Business Day
THE Department of Mineral Resources has sent a clear notice of its intention to take a firmer grip of SA’s mining sector by cancelling the mining right of Central Rand Gold , an embattled company that has an operation just south of downtown Johannesburg.
"This is the first mining right to be revoked in the recent past," department spokesman Bheki Khumalo said yesterday shortly after the notice was issued to JSE- and London-listed Central Rand.
"If people make a commitment to the state they must honour that commitment. They will be held accountable. We will throw the book at any company that does not honour its part of the bargain," he said.
The department began its probe of Central Rand during the first quarter of this year.
Central Rand is alleged to have breached terms of its contract regarding its mining works programme and social labour plans, leading Mineral Resources Minister Susan Shabangu to issue the notice cancelling the mining right.
"Central Rand Gold did not adhere to the conditions of the mining rights," Mr Khumalo said.
The notice was issued in the afternoon, but by close of business Central Rand had not notified its shareholders of this material development by way of an announcement on the JSE electronic news service.
A notification was expected to be issued early today on both the London and Johannesburg bourses, a spokeswoman said.
Central Rand is trading at 8c on the JSE, the bottom end of a 52-week range of between 6c and 62c. It was untraded in Joburg yesterday.
One of the key reasons for Central Rand failing to comply with its mining works plan was the flooding of the lower reaches of its projects, sterilising about 90% of the resources contained in old mines on the outskirts of Johannesburg, CEO Johan du Toit said yesterday.
"It was disappointing to receive this notice. I don’t think the (department) applied its mind and it was unwilling to engage us," he said.
Central Rand was talking to its lawyers and may lodge an appeal but until a court suspended the minister’s decision, all operations were suspended, Mr du Toit said.
He said there was a difference of opinion between the department and Central Rand on the mining works programme because of the impact of the flooding, which meant the company could not be expected to meet the obligations it had initially agreed to when the flooding was not an issue .
A community petition signed by about 500 people asked for the mining right to be revoked, alleging there has been no benefit to the community since Central Rand started.
Central Rand has spent about $200m on establishing a mining operation to extract gold from unexploited reefs at defunct mines in a belt across southern Johannesburg. It made extravagant promises about production when it first started in 2007, promising a million ounces of gold by 2012, a target it has never come close to achieving.
New management adopted a more sober approach and revised its target to 30000oz by 2014, but various geological difficulties have combined to curtail production.
The company has also been engaged in a long-running dispute with its 26% empowerment partner, Puno Gold, which it has been unable to resolve.
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