Central Rand Gold : Enter into strategic partnership

CENTRAL RAND GOLD ENTERS INTO A STRATEGIC PARTNERSHIP WITH ZHEJIANG GOLDEN MACHINERY PLANT

·     Central Rand Gold has entered into a non binding Memorandum of Understanding ("MOU") with Zhejiang Golden Machinery Plant ("ZGMP").

·     The short-term priority of the Strategic Partnership is to focus on Central Rand Gold's existing metallurgical plant to determine whether ZGMP can assist in the upgrade and optimisation program currently underway.

·     The medium- to long-term focus of the Strategic Partnership is to advance the Company's 'string of pearls' development strategy, as the Company moves towards becoming an emerging mid-tier gold producer.

·     The Strategic Partnership will provide Central Rand Gold with access to ZGMP's knowledge and expertise of plant design and engineering.

Background

The Company has a stated goal of becoming a mid-tier gold producer. Key to achieving this goal is the success of the Company's mid- to long-term growth and development strategy. The board of directors of the Company ("Board") strongly believes that the chance of success of this strategy is improved by aligning its interests with strategic partners. In this regard, the Board has worked closely with Central Rand Gold's significant shareholder, Redstone Capital Limited, to establish and develop a relationship with ZGMP, which is one of China's largest gold plant machinery manufacturers.

ZGMP has a successful record of identifying emerging gold producers and assisting them with their growth and development through the provision of customised plant and machinery. ZGMP has manufactured mining and processing equipment for operating mines across the globe, including in Africa. For additional information on ZGMP,  shareholders are referred to ZGMP's webpage, www.zjhjjx.com.

The Board is confident that the Strategic Partnership with ZGMP, and the potential provision of customised plant and machinery manufactured by ZGMP, could offer significant benefits to the Company in the future.

Memorandum of Understanding

The Company has entered into a non binding MOU with ZGMP. The rationale for the MOU is to establish a framework to enable information sharing and collaboration between Central Rand Gold and ZGMP. The Board believes the Strategic Partnership could lead to a potentially lower capital cost for ongoing improvements to the existing metallurgical plant, coupled with a more effective roll-out of the 'string of pearls' development strategy across Central Rand Gold's significant resource base. In terms of the MOU:

1. the Company and ZGMP will review the current upgrade and optimisation roll-out for the existing metallurgical plant to ascertain whether ZGMP can supply the appropriate plant and machinery at a competitive price; and

2. in the longer term, and once all the appropriate feasibilities have been completed for a new mining target area, ZGMP can assist in expediting the planning, design, engineering and construction of the above ground plant.

Should ZGMP ultimately provide the Company with any equipment or services, the Company can elect to pay ZGMP through the issuance of Shares in Central Rand Gold rather than in cash, subject to the required shareholder approvals. This option would have the benefit of reducing balance sheet strain while aligning the interests of Central Rand Gold and ZGMP.

Commenting on the MOU, Johan du Toit, Chief Executive of the Company stated "The signing of the memorandum of understanding with ZGMP is an exciting progression in the development of Central Rand Gold that complements the work that the Company is undertaking to advance its 'string of pearls' strategy along the 40km strike at the heart of the world famous Witwatersrand Goldfield. The potential strategic partnership with ZGMP provides a strong platform for Central Rand Gold to transform into an emerging mid-tier producer." 

About Zhejiang Golden Machinery Plant

ZGMP is one of China's largest private mining machinery manufacturers and is located in the Zhejiang province. ZGMP has a significant and well established client list, with many of its clients ranking amongst the world's largest gold and base metals producers, including ZiJin Mining, Jiangxi Copper, Zhongjin Lingnan. The product list and manufacturing capabilities of ZGMP are significant, with industry leading capabilities in crushing and grinding circuits, mixing and flotation equipment, concentration and filtration equipment and hydrometallurgy equipment. Furthermore, ZGMP has the capability to provide ancillary goods and services to its clients including engineering services, building materials, metallurgy, nonferrous metal, electric power, chemical industry and other basic industries. ZGMP has manufactured mining and processing equipment for operating mines across the globe including Asia, Africa, North America and Australia.

For further information, please contact:

Central Rand Gold                          +27 (0) 87 310 4400 

Johan du Toit / Nathan Taylor

Charles Stanley Securities Limited         +44 (0) 20 7149 6478

Marc Milmo / Mark Taylor

Merchantec Capital                         +27 (0) 11 325 6363

Monique Martinez / Marcel Goncalves

Jenni Newman Public Relations              +27 (0) 11 506 7351

Proprietary Limited 

Jenni Newman

Johannesburg

1 September 2014

Sponsor

Merchantec Capital