Central Rand Gold shares rocket on possible $150m takeover

Central Rand Gold's (CRG) share price more than trebled on Tuesday after the South African miner said it had signed a memorandum of understanding (MOU) for the potential $150m sale of all its assets.

CRG, which owns a range of assets at various stages of development on the outskirts of Johannesburg, floated on AIM in 2007 at a price of 125p but saw its shares collapse over subsequent years and was trading at just 7.7p by Monday's close.

The company was valued at over £300m upon its listing in London, but was as of Monday worth less than £20m.

However, as of 14:28 on Tuesday, the stock was up 216% at 25.25p, having risen to a high of 45.29p earlier in the session.

CRG has now entered into a non-binding MOU with Hong Kong's Hiria Group for the potential disposal of all its shares in Central Rand Gold (Netherlands Antilles), which owns the group's principal operating subsidiary.

The group said in a statement that the MOU was the result of "recent detailed discussions between CRG and Hiria". The deal is conditional on both parties completing due diligence, as well as all the necessary regulatory exchange approvals.

The company warned that there was no certainty of the takeover going through, but said that it wanted to complete the deal by 31 March 2015.

Production rates at the company's underground operations had been reduced earlier in the year due to "elevated water levels" and the continued inability to re-access these areas is putting pressure on its cash resources. The group said it was a "short-term setback" and has recently been revisiting older mines.

CRG said: "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."