Quarterly Update - Update on the six months ended 31 December 2019
Goldplat plc / Ticker: GDP / Index: AIM / Sector: Mining & Exploration
22 January 2020
Goldplat plc ('Goldplat' or 'the Company')
Quarterly Update - Update on the six months ended 31 December 2019
Goldplat plc, the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana and an underground mining operation in Kenya, is pleased to announce an operational update for the six months ended 31 December 2019.
The following events have contributed to the improved performance during the six months:
- South African operations performed strongly and achieved an operating profit for the six months ended 31 December 2019 of £2,601,000 (31 December 2018: £752,028). A pre-treatment facility has been added at a cost of £70,000 which will enable the company to treat lower grade material.
- Performance at the Ghana operation improved substantially as the Company's marketing and sourcing efforts gains momentum and achieved an operating profit for the six months ended 31 December 2019 of £148,000 (operating loss - 31 December 2018: £241,449).
- Operating losses at Kilimapesa have been reduced, year on year, for the six months ended 31 December 2019 to £295,000 (Operating loss 31 December 2018: £686,845) while we have continued to hold discussions with funding partners to re-capitalize this valuable asset.
- During the six-month period, £523,000 of VAT reclaims have been paid by the Kenyan Revenue Authorities.
- Cost reductions and improved operational efficiencies throughout the Group continued to manifest during this quarter.
- The Group benefitted from the higher gold spot price.
- Improvement in plant operational efficiencies in South Africa have not only reduced costs but improved gold recovery.
- Some of the cost savings have been invested into material sourcing initiatives and increasing physical security in South Africa.
- The TSF (Tailings Storage facility) in South Africa has been structurally supported at a planned cost of £250,000 of which £123,000 has been expended in the first half of FY 2020. This expenditure will increase the life of the TSF whilst we investigate a redesign of the TSF.
We plan to release the unaudited consolidated financial statements for the six months ended 31 December 2019 in the last week of February and we expect results for both the half and full year to exceed current market expectations.
We remain committed to our strategy of increasing long term visibility of earnings in the recovery businesses through key initiatives and finding an investment partner or buyer for Kilimapesa. These key initiatives include:
- improving our gold recoveries from lower grade contaminated material, effectively reducing the grade of the material we will be able to source economically. Reserves of lower grade materials are more readily available and, help to alleviate the sourcing risk;
- Building strategic partnerships within the mining industry;
- Evaluating the investment into larger tailings storage facility and additional mill and leaching capacity to enable us to reprocess our current TSF; and
- Increased investment into sourcing initiatives and test work on a wider range of materials, including PGM discards.
Goldplat Recovery (Pty) Ltd ('GPR')
GPR had a very strong operational performance and recorded sales during the six months ended 31 December 2019 of £9,269,000 (six months ended 31 December 2018: £8,817,842). Operating profits for the six months ended 31 December 2019 of £2,601,000 increased by 246% (six months ended 31 December 2018: £752,028), and reflects the contribution of the abovementioned interventions and higher gold price.
Towards the end of the 1st Quarter, we started the construction of the first stage of a pre-treatment facility to the largest Carbon in Leach ('CIL') section at a cost of £70,000. The purpose of the pre-treatment facility is to improve recoveries and margins on lower grade contaminated material and together with efforts to reduce operating costs, should allow us to source more and profitably process lower grade contaminated material. This project has now been completed on time, on budget and we look forward to updating the market in due course on the expected improvements on the processing of the substantial stockpiled reserves available.
Our tailings storage facility ('TSF') is approaching full capacity in its current form and so we planned to expend £250,000 during the 2nd quarter to increase its life by a further 12 to 18 months. Capital expenditure on this project to date is £123,000 and we expect that the final cost will come in at the original budget of £250,000 and that the project should be complete by the end of January 2020.
Gold Recovery Ghana ('GRG')
Activities at GRG continued to increase during the 2nd Quarter, achieving sales of £2,271,000 during the six months ended 31 December 2019 (31 December 2018 - £1,865,957) resulting in a turnaround from an operating loss during the six months ended 31 December 2018 of £241,449 to a profit of £148,000.
The sourcing of material improved further in the 2nd quarter with material being received from Ghana and other West African countries as well as from South America. We are starting the 3rd quarter with inventory on hand for processing and have reasonable visibility on material in the pipeline. We are very pleased with this and remain positive that material from Burkina Faso and the Ivory Coast will also become available. The sourcing of material remains paramount and we continue to work towards our objective to be the preferred processor of material from the Economic Community of West African States (ECOWAS).
GRG's Gold license, which has to be renewed every three years, has been approved for a further term up to December 2022.
We are continuing exploring the opportunities for toll treating lower grade material from artisanal sources in Ghana. This potential new revenue stream will be subject to obtaining support from The Minerals Commission of Ghana. We have incorporated a company specifically for this purpose so that we can keep our free zone activities ring fenced.
Kilimapesa Gold ('KPG')
The mining operation remains on care and maintenance whilst we seek an investment partner to inject funds directly into KPG or the assets.
The processing of artisanal tailings continues and operating losses are lower than it would have been under full care and maintenance.
KPG has reduced liabilities to creditors by £521,000 during the six months ended 31 December 2019, mainly from the recovery of previously unpaid VAT reclaims. During the six-month period, £523,000 of VAT reclaims have been paid by the Kenyan Revenue Authorities.
We are pleased that we have support from the Kenyan Government and that the status of our permits and licenses has not been affected by our decision to halt underground mining and that the local community continues to receive some benefit from KPG's activities.
Operating losses reduced circa 57%, year on year, to £295,000 for the six months ended 31 December 2019 (six months ended 31 December 2018: Loss £686 845). The cash utilized in operating activities before working capital changes for the six months ended 31 December 2019 was £141,000 (six months ended December 2018 - £388,545). There has been no capital expenditure incurred.
Anumso Gold Corp ('Anumso')
We have agreed with our Joint Venture partner at Anumso, Desert Gold (Ashanti Gold and Desert Gold merged towards the end of September 2019), to seek a buyer for the Anumso gold project. We have had discussions with a potential buyer and will announce the outcome in due course.
Werner Klingenberg, CEO of Goldplat commented: "I am pleased to report that the team delivered on our initial focus of returning the business back to profitability after losses incurred during the previous FY and that the outlook for the third quarter remains positive.
The strong performance from South Africa and the successful sourcing initiatives in Ghana provides a strong basis from where we can invest into the key initiatives for long-term visibility in supply and earnings.
|Werner Klingenberg||CEO Goldplat plc (CEO)||Tel: +27 (82) 051 1071|
|Colin Aaronson / Richard Tonthat / Ben AO Roberts||Grant Thornton UK LLP (Nominated Adviser)||Tel: +44 (0) 20 7383 5100|
|James Joyce / Jessica Cave||WH Ireland Limited (Broker)||Tel: +44 (0) 207 220 1666|
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