Central Rand Gold Limited
(“Central Rand Gold” or “CRG” or the “Company”)
(Incorporated as a company with limited liability under the laws of Guernsey,
Company Number 45108)
(Incorporated as an external company with limited liability under the laws of
South Africa, registration number 2007/019223/10)
ISIN: GG00B24HM601
Share code on LSE: CRND
Share code on JSE: CRD
Operations Update
Central Rand Gold (“CRG” or “the Company”), the gold mining company with assets in Southern
Johannesburg, is pleased to announce the following update:
•
Combined Exploration Target material of between 54,000 and 102,000 tonnes at an average grade of between 5.1 and 5.2 grams per tonne have been identified for extraction and processing until underground production commences.
•
Delivery of the Long-Hole Drill Rig required for stoping (
•
Commercial production from underground stoping to commence in January 2011.
•
5,932 ounces have been produced in the current year to date.
•
2010 annual production target reviewed to 9,000oz – 11,000oz, as a result of the delayed start to underground production
•
Underground development proceeds apace (345metres completed in September 2010).
•
Footwall decline development plans have been modified to allow more direct access to reef
(reducing decline development by 382m in 2011 and saving $0.6 million in capital expenditure)
•
An alternative reef-access methodology has been developed for areas where poor hanging wall conditions are encountered.
•
Arbitrator appointed to commence arbitration proceedings with Puno Gold Investments
(Pty) Limited (“Puno”).
•
Independent Economic Scoping studies commissioned to evaluate the Consolidated Main
Reef (“CMR”) East, Village and City Deep areas
•
The targeted 45,000 ounces of gold in 2013 (per the 2010 capital raising Prospectus) remains on track.
1.
Geology
1.1
Underground Geology
Geological mapping and close spaced channel sampling along 212metres of the currently developed on-reef drives have yielded positive results in terms of the predictability of the Main Reef grades in our immediate mining area.

On Reef Resource Theoretical Resource
Development Block Insitu g/t CO g/t Pay%
1596
1583
1581
1580
1575
1563
1551
1534
CMR 46
CMR 46
3.04
3.04
CMR 33 3.55
CMR 33 3.55
CMR 33
CMR 33
CMR 33
CMR 32
3.55
3.55
3.55
3.45
3.00
3.00
3.00
50%
3.00
50%
3.00
3.00
3.00
3.00
46%
46%
50%
50%
50%
47%
Reef Drive Sampling
Ave Width Ave g/t Insitu g/t CO g/t Pay % Ave Width Ave g/t
151
151
112
112
112
112
112
110
4.67
4.67
5.29
5.29
5.29
5.29
5.29
5.32
3.81
2.96
8.80
0.83
3.14
4.37
4.04
5.80
3.00
35%
3.00
50%
3.00
80%
3.00
0%
3.00
35%
3.00
72%
3.00
56%
3.00
100%
100
100
100
100
103
111
104
123
9.18
3.85
10.58
0.83
6.07
5.36
5.83
5.80
3.00
49% 120 3.00
45% 103 Average
Contained Au
Equivalent g/t
3.42
410
3.42
5.13
3.88
616 401
5.13
3.34
6.12
633
5.27
The table above portrays the deduced grades in the reef drives excavated thus far (Theoretical
Resource) and compares them to actual grades measured through drive sampling. Whilst there is some degree of variation between the expected grades and the actual sampled grades, this variation is generally on the upside and overall a small positive increase in grade from 5.13g/t to 5.27g/t is observed.
This strong correlation between underground Reef Drive sampling and the Theoretical Resource
Model continues to support the grade control and mining assumptions made in the prospectus published on 04 June 2010 (“Prospectus”).
As an additional aid to underground grade control, a mobile underground drill rig has been sourced and is currently being used to test the application of underground diamond drilling as a primary grade control technique. Initial results are expected towards the end of the year and if positive, should result in significantly improved grade control in areas where drive sampling is restricted, thus allowing for a higher degree of selective mining.
1.2
Exploration and Expansion Activity
There has been considerable focus during the third quarter of 2010 on the development and optimisation of the significant Australasian Joint Ore Reserve Committee (“JORC”) / South African
Mineral Resource Committee (“SAMREC”) resource base available to the Company.
•
Independent Scoping studies into the feasibility of developing CMR East are currently underway and results are expected by the end of this calendar year.
•
CRG has also commissioned initial planning and scheduling studies to investigate the economics of the City Deep and Village mining projects.
•
Tender processes have commenced for Resource Drilling at the new Crown Mines site. It is expected that this drilling programme will ultimately lead to an upgraded Resource
Statement and allow for the development of Crown Mines as the next major stand alone operation, which will enable CRG to further leverage its fixed cost base. Drilling is expected to begin late 2010/early 2011 and will run for most of 2011.
•
Studies are also underway to investigate the economic potential of subsidiary mineral assets such as the auriferous Kimberley and White Reef packages. These largely unexploited and underexplored reefs are developed over a continuous strike distance of more than 25 kilometres and remain a very substantial part of the CRG portfolio.

