Goldplat plc, the AIM listed gold producer, is pleased to announce its unaudited results for the six months ended 31 December 2008.
- Pre-tax profits up 92% to £1,201,000 (2007: £624,000) strong cash flow with healthy cash balance of £2.5 million as at 31 December 2008
- Margins positively impacted by the rise in the gold price
- Commenced production at the Kilimapesa mine in Kenya in January 2009, which is expected to fund the development of the mine
- South African and Ghanaian recovery plants continuing to perform buoyantly
- South Africa : Further stockpiles secured, bringing the total stocks of materials for processing to 44,050 oz of contained gold, equating to four years of current woodchip production capability, three years of gravity concentration capacity and three years of leach capacity
- Ghana : Further stockpiles have been identified and sampled - Goldfields Ltd has extended the fine carbon contract with Gold Recovery Ghana Ltd
- Compliance with Black Economic Empowerment rules in South Africa in advance of the May 2009 deadline
- Expanding geographic reach, locating opportunities in Tanzania and Zambia
Goldplat CEO Demetri Manolis said, "These excellent results underpin the rapid progress that the Company is making and the strength of our business model. With the cash flow from our processing plants continuing to increase and the contribution from our Kenyan mining operation due to impact the Company in Q2 2009, I believe we are in a strong financial position. Importantly, our earnings from gold sales are in US dollars, which should equate to a strong performance in sterling terms. This, in tandem with the favourable gold market conditions, should enhance shareholder value."
For further information visit www.goldplat.com or contact:
Demetri Manolis, CEO Goldplat plc, Tel: +27 11 423 1203, Mob: +27 82 454 7392
James Joyce WH Ireland Limited, Tel: +44 (0)20 7220 1666
Bill Sharp / David Scott Alexander David Securities Limited, Tel: +44 (0)20 7448 9820
Felicity Edwards / Hugo de Salis St Brides Media & Finance Ltd, Tel: +44 (0)20 7236 1177
It gives me great pleasure to report a strong financial result for the six months ended 31 December 2008 and our substantial progress towards becoming a mid-tier gold miner in Africa . Profit before tax for the six months is £1,201,000 (2007: £624,000), an increase of 92% and profit after tax has seen an increase of 113% at £806,000 (2007: £379,000). This is the first time that a six month period has shown profits of more than £1 million for the Company.
During the period under review, we have maintained our strong growth profile and as a result have increased our cash position to £2.5 million. Revenue was contributed from both the South African and Ghanaian recovery operations which have been further reinforced following the securing of additional stockpiles of gold bearing materials which will increase the production potential of our operations. Post period end, we commenced production at our Kilimapesa gold mining project in Kenya which is expected to make an operational profit from Q2 2009, which will fund the development of the underground mine. On a broader level we continue to evaluate additional mining opportunities in line with our growth strategy of developing further cash generative assets in Africa and building a mid tier gold producing company.
Gold Recovery Businesses
Currently the Company's primary business is the recovery of gold and, to a small extent, platinum group metals from the by-products of the mining industry, which fulfils an important aspect of a mine's environmental management programme. Goldplat recovers gold from metallurgically challenging materials, primarily those which have been inadvertently enriched by the mining process. It does not process low grade tailings and other partly depleted materials, except artisanal tailings in Ghana , which have a high gold content.
The South African subsidiary, Goldplat Recovery (Pty) Ltd ('GRL') has previously been described as a 'mature' business, as it controls the major part of the material available for processing in its sector. Nevertheless, a combination of improvements to technology and a committed management has enabled profits to continue to increase. Importantly, strong relationships with the major mines have enabled GRL to increase its stocks of materials for processing to 44,050 oz of contained gold, which equates to four years of current woodchip production capability, three years of gravity concentration capacity and three years of leach capacity , thus safeguarding future profitability.
To comply with Black Economic Empowerment ('BEE') rules in South Africa , the Company sold 15% of GRL to a subsidiary of Amabubesi Capital for a total of ZAR 15.3 million, which equated to £1.01 million as at 6 October 2008. We believe that compliance with BEE rules will facilitate GRL's business in South Africa , enabling it to acquire or apply for mining rights, as well as improving its competitive position when tendering for processing contracts. GRL is now fully BEE compliant until 1 May 2014, when the percentage in the hands of Historically Disadvantaged South Africans (HDSA) will need to increase to 26%.
