Replacement: Interim Results 31 Dec 20

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

16 March 2021

Goldplat plc ('Goldplat' or 'the Company')

The following amendments have been made to the Interim Results for the six months ended 31 December 2020 announcement released at 16.42 on 12 March 2021 under RNS Number 1678S.

The RNS headline has been updated to reflect the correct interim period with the new headline "Replacement: Interim results 31 Dec 20" updated from "Interim Results for the six months ended 31 Dec 21".

The announcement under RNS Number 1678S replaced the announcement made at 07.00 on 5 March 2021 under RNS Number 2568R for the following amendments.

The earnings per share numbers shown on the Condensed Consolidated Statement of Comprehensive Income for the interim periods ended 31 December 2020 and 31 December 2019 and in the overview and Chairman's Statement have been amended to show the earnings for the six month periods, rather than annualised amounts.

All other details remain unchanged.

The full amended text is shown below.

Interim results for the six months ended 31 December 2020

Goldplat plc, the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana, announces its unaudited interim results for the six months ended 31 December 2020.

Overview

Group

· Goldplat achieved an operating profit for the six months ended 31 December 2020 of £2,600,000 (31 December 2019: £2,566,000). Within this, the South African operation achieved an operating profit of £2,108,000 (31 December 2019: £2,659,000) and the Ghana operation increased operating profitability by more than 5-fold to £849,000 (31 December 2019: £151,000);

· The fully diluted earnings per share for the period from continuing operations increased to 0.73 pence (31 December 2019: 0.32 pence) as a result of increased performance in Ghana, increasing net profit from continuing operations attributable to owners of the company to £1,256,000 (31 December 2019: £536,000).

South Africa

· Revenues in South Africa decreased by 13% to £8,243,000 (six months ended 31 December 2019: £9,486,000);

· In pursuance of the objective to ensure profitability of our production lines, from material available in the market, on a sustainable basis, we have invested substantial time and resources on gathering data to optimise the production lines and investigating the best processing routes to obtain maximum recovery during re-processing of the gold contained in our tailings storage facility ("TSF"). This expenditure contributed to higher operating cost but this research should inform our future decision making;

· The total capital expenditure during the period in South Africa amounted to £394,000 focussed on the optimisation of the largest milling and Carbon-in Leach Circuit by adding additional equipment, and the installation of a pilot plant to bulk test material from the TSF, as described above, and the further extension of the deposition area on the current TSF;

· Normal operating costs increased, specifically as a result of electricity price increases, more water used from the Rand Water Board and rental of yellow machinery for material handling purposes in addition to higher security and engineering costs. Further electricity increases are expected but measures have been taken to mitigate and reduce other cost.

Ghana

· We experienced a good supply from our regular clients during the period which was supported with supply from a new client in South America, driving the 92% increase in revenue year on year to £4,359,000 (six months ended 31 December 2019: £2,273,000).

· Our marketing efforts in Mali, Burkina Faso and Ivory Coast to secure additional sources of supply continue, with engagements at mine and Government level. We have received a low-grade trial batch from another mine in Mali for evaluation purposes and initial results are encouraging. By achieving a larger geographical spread with more clients, our objective is to have a steady supply to our plant in Tema from current production rather than ad hoc supplies from stockpiles.

· We are still engaging with relevant authorities in Ghana on re-entering the processing and tolling of tailings material.

Kilimapesa Update

· We are encouraged with the progress made during the last month on the sale of Kilimapesa to Mayflower. The formal legal documentation has been signed and transaction has been approved by a majority of Papillon shareholders, Papillon creditors deeds have been executed and we are in a position to complete the transaction by 31 March.

Chairman's Statement

I am pleased to report good progress in delivering sustainable and strong results from our gold recovery operations, with profit for the half year from continuing operations of £1,500,000 (2019: £1,000,000) and an all-in, fully diluted EPS for the half year of 0.73 pence (Restated 31 December 2019: 0.32 pence). As recently announced, progress also includes simplifying the group structure to reduce group costs and ensure more of the strong operational performance may flow to our shareholders.

Our portfolio of core assets consists of two gold recovery operations, in South Africa and Ghana, which recover gold from by-products of the mining process, thereby providing mines with an environmentally-friendly and cost-efficient way of removing waste material.

We are also in the process of selling our Kilimapesa gold exploration and mining operation in Kenya and this is progressing well.

