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LONDON (Alliance News) - Goldplat PLC Monday said it swung to profitability in the first half of its financial year after managing to successfully turnaround the company following problems last year, with both its primary operations generating positive cashflow.
The African-focused gold miner said it made a pretax profit of GBP395,000 in the six months ended December 31, swinging from a GBP377,000 loss a year earlier as revenue increased to GBP10.6 million from GBP8.1 million.
"I am delighted to report that Goldplat has returned to net profitability during the period under review," said Chairman Brian Moritz.
"The problems relating to Rand Refinery, which resulted in the inability to process certain materials, significant backlog stock build-up, consequential reduced new deliveries from numerous clients, and a significant reduction in cashflow and profitability, are now behind us," said Moritz.
The profit came as both its primary gold recovery operations in South Africa and Ghana generated positive cashflow in the first half, producing a total of 17,457 ounces of gold and selling 17,875 ounces.
To put that into perspective, in the entire last financial year, Goldplat produced 30,525 ounces and sold 24,905 ounces - suggesting the miner is on track to report a rise in production for the full year after initiating a turnaround strategy at its recovery operations last year.
Goldplat was dealing with problems with its third-party refiner last year that saw the miner's gold inventory build up, impacting cashflow, but the company has now agreed a deal with a German smelter company and is now processing more of its own material.
"I am pleased to say that the turnaround strategy put into place in the previous year to address various issues, as well as to make Goldplat more profitable in the continued low gold price environment, has progressed well during this interim period and is starting to deliver the desired outcomes and benefits," said Moritz.
Moritz said the previous risks associated with relying on a single refinery have been "mitigated", as throughput at its gold recovery operation in South Africa increased and the company's numerous capital projects were successfully completed. Moritz said the capital projects were all funded internally and were "critical to the turnaround".
The company saw its gross profit rise to GBP1.2 million from only GBP102,000 last year, but Goldplat still ultimately stayed in the red, yielding a GBP11,000 loss after tax attributable to shareholders. However, that was significantly narrower than the GBP503,000 loss last year.
At Goldplat Recovery (Pty) Ltd, its South African recovery operation, the company said it was focused on completing a number of capital projects in the period, the most important of which was the installation of a 4-tonne elution column as the miner tried to get rid of its backlog by processing its product itself rather than sending it off to a third party to be refined.
"All of these projects represent either the necessary replacement of critical infrastructure and equipment, or new installations which make the operations more efficient and allow Goldplat to retain more of the value chain which had previously been lost to downstream third parties," said Moritz.
The operation produced 11,831 ounces of gold in the first half as sales totalled 11,317 ounces. Moritz said the results were "particularly pleasing" as the new elution column only became operational towards the end of the period.
To put the impact of the column into perspective, the elution throughput at the operation increased to 8.0 tonnes a day from only 1.5 tonnes a day - allowing the miner to quickly plough through its backlog.
"Not only has this enabled the rapid reduction of backlog stocks, but has provided the flexibility and capacity to procure and process additional sources of material from within South Africa and internationally," said Moritz.
Significantly, Goldplat also completed a JORC-compliant resource statement for the tailings storage facility at the South-African operation, revealing a total resource of 81,959 ounces of gold, 216,094 ounces of silver and 193,276 pounds of uranium oxide back in January.
"Work is underway to determine the optimal production method, recovery process, final tailings deposition facility and costs associated with re-processing this material," said Moritz.
At Goldplat Recovery Ghana, the operation that was severely impacted by the third-party refinery issues last year, the company said it managed to turnaround the operation after signing a pre-payment agreement with a German smelter, Auramet International LLC.
"For the six month period ended December 31, 2015, Goldplat Recovery Ghana was limited to a single revenue stream (fine carbon). As a result of the Rand Refinery problems a significant increase in stock was built up in Ghana, resulting in payments to clients being delayed, pending treatment, and clients in turn delaying additional deliveries," said Moritz.
"[The pre-payment agreement] enabled Goldplat Recovery Ghana to accelerate payments to material suppliers in Ghana and in return facilitate the receipt of new material from these suppliers. This transaction was concluded successfully and Goldplat Recovery Ghana may enter into similar transactions in the future, as and when required," he added.
The operation produced 4,694 ounces of gold in the six month period and sold 5,626 ounces of gold.
The last main operation is the Kilimapesa gold mine in Kenya, and it didn't fair as well in the period, only producing 932 ounces of gold compared to 1,081 ounces a year ago.
"The main reason for this decrease was that sourcing of tailings from third parties was stopped by the Kenyan government during the period. Processing of tailings from within the Kilimapesa lease area has subsequently been restarted," said Moritz.
"For the rest of the current year we expect [overall group] production and sales to continue at current rates, and for the recovery operations to build on the success of the first half," said Moritz. "The major challenge ahead is to return Kilimapesa to profitability or to find a corporate solution to alleviate the losses from this operation."
Goldplat shares were trading flat on Monday morning at 5.0 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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