Director dealing

Overview

  • Goldplat is an established producer of gold and platinum group metals ("PGM") recovered from by-products, such as woodchips, fine carbon and grease, of the mining process
  • Listed on AIM today having raised £1.5 million
  • Existing operation in South Africa with supply relationships with wide range of mining companies including Anglogold Ashanti, Goldfields, Harmony, Placer Dome, Impala Platinum, Lonmin and Anglo Platinum
  • Mining operations in South Africa are obliged to dispose of mining by products in an environmentally friendly manner - Goldplat's ongoing availability of raw materials is therefore not dependent on particular mines with finite resources
  • Plans on course to establish a complementary recovery facility in Ghana
  • Management team with many years' experience in the recovery of gold and PGMs as well as gold production from mines
  • Defined strategy to become a leading junior gold mining business supported by revenue generated from the gold and PGM recovery operations

Goldplat CEO Demetri Manolis: "Our intention is to create a successful junior mining house focussed on gold production assisted by revenue secured from the Group's recovery business, which extracts gold and platinum group metals from by-products of the mining process. Our main operation is in South Africa, which has established relationships with the major mining houses, who all have a need as well as an environmental obligation to dispose of their by-products. It is the intention to expand our operations into Ghana where we will service the expanding West Africa gold industry. We intend to utilise the cash flow generated from these operations as well as our experience and networks within the industry to identify gold deposits of 200,000-2,000,000 ounces of contained gold in order to fulfil our strategy and build value for our shareholders."

Goldplat plc has raised £1.5 million through a placing of 20,000,000 New Ordinary shares at 7.5p per share giving the Group a market capitalisation of circa £7.8 million and has listed on AIM today - 26 July 2006.The funds raised will be used to complete the acquisition of Goldplat Recovery (Pty) Limited, establish a complementary recovery operation in Ghana, evaluate gold mining opportunities and for general working capital. HB Corporate is the Nominated Adviser and Broker to the Company.

Through its wholly owned subsidiary, Goldplat Recovery (Pty) Limited ('Goldplat Recovery'), the Group is an established producer of gold and platinum group metals ("PGM") recovered from by-products of the mining process.Its plant in South Africa is located near the centre of the East Rand Goldfield and raw material feedstocks are sourced from many of the major South African mining companies including Anglogold Ashanti, Goldfields, Harmony, DRD Gold, Placer Dome, Bema Gold, Simmer and Jack, Impala Platinum, Lonmin and Anglo Platinum.

The safe disposal of mining by-products to Goldplat Recovery fulfils an important aspect of the mines' environmental management programmes as well as providing an additional income stream. The Directors believe that Goldplat Recovery is the leading operator in its field in South Africa.

Strategy

The Directors intend to make a number of improvements to the existing plant, which will enable Goldplat Recovery to be competitive in the higher grade section of the market.

The Group also plans to expand its operations to process by-products from gold mines in West Africa and an initial contract has already been secured with Anglogold Ashanti. Production of gold is expected to commence towards the end of 2006 at a plant to be constructed in the Free Zone Port of Tema in Ghana, the second largest gold-producing country in Africa. The environmental permits required to secure the site have been obtained. Operating costs in Ghana are expected to be considerably lower than those at the existing plant and the new plant will also process materials with a much higher gold content.

In tandem with the expansion of the recovery business, the Directors' strategy is to take advantage of their considerable experience in the gold mining sector to become a junior gold mining company in Africa. This will be achieved by utilising the cash flows generated from the by-product processing operations to identify and evaluate opportunities. Accordingly, the Board is currently reviewing a number of opportunities and is in exploratory talks in relation to projects in Ghana, Mozambique and Kenya.

Operations

Goldplat Recovery operates from a freehold site of 22 hectares near Benoni in Gauteng, South Africa near the centre of the East Rand Goldfield. The site houses the processing plant and raw material stockpiles. In addition, Goldplat Recovery has surface rights over an adjacent site of 12 hectares where it proposes to establish a tailings facility in 2007.

