GoldPlat Regulatory News (GDP)

Goldplat plc / Ticker: GDP / Index: AIM / Sector: Mining & Exploration

31 March 2023

Goldplat plc

('Goldplat' or the 'Company')

Interim results for the six-month period ended 31 December 2022

Goldplat Plc, (AIM:GDP) the AIM listed Mining Services Group, with international gold recovery operations located in South Africa and Ghana, servicing the African and South American Mining Industry, is pleased to announce its unaudited interim results for the six months ended 31 December 2022 ('H1 2022').

Goldplat continued to achieve profitable results for the six months ended 31 December 2022. Highlights include:

· Achieving operating profit for H1 2022 of £2,813,000 (H1 2021: £3,334,000), after the impact of the electricity cuts, by the electricity provider in South Africa, on production in the second quarter in South Africa, the loss on the sale of Caracal shares (£45,000) and the decrease in valuation of the net smelter royalty (£107,000);

· Even after considering the impacts mentioned above, a net profit from continued operations attributable to owners of the company was maintained at £1,742,000 (H1 2021: £2,071,000);

· Fully diluted earnings per share for the six-month period remained above 1 pence per share at 1.02 pence per share (H1 2021: 1.19 pence per share);

· The group cash balance remained strong at £2,826,000 (30 June 2022: £3,895,000); and

· During the period the Company spent £802,000 (H1 2021: £313,000) on capital expenditure, mainly on construction of a new tailings facility ('TSF') in South Africa and refurbishment of one of the circuits.1

Werner Klingenberg, CEO of Goldplat commented: "I am pleased with the continued strong operating results achieved by the group, considering some of the difficult circumstances we've experienced during the second quarter in South Africa."

For further information visit www.goldplat.com, follow on Twitter @GoldPlatPlc or contact:

References

1 - '2nd Quarter operating results update' announced 20 February 2023. The TSF is a JORC compliant resource.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Chairman's Statement

I am pleased to report continued strong results from our gold recovery operations, with profit for the half year of £1,839,000 (H1 2021: £2,217,000) and an all-in, fully diluted EPS for the half year of 1.02 pence (H1 2021: 1.19 pence).

Our portfolio of core assets consists of two gold recovery operations, in South Africa and Ghana, with plans to extend this to Brazil. These operations recover gold and platinum group metals ('PGM') from by-products of current and historical mining processing, thereby providing mines with an environmentally-friendly and cost-efficient way of removing waste material.

Revenue decreased by 3% to £20,597,000 (H1 2021: £21,326,000), with the Ghanaian and South African recovery operations recording a decrease in revenue of 7% and 1% respectively.

The decrease in operating profit to £2,813,000 (H1 2021: £3,334,000) is mainly due to the impact of the electricity cuts, by the electricity provider in South Africa, on production in the second quarter in South Africa. The results were also impacted by the loss on the sale of Caracal shares and the decrease in valuation of the net smelter royalty (explained below).

At the beginning of the period, Goldplat held a 5.52% interest indirectly in Caracal PLC ('Caracal') valued at £727,000 and a 1% net smelter royalty capped at United States Dollar 1.5 million in Kilimapesa (the Kenyan Gold Mining Company it sold to Caracal) valued at £698,000.

During the H1 period, all shares in Caracal were sold for £682,000, at a loss of £45,000. We also reviewed and decreased the valuation of the net smelter royalty by £107,000, as a result of the lower than expected production profile at Kilimapesa even though the future gold price outlook has improved.

The net financing cost fluctuates from period to period due largely to the fluctuation in the intergroup unrealised foreign exchange losses or gains, which is driven by the movement of Ghana Cedi, the South African Rand and the British Pound against the United States Dollar in which intergroup balances are denominated.

The foreign exchange loss of £122,000, an increase of £93,000 from H1 2021, was mainly due to the Ghana Cedi weakening by 58% against the United States Dollar between July and December 2022.

Net interest paid of £202,000 includes £116,000 (H1 2021: £64,000) interest paid to Nedbank and £76,000 (H1 2021: £225,000) interest paid to Auramet to finance our working capital.

As at the end of December 2022, the outstanding value of the loan with Nedbank was £1.8m.

During the period, the Group accrued for income taxes in Ghana and South Africa and also dividend taxes on payment of dividends from South Africa:

To ensure the repayment of intercompany debt owed by the Group to GPL, a total dividend of £1,640,000 has been declared by GPL during the period of which £870,000 have been repaid to GPL.

Even though we experienced a reduction in production in South Africa during the second quarter, the profit after taxation for H1 of £1,839,000 (H1 2021: £2,217,000) is 17% lower than the previous period.

Working capital

Cash and cash equivalents at the end of the period decreased to £2,826,000 (30 June 2022: £3,895,000). The decrease of £1,069,000 is largely as a result of investment in working capital as noted below.

Inventory increased from 30 June 2022, by £1,600,000 of which £1,382,000 relates to an increase in precious metals on hand and in process mostly in South Africa, driven by an increase in the supply and grade of material received from customers during the half year not yet delivered to the smelters. There was a general increase in raw materials of £218,000.

