We were joined by Werner Klingenberg, CEO at Goldplat (GGP), the AIM-listed gold recovery services company heaquartered in South Africa.
Werner wanted to update us on the receivables from the sale of the Kilimapesa gold mine in Kenya and the substantial share buy back of shares from minority shareholders.
"We had some good corporate transactions and positive momentum from the sale of Kilimapesa" said Werner, "which means we are both encouraged and excited."
"With these transactions done, essentially we are a gold recovery business and 100% own our gold recovery business in West Africa, located in Ghana, and 90% in South Africa. We source gold by-product materials from mines in West Africa, South Africa and South America, and then we process and recover that last bit of gold and other metals contained in that material."
As for the sale of Kilimepesa, on or around 23 August around $450,000 is payable in cash to Goldplat plc, and the remainder of the consideration, around $1.5M will then be payable in shares in Papillon at that point in time.
"It completes a strategy which we have embarked upon for the last two years whereby we looked at exiting gold mining and excavation. Mining is always quite capital intensive and now we simply focus on growing our gold recovery business and distributing excess cash to shareholders. The business is set up to look at how we can get money back to shareholders."
The minority shareholders wanted to sell their shares and the company have devised this solution. "We offered to buy back 22.3% and then we issued some shares back to Mr Ntsaluba. All of this will be funded by a £3M loan from Ned Bank, denominate in SA Rands and at an interest rate of Prime plus 1.75%, or 8.75%. This gave us the opportunity to take a bigger stake in our most profitable subsidiary, producing 2/3rds of revenues in the past. And to take control of the intercompany loan which is outstanding to Goldplat Recovery, which is £4.5M. All of this gives us the ability to distribute value back to shareholders and we are in a good space to focus on growth".
"As a minimum we would like to distribute back the royalty from the sale of Kilimepesa, which is capped at 1%, $1.5M and then look at sharing the profits from the recovery operations in Ghana and South Africa going forwards." explained Werner.