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Goldplat plc

Goldplat plc preliminary results

Goldplat plc (LON:GDP), the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana and a gold mine in Kenya has today announced its preliminary results for the year ended 30 June 2018 (‘FY 2018’).

Operations / Corporate

35,431 gold equivalent ounces, representing a 17% decrease over the previous year, were produced during FY 2018 (FY 2017: 42,857 ounces), albeit at higher margins
When compared to FY 2017, production at both Goldplat Recovery (Pty) Ltd (‘GPL’) and Gold Recovery Ghana (‘GRG’) were lower whereas production at Kilimapesa Gold (Pty) Limited (‘Kilimapesa’) increased by more than 50%
39,400 gold equivalent ounces were sold and transferred during FY 2018 (FY 2017: 40,285 ounces). The amount of gold sold and transferred during FY 2018 was higher than production for the period primarily due to sales of stock being carried over from the previous year

Goldplat Recovery (Pty) Ltd (‘GPL’) – South Africa

Produced 23,567 ounces of gold and gold equivalent during FY 2018 (FY 2017: 29,418) of which 21,059 ounces were produced for its own account (FY 2017: 22,570) and 5,219 ounces were transferred to clients (FY 2017: 6,173)
Resolved dispute with Rand Refinery, with an undisclosed amount being paid to GPL
Purchased a large strategic stockpile of raw material (containing circa 16,000 ounces of gold) to secure future production through the CIL circuits
Continue to identify best way in which to monetise tailings storage facility, which contains 81,959oz Au – good progress made to find additional processing options whilst discussions regarding the use of West Pit 3 remain ongoing

Gold Recovery Ghana Limited (‘GRG’) – Ghana

Produced 6,752 ounces of gold during FY 2018 (FY 2017: 10,031) and 8,010 ounces were sold (FY 2017: 8,327). The decrease in production is primarily a result of a large, one-off contract being processed during FY 2017, with the sales figure for FY 2018 reflecting sales of gold produced from this contract
Identified an opportunity to promote the environmental value of GRG’s recovery services and entered into discussions with the Government of Ghana regarding a potential project to address environmental issues in-country by recovering and treating artisanal tailings
Refurbished and commissioned a 3-tonne elution plant (acquired in South Africa in FY 2017) creating greater value uplift as beneficiation of most material to Dore bars can now be completed in-country

Kilimapesa Gold (Pty) Limited (‘Kilimapesa’) – Kenya

Increased production by 50% to 5,112 ounces of gold during the year (FY 2017: 3,408 ounces), all of which were sold during the period (FY 2017: 3,215 ounces)
Stage 2 expansion at Plant 2 was completed early in the financial year and the Stage 2 mill throughput target of 120 tonnes per day has been exceeded with feed rates of 180 tonnes per day being regularly achieved
In May 2018, in line with previously announced plans, processing at Plant 1 was stopped, reducing overall production costs and allowing gold recovery to be optimised
The Board of Goldplat approved a process to seek an investment partner for Kilimapesa to enable existing shareholders to realise value from the operation without having to invest additional capital – discussions have begun with a number of interested parties and operational focus remains on achieving profitable production

Financials

6.8% increase in revenue to £33,796,000 (FY 2017: £31,650,000)
Profit from operating activities, including a bad debt write-off of £320,000 decreased by 13.8% £2,509,000 (FY 2017: £2,910,000)
Strong performance continues to be reported at the GPL with a 10.7% increase in profit from operating activities to £3,667,000 (FY 2017: £3,312,000)
GRG reported a 51% decrease in profit from operating activities to £646,000 (FY 2017: £1,325,000)
Kilimapesa reported a net loss of £892,000 for the year (FY 2017: loss of £1,100,000)
Net profit for the year decreased by 48% to £506,000 (FY 2017: £964,000) for the Group
Net cash position for the Group of £1,539,000 as at 30 June 2018 (£2,650,000 as at 30 June 2017)

Chairman’s Statement

Goldplat is a unique gold producer, combining gold recovery with primary mining across the Group’s three principal operations – precious metal recovery facilities in South Africa and Ghana, and gold mining in Kenya. This diverse production approach provides us with multiple growth opportunities, which we have self-funded as we look to build production and revenues for the benefit of all stakeholders.

For the year to 30 June 2018 Group results from operating activities achieved a profit of £2,509,000 (FY 2017: £2,910,000). Whilst this is lower than the previous year, I believe this is a positive result which underpins the robustness of our business model as whilst our South African operation, Goldplat Recovery (Pty) Ltd (‘GPL’) performed strongly during the period with significantly increased operating profits, the Ghanaian and Kenyan operations faced challenges, which impacted bottom line numbers. In Ghana, at Gold Recovery Ghana Limited (‘GRG’), the issue was a period of shortage of suitable material for processing, meaning that we operated at under-capacity. I am pleased to confirm that we have a number of new contracts in the pipeline, which we expect to positively impact production and accordingly profitability moving forward. In Kenya, at Kilimapesa Gold (Pty) Limited (‘Kilimapesa’), unseasonably high rainfall, disruptions from elections and production hold-ups presented issues as we seek to transition to steady-state mining and processing. We have identified a number of operational improvements that already have and can be made to lower costs and improve efficiencies to achieve profitability in the short term, and we are actively seeking an investment partner to help us realise the full value potential of the mine moving forward.

Profit for the year from continuing operations was £506,000 (FY 2017: £1,976,000), reflecting higher charges for finance costs of £722,000 (FY 2017: £74,000) and for taxation of £1,281,000 (FY 2017: £860,000). As a result, I believe that the year’s financial performance masks progress. We have made good progress in developing worldwide opportunities for sourcing material for processing in our precious metal recovery facilities and we continue to enhance our processing facilities in order to profit from those opportunities. We have also run a lean operation when it comes to administrative expenses, after adjusting for a one-off bad debt provision for the year. As a result, I believe our foundations for growth remain strong.

In support of this growth, as a Group we continue to engage positively with the governmental, regulatory and community structures in countries where we operate. In Ghana, we have been supportive of the government’s initiative to address the environmental aspects of artisanal mining, providing equipment and sitting on the steering committee. Furthermore, in South Africa we continue to contribute our views on the proposed changes relating to the ownership and operation of entities in the mining sector. Our operations in South Africa, Ghana and Kenya continue to provide employment, skills upgrading for employees and local purchasing, all of them operating to high standards of environmental and health and safety protocols.

At a corporate level, during the year and in response to a change in the rules of the AIM market, the Board adopted the QCA Corporate Governance Code (2018). Since Goldplat’s admission to AIM in 2006, the Board has practiced standards of corporate governance generally recognised as appropriate for an AIM company of Goldplat’s size and resources. The adoption of the Code in 2018 represents a significant step in the evolution of the Group’s corporate governance as we continue to examine its management and how we communicate that corporate governance to shareholders and other stakeholders in line with our commitment to maintaining transparency and operating honestly and fairly in all that we do. This report covers a period prior to the adoption of the Code.

As part of this transparency, we also remain committed to maintaining our programme of seeking active engagement with our shareholders, as demonstrated by the executive team hosting a well-attended Q&A conference call in March 2018. We look forward to organising similar events in the coming year and of course will continue to keep shareholders updated on developments across our portfolio.

Finally, whilst this year has had its frustrations and successes, constant through the year has been the effort and enthusiasm of management, staff and advisors in South Africa, Ghana and Kenya, for which I’d like to give thanks. With a skilled workforce, strong portfolio of assets and a clear development pipeline through which we can grow our business, I am optimistic about our prospects in FY 2019.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.