The Revenues for continuing operations for the six months ended 31 December 2020 increased by 7% to £12,602,000 (restated six months ended 31 December 2019: £11,759,000), with the growth achieved in Ghana, where revenues increased by 92%, from £2,273,000 for the six months ended 31 December 2019 to £4,359,000. The growth in Ghana was set-off by lower gold production in South Africa resulting in a decrease in Revenues in South Africa by 13% to £8,243,000 (six months ended 31 December 2019: £9,486,000). 

The Group achieved an operating profit from continuing operations for the six months ended 31 December 2020 of £2,600,000 (restated for the six months ended 31 December 2019: £2,566,000). The overall increase was impacted by lower gold production in South Africa where material processed during this period was lower in grade and the volume of fine carbon was less than in previous periods. The measures being taken by the Company and the continuous research of better processing methods should ameliorate this effect as mines become more efficient and during the consolidation process of the industry.

The net financing cost can be split into intergroup foreign exchange movements, third party foreign exchange movements and net interest paid. This has been broken down in the below table:

The net interest paid includes £66,000 (31 December 2019: £41,000) paid on the Scipion loan. The remainder relates to lease interest of £36,000 (31 December 2019: £44,000) and pre-financing of proceeds of £36,000 (31 December 2019: £132,000).

The profit after taxation of £1,500,000 (restated 31 December 2019: £1,000,000) was negatively impacted by unrealised intragroup foreign exchange losses on intercompany loans balances for the six months ended of £357,000(31 December 2019: £400,000). The group has intercompany loans denominated in USD which differ from its reporting currencies. The strengthening of the ZAR against the USD contributed the most to the unrealised intragroup foreign exchange loss for the six months.

The taxation expense decreased to £560,000 (31 December 2019: £918,000) as a result of more of the Group profits being attributable to Ghana which are subject to a favourable tax rate of 15%. Furthermore, the withholding tax expense year-on-year was lower due to less dividends declared by Goldplat Recovery (Pty) Ltd ('GPL')during the period, reducing dividend taxation paid for the six months ended 31 December 2020 to £80,000 (31 December 2019: £190,000). With Kilimapesa no longer requiring funding from the group we expect to maintain lower dividend declarations to fund working capital requirements. By restructuring GPL as a subsidiary of Goldplat Plc, as recently announced, there will not only be a saving of General and Administrative expenses but also a reduction in the withholding tax rate on dividends declared to Goldplat Plc

Cash and cash equivalents at the end of the period (net of bank overdrafts) decreased to £910,000 (31 December 2019: £1,981,000). This decrease in cash is attributable to increases in inventories and accounts receivable.

Precious metals on hand and in process doubled to £7,591,000 during the period, directly related to the larger batches of material received in Ghana and gold produced in South Africa not sold. Sales from this material will be accounted for during the third quarter.

We further increased our strategic raw material stockpiles by investing £1,400,000 in material. This is a defined strategy of the company to ensure sustainable production and afford the company the opportunities to blend and schedule production to maximise returns.

 During the period trade and other receivable balances increased by £1,470,000.

 The precious metals on hand and in process and trade receivable balance fluctuate based on when material is received and sold. The cash balance at date of the report increased to £1,990,000.

Goldplat Recovery (Pty) Ltd ('GPL')

Revenues in South Africa decreased by 13% to £8,243,000 (six months ended 31 December 2019: £9,486,000). Fluctuations of this nature are not uncommon and are dependent on the nature of material purchased, the grade of the material and the stage of processing. Margins on high value material are normally lower than lower value material received and changes in revenues do not necessarily result in lower margins. During the comparative period ending 31 December 2019, South Africa achieved record sales numbers as a result of good quality, high grade material available to be processed through all circuits. The production during the six months ended 31 December 2020, was in line with production during the six months ended 30 June 2020. In comparison with the six months ended 31 December 2019 the current period production was impacted by a milling circuit being offline for 3 months, whilst the pilot plant was constructed, and lower volumes of by-products received from clients.

The reduction in turnover and increased operating costs, did offset the benefit derived from increases in gold prices and resulted in the operating profit in South Africa for the period decreasing year-on-year from £2,659,000 for the six months ended 31 December 2019 to £2,108,000. 

Increases in operating costs included £51,000 in water consumption from Rand Water Board due to poorer quality of other water sources we used in the past being contaminated by sewage from pipe failures in surrounding areas. The rental and repair of plant machinery during the period increased by £38,000, due to additional material handling requirements and breakdown of yellow machinery requiring lengthy repair. The additional plant infrastructure, together with increased electricity prices resulted in an increase in electricity cost compared to the previous period of £67,000. During the period we changed the security service provider in South Africa, resulting in an extra month of security cost being incurred. The additional cost amounted to £32,000 but in changing service providers will result in future saving of £11,000 per month.

