Goldplat plc, the AIM listed gold producer, is pleased to announce its results for the year ended 30 June 2008.
- Pre-tax profits more than doubled to £1,624,000 for the year ended 30 June 2008 (30 June 2007 £751,000)
- Healthy cash position with £1,486,000 in the bank
- Gold production at Kilimapesa in Kenya on track to commence in Q4 of 2008 - financial contribution expected FY 2009
- South Africa recovery plant is performing buoyantly - new and upgraded machinery enabling materials to be processed more efficiently, enhancing economies of scale
- Stocks of materials for processing have increased to record levels of circa 1.4 tonnes contained gold (circa 45,000 oz of gold) in South Africa
- Ghanaian recovery plant progressing well with revenues steadily increasing - set to contribute fully to profits in current year
- 89,000 tonnes of artisanal tailings stockpiled, estimated to contain up to 35,000 oz, based on representative samples of gold in Ghana
- Formed joint venture company in line with South Africa 's Black Economic Empowerment policy
- Strategy of acquiring known deposits of between 200,000 and one million oz of gold with a short lead time to production - continuing to review a number of projects across Africa
Goldplat CEO Demetri Manolis said, "These excellent results, which are ahead of market expectations, emphasise the strong progress we are making across the board. The gold recovery operations in both South Africa and Ghana are generating increased cash flow which means we are a profitable operation. Our stockpiles will ensure that production is maintained which provides increased solidity to our business model. Goldplat's Kenyan Lolgorien gold exploration and production project is advancing as planned, with an aim to commence production in Q4 2008. This is the first step in creating a mid-tier mining house focused on gold production, leveraged through revenue generated from its gold recovery operations."
It gives me great pleasure to report on your Company's progress towards fulfilling its objective of creating a mid-tier mining house focussed on gold production, leveraged through revenue generated from its gold recovery operations in South Africa and Ghana . During the period under review we have advanced our Kenyan gold project where production is due to commence Q4 this year, strengthened our cash position via increasing revenues from our recovery operations, and continued to seek new acquisition opportunities throughout Africa to expand the Company's asset base.
I am pleased to report a 116 % increase in pre-tax profit to £1,624,000 for the year ended 30 June 2008, and an after tax profit of £1,054,000 (pre-tax profit £751,000, after tax profit £569,000: 30 June 2007).
Rapidly Advancing Towards Production from Mining
Developments at our 50/50 joint venture Kilimapesa Gold Ltd ('Kilimapesa') Lolgorien project in Kenya have progressed well with our US$500k plant refurbishment programme on track to commence production in Q4 2008. The plant will initially be fed from stockpiles, which now amount to over 2,000 tonnes, delivered from artisanal high grade tailings and from our own underground Phase II development programme.
Phase I of the programme focussed on the evaluation of 10 key targets within the licence area. Phase II comprises the extension of existing underground development to provide a high confidence ore resource evaluation of the quartz vein ore bodies at Kilimapesa Hill. The total strike length now exposed has been extended to 93 metres. Chip sampling assay results indicate that the entire strike has an average gold value of 6.9 g/t gold over a stope width of 1.27 metres and excitingly contains a 42 metres stretch grading 10.13 g/t gold over 1.4 metres.
The main adit has also been fully equipped with rails which allow the use of 'coco pans' to transport the broken ore to the tipping point. Production efficiencies will increase markedly as a result.
In addition to the on-reef development, a diamond drilling programme has commenced comprising 14 holes for a total drill length of 500 metres. These holes are designed to intersect the quartz vein some 30-40 metres down-dip from the current on-reef development. The information from the drilling programme, together with that from the adjacent development, will be modelled in 3D using Datamine software and used to produce a JORC - compliant ore resource statement. It is hoped that the close proximity of the sampling points should allow for a high confidence resource.
In addition, developments to local infrastructure are underway by the Rural Electrification Authority ('REA') including an electrification programme for the local town of Lolgorien . Due to be completed by the end of September 2008, this programme should benefit our operation considerably as it precludes the use of expensive and inefficient diesel generators.
As part of our strategy of acquiring known deposits of between 200,000 and one million oz of gold with a short lead time to production, Goldplat continues to review a number of projects across Africa.
Earlier this year, we formed a joint venture company to take advantage of potential acquisition opportunities in South Africa , in line with the country's Black Economic Empowerment policy ('BEE'). We are currently reviewing interesting mining opportunities within the country and anticipate updating the market shortly with our progress.
Our recovery business in South Africa is performing buoyantly, with our new and upgraded machinery enabling materials to be processed more efficiently, thereby enhancing economies of scale. Further improvements are scheduled at the plant, including the installation of an automatic gravity concentrator, which is expected to be operational before the year end, in place of the existing labour intensive units.
In addition, stocks of materials for processing have increased to record levels of circa 1.4 tonnes contained gold. Further discussions are underway with a number of leading gold producers in the region for the recovery of by-products and the purchasing of surface material stockpiles. If secured, we will have sufficient material for an additional two years of production for all lines of production at the plant.
