[miningmx.com] – CENTRAL Rand Gold (CRG), which operates on the southern outskirts of Johannesburg, has called time on ambitions to sell its business to Chinese investors which had been kicking the tyres for most of 2015.
The company, which mines gold from surface after mothballing its underground operations, subsequently announced the resignation of CEO, Johan du Toit who joined CRG as its financial director in 2008.
Du Toit will be replaced by non-executive director, Allen Phillips, on an interim basis whilst the board finds a full-time replacement.
No less than four potential Chinese investors considered buying CRG’s South African operations, at an indicative value of about $150m, following a marketing sortie by the company last year.
However, by mid-year two of the buyers had withdrawn from the due diligence process, while a third – Huli Resources Group – was still considering a takeover. A fourth company, Hiria Group Company, had switched its focus from a buyout to a potential strategic investment.
CRG said that any transaction looked unlikely in the short-term owing to flooding of CRG’s underground gold mining shafts as well as uncertainty caused by falling commodity prices and difficult market conditions across the junior mining sector.
“Specifically, the gold price has fallen in recent times along with a wide spread sell off in junior gold miners, which has resulted in companies across the sector reducing capital expenditure and delaying investment decisions pending an improvement in underlying market conditions,” it said.
Today’s announcement, however, sees CRG dampen shareholder expectations of anything substantive compared, at least, to the grandiose values set down in the proposed sell off to Chinese investors.
“The company continues to negotiate with one Asian investor regarding a strategic investment into Central Rand Gold Ltd,” it said. “This negotiation will continue in parallel with discussions with other third party investors, to provide funding in order to pursue growth opportunities for the company.”
CRG posted a reduced $600,000 interim loss year-on-year, but its share price has been under relentless pressure falling 44% so far in 2015 against a flattish Johannesburg gold index, and 64% from August to December as the buyout interest dried up.
Commenting on the departure of Du Toit, it said the resignation would be effective from December 31. The development does not seem to be a surprise as Phillips had been “more hands-on” over the last three months, CRG said.
In the company’s interim update in September, Du Toit said he was hopeful of restarting CRG’s underground operations by end-2016.
As the area in which they are situated is heavily mined out, extant mines such as those owned by CRG flood as old workings decant their underground mine water.
Du Toit’s departure also seems to have heralded a minor board reshuffle with the appointment of Lola Trollip and Mark Austin as CRG’s CFO and non-executive director respectively.