Trade and other receivables also increased from 30 June 2022 by £10,554,000 due to the large volumes of material delivered to smelters closer to the end of the financial period, specifically in Ghana. We are currently experiencing an increase in the time taken by the smelters to process our material which may negatively impact the interest cost for the remainder of the financial period.

Goldplat Recovery (Pty) Ltd

Although production in South Africa in the second quarter was impacted by electricity cuts by the electricity provider in South Africa, revenues in South Africa only decreased by 1% to £10,460,000 (H1 2021: £10,616,000) due to more higher grade by- products sourced from suppliers, which are processed in batch and impacted less by electricity power cuts. Our lower-grade production circuits, that run continuously, have been impacted, resulting in the cost per ounce of gold produced increasing, due to fewer tonnes being processed for the same monthly fixed costs. As a result the operating profit for the period reduced to £1,040,000 (H1 2021: £1,552,000).

The construction of the new tailings storage facility ('TSF') started in Q2 (to 31 December 2022) and whilst we aim to have this completed by the end of Q4 (to 30 June 2023), some delays may occur due to the rainy season in South Africa as well as additional preparation work required. The capital spent during H1 on the TSF was £371,000 and we estimate we will need to spend a further £500,000 to completion, which is £200,000 higher than expected as a result of the requirement to install monitoring equipment, which we are in the process of querying with the regulator.

Apart from the capital incurred on the TSF, we incurred an additional £339,000 during the half year of which £233,000 was spent on refurbishment of one of our circuits. We estimate that we will require a further £1,750,000 (including £500,000 for TSF) during the next 12 to 18 months to be spent on repairing and maintaining current operations, on completing the TSF and improving the environmental impacts of our current operations.

We are working with DRD Gold to find the most economical methods to reprocess the TSF (which has a JORC Compliant Resource of 81,959 ounces) and to receive environmental approval for a pipeline which will be required to transport material to a facility for processing.

Gold Recovery Ghana

During the period GRG processed more lower grade types of material with lower acquisition costs. As a result, the operating margin increased, contributed by stable half year revenue of £10,007,000 (H1 2021: £10,710,000). Net operating profit increased by 63% to £1,982,000 (H1 2021: £1,217,000). During the period, GRG spent £152,000 on capital expenditure to expand processing capacity in the plant.

Notwithstanding the continued improved performance in GRG, and the growth potential of the West African market, GRG remains dependent on getting approval for export of material from neighbouring countries, which is proving to be challenging and GRG will remain subject to sourcing risk.

The majority of material processed in Ghana during the half year was from clients inside the country, however we secured a larger consignment out of South America in December and should see the returns from this material during the last two quarters of the current financial period.

Based on the increase in clients in South America, it has become more important to expand into South America and we will continue to do so on a measured basis. We plan to make an initial investment of £100,000 and will expand from there. The initial investment will be for property. Although we have identified the area, the negotiations around procurement of the site are still ongoing.

Outlook

We remain committed to our strategy of increasing long term visibility of earnings in the recovery businesses through key initiatives. These key initiatives include:

• investing into research and development to identify different processing methods and equipment to maximize value from resources available;

• expanding our environmental services delivery to industry;

• identifying opportunities for growth in the recovery operations by investing into other locations and into additional equipment in our current operation, as well as enhancing operational efficiencies. This should enable the processing of lower grade material at current operations and at different locations closer to the source and;

• continuing to leverage on industry relationships to increase long-term visibility so that we can increase our resources and available materials for processing; and

• continuing to look beyond our current recovery operations for further opportunities to apply our skillsets and resources. In line with this, we made a strategic investment of £150,000 to obtain the usage of a small spiral plant for our gold operations in South Africa and acquire a 15% shareholding in a fine coal recovery technology company. Goldplat has an option to invest an additional £1.5m which will increase our shareholding in that business to above 50%. Management is still evaluating this option which would diversify our recovery operations into a different commodity, namely coal, of which South Africa has significant resources available. The technology is designed to extract fine coal from previously mined and processed material and should have an environmental neutral impact.

Results are currently being impacted by electricity cuts due to capacity constraints and faulty transmission networks to our operations in South Africa. We are engaging with the municipality to see how we can reduce the impact on our operations and continue to investigate ways to increase productivity during times of availability.

The Company will remain focused on sharing future cashflows with shareholders, specifically distributing surplus cash to shareholders where not required for growth in line with key initiatives or managing specific risks.

Gerard J Kemp

Chairman

31 March 2023

Statements of Financial Position

The notes below are an integral part of this condensed consolidated interim financial report.

Statements of Profit or Loss and Other Comprehensive Income

The notes below are an integral part of this condensed consolidated interim financial report.

Statements of Changes in Equity - Group

The notes below are an integral part of this condensed consolidated interim financial report.

Statements of Cash Flows

The notes below are an integral part of this condensed consolidated interim financial report.

