Goldplat plc, the AIM listed gold producer, is pleased to announce its preliminary results for the year ended 30 June 2011.
- 48% increase in operating profits to £3,054,000 (2010: £2,059,000)
- 76% increase in profit before tax to £3,428,000 (2010: £1,943,000)
- Net cash position of £3,010,000 (2010: £1,018,000)
- Gold recovery plants performing robustly – production up 31% to 28,185 ounces of gold (2010: 21,461):
- Additional contracts won with mining majors in South Africa and West Africa to acquire gold bearing by-products for processing
- New toll processing agreements in Ghana generating significant cash
- Increased efficiency at both plants
- On track to delineate in excess of 1 million ounces of resources by H1 2012
- Imminent gold production at Kilimapesa gold project in Kenya and 1,800m drilling underway
- 3,100m drilling programme completed at Nyieme gold project in Burkina Faso with results expectedto be announced shortly
- Commencing exploration programme at the recently acquired Banka Gold Project located in a premier gold district in Ghana
I am delighted to report on the progress your Company has made during the period as a cash generative, profitable, debt free gold producer and mine development company focussed in Africa.
This year has seen us make a significant increase in profit before tax due to gold production increasing to record levels of 28,185 ounces (‘oz’) from the Company’s gold recovery operations in South Africa and Ghana and the favourable gold price environment.Whilst building profits and revenues remains a key objective for the Company, the exploration and development of brownfield projects, typically high grade vein systems, is where we see the growth and value uplift potential, as we continue to build the Company into a mid tier gold producer in Africa. With three mining development projects in Kenya, Burkina Faso and Ghana, all with near term resource upgrade and production potential, I believe that Goldplat looks set for significant growth during the remainder of 2011 and beyond.
Operating profits increased by 48% to £3,054,000 (2010: £2,059,000).This is the measure by which Goldplat believes its performance should be judged, as measures such as turnover are complicated by the different deals under which Goldplat purchases materials for processing.It is particularly noteworthy that the major part of the increase was generated in Ghana, where the Group benefits from a tax holiday, thus reducing the overall tax charge.In South Africa, the long term strengthening of the Rand seems to be reversing, which will enable the producing companies in both South Africa and Ghana to benefit from the strength of the gold price.
The headline profit before tax is £3,428,000 (2010: £1,943,000).After stripping out the exceptional gain explained below of £425,000 this is an increase of more than 50%.The low tax charge of £472,000 (2010: £713,000) is partly due to the fact that profits in Ghana are not subject to tax until 2015, but also due to the fact that a reduced dividend was declared by the South African subsidiary, as such dividends give rise to a secondary tax charge.
The increase in earnings per share of 93% while very satisfactory should be viewed in the light of the comments above.
In December 2010 we undertook a placing and raised £5.5 million (£5.2 million after expenses) in order to accelerate the development of our brownfield exploration assets in Kenya, Burkina Faso and Ghana and to acquire potential further gold mining assets.This cash enabled us to negotiate early settlement of the balance of the purchase price of Kilimapesa Gold.The original amount owed of US$ 1.5 million was settled for a single payment of US$ 0.8 million.Under IFRS, the reduction of £425,000 is included as an exceptional gain in the Group Statement of Comprehensive Income.
As I mentioned earlier, our two gold recovery operations, which process by-products from the mining process to recover gold, performed strongly during the period.Total gold production for the year increased by 33% to 28,185 (2010: 21,461 oz of gold), which can be attributed to the improving operational efficiency of both plants.A number of initiatives were made, including the purchase of new equipment, the re-negotiations of by-product contracts and the signing of new contracts with both major and smaller mining companies, all of which helped improve margins and counteract the rising costs of electricity, royalties and transport.In Ghana, toll processing agreements referred to in the operations report were also a significant factor in increasing both production and profits.
As previously highlighted, Goldplat’s growth strategy is one of value creation, developing gold projects with near-term resource potential towards and into production.We aim to delineate in excess of 1 million oz of gold of JORC compliant resources from our three gold mining development projects by the first half of 2012 and in line with this, we have implemented defined exploration and development programmes across each of our projects with the view of developing multiple profitable mining operations in the near to medium term.