After testing to establish gold or PGM content, moisture content, recoverability and size, Goldplat Recovery purchases the materials from the mine operator (occasionally it will undertake a joint venture whereby the mine operator shares in the resulting profits). In order to provide a high level of service to its customers, Goldplat Recovery's policy is to purchase raw materials when they become available. This also helps management to schedule production in an efficient manner as well as making it more difficult for potential competitors to enter the market.

Goldplat Recovery's extraction processes and multiple process lines enable it to keep materials separate, which provides a high degree of flexibility when proposing a solution for a particular type of material. The processes which are employed include roasting in a rotary kiln, crushing, milling, thickening, flotation, leaching, CIL, elution and smelting of bullion. Recently, a gravity concentrator was installed in the low grade circuit and a second flotation section has been erected in the underground line. It is intended to install a fluidized bed furnace in the high grade circuit.

Production is scheduled to make the most efficient use of the materials taking into account the ore grade and anticipated recovery factors. Raw materials are blended and routed to the various plants in an effort to ensure that production levels are reasonably consistent from month to month. In some cases, similar material can be treated in different plants. The wide variety of materials stockpiled means that the company can benefit from being able to blend materials for more effective processing.

Precious metals are usually recovered from materials within a single process. In some cases, there may be a second process which takes place many months afterwards, for instance where the residue from processing very high grade material is left to oxidize in a stock dam in order to enhance the overall recovery rate. Such stock dams can contain substantial amounts of gold and PGM.

Goldplat Recovery's plant is designed to process a variety of material, such as woodchips, fine carbon and waste grease.The final product for sale can either be smelted gold bars, or gold or PGM concentrate.

Goldplat Recovery is also interested in the rehabilitation of mining areas where, although mining operations have ceased, material has been left in the area containing gold or PGM which is difficult to extract, and may have environmental problems such as low level radioactivity.

Trading Record and commentary

Year ended 31 June 2003
£

Year ended 30 June 2004
£

Year ended 30 June 2005
£

Period ended 31 Mar 2006
£

Continuing operations

Revenue

120,767

2,935,958

3,743,475

2,593,197

Cost of sales

(76,258)

(962,759)

(2,868,093)

(2,358,775)

Gross profit

44,509

1,973,199

875,382

234,422

Administrative expenses

-

(683,727)

(242,165)

(262,801)

Operating profit/(loss)

44,509

1,289,472

633,217

(28,379)

Operating profit/(loss)
Discontinued operations

24,121

22,259

(22,733)

1,347

Total operating profit/(loss)

68,630

1,311,731

610,484

(27,032)

Finance income

3,975

13,356

34,338

4,784

Finance expense

(41,146)

(38,234)

(11,313)

(14,652)

Net profit/(loss) before tax

31,459

1,286,853

633,509

(36,900)

Tax

-

(171,947)

(224,425)

9,671

Net profit/(loss) after tax

31,459

1,114,906

409,084

(27,229)

The increase in revenue over the period reflects the commissioning of the PGM flotation circuit during the year ended 30 June 2003 and the purchase of the gold plant towards the end of the first quarter of the following year. The year ended 30 June 2005, the first full year of operation of both plants under the management of Goldplat Recovery, saw sales of gold and PGMs reach 10,900 ounces and 3,851 ounces respectively. This reflected a combination of higher processing throughputs offset by lower recoveries compared with the previous year. The average revenue per ounce of gold showed a marginal increase to £229 (2004: £224) whereas PGM prices weakened from £366 to £334. Total revenue from continuing operations for the year ended 30 June 2005 increased by 27.5 per cent. to £3.7m.

The results for the nine months ended 31 March 2006 were affected by a number of factors which were either operational in nature or were the result of decisions taken for the benefit of the year as a whole and the longterm efficiency of the processing plant.These included investment in a gravity concentrator and two flotation circuits in order to increase recovery rates from higher grade material by up to 30 per cent.The company also took steps to increase its burning capacity to improve recovery rates by making major repairs to the kiln and installing seals.Furthermore, during the period two additional mills were acquired to provide extra capacity at the low grade milling circuit and flotation circuit and two sets of spirals were purchased to be used in conjunction with the fluidized bed furnace.