Notes to the Consolidated Financial Statements

1. General information

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2022 were approved by the Board of Directors and have been delivered to the Registrar of Companies. The auditors report on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2. Basis of preparation

Statement of compliance

The annual financial statements of Goldplat plc (the 'Company') are prepared in accordance with IFRS as adopted by the European Union.

Going concern

The directors assessed that the group is able to continue in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations and thus adopted the going concern basis in preparing these financial statements.

The assessment of the going concern assumption involves judgement, at a particular point in time, about the future outcome of events or conditions which are inherently uncertain. The judgement made by the directors included the availability of and the ability to secure material for processing at its plants in South Africa and Ghana, the impact of loss of key management, outlook of commodity prices and exchange rates in the short to medium term and changes to regulatory and licensing conditions.

3. Significant accounting policies

The accounting policies applied in this condensed consolidated interim financial report are the same as those applied in the Group's consolidated financial statements as at and for the year ended 30 June 2022.

4. Property, plant and equipment

During the six months ended 31 December 2022, the Group acquired assets with a cost, excluding capitalised borrowing costs, of £802,000 (six months ended 31 December 2021: £313,000; twelve months ended 30 June 2022: £552,000).

5. Intangible assets

Intangible assets at the end of the period relate only to goodwill which relate to the investment held in Gold Minerals Resources Limited. The balance is supported by the combined ongoing gold recovery operations in South Africa and Ghana. During the six months ended 31 December 2022 the goodwill balance has not been impaired (six months ended 31 December 2021: £nil; twelve months ended 30 June 2022: £nil).

6. Investments in subsidiaries, joint ventures and associates

The amounts included on the statements of financial position comprise the following:

7. Receivable on Kilimapesa sale

Receivable on Kilimapesa sale incorporates the following balances:

The receivable relates to the 1% net smelter royalty on production of Kilimapesa to the maximum of USD1,500,000.

Other financial assets are recognised initially at the fair value, including transaction costs. The asset will subsequently be measured at fair value and are grouped into levels 1 to 3 based on the significance of the inputs used in the valuation. The financial assets from the Kilimapesa sale has significant inputs and is therefore included in level 3.

8. Investment in Caracal Gold

At the beginning of the period, Goldplat held a 5.52% interest indirectly in Caracal PLC ("Caracal") valued at £727,000. During the H1 period, all shares in Caracal were sold for £682,000, at a loss of £45,000.

9. Other loans and receivables

Other loans and receivables comprise the following balances

The loan receivable in Goldplat Recovery (Pty) Limited, in compliance with Black Economic Empowerment legislation in South Africa, is recoverable from future dividends. They have been included at historical cost due to the uncertainty surrounding the variables required to calculate this asset at amortised cost. The directors consider that the carrying amount represents the fair value of the assets.

10. Inventories

Inventories comprise:

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Weighted average cost is used to determine the cost of ordinarily interchangeable items.

11. Trade and other receivables

Trade and other receivables comprise:

12. Cash and cash equivalents

12.1 Cash and cash equivalents included in current assets:

12.2 Overdrawn cash and cash equivalents included in current liabilities

13. Share capital

Authorised and issued share capital

During the current period, share options were exercised that resulted in an increased in share capital and share premium.

14. Provisions

Provisions comprise:

In terms of section 54 of the regulations of the Minerals Resource and Petroleum Act of 2002, in South Africa, a Quantum of Financial Provisioning is required for activities performed under mining lease. Quantum of Financial Provisioning requires a detailed itemization of actual costs relating to the premature closure, decommissioning and final closure and post closure management. The Company makes use of an independent consultant to calculate the detail itemized actual current costs for rehabilitation and to evaluate any critical estimates and assumptions. The Quantum of Financial Provisioning has been approved by Department of Minerals Resources in South Africa. The Company has insured the obligation and has ceded the proceeds from the policy to the Department of Minerals Resources. During the prior financial year, the provision held in GPR was reassessed by using an external expert and it was concluded that due to the additional capital expenditure that has taken place over the financial period, the provision had to be increased to account for the additional capital incurred. The movement in the current financial period is due solely to foreign exchange.

15. Trade and other payables

Trade and other payables comprise:

16. Long term borrowings

The principal on the bank facility is repayable monthly over 36 months. The interest payable on the facility will be the South African Prime Rate plus 1.75%.

Further to above, GPL did grant security over its debtors as well as a negative pledge over its moveable and any immovable property and a general notarial bond over all movable assets of GPL will be registered. The Group entered into a limited suretyship for ZAR 60 million (approximately £ 3.02 million), in favour of Nedbank.

Long term borrowings comprise:

17. Income tax expense

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The tax charges for the period arises in South Africa, Ghana and on declaration of dividends from South Africa. The effective income tax rate in GPL was 21% (six months ended 31 December 2021: 24%), GRG was 14% (six months ended 31 December 2021: 15%) and the withholding tax rate on dividends declared was 5% (six months ended 31 December 2021: 5%).

18. Earnings per share

Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

19. Segment information

19.1 Segment revenues

19.2 Other incomes and expenses