JOHANNESBURG (miningweekly.com) – The JSE share price of dual-listed Central Rand Gold (CRG) rose by 65.2% on Thursday after the company announced that it had entered into an agreement to buy mine waste dump material near its own metallurgical plant from an undisclosed vendor.
The value of the deal was also undisclosed.
The agreement is expected to diversify and expand CRG’s revenue streams.
Rising water levels had forced the company to halt underground operations in October 2014. Its activities are currently focused on processing gold-bearing ore under a joint venture tolling agreement.
It has, over the past few months, been in negotiations with the vendor about the opportunity to process ore from its tailings deposit.
Under the terms of the agreement with the vendor, CRG will manage the mining, transportation, milling, leaching, smelting and gold refining of the mine waste dumps material and will pay the vendor a nominal rand per tonne fee and a percentage of the earnings before interest, taxes, depreciation and amortisation.
CRG pointed out that the mine waste dumps, which are located 10 km from its metallurgical plant, are jointly owned by a South African company and its black economic empowerment partner (the vendor) and are the result of mining operations that took place in the area in the late 1890s.
CRG has conducted legal and technical due diligence, including a drill programme, three-dimensional modelling, gravity concentrator trial processing and metallurgical testwork, on the mine waste dumps over the past nine months.
The size of the entire mine waste dumps complex is considered significant, but is still undefined.
CRG focused its due diligence on a portion of the mine waste dumps. It confirmed that the Phase 1 portion contains 2.3-million tonnes of gold-bearing material, with an average grade of 0.7 g/t gold.
The company is evaluating a variety of processing alternatives for the concentrated material from the mine waste dumps, including processing the material through its existing metallurgical plant or through third-party metallurgical plants.
It is also working on finalising capital raising initiatives to help fund the development of the mine waste dumps opportunity.
CRG’s share price on the JSE rose by as much as 65.2% on Thursday, while its share price on the LSE was up by 12%.
Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
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