The stocks of woodchips and material suitable for the gravity circuit are also continuing to increase with stocks now exceeding two years of production. We have also increased our market share of the mill liner cleaning service.
Negotiations are underway with our strategic partner, Rand Refinery Ltd, to reduce processing charges on the basis of increased volumes of concentrates delivered to Rand Refinery by Goldplat. If such discussions are successful our operational costs will be streamlined further.
Goldplat Recovery is classified as a mine under South African law, and therefore needs to comply with legislation relating to BEE. This requires 15% of Goldplat Recovery to be owned by Historically Disadvantaged South Africans by 1 May 2009, increasing to 26% by 1 May 2014. Negotiations are under way with BEE entitities for the sale of the required percentage of Goldplat Recovery at full value for such a minority interest.
Our Ghanaian recovery plant commenced production at the beginning of the year and is now running at full capacity. Operations are progressing well with revenues steadily increasing, further improvements scheduled to maximise the plant's efficiency in place and new supplies of raw materials have been secured for future processing.
A new incinerator for the processing of the fine carbon is expected to be installed and operational in early 2009. This should reduce the plant's costs and ensure that it is competitive when bidding for fine carbon stockpiles. The new incinerator will also add to our local beneficiation achievements, increase flexibility to process a larger variety of materials and boost the number of local staff employed.
In addition, the new smelter is operational and the first samples of gold purchased from the small workers have been smelted. The bullion produced assayed in excess of 85% gold.
As previously reported, three large surface stockpiles totalling 37,000 tonnes of material estimated to contain up to 7,465 oz of gold based on assays of representative samples were purchased from third parties . Goldplat now has 89,000 tonnes of artisanal tailings stockpiled, estimated to contain up to 35,000 oz of gold, based on representative samples of gold, which exceeds nine years of current production capability. Following leach tests on composite samples, these materials have been re-measured and evaluated by an independent laboratory, which confirmed the previous conclusion that the recovery of gold is high.
In order to ensure a continuous supply of materials to process, the plant was recently awarded a second contract for a large shipment of fine carbon by Gold Fields Limited's Tarkwa gold mine in Ghana . Additionally, we have submitted a number of tenders including one to AngloGold Ashanti to process its fine carbon materials from its operations in Ghana , Mali , the Republic of Guinea as well as various tenders to smaller operations in Mali as part of our drive to expand Goldplat's geographic reach.
We believe that the performance of our share price has been influenced by general market sentiment rather than the Company's underlying value. We have therefore put in place a number of new initiatives, which we hope will help investors to understand our true potential. These include the appointment of a joint broker, Alexander David Securities Limited, to support private client share transactions; a new website, to give improved information to investors as well as Goldplat's clients; a programme of webcasts to update shareholders on Goldplat's progress; and, through the Financial Times London Share Service section, the identification of some 1,500 potential investors requesting Goldplat's accounts.
Following the introduction of the Companies Act 2006 changes are required to the Company's Articles of Association. A resolution to adopt Articles compliant with the new Act is being proposed at the Annual General Meeting. At the same time the directors are seeking powers to buy back ordinary shares, to be held in treasury and resold to satisfy market demand. It should be stressed that this is an enabling resolution.
I am pleased to report excellent pre-tax profits of £1,624,000 for the year ended 30 June 2008, and an after tax profit of £1,054,000. Pre-tax profit increased by more than 100%; however the tax charge increased as a percentage of profits due to secondary tax on dividends remitted back to the parent company. This trend should be offset in the current year by the tax holiday of ten years negotiated in Ghana .
Our cash position remained healthy with £1,486,000 in the bank. No dividend is proposed as the profits will be retained for further expansion of the Company's operations and to accelerate our growth strategy.
Profitability at our South African operation remains at a high level and despite being a mature business, new opportunities continue to be identified and implemented. In the current year full contribution to the Group's total profits are expected from our Ghanaian recovery plant which became fully operational in the second half of the last financial year. With no tax payable in Ghana , profits will flow directly through to the bottom line. In addition with Kilimapesa targeted to commence initial production in Q4 2008, we believe that Kilimapesa will become a positive contributor to profitability in financial year 2009.
Staff and Government Relations
Staff relations, both in South Africa and Ghana , remain good. Once more the operations have an excellent safety record, with no reportable accidents at any group company. Our new developments in Ghana and Kenya benefit from the support of the Governments of the countries, and are seen as benefitting the countries employment opportunities, and, in the case of Ghana , the recovery plant is seen as a valuable contribution towards environmental obligations.
I believe that our objective to build Goldplat into a significant mid-tier gold mining house in Africa will soon become a reality. We are currently in a favourable gold price environment and although its spot price has tailed off, the general consensus remains that gold is a safe haven to invest in, which naturally bodes well for us. With Kilimapesa on target to commence production in the fourth quarter of 2008 and both of our recovery businesses increasing revenues, I believe that Goldplat has a bright future.
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.
12 September 2008
Group and Company balance sheets
as at 30 June 2008
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
Isabel Crossley St Brides Media & Finance Ltd, Tel: +44 (0)20 7242 4477
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