CENTRAL Rand Gold (CRG) saw its shares crash 56 per cent to just 0.22p yesterday after the FTSE Fledgling firm had its mining licences revoked.
The firm said the South African ministry of mineral resources has cancelled its mining rights with immediate effect, in a dispute over rules on mining work and social labour.
The London- and Johannesburg-listed miner has said it is consulting with legal advisers over its next steps.
Talks had been ongoing between the government and CRG for several months, after the firm pledged to drain mines and treat acid damage at its sites.
The mining department sent the company a compliance notice in August, complaining that the firm was in breach of its rights agreement for the site south of Johannesburg.
CRG has argued that its agreement “was based on its original 2008 operational plans submission which had envisaged a considerably larger resource base and operation”.
A spokesperson for the ministry told South African media yesterday: “This is the first mining right to be revoked in the recent past… If people make a commitment to the state they must honour that commitment. They will be held accountable.”
CRG, which floated in London in 2007, launched a strategic review in March, which included scoping out a possible sale of the firm. But earlier this month it said all takeover approaches so far had been rejected and it was no longer in an offer period under the UK takeover code.
Analysts at Numis said the ministry’s decision “must surely be the last of the thousand cuts” for the company.