Current trading and prospects

Following this period of investment in the first nine months of the year, the management accounts of Goldplat Recovery for April and May 2006 indicate that the unaudited profits for this two month period amounted to approximately £65,000 before tax and after adjusting for costs associated with the AIM flotation. The Directors consider that the operational outlook is now favourable but believe that the full effect of the recovery in profitability will only be evident in the Group's results for the year ending 30 June 2007.

Mining opportunities

The Directors are currently reviewing a number of gold mining opportunities which they believe will add significant value to the Group and complement the existing and proposed gold and PGM production plants in South Africa and Ghana. The Group is currently in exploratory talks in relation to projects in Ghana, Kenya and Mozambique. Typically the Directors will be seeking to acquire gold deposits comprised of between 200,000 and 2m ounces of contained gold.

Directors

Brian Moritz, aged 70, Non-executive Chairman
Brian is a chartered accountant and the former Senior Partner of the London office of Grant Thornton, one of the leading international accounting firms. He is currently chairman or director of a number of junior mining and exploration companies, the majority of which operate in Africa. He also specialises in advising companies, mainly in the area of flotation. In his former role at Grant Thornton, he was registered by the London Stock Exchange as a nominated adviser qualified executive for companies seeking admission to the AIM Market and a Listed Company sponsor.

Demetri Manolis, aged 49, Chief Executive
Demetri was born in Cyprus and gained his mining and metallurgy degree in 1981 at the Technical University of Athens. He worked in chrome and bauxites mines in Cyprus and Greece until 1983 when he emigrated to South Africa becoming a South African citizen. In 1986, he obtained his Certificate of Competency for Mine Managers. Between 1989 and 1992, he was variously General Manager and Managing Director of Consolidated Modderfontein Mines Limited, a goldmining company listed on the Johannesburg Stock Exchange. Between 1992 and 2000, he was Managing Director of Gravelotte Mines Limited, a privately owned underground gold mining company. Here, he and his team grew sales from ZAR 1.6m in 1992 to ZAR 45.4m reaching a peak net profit of ZAR 10.1m in 1999.Demetri became Managing Director of Goldplat Recovery in July 2000 and together with Ian Visagie, he took over management control of Goldplat Recovery in November 2000 and its rapid increase in profitability since then has been under his leadership.

Ian Visagie, aged 46, Finance Director
Ian is a South African citizen. He trained as a Chartered Accountant with KPMG in its Pretoria office. Having gained post qualifying experience with KPMG he moved into a mining environment in 1990 when he joined Consolidated Modderfontein Mines Limited as financial manager where he first worked with Demetri Manolis. In 1992, he joined Gravelotte Mines Limited as financial manager. He joined Goldplat Recovery in March 1997 as financial director. With Demetri Manolis, he took over management control of Goldplat Recovery in November 2000.

John Woolgar, aged 66, Non-executive Director
A former stockbroker, John has 35 years' substantial and diverse City experience, principally involving private investors in smaller companies. As a former corporate adviser, he raised funds for over 30 companies by way of Official List and Unlisted Securities Market flotations, Business Expansion Scheme and Enterprise Investment Scheme private placings. He conceived the idea of Web Shareshop (Holdings) Plc as a cost effective method of attracting large numbers of private investors into new issues and as a delivery system for private funds into placings. More recently (in 2004) he co-founded Zari Resources plc (now Genesis Petroleum Corporation plc) as an AIM-listed investment company and oversaw its reverse takeover of Genesis Petroleum Corporation Limited. Similarly (in 2005) he co-founded Zareba plc (now Quadrise Fuels International plc) and oversaw its reverse takeover of Quadrise Fuels International Limited.

Following Admission, it is the Directors' intention to appoint an additional independent non-executive Director.

For further information contact:

Demetri Manolis
Tel: +27 11 423 1202
Fax: + 27 11 423 1230
Mobile : + 27 82 454 7392

Isabel Crossley
St Brides Media & Finance Ltd
Tel+44 (0)20 7242 4477