In western Kenya at our Kilimapesa Gold project located in the historically producing Migori Archaean Greenstone Belt, we have a maiden resource of 1.65Mt at 2.44 g/t of gold for 129,000 oz of gold which we intend to increase and upgrade towards the 0.5 million oz mark by Q4 2011.Underground development is underway, as is a 28 shallow hole 1,120m drilling programme. In tandem with this, we intend to increase the rate of production to approximately 10,000 oz of gold per annum within 12 months of being granted our mining licence.We anticipate being granted the Mining Lease in the near future and look forward to updating on this in due course.Sales of gold bullion will commence as soon as we have commissioned the elution plant, anticipated to be early in October 2011.
Meanwhile, at our 246sq km Nyieme gold project in Burkina Faso, another drilling programme is underway aimed at proving-up the project’s economic validity and production potential. Previous drill programmes have yielded highly positive results highlighting high-quartz vein structures. Currently, the project has a maiden resource of 685,000t at 2.61g/t gold for 57,501 oz gold, which has been calculated over an initial 2km of a potential 8km strike.A 3,100m resource drilling programme has just been completed, and we will announce our first drill results in due course followed by a JORC compliant resource upgrade.
In line with Goldplat’s strategy of expanding its portfolio of brownfield projects, we completed the purchase of the 29 sq km Banka Gold Mining Lease in Ghana (‘Banka’) from Gulf Coast Resources Ghana Limited (‘Gulf Coast Resources’) in May 2011.Previous drilling programmes at the project, which is located in the Ashanti Gold Belt 10km southwest of Newmont’s 14 million oz Akyem gold deposit, have defined significant high grade gold intersections. With an initial non-JORC compliant resource of 262,107oz of gold, which we intend to upgrade, increase and convert to a JORC compliant status through infill drilling at depth later this year, Banka looks to have mine development and value upside potential.
We are reviewing other similar projects across the continent including a gold mining asset in South Africa located close to the Benoni operation, which the management believes could provide long term feed stock for the processing plant and would enhance the stability of the South African operations.We will update the market on developments in due course.
Looking ahead, we anticipate that our current strong performance will continue with increasing profits at our gold recovery plants and solid growth from our three brownfield gold projects as we focus on attaining a resource base in excess of 1 million ounces. Our mining development projects are central to Goldplat’s portfolio as we advance towards increasing our gold production profile to become a gold mining company in Africa.
I would like to take this opportunity to thank my fellow directors, management and our workforce for their dedication and help over the past year as well as our shareholders for their continuing support.I believe that Goldplat has the foundations in place from which to deliver significant value and I look forward to updating the market on our progress.
12 September 2011
Gold Recovery Operations
Goldplat Recovery – South Africa
The South African gold recovery business continues to perform well, with gold production for the year ended 30 June 2011 totalling 18,190 ounces of gold (2010: 17,263).
During the year, a number of initiatives were undertaken to improve the plant’s operational efficiency and profitability, which have impacted positively.A mobile screen was purchased to pre-screen selected raw materials, remove waste material and increase the grade of the fines generated at the plant.The high grade mill project is in the process of being commissioned which will increase milling capacity at the recovery plant. Importantly the production capacity at the flotation section of the recovery plant has been increased by 15%.
We keep an open dialogue with the surrounding gold mining houses.In line with this, we renegotiated a number of existing contracts, to improve our economic margins, which has helped counteract the rising costs of electricity, royalties and transport seen in South Africa during the past year.We have also signed a number of new contracts with mining companies including Simmer and Jack Limited and AngloGold Ashanti (‘AngloGold’) in South Africa. Post period end, we signed a Letter of Intent with DRD Gold, to secure further feedstock from its East Rand Proprietary Mines operation.We are currently reviewing and analysing the surface reserves including old shaft areas, railway lines and the gold plant itself, following which contracts will be signed based on the volumes, grades and recovery for the viable reserves established.
Interest has also been shown by a number of Tanzanian gold producers in supplying raw materials to Goldplat Recovery, although the issue of receiving permission from the Government of Tanzania to export gold in concentrate form rather than bullion remains outstanding.
Gold Recovery Ghana (‘GRG’) – Ghana
GRG’s gold processing operation has moved from strength to strength as it utilises its prime location in West Africa to build contacts with major gold mining houses operating within the region.Its solid performance during the year has generated significant cash flow for the Company and the ten year tax break, which runs until 2015, has also helped our bottom line.
Gold production for the year to 30 June 2011 was up 138% to 9,995 oz of gold (2010: 4,198 oz).Additionally, we secured two toll processing agreements with Golden Star and Adamus Resources in Ghana in September 2010 and April 2011 respectively, which allows some of GRG’s stockpiled by-products to be processed off-site.Both agreements were a significant factor in increasing both gold production and profits for the full year at GRG.
