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LONDON (Alliance News) - Goldplat PLC Monday said its pretax loss narrowed in 2014 but said it is hoping the initiatives it has put in place will return the company to profitability in the second-half, including the potential acquisition of a gold exploration company that would bring in experienced management to try and make its Kilamapesa mine economical.
For the six months ended December 31, the gold recovery services company based in South Africa and Ghana reported a pretax loss of GBP377,000 from a GBP912,000 loss in 2013 after a decline a revenue was offset by reduction in finance costs and an increase in finance income.
Revenue for the year totalled GBP8.1 million from GBP9.6 million as the company built up a substantial back-log of product after a third party refiner elected not to take any product during 2014.
Finance costs fell to GBP194,000 from GBP435,000 whilst finance income rose to GBP644,000 from GBP217,000, leading to net finance income of GBP450,000 in 2014 compared to a GBP218,000 cost a year earlier. Administrative costs also experienced a slight fall.
Goldplat said it has signed a non-binding letter of intent to acquire a private gold exploration company, which it did not name, but said it will keep shareholders updated as the potential deal progresses.
"The proposed acquisition is at an early stage and, if completed, the management it would bring, amongst other things, will have the skills and experience to assume responsibility for managing and enlarging the Kilimapesa gold mine," said the company.
At the Kilamapesa mine, the company said it continues to be a loss making operation and said it is focused on reducing the losses and implementing numerous initiatives to reduce overall costs and to increase gold production.
"I believe that Goldplat is now in a position to move forward once more, and the management remains confident that the changes detailed above have returned the group to profitability, but it is uncertain whether the improvements will flow through sufficiently quickly to eliminate the
first half loss within the current financial year," said Chairman Brian Moritz.
The company's core assets consist of two gold recovery operations, one in South Africa and one in Ghana, which both recover gold from by-products, alongside its Kilampesa mine in Kenya.
Goldplat said both its gold recovery operations have been impacted by "continuing difficulties" with its third party refiner, Rand Refinery. Goldplat said it would have sold a "substantial proportion" of its concentrate product to Rand Refinery, but said Rand elected not to receive and process concentrates during the period, resulting in a build up of stock and consequently Goldplat's customers are withholding further deliveries pending the clearance of the backlog, it said.
As a result, the company is in the process of increasing its elution capacity for its recovery operations which will help limit the company's exposure to the same difficulties in the future, it said.
"To help limit our exposure to such difficulties going forward, in particular until our own elution capacity has been expanded, we have been shipping concentrate to Aurubis Refinery, located in
Germany, and are broadening our contract with them," it said.
In addition, Goldplat said it is close to reinstating its tolling agreement with Endeavour Resources which would "significantly improve the outlook" of the operation.
"The group has an increased exposure to fluctuations in gold price and exchange rates which may affect profitability going forward and as a result put a strain on the group's current cash position," said Goldplat.
Goldplat shares were down 11.7% to 2.32 pence per share on Monday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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