Cenrand reports a success in its cost-cutting exercise

GOLD exploration and development company Central Rand Gold (Cenrand) yesterday announced that for its latest half year it had reduced it losses after it cut its costs.

The company announced that for the half year to June, its losses had declined by 58 percent to $1.2 million (R16.25m) from a loss of $2.8m for the six months ended June last year. Cenrand reported a basic loss per share of 1.24c (US) during the six months ended June from 3.78c in the half year ended June last year.

The company’s shares on the JSE did not trade yesterday from the previous close of R2.60, which valued the company added at R227m.

The company listed on the JSE in late 2007 with the aim of mining at a rate of 1 million ounces of gold during 2012 at a cost of $320 an ounce. Instead, in the first half of this year Cenrand produced 3 679 ounces of gold down from 4 149 ounces in the first half of last year.

Revenue fell

The average amount of gold extracted from a ton of rock mined fell to 1.45 grams from 1.77 grams previously.

The company’s half year revenue fell from $5.8m to $4.3m due to the company sending less material for toll treatment by Mintails and the reduction in gold price.

“Significant restructuring occurred within the company to realign the business to its new focus on surface mining resulting in a reduction of 40 percent in the group’s cost base,” Cenrand said.

“These savings were not only reported through the elimination of underground mining costs but also as a result of the re-negotiation of key contracts, improving operational processes and eliminating inefficiencies in consumable usage,” the company added.

“Although the trend is positive, the key focus remains to move the organisation into sustainable cash generative and profitable position.”

Cash and cash equivalents at the end of June 2015 was $1.1m down from $4.4m at the end of June 2014.

In the six-month period, Cenrand issued shares for cash worth $1.26m. During the cost of last year, Cenrand issued shares for cash worth $4.254m.

During the first half of this year, Cenrand said it had been focused on discussions with various investors that had expressed an interest in buying the company, including four Asian companies – Hiria Group, Beijing Ankong Investment, Shengbang Jiabo Consulting and Huili Resources.

In June, Cenrand halted talks with Ankong and Shengbang, but it said that it remained in discussions with Hiria and Huili.

Losses declined by 58% to $1.2 million from a loss of $2.8m for the six months ended June 2014.