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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (37525)	5/22/2009 8:02:19 PM
From: LoneClone	Read Replies (1) \| Respond to of 194794

Central Rand Gold gets grilled Brendan Ryan \| Thu, 21 May 2009 16:40 miningmx.com [miningmx.com] -- CENTRAL Rand Gold (CRG) has notably run counter to the bull trend in gold shares during the past two months. Thursday’s webcast of its annual general meeting (AGM) and operational update presentation showed some of the reasons why. Since mid-April, CRG shares have dropped 50% from 800c to 400c and the shares lost 27% in today's trading falling from 550c. CRG is looking to re-establish mining operations on various parts of the old Central Witwatersrand gold field, stretching from near Roodepoort on the West Rand to Germiston on the East Rand. The first mine is being developed on the West Rand on the Consolidated Main Reef (CMR) lease area. Top management faced a barrage of questions from a number of fund managers at Thursday’s conference call and, in many cases, were not able to come up with convincing answers. The key issue is that CRG is supposed to start mining operations in two months but, at this late stage, its managers cannot confirm the precise mining method to be used. According to CRG, the mining methods being looked at “are all variations on cut and fill. There are no showstoppers and the situation will be resolved by the end of June”. This, fund managers pointed out, stood in sharp contrast to assurances from CRG’s previous management – both its CEO and chief operating officer recently left - that the mining method was proven. Instead, CRG is now describing its proposed mining operations as “trial mining” to prove its viability. It has chopped its forecast gold production for 2009 to 20,000 oz from the original estimate of 40,000 oz. Reasons given for the production cut are “operation delays and trial mining processing issues”. The bottom-line situation is that the independent review of the proposed mining operation has not yet been signed off by Snowden Mining Consultants. Snowden has still to confirm the conversion of CRG’s ore resource estimate into a reserve that can be mined. A key factor in this calculation is the mining method. CRG delivered its completed analysis to Snowden in March 2009 for the independent review. According to the CRG presentation, “Snowden has advised CRG that several modifying factors require additional analysis due to our non-traditional approach to mining, specifically mining methods (mechanisation, mine development, stoping and backfill methods) and capital and operating cost estimates.” RBC Capital Markets’ Leon Esterhuizen told CRG chairman Alastair Walton during the webcast that “you are leaving the market too uncertain and that’s not good for the share price, in my opinion”. Other questioners focused on CRG’s financial situation and its ability to reach the stated first phase production objective of 100,000 oz of gold annually with its present cash reserves, which totalled $51m at the end of April. The questions were triggered by CRG’s statement that “the company is evaluating equipment finance alternatives to underpin liquidity”. Walton said: “We have been looking at this very carefully and, with $51m, it’s fairly evident that it’s going to be pretty tight. “It is essential that we produce the 20,000 oz of gold that we are assuming will be produced. I think we can get to the 100,000 oz/year level but it will not be straightforward.”