2.
Mining Operations
2.1 Key Mining Statistics
Year To Date 30 September
2010
Actual Prospectus
Decline sinking (m)
Waste development (m)
Reef development (m)
Tons(t)/Metres(m) Grade(g/t) Tons(t)/Metres(m) Grade (g/t)
727 669
1,042
355
2,124
6,073 2.6
420
2,008
3,097
23,752 3.80
Total (m)
Trial stoping (t)
Reef development (t)
Surface mining (t)
39,669
98,089
1.7
3.0
77,202
31,041
1.80
4.40
Total (t) 143,831 2.62 131,995 2.77
2.2 Underground Mining Operations
Pending receipt of the Long-Hole Drilling Rig (required for stoping) resources have been applied solely to development (both footwall decline and on-reef pre-stoping). Good progress and prestoping preparation mean that the targeted 45 000 (annualised) production rate by year end 2013 is still on track.
Monthly development continues at a good pace, with 345metres (total on-reef and footwall) being achieved for the month of September 2010.
Variable hanging wall conditions in on-reef drives are being encountered, resulting in sub-economic volumes of associated waste development (refer to section 3. Mining methodology, for further clarification).
It is anticipated that the first three stoping levels in the current mining area will predominately be mined through footwall development.
As mentioned in the June 2010 Interim Results announcement, the global increase in the demand for mining equipment has resulted in delivery lead times increasing substantially over the last six months. This was compounded by our inability to contract for the additional equipment until the fundraising (which took 6- 8 weeks longer than anticipated) was completed.

Post the successful fundraising the Company was fortunate to secure its second development Jumbo
DD240, by end July 2010 (three months later than originally planned). The other critical piece of equipment is the Long-Hole Rig (a prerequisite for underground stoping).
The Company was initially only able to source a Long Hole Rig for delivery in March 2011. Due to a cancellation of an existing order by another Mining Operation CRG has been able to take over this order with delivery now expected before the end of 2010. Consequently the Company now expects underground stoping to commence in early 2011.
This delay in delivery does have short-term production implications as the 2010 production forecast in the Prospectus anticipated significant higher grade underground ore before the end of the year.
This delay has been partially mitigated by extension of the surface exploration and surface mining to supplement gold production. .
2.3 Surface Material
To date 98,089 tonnes of surface ore has been mined at an average grade of 3.0g/t. This compares favourably to the original plan, which only anticipated 2010 production of surface ore of 38,000 tonnes at 4.3g/t. Surface mining is currently focusing on three open pit operations:
Pit 1 (Central Pit) - extraction and processing has thus far provided the process plant with approximately 17,000 tonnes of material with an average stockpile grade of approximately
3.0g/t. Additional exploration target material of between 10,000 and 30,000 tonnes with an average grade of between 2.8g/t and 3.2g/t has been identified.
Pit 2 (New Unified) - this open pit has to date yielded some 50,000 tonnes at approximately
2.9g/t. Approximately 17,000 tonnes, at a similar grade, still remains to be extracted.
Pit 3 (New Unified extension) - currently being prepared for open pit mining and good grades are expected from this area with between 27,000 and 55,000 tonnes of Exploration Target
Material at an average grade of approximately 7.3g/t available for extraction and processing during the fourth quarter of 2010.
Note: The potential quantity and grade described by the term “Exploration Target” is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the definition of a Resource. Further exploration work is ongoing, and includes trial mining and processing of this shallow target to establish grade and orebody continuity, mineability, dilution and throughput characteristics.
3.
Mining methodology
As normal in our industry the Company continuously reviews, updates, optimises and adapts its mine plan to match the realities of conditions experienced underground.
3.1.
Decline development
CRG has been able to redesign and reposition the underground decline for 2011. The new design allows for central access to the ore body, which will reduce the decline development required to access the resource. The new arrangement reduces the planned 2011 decline development by 382m to 2,000m.
3.2.
Alternative mining method
As noted in the June 2010 Interim Report, CRG has experienced variable ground conditions within the reef drives. When poor hanging wall conditions are experienced, it slows down development