Additionally, our wholly owned Ghanaian operation, Gold Recovery Ghana Ltd. ('GRG'), has also performed buoyantly. Full production commenced at the beginning of 2008, with profits building steadily as plant improvements and efficiencies have been implemented. Although GRG is a smaller operation than GRL, the 10 year tax free status of the operations in the free port of Tema has resulted in a noticeable reduction in the percentage of Group profits being paid in tax. Importantly, GRG's operations have been welcomed by authorities in Ghana as a positive contribution for their strategy of environmental improvement in the mining industry, an objective we hope to capitalise on going forward.
The ability of GRG to acquire stock for processing has been gratifying, with stocks of materials at a high level totalling 35,000 oz of contained gold. Importantly further stockpiles are being identified and secured, reinforcing the plant's economics and facilitating its future expansion. In particular, GRG extended an agreement with Goldfields' Tarkwa operation to deliver fine carbon for a further year and won a contract to process fine carbon from the Bibiani mine in Ghana . GRG is also transporting woodchips from Golden Star's Wassa operation to establish a stockpile for burning once the new incinerator is operational - this expected to be shipped imminently from South Africa and in operation by the end of April 2009.
The Company's first mining project, the Kilimapesa mine in Kenya , commenced production in January 2009. All costs in the first half year have been capitalised and further developments will continue in 2009 in parallel with production to enhance gold recovery rates and in turn increase operational economies of scale. The mine, which is a 50-50 Joint Venture with International Gold Exploration AB, is expected to make an operational profit from Q2 2009.
In addition, the high grade gold vein system is being rapidly developed with exploration and development targeting both surface and underground anomalies. We are aiming to publish a JORC compliant resource statement later this year which will further reinforce the economic potential of the project.
The Directors believe that the current problems being experienced by the junior natural resource sector provides a unique opportunity for Goldplat, with its strong cash flow, to acquire additional mining projects. A number of opportunities are under consideration, which are being evaluated using a stringent criteria, to ensure that the Company's resources will not be dissipated.
In line with the Company's strategy of developing further cash generative opportunities in Africa, Goldplat's management team have made exploratory visits to Tanzania and Zambia to examine the possibility of commencing additional gold recovery activities. Volumes of artisanal tailings in excess of 100,000 tonnes have been identified, measured and sampled. Discussions with two Tanzanian parties are ongoing, with a view to Goldplat providing its technological expertise, and the Tanzanian parties supplying the tailings.
Additionally in Zambia , Goldplat has initiated a preliminary investigation into the potential of an operation, under which copper gold material will be upgraded by Goldplat and the concentrates sold to our strategic partner, Rand Refinery, which has facilities to handle copper gold concentrates. We look forward to updating the market accordingly on any developments in due course.
The profit before tax for six months ending 31 December 2008 is £1,201,000 (2007: £624,000) an increase of 92% and profit after tax has seen an increase of 113% at £806,000 (2007: £379,000). The profit after tax benefits from the increasing profits generated in Ghana , where our wholly owned subsidiary has a 10 year 'tax holiday' as a new business in Ghana .
The profit before tax indicated is after allowing for the 15% minority interest due to our BEE partner in South Africa post acquisition.
In December 2008 the Company issued options to Directors and senior management to acquire new Goldplat ordinary shares. This will give rise to charges in the Group Income Statement over the next two years, although reserves in total will not be reduced. No charge has been made in the Income Statement for the six months to 31 December 2008 as the amount is not considered material.
The Directors expect the progress made in the first six months to continue during the rest of financial year. The gold price has proved resistant to the reductions experienced by other precious and base metals, giving us an excellent platform for expansion. In addition, opportunities for new mining projects are constantly being offered to and evaluated by Goldplat, which bodes well for future growth.
Finally, I would like to take this opportunity to thank my fellow directors, advisers, management teams and shareholders for their dedication and support over the past year, which has seen Goldplat go from strength to strength.
23 February 2009
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