Central Rand Gold (CRG) aims to boost its earnings with the recent acquisition of mine waste dump material from an undisclosed vendor for processing at its metallurgical plant.
The historic dumps – situated 10km from CRG’s plant – date back to mining operations from the late 1890s and are jointly owned by a South African company and their black economic empowerment partner. The latter has submitted the requisite mining right applications for the various sites. CRG has conducted the legal and technical due diligence on the site over the past nine months. Although the complex is large the drilling programme was focused on one area, known as Phase 1 Mine Waste Dump, which contains 2,3m tonnes of gold-bearing material, with an average in-situ grade of 0,7g/t gold.
The company has also carried out concentrator testwork, the results of which were in line with expectations. Metallurgical testwork achieved encouraging recovery outcomes ranging from 88-97%. In addition, the material lies on a surface that does not support any vegetation, with a maximum height of 16m, and there were no contaminants identified in the material sourced. Following the flooding of the Central Basin, CRG had to cease its underground operations in 2014 until the water table subsides sufficiently. The company subsequently focused on mining surface and open pit operations. However, due to the grade variability, the open pit mining operations came to a halt in May 2016.
Needing to find other revenue streams, CRG’s short-term focus is rehabilitating opened up areas, as well as processing material under a binding tolling agreement.
According to the tolling agreement, a third-party supplier of ore will source and deliver gold-bearing material to Central Rand Gold’s metallurgical plant for processing by CRG, commencing from July 2016, for which CRG receives a graduated fee for processing the material in accordance with the number of tonnes processed through the metallurgical plant.
While under the mine waste dumps agreement, the company is required to pay the vendor a nominal rand per tonne fee and a percentage of the earnings before interest, tax, depreciation and amortisation.