rates and increases support requirements. To this end CRG commenced a study to identify alternative reef-access methodology when poor ground conditions were experienced.
CRG’s alternative method uses footwall development along strike, with the Main Reef being accessed via multiple cross cuts. All drilling and mucking operations are undertaken from the footwall development and no personnel are exposed to the Main Reef Leader (“MRL”) void or hangingwall.
The long-hole stoping patter is slightly changed with fan-drilling being incorporated and the cement aggregate fill pillars being place on strike as opposed to down-dip.
Snowden has reviewed the alternative method in the context of the unique mining environment at
CMR. In Snowden’s opinion the method has merit and should replace the current method in areas of poor hanging wall conditions.
Access via footwall development at R107 per stoped tonne, costs approximately 16% more than onreef development at R92 per stoped tonne. This is due to the additional metres of development
(essentially cross-cuts) required to access the Main Reef. However, this cost is close to half the R203 per stoped ton actual cost experienced of on-reef development in these poor ground conditions.
CRG has identified various opportunities to further reduce the cost of this approach so that it can be more closely aligned to the originally planned on-reef development cost of R92 per stoped ton.
Please click on the following link to download a cross section of the alternative mining method

Figure 1: Cross section showing sequential stages in the alternative mining method*
Figure 2: Long section showing the extraction sequence of the alternative mining method*
*A 4.5 m wide footwall development drive, following the strike of the deposit and located 10 m horizontally from the Main
Reef, will be extracted. As this drive is being developed, 4.0 m by 4.0 m crosscuts will be developed to intersect the Main
Reef. These cross cuts are spaced 15 m apart along strike. Once the top and bottom cross cuts have been established, a top down long hole production open stope will be mined. Given the flat dip of the Main Reef, the reef and parting will need to be “throw blasted” to the cross cut, where it will be mucked using a remote control LHD. After the stope is emptied, it will be backfilled using a combination of tipped waste and waste mixed with cement slurry.

Footwall development has the following advantages in poor hanging-wall areas
−
Better ground conditions in the footwall of the Main Reef;
−
Limited exposure of the Main Reef Leader hangingwall and therefore safer;
−
Less support requirements than for Reef drives;
−
Mining can commence as soon as the top and the bottom holings become available;
−
Mining can take place at several places at one time;
−
Waste rock can be dumped in the old stopes; and
−
More effective control of ventilation.
The following are the challenges facing footwall development
−
Additional waste development;
−
Lower extraction where fall of ground occurs during the blast;
−
Blockages at the draw points requiring secondary blast;
−
Due to the size of the access points, the extraction method may not lend itself to split firing of the middling and therefore the ore will be diluted. Dilution from middling will however be limited by increasing blast fragmentation size, scalping of large waste rock on surface and optical sorting; and
−
Sampling across the reef face will be limited to the access points. The selective extraction of high grade blocks will be achieved by using Reef Drive sampling where possible, and close spaced underground diamond drilling in footwall development scenarios.
4.
Metallurgy
The metallurgical plant has processed 133,748 tonnes of predominantly oxide ore and recovered
5,932 oz of fine Gold as at end September 2010. September was a record month, with 1,120 oz produced from relatively low grade (2.0g/t to 3.0g/t) material.
Higher grade oxide ore, as described in section 2.2 above, from new open pits recently developed, is scheduled to be processed for the remainder of the year.
Gold production is lower than the forecast 8,844 oz to end September 2010 due to the delay in the delivery of underground stoping equipment. This delay is not expected to impact the Company’s medium term annualized production target rate of 45,000 oz pa by 2013. It should be noted that the
Prospectus production target of 5,724 oz of Gold from lower grade oxide material in the year 2010 has been increased as far as possible to partially offset the shortfall of underground ore.
Production for the year will therefore predominately be from lower grade oxide material at the current process recovery of 79%, which is marginally higher than the recovery anticipated for this type of ore.

