“Bloodied but unbowed” would best describe Central Rand Gold after mineral resources minister Susan Shabangu cancelled its mining licence last week. CEO Johan du Toit describes the company as “disappointed”.

In the next two weeks Central Rand plans to file papers asking for a court order to allow it to continue mining while it requests a review of the decision.

Central Rand’s shares, at around 4c, are a fraction of the R16 at which they were listed in London and Johannesburg, amid much interest, especially from offshore, in 2007. It promised to use new mining techniques to extract the remaining gold from the 100-year-old workings around Johannesburg.

The shares have been sold on a stream of bad news over the past four years. This included failure to meet targets, delays in securing the mining licence, doubts over the mining method, a dispute with black empowerment partners Puno Gold Investments and, earlier this year, disclosures about the extravagant lifestyle of Puno Gold’s Kenny Kunene and Gayton McKenzie, who earned salaries from Central Rand. Rising levels of acid mine water around the Witwatersrand also threaten to sterilise some of the company’s gold resources.

Central Rand’s licence was cancelled because it had failed to fulfil the targets in its social and labour plan. Du Toit says the company has spent R18,8m on social and labour projects over two years instead of the R32,9m it committed . It has also spent R35m on pumps to treat acid mine water ingress, which will benefit not only its own operations but a wider area.

Central Rand says it is now “a radically different (and unfortunately radically smaller) company than it had expected to be” when it applied for its mining right.

Du Toit says SA’s mining laws don’t recognise that when a company applies for a mining licence it has to make assumptions about what is underground, and sometimes those do not materialise. But more disappointing was the department of mineral resources’ unwillingness to engage with Central Rand.

Departmental spokesman Bheki Khumalo says the department has always attended to Central Rand through its Gauteng regional office. “[Since] these matters are now before court we would prefer to take our side of the story to the relevant courts,” he adds.

Earlier this year, in a six-month strategic review, Central Rand identified three main technical issues it had to tackle . By late last month management had reviewed all three . “That was the point at which our mining licence was cancelled,” Du Toit says. It will shortly announce the results of trial mining using conventional mining methods.

Central Rand has raised US$214m from listing and capital issues since 2007, of which only $4m is left. Chief financial officer Patrick Malaza says about $60m was spent on capex and $70m on exploration. Other big costs were adverse exchange rate movements and deposits paid for rehabilitation guarantees and services. Payroll costs were about $35m.

Du Toit doesn’t believe salaries paid to Kunene and McKenzie were out of line. Those salaries were approved by the board, and Central Rand is satisfied they delivered what they were contracted to do, namely advising on the social and labour plans and helping to secure a licence. Kunene and McKenzie are no longer executives of the company.

A February note from Central Rand’s sponsoring broker in London, Evolution Securities, rates the shares as “neutral”, a downgrade from its “buy” recommendation in mid-August last year. Then Evolution described Central Rand as “better than Randgold Resources”, the West African miner headed by South African Mark Bristow.

Randgold’s shares have gained 14% from mid-August 2010 to last week. On the quality of Randgold’s assets and Bristow’s track record of delivery, the FM would rate it more highly