As with the South African gold recovery business, building stockpiles of gold bearing raw materials to process is important for the long-term success of the business with existing contracts with mining companies including Goldfields Limited, AngloGold and Golden Star Resources Limited, contributing to this.We are also in advanced discussions with other major mining companies in Mali and Burkina Faso regarding the acquisition of further processing by-products for gold recovery, which could significantly boost these stockpiles.In light of this, an additional furnace is being installed at the plant to increase its processing capacity, which we anticipate will be operational by Q1 2012.
Gold Mining and Exploration
Kilimapesa Gold - Kenya
Kilimapesa Gold is on track to become a high grade profitable mining operation in the near term.Initial production is targeted at 5,000 oz of gold per annum increasing to 10,000 oz of gold per annum within 12 months of being issued our mining licence. In this respect, the Title Deed required for the completion of the application of the mining licence has been issued and the documentation has been delivered to the Commissioner of Mines and Geology of Kenya.The gazetting of the application for three months in the Kenyan national press before issuance of the Mining Lease can be finalised is soon to be completed, and we look forward to updating on this development in due course.
Commissioning of the elution plant is expected in early to mid October 2011 after which sales of gold bullion will commence.
In terms of exploration, we have an active programme in place comprising both underground development and exploration drilling, which aims to upgrade our current resource 1.65Mt at 2.44 g/t of gold for 129,000 oz towards the 0.5 million oz mark by 1H 2012.
Underground development is underway, primarily focussed on extending the 250m underground strike exposure of the auriferous quartz veins and to provide additional ore resources.The programme has started with three development ends on the auriferous quartz vein being explored to the east of the project.The vein structures across Kilimapesa Gold have been historically worked on in places and we are confident of the grade continuity.
Following a data gathering exercise earlier in the year, which included geological mapping and sampling, Induced Polarisation (‘IP’) anomalies, artisanal activity, and previous reverse circulation (‘RC’) drilling results, we identified four highly prospective targets at Kilimapesa Gold (Vim/Rutha and Red Ray, Kilimapesa Hill and Olepoipoi), which have formed the focus for our 1,800m 2011 drilling programme.
Phase 1 of a two phased drilling programme commenced June 2011 and has focussed on exploring the Vim/Rutha and Red Ray target areas which are 2km south of Kilimapesa Hill where the maiden resource was defined. At the Vim/Rutha target 16 shallow holes for a total of 640m are being drilled.Several narrow (between 5cm and 100cm thick) steeply dipping auriferous quartz veins trending parallel to the veins intersected in the mining operations at Kilimapesa Hill outcrop on surface and have demonstrated lateral continuity of between 300-400m.A geophysical IP survey confirmed the lateral continuity of the veins but has also indicated possible hitherto unknown veins.The estimated total strike length of the veins of over 5 km attests to the prospective potential of this area.Following Phase 1, four deeper holes will be drilled for a total of 460m.
The Red Ray target is located 1 km east of Kilimapesa Gold’s processing plant.Phase 1 drilling comprises surface and underground mapping as well as 12 shallow diamond drill holes for a total length of 480m.Two deeper holes for a total of 180m will be drilled in the second phase of the drilling programme.The Red Ray target has two main veins striking east to west and dipping steeply to the south which can be traced along the crest of two small hills which are approximately 1.5 km in length.These veins are thought to correlate to the veins currently exposed in Adit B at Kilimapesa Hill 5 km to the west.Extensive artisanal activity has taken place along the crest of the hills and the veins are also exposed at the base of the hills in the adits. Additionally, individual rock chip samples of up to 10 g/t Au have been previously recorded by Goldplat.
To date five holes of the total 1,120m 28 shallow hole (depths of 40m) Phase 1 programme have been completed.We expect this phase to be completed by end of October 2011 with results to follow there after.Once a full analysis of these results has been undertaken we will commence with Phase 2, which has been designed to follow up on the results of Phase 1 with intercepts up to 80m deep.
Nyieme Gold Project - Burkina Faso
Development of the 246 sq km Nyieme project in Burkina Faso, located 270 km southwest of Ouagadougou, is progressing well.It is our intention to prove up the economic viability of the project and delineate an upgraded JORC compliant resource by 1H 2012 with the target of bringing it into production in the mid term.
