# Goldplat plc An improved performance with return to profitability

- Link: https://www.directorstalkinterviews.com/goldplat-plc-an-improved-performance-with-return-to-profitability/412796482
- Published: 2019-10-29T07:17:58+00:00
- Author: Giles Arbor

**Goldplat plc** ([LON: GDP](https://www.directorstalkinterviews.com/company/goldplat-plc/gdp.l)),
the AIM listed gold producer, with international gold recovery operations located
in South Africa and Ghana and a gold mine in Kenya, has announced an operational
update for the three months ending 30th September 2019 and a return to Group profitability
before and after tax.

The following events have contributed to the improved performance during the Quarter–

· The continued production in South Africa was supported by the increase in gold
price;

· Increase in production levels in Ghana due to increase in material sourced;

· Reduction in losses at Kilimapesa due to the mine being on care and maintenance,
with only artisanal tailings being processed to contribute towards the costs of 
care and maintenance;

· Cost reductions and improved operational efficiencies throughout the Group over
the past year are contributing to profitability, including cost reductions on central
group overheads;

· Improvement in certain plant operational efficiencies 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.

We remain committed to our key initiatives of increasing long term visibility of
earnings in the recovery business and finding an investment partner or buyer for
Kilimapesa.

We aim to achieve improved visibility of earnings in the recovery business through:

· improving our gold recoveries from lower grade contaminated material so that this
type of material can be treated profitably. Reserves of lower grade materials are
more readily available and where we can source stockpiles of this material the sourcing
risk is alleviated;

· Increased investment into sourcing initiatives and test work on a wider range 
of materials, including PGM discards.

To help shareholders’ understanding of the Group’s performance we are also pleased
to initiate quarterly reporting of the sales and operating profit, on an unaudited
basis, of each principal operating entity.

**Goldplat Recovery (Pty) Ltd (‘GPL’)**

GPL maintained good production levels and recorded sales during the Quarter of £
4,479,000. In comparison, sales in the first quarter of the previous financial period(
QTR1 FY2019: £3,374,000) were low because of specific production issues. The improvement
in production levels year-on-year, supported by higher gold prices, resulted in 
an increase in quarterly operating profit to £1,074,000 (QTR1 FY2019: loss of £252,000).

Towards the end of the Quarter, we started to install the first stage of a pre-treatment
section to the largest CIL section at a cost of GBP70,000. Pre-treatment is intended
to improve recoveries of and margins on lower grade contaminated material and together
with efforts to reduce operating costs, should allow us to source and profitably
process lower grade contaminated material.

Our tailings storage facility is approaching full capacity in its current form and
we will be spending £250,000 during the quarter to increase its life by a further
12 to 18 months. After consultation with various governmental departments we have
concluded that the costs we will need to incur to allow us to deposit into West 
Pit 3 will be more than those needed to extend our current TSF. In addition, we 
have started the design of the a TSF which we plan to be approved, constructed and
commissioned during the next 12 months at an estimated cost of between £500,000 
to £700,000.

Once we have established the new TSF, the existing TSF, which contains circa 88,000
oz of gold, can be allowed to dry out after which we can look at monetising this
asset.

**Gold Recovery Ghana (‘GRG’)**

GRG experienced increased activity during the Quarter, achieving sales of £1,175,000(
QTR1 FY2019: £805,000) resulting in a small operating profit £23,000 (QTR1 FY2019:
loss of £203,000).

The current indications are that the next quarter’s results should improve further,
however the sourcing of material to process remains sporadic and the visibility 
of future consignments remains low.

There are indications that we are penetrating the West African market as planned
and we remain optimistic that we will receive support from the various Governments
and the mines to expand our market reach to source material in West Africa. We have
more than a decade of history in Ghana and we are optimistic that the Economic Community
of West African States (ECOWAS) countries will support our Ghana operation, being
a regional enterprise.

We are 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.

**Kilimapesa Gold (‘KPG’)**

The mine remains on care and maintenance; mining has ceased and we are only incurring
costs on security at the mining sites to safeguard our assets.

To reduce the cash costs of care and maintenance and to support the local community
while we seek an investment partner, we are processing batches of artisanal material,
which we will continue to do whilst it makes a cash contribution to the care and
maintenance costs.

Operating losses were £127,000 for the Quarter (QTR1 FY2019: loss of £352,000). 
The operating loss for the quarter, excluding depreciation of £69,000, was £58,000.
In comparison the estimated cost of care and maintenance would have been £150,000
for the Quarter, if we did not run the plant.

The majority of VAT refunds that have been received so far of £345,000 has been 
applied to reduce debt.

**Anumso Gold Corp (‘Anumso’)**

Goldplat plc state they have agreed with 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 initial early stage discussions
of possible terms with some interested parties.

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