once the ball mill has been commissioned, CRG will have milling capacity in excess of 25 000 t/m. The mill installation is expected to be commissioned by the end of the second quarter of 2014,” he said.

PROSPECTS

Du Toit believed that the “meaningful” investments made in plant and equipment in 2013 placed the company in a good position to make substantial progress on a number of fronts in 2014, including ore production, processing, gold output, underground development and further exploration of tenements.

He noted that CRG’s goal in 2014 was to stabilise ore production at 25 000 t/m and generate yearly gold output of around 16 000 oz.