In September 2010 we concluded an 11 hole diamond drilling programme over a high gold grade area previously identified by an RC programme completed by the previous owners, Sanu Exploration (‘BVI’) Limited in 2008.Results received were highly encouraging with five holes returning gold grades in excess of 4 g/t, the highest value being 19.1 g/t over a width of 116cm – clearly demonstrating the economic potential of the project.
Following this, in December 2010 we announced a maiden JORC compliant resource from Nyieme’s first target totalling 685,000 tonnes at 2.61 g/t gold for 57,501 oz of gold at a cut-off grade of 1.0 g/t gold for all categories.The total estimated resource includes an Indicated mineral resource of 225,000 tonnes at 2.98 g/t gold for 21,557 oz gold and an additional 460,000 tonnes at 2.43 g/t gold for 35,937 oz of gold within the Inferred category.
It must be noted that the maiden resource was calculated over an initial 2 km of a potential 8 km strike, and in April 2011 we implemented a 3,100m RC drilling programme to test the geological model and to identify other areas on the licence area with the aim of significantly increasing the JORC resource. Follow-up diamond drilling will be conducted over areas of potential that have been identified in the now complete RC drilling programme, the results of which will be announced shortly.
Banka Gold Project - Ghana
In November 2010 we signed a binding memorandum of agreement with Gulf Coast Resources, a Canadian mining company, to acquire a 90% interest in the Banka Mining Lease, a ten year renewable mining lease for gold and associated minerals covering an area of 29 sq km located in the highly prospective Amansie East and Asante Akim South Districts of the Ashanti Region of the Republic of Ghana.We completed the acquisition in May 2011, once the full mining licence had been issued, for the consideration of USD 1.6 million. A 10% carried interest is owned by the Government of Ghana, and Gulf Coast Resources Inc, the parent company of Gulf Coast Resources, will receive a net smelter royalty of 1.5% on any gold sold in the future.
Before we purchased the project, an independent report compiled by SEMS Exploration Services, a leading mineral exploration consultancy in West Africa, highlighted the potential for significant gold mineralisation. Banka has a current initial non JORC compliant resource of 262,107 oz of gold to a depth of 100m but the report suggests significant potential to upgrade this and increase the resource with infill drilling and increase the depth of drilling to 250m.
The geological setting of Banka comprises Birimian volcanosedimentary rocks occurring to the east of the property and Banket conglomerate horizons trending in a north easterly direction through the western portion.Newmont’s Akyem deposit, which is located 10 km to the east and has circa 14 million oz of resource, occurs within the Birimian volcanosedimentary units and the massive gold deposits of Tarkwa occur in Banket conglomerate horizons similar to those seen on the Banka concession.
Previous diamond core drilling programmes clearly defined significant high grade gold intersections located within a broad low grade mineralised zone, and a 4 km strike with surface outcropping has also been identified.Previous drill results include best intersections of 0.8m at 13.2g/t gold and 1m at 11.30 g/t of gold and historical mine records suggest artisanal miners were exploiting a gold resource estimated to be at a grading of up to 26.9 g/t gold.
Our aim is to rapidly advance this brownfield gold project, convert and raise the existing gold resource to a JORC compliant status, and develop Banka in the mid-term into a profitable mining operation.The first step towards achieving this will be the initiation of a 4,300m diamond drilling programme at Banka due to commence October 2011.
Chief Executive Officer
12 September 2011
View the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group and Company Statements of Changes in Shareholders' Equity and the Group and Company Cash Flow Statements as at 30 June 2011 >>
- The financial information contained in this announcement does not comprise full statutory accounts.
- The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU.The financial statements have been prepared on the historical cost basis.
- No dividend is proposed in respect of the year.
For further information visit www.goldplat.com or contact:
|Demetri Manolis, CEO||Goldplat plc||Tel: +27 (0) 11 423 1203|
|James Joyce||WH Ireland Limited||Tel: +44 (0) 20 7220 1666|
|David Porter||WH Ireland Limited||Tel: +44 (0) 20 7220 1666|
|Bill Sharp||Alexander David Securities Ltd||Tel: +44 (0)20 7448 9820|
|David Scott||Alexander David Securities Ltd||Tel: +44 (0)20 7448 9820|
|Felicity Edwards||St Brides Media & Finance Ltd||Tel: +44 (0)20 7236 1177|
|Isabel Crossley||St Brides Media & Finance Ltd||Tel: +44 (0)20 7236 1177|
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