Arrangements made to transport our staff in a hygienic and safe manner and other operating requirements under Covid-19 restrictions, cost the South African subsidiary an additional £75,000.

During the period we also evaluated an alternate PGM resource at some cost. We achieved mixed results but will continue our endeavours to penetrate and pursue this market.

The approval of our new TSF in South Africa remains critical to our ability to continue operating at current levels. The approval for the application is due in July 2021 but we will start pre-construction work during the June quarter to ensure we are in a position to move our deposition to the new facility when approval is received. The construction cost of the new TSF is estimated at £700,000.

The test work on re-processing the existing TSF has advanced to the point where we have established what we believe to be the optimal processing routes in terms of gold recovery, processing volumes and operating costs. These options will now be evaluated by accredited technical facilities to obtain the data on which the final processing plan can be designed.

Gold Recovery Ghana ('GRG')

We experienced a good supply from our regular clients during the period which was supported with supply from a new client in South America, driving the 92% increase in revenue year on year to £4,359,000 (six months ended 31 December 2019: £2,273,000). The increase in volume of material processed, together with the higher gold price resulted in operating profit margins increasing from 6.6% during the 6 months ended 31 December 2019 to 19.5% for the 6 months ended 31 December 2020. Operating profit of £849,000 for the 6 months ended 31 December 2020 represents a more than five-fold increase from Operating profit reported for the 6 months ended 31 December 2019 of £151,000.

Our efforts in Mali, Burkina Faso and Ivory Coast to secure additional sources of supply continue, with engagements at mine and Government level, has yielded positive outcomes and the company continues its marketing in the region. We have received a low-grade trial batch from another mine in Mali for evaluation purposes and initial results are encouraging. By achieving a larger geographical spread with more clients, our objective is to have a steady supply from the mines current production, rather than ad hoc supplies from stockpiles.

We are still engaging with relevant authorities in Ghana on re-entering the processing and tolling of tailings material.

Kilimapesa Gold ('KPG')

KPG is currently classified as an asset in disposal groups classified as held for sale and has been disclosed separately in the statement of financial position at fair value less the cost of sale. During the period the Group supported KPG with a balance of £243,000 which has been impaired and recognised under discontinued operations during the period.

The formal legal documentation relating to the acquisition of total issued share capital of Kilimapesa by Mayflower Gold Investments Limited ("Mayflower Gold") a wholly owned subsidiary of Mayflower Capital Investments Pty Limited (the "Transaction") has been signed by all parties. The formal documentation includes a Share Purchase Agreement ("SPA") entered into by Gold Mineral Resources Limited ("GMR") (a wholly owned subsidiary of Goldplat) with Mayflower Gold. The SPA sets out the terms of the Transaction under which Mayflower Gold will acquire 100% of the entire issued share capital of Kilimapesa which holds the licences and assets of producing Kilimapesa Gold Mine and processing operations located in Narok County, Kenya. The completion date for the Transaction has been changed from 28 February 2021 to 31 March 2021.

A deed of novation and royalty agreement has also been entered into by GMR and Mayflower Gold. The deed of novation relates to the transfer of all rights and obligation of GMR in the loan agreement between GMR and Kilimapesa to Mayflower Gold as described in the Company's announcement of 31 July 2020. Under the royalty agreement, GMR has the right to receive a 1% gross net smelter return royalty subject to a maximum of US$1,500,000 on future gold produced and sold by Kilimapesa.

Completion of the Transaction remains subject to a number of conditions being satisfied including, amongst other things:

o Receipt of various regulatory approvals in Kenya;

o Approval of Kilimapesa's prospecting license;

o The completion by Mayflower Gold of the Reverse takeover of Papillon Holdings plc including a fundraising of at least US$4 million; and

o initial consideration to be satisfied by the issue of shares to that value of US$1,750,000 in Papillon Holdings Plc or US$1,500,000 in cash payment to GMR;

As at 31 July 2020 GMR had lent US$10 784 765 to Kilimapesa which will be subject to the novation agreement and during the interim period a further US$150 000 was advanced to facilitate the conclusion of the transaction.

Post-Period End

Progress can be reported subsequent to 31 December 2020 