Central Rand Gold’s cash flows have been further affected by what it states is “costs for unusual items” which include the on-going litigation costs of the dispute with the company’s Black Economic Empowerment partners.
Central Rand Gold said it experienced excessive rainfall in the months of January and February 2017 and the negative effects of the rain are that the run of mine material is problematic to crush and screen when wet, and also that the wet conditions affect the feed material as it becomes muddy and challenging to handle, resulting in clogging, which in turn leads to a reduction in the processing capacity.
The storms also created lightning, which caused various power outages at the plant, at the site, and at the power stations supplying Central Rand Gold.
In fact, in January 2017, power outages accounted for a 7.5% loss in capacity, and for the period 1 February 2017 to 12 February 2017, a 25% loss in production. Central Rand Gold is exploring alternate power sources, as well as the use of a diesel generator to provide back-up power during any power outages.
Central Rand Gold also incurred additional expenditure at the end of last year as it had to install pumps and introduce a water reticulation system to use recycled water in its plant. This was due to the water restrictions imposed in Gauteng.
“The tolling companies have also reduced their feed to Central Rand Gold, as the material that is available is not always suitable for the plant. But we have addressed this issue by sourcing smaller quantities from reliable tolling companies. Central Rand Gold is currently crushing and screening its own material on site, which has been made available from previously mined out areas.
“In January 2017, 44% of the material processed through the plant was Central Rand Gold’s own material, and for the period from 1 February 2017 to 22 February 2017, 86% of the material processed through the plant was Central Rand Gold’s own material.” The tolling companies’ material is being stockpiled and sampled, and will be processed in batches throughout the period.
Central Rand Gold said that in order to address the issues faced over the past two months, various programmes and plans have been put into place, including the open-pit mining and processing of Central Rand Gold’s own material, interspersed with the batch treatment of tolling companies’ materials. “As South Africa enters into autumn, the rain is expected to reduce, thereby alleviating the issues of wet and muddy feed material,” the company said.
A steel structure has also been ordered, which, once erected, will assist in keeping the feed materials dry during the wet seasons.
“Management is committed to minimising production downtime and improving production efficiency in order to support the current operation until the concentrator circuit has been installed and commissioned,” the company concluded.