South African gold miner Central Rand Gold (LON:CRND) warned this morning that the second half of this year “will be a critical period in determining” its future as it strives to prevent acidic water from flooding its mining operation near Johannesburg. Reporting its interim results today – in which it revealed it had boosted gold production by 133 per cent to 7,189 ounces during the six months to the end of June – Central Rand said its first half had “turned out to be a watershed period” for the company. In late May, the firm suspended underground mining operations because continuing acid mine drainage (AMD) in the Central Basin had “become a major risk factor and an operational impediment”. Central Rand added: “As a result of the uncertainty facing the company, the size of the workforce has had to be substantially reduced, thus prompting the implementation of a retrenchment programme.” As a result of this programme about 159 staff members, of the current total head count of 218, will leave the company by the end of September. As recently as March, Central Rand reported that some progress and commitment had been made y the South African government towards addressing the AMD situation. But the fact that the water table was gradually rising towards 250 metres below surface, at which point approximately 90 per cent of the company’s resource base would be under water, it was deemed prudent to discontinue the underground mine development. The water level at the end of July 2011 was measured at 425 metres below surface at South West Vertical, rising at approximately 0.3 metres per day. Central Rand said it had done “as much as it possibly can to contribute towards finding a workable solution to the AMD problem, and continues to participate in industry lobbying”. Meanwhile, the company is continuing to review all its operations and activities to assess its strategic options, it said. Central Rand’s operating loss for the period decreased by 17 per cent to US$14.4 million (H1 2010: US£17.4 million), while its net attributable loss reduced by 14.6 per cent to US$14.8 million. At the end of June, the company had a net cash position of US$4.8 million (June 30 2010: US$4 million). At 10:19am today, the firm’s share price was down 8.2 per cent at 0.62 pence.

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