1.   Memorandum of Understanding

The board of directors of Central Rand Gold ("the Board") advises that Central Rand Gold has entered into a non-binding Memorandum of Understanding ("MOU") with Hiria Group Company Limited ("Hiria"), a Hong Kong registered company. The terms of the MOU contemplate the potential disposal of 100% of the shares held by Central Rand Gold in its wholly-owned subsidiary, Central Rand Gold (Netherlands Antilles) N.V. (the "Subsidiary") to Hiria, for a cash consideration of USD150 million (the "Transaction"). The Subsidiary owns the assets of the Central Rand Gold Group.

The MOU, which provides the framework to enable Hiria to undertake detailed due diligence on the Subsidiary and its assets, is the result of recent detailed discussions between Central Rand Gold and Hiria.

The MOU is subject to a number of conditions including:

·    mutual completion of due diligence by both Central Rand Gold and Hiria;

·    Central Rand Gold obtaining all necessary regulatory and exchange approvals for the potential sale of the Subsidiary;

·    Hiria obtaining relevant regulatory approvals;

·    the entering into a formal share sale agreement for the sale of the Subsidiary.

Hiria has provided a high level representation to the Board that it has the resources and ability to effect the Transaction. As part of the due diligence process, Central Rand Gold will undertake a detailed due diligence on Hiria, including a review of Hiria's financing capabilities.

Central Rand Gold and Hiria have agreed to a target completion date of 31 March 2015 for the finalisation of all required due diligence and the execution of a share sale agreement. 

The Board cautions that at this time there can be no certainty that the potential sale of the Subsidiary to Hiria will be completed. The MOU with Hiria is not exclusive and the Board will continue to engage with other parties who have recently expressed an interest to better understand the assets of Central Rand Gold.

A further announcement relating to the Transaction will be made in due course.

About Hiria Group Company Limited

Hiria is a 100% owned subsidiary of Marsa (Canada) Group Holdings ("Marsa"), which is registered in the British Columbia province of Canada. The main business of Marsa is to provide vehicle and yacht financial leasing for its customers in the Columbia, Ontario and Quebec provinces of Canada. Marsa owns more than HK$6.5 billion of assets. Marsa and its subsidiaries have been active investors in iron and nickel mining operations throughout Indonesia, Philippines and Tanzania. Marsa has a strategy to expand its mining interests across various commodities throughout Africa and Southeast Asia.

2.   Operational Update

2.1  Acid Mine Drainage ("AMD")

The High Density Sludge Plant ("HDSP") has now been operational for five months. Central Rand Gold continues to monitor the water level at its mining operations as well as the daily flow rate, being the amount of water pumped out of the Central Basin from the HDSP. Overall, since July 2014, the water levels at Central Rand Gold's mining operations have risen by approximately 5.8 vertical metres. The Company has observed that when the flow rate is maintained at approximately 60 million litres per day ("mlpd"), which equates to approximately 80% of nameplate capacity, a reduction in the water level occurs. The HDSP ran at or around nameplate capacity between mid-July 2014 and early August 2014 and accordingly, a reduction of approximately 1.5 vertical metres in the Central Basin water levels was reported. This trend provides evidence that the HDSP is able to de-water the Central Basin, even when the daily flow rate is only at 80% of the Ritz submersible pump capacity.

The flow rate was reduced in mid-August 2014 as a result of the decision by the Trans Caledon Tunnel Authority ("TCTA") to strengthen the mechanical components of the two 42 million litre thickeners at the HDSP. This upgrade was required in order to improve, manage and control the AMD sludge and to ensure the longer term improved performance of the HDSP. During September 2014, a temporary upgrade to the thickeners was completed. The final upgrade is planned for completion in early 2015. Until this upgrade has been completed, the daily flow rate is expected to be between 48 and 60 mlpd. If the planned daily flow rate can be maintained, the Board believes that the water level is not expected to change significantly during this time.