For the year ending 31 December 2010 CRG is expecting annual production, to be between 9,000 oz and 11,000 oz.
Potential comminution bottlenecks identified during operation with the harder underground sulphides have been investigated by Dowding Reynard & Associates, (specialists in process plant design), in order to model an optimised crushing and milling arrangement. Changes proposed include the incorporation of cone crushers for secondary and tertiary crushing to effectively achieve the required size reduction.
Elimination of intermediate stockpiles in these modifications will remove associated material handling gold losses and reduce operating costs. US$1.7 million (not included in the Capital Raising forecast) has been approved to carry out these upgrades and will be funded by savings in mobile earthmoving equipment (no longer required in the new configuration) of US$570,000 as well as the refund received from Gekko of the $2.3m deposit made for the second Gekko processing plant, the order for which was cancelled in 2009. This refund was not included in the 2010 capital raising
Prospectus forecast.
5.
Black economic empowerment
5.1.
Arbitration
The Company has been advised by its subsidiary, Central Rand Gold South Africa (Pty) Limited
(“CRGSA”), that the Secretariat of the Arbitration Foundation of South Africa has, in the absence of agreement between Central Rand Gold Netherlands Antilles N.V. (“CRGNV”) and Puno (“Puno”), appointed Judge Lewis Goldblatt to arbitrate on the dispute to the entitlement of CRGNV’s call on
Puno’s shareholding in CRGSA and other ancillary issues.
Judge Goldblatt has been advised of the preliminary issues which have been raised and the notice of a pre-arbitration hearing is expected imminently, at which the procedures and final arbitration timetable required to address such issues will be set out.
5.2.
Legal cost recovery
CRGSA has advised the Company that on Tuesday 12 October 2010 the taxing registrars at the South
Gauteng High Court of South Africa will make a final determination as to the quantum of costs to be recovered from Puno relating to their failed application made earlier this year to obtain an interdict to stop mining operations being carried out by CRGSA, which the High Court dismissed with a costs order against Puno.
Ahead of this hearing attempts to settle the amount of costs due are being made by both sides cost consultants, which may avoid the need for a protracted hearing on 12 October.
6.
Water table
As stated in the June 2010 interim announcement, pending final resolution in the multi-party debate on acid mine drainage (“AMD”) in the Central Witwatersrand Basin, to limit the extent that the water table will rise above the 400metres below surface level the Company has ordered the proposed submersible pumps (the longest lead items).
There continues to be positive communication with and commitment from, the South African
Government. South Africa's Water and Environmental Affairs Minister, Buyelwa Sonjica, indicated recently that she expects the AMD report being compiled by a team of experts under government leadership, to be delivered on or around 15 October 2010. She further stated that the Inter-

Ministerial Committee (IMC), appointed by Cabinet to address the AMD issue in the Western and
Central basins of the Witwatersrand has met four times since it was established in early September.
CRG awaits the results of the report, which are expected to be announced by the end of October
2010
7.
Finance
Cash and cash equivalents increased during the third quarter from US$3.9 million at 30 June 2010 to
US$29.8 million as a result of the following items:
Net proceeds from recent capital raising of US$36.5 million;
Revenue from the sale of 2,648 ounces of gold processed from surface mining; and
Refund of the deposit on cancellation of the order for the processing plant of US$2.3 million.
Later than anticipated purchases of underground mining equipment
Cash and cash equivalents were reduced by expenditure required to continue development of the mine and surface mining operations, more specifically:
Underground mine development expenditure of US$3.3 million;
Procurement of mining fleet and other equipment of US$1.4 million;
Mining of nearby surface materials as an additional source of gold while the underground mining fleet is being procured; and
In addition, the Company made payments of voluntary retrenchment packages for 46 head office and support staff.
Cash and cash equivalents at 1 July 2010
US$ (million)
3.9
Gold Sales
Cash used in operations
Interest Received
Mine property, plant and equipment
3.2
(8.0)
0.1
(4.7)
Prepayments and deposit
Net Proceeds from shares issue
Effect of exchange movement on cash balances
Cash and cash equivalents at 30 September 2010
(2.2)
36.5
1.0
29.8
The Company remains confident that it has sufficient cash resources to execute the mining plan
(with the minor alterations described above) outlined in the prospectus dated 4 June 2010.
For further information, please contact:

Central Rand Gold Limited
Johan du Toit
Patrick Malaza
Evolution Securities Limited
Simon Edwards / Chris Sim / Neil Elliot
Macquarie First South Advisers (Pty) Ltd
Annerie Britz / Melanie de Nysschen
Buchanan Communications Limited
Bobby Morse / Katharine Sutton / James Strong
+27 (0) 11 674 2304
+44 (0) 20 7071 4300
+27 (0) 11 583 7000
+44 (0) 20 7466 5000
Jenni Newman Public Relations (Pty) Ltd
Jenni Newman / Shireen Ramjoo
+27 (0) 11 506 7350
The information in this statement relating to Mineral Resources and geology has been reviewed and approved by Mr. Keith Matier, BSc (Hons), GDE, Pr Sci Nat, who is a competent person in terms of the SAMREC and JORC codes. Mr. Matier is Geology Manager of Central Rand Gold South Africa (Pty)
Ltd and has over 17 year’s experience in exploration, mineral resource management and mineral evaluation.