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LONDON (Alliance News) - Goldplat PLC Monday said it has implemented cost-saving initiatives to improve its margins, after it swung to a pretax loss in its last financial year as lower gold prices reduced its revenue.
The company also said it will invest in new processing equipment for its plants in South Africa and Ghana so that it can produce more bullion and less gold concentrate. It said it had been suffering delays in concentrate processing in recent months. However, it has decided not to pay a dividend in the current financial year to help pay for the new equipment.
Goldplat swung to a pretax loss of GBP248,000 in the 12 months ended June 30, from a GBP207,000 profit a year earlier, as revenue dropped to GBP21 million, from GBP28.9 million. The average gold price in the 2014 financial year was USD1,300 per ounce, USD300 per ounce less than in 2013.
"We have implemented a number of cost saving initiatives across our gold recovery operations in South Africa and Ghana, which have already proven to be successful, with the second half of the year, eliminating the first-half 2014 operating loss," said Chief Executive Ian Visagie.
A major part of Goldplat's costs are processing costs, which do not vary with the gold price, and the main factor in the improving trading position has been rigorous cost control measures introduced by management across all operations, the company said.
Goldplat produces both bullion and high grade concentrates of gold. Cash receipt's from bullion sales are fast, but the company has experienced lengthy delays in analysing and processing concentrates over recent months, meaning both stocks and receivables increased.
This has put strains on its cash flow and it therefore decided to invest in additional processing equipment in South Africa and Ghana so that it can increase bullion production and lower concentrates output, it said.
"Additionally, we have received approval, since the end of the year, to set up a recovery business in Burkina Faso. These projects will require substantial capital investment, and, given the delays with the current South African refinery as well as the capex requirement, the directors have resolved not to recommend a dividend in respect of the current year. In the longer term, the board intends to resume dividend payments as soon as it is prudent to do so," said Chairman Brian Moritz.
Goldplat's shares were down 6.7% to 3.50 pence per share Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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