Given that the Ritz submersible pumps have performed reliably since July 2014, it has been agreed that once the thickener upgrade has been completed, the TCTA will increase the flow rate to 84 mlpd. This represents a 17% increase on the original planned capacity of 72 mlpd. This increased capacity will provide the HDSP with greater ability to accelerate the future dewatering in the Central Basin to ensure that the underground AMD is, at a minimum, maintained at the Environmental Critical Level. This will allow Central Rand Gold to de-water the Central Basin to at least 450 metres below surface ("mbs").

2.2  Mining operations

As reported in the 2014 interim report, the Company had reduced the production rate from the underground mine due to the elevated water levels which currently sits at 152 mbs. The Board had hoped that by the date of this announcement, the Company would have been able to re-access some of its previously flooded and developed stoping areas. However, the inability to re-access these areas has placed strain on the Company's gold production and cash resources as the Company has been forced to substitute higher grade underground ore with other lower grade material, such as underground North Reef ore, old rock piles and material from tailings dams.

It is important to note that the Board remains extremely positive about the medium and long-term viability of the Company's current target mining area. The Board recognises that the current high water level is a short-term challenge and remains confident in the ability of the HDSP to dewater the Central Basin.

In light of this short-term setback, the Company has pursued a strategy of repositioning itself with respect to primary ore source. The Company has, for the past two months, focussed on revisiting and reassessing open pit targets that were mothballed on the commissioning of the underground operation.  

This temporary change in focus from underground operations brought about by the rising water levels has allowed the Company to consider alternate approaches to mining these more technically challenging surface resources. The introduction of mechanical ripping and other rock breaking technology has opened up SAMREC Compliant Exploration Target material of between 91 000 and 350 000t of reef running up to 2.5g/t as set out in the table below.    

SAMREC Compliant Exploration Target Schedule

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.

In addition to the reactivation of existing surface Resources and Exploration Targets, the Company has conducted a regional survey focussing on known surface gold sources. The study has identified a number of interesting alternative and easily accessible target mining operations which may be available to the Company. Given that a number of the target mining areas are outside Central Rand Gold's existing mining right areas, the Board is presently engaged in numerous commercial discussions with a view to securing an option to mine these areas. These initiatives are focused on maintaining the Company's production rate to ensure the Company moves into a cash positive position.

As there appears to be sufficient surface material available to sustain the existing operation at similar levels to those originally planned, the Board has taken the decision to temporarily suspend underground mining on its lease-hold. This will allow the operational team to focus its attention on surface operations while the final upgrade of the thickeners at the HDSP plant is being completed, which will allow the water table to be reduced so that ultimately the Company can re-access to the high grade underground working areas.

2.3  Operational costs

The Board continues to focus on reducing the Company's cost structure. Since January 2014, it has been able to reduce the overall Head Office salaries and Board remuneration by 15%. Similarly, the Company has reduced its overtime costs by 72% since January 2014 through efficiency improvements and more rigorous scheduled maintenance programs. In addition, the Company has, through the development of strategic alliances with other gold mining groups operating within the Witwatersrand, been able to reduce the cost of high usage Metallurgical re-agents, notably steel balls, by 12%. The Board will continue to focus on reducing the Company's existing cost structures, and will also make appropriate adjustments where the business focus changes (such as adjustments to underground mining operations whilst the water level continues to impact the business).

3.   Operational Funding

Given the ongoing operational review and recent approach from Hiria, the Board is also actively reviewing its balance sheet and capital requirements to ensure it remains well funded to continue operations and expedite completion of the Transaction. Further information will be provided to shareholders, in due course.

Note: The information in this statement relating to Mineral Resources and geology has been reviewed and approved by Mr Matier, BSc (Hons), GDE, Pr Sci Nat, who is a competent person in terms of the SAMREC and JORC codes. Mr Matier is the Geology Manager of Central Rand Gold South Africa Proprietary Limited

and has over 20 years' experience in precious metal exploration, mineral resource management and evaluation.

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

11 November 2014

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