Central Rand Gold stays above water for now

[miningmx.com] — THE future of Central Rand Gold (CRG) continues to hang in the balance despite the end-October deadline previously given by management for key decisions to be taken in terms of a strategic review.

CEO Johan du Toit said in an interim management statement released on Friday that, “whilst the success of the conventional mining trial gives the company a great deal of encouragement, CRG still faces a number of significant challenges that need to be addressed.

“The company continues to work towards finding solutions to these challenges, building on the progress made with the new stoping methodology and looks forward to updating shareholders as appropriate’.

The reference to the “conventional mining trial’ concerns the failure of CRG’s initial mining approach using mechanised “longhole stoping’ which apparently worked during trial mining in 2009.

But when CRG went for full production the system was a disaster because of “excessive hanging wall failure’ – for which read “the roof collapsed extensively’ – resulting “in excess of 200% dilution by zero grade material”.

Management then switched to conventional mining using jack hammers which it believes can be used to build up production to 12,000t/month.

But the main issue remains the uncertainty over what is to be done to deal with the rising levels of acid mine drainage (AMD) in the old mine workings of the Central Witwatersrand which threaten to drown CRG.

According to Du Toit, the solution proposed by the Trans Caledon Tunnel Authority (TCTA – the implementing agency appointed by the Minister of Water Affairs) was presented to Government’s portfolio committee on water and environmental affairs on September 7.

Du Toit said the proposed solution called for the utilisation of CRG’s pumps to dewater and maintain the Central Basin to protect the environmental critical level (ECL) at 186m below surface. That works out to 225m below surface in CRG’s mining area.

A new high-density sludge plant with a capacity of 84 million litres a day is to be built next to the South West Vertical Shaft (at DRDGold’s closed ERPM mine) and treated water will be transferred via pipeline to the Elsburg Spruit.

Sludge is to be disposed of in co-operation with DRDGold and “grey water’ would be sold where possible.

Du Toit said, “TCTA has issued a single tender for all three basins and tenders are expected to be adjudicated and awarded by January 2012 with the pump station being commissioned by September 2012.’

But he pointed out the funding was still not yet in place because TCTA was still waiting for National Treasury to allocate and commit the funds for full implementation of the AMD solution.

Du Toit added, “the company is currently in discussions with TCTA to agree on the principles of dewatering the Central Basin below the ECL.’

CRG shares have recovered from the all-time low of 4c hit in early October and currently sit around 8c compared with a 12-month high of 62c and an all-time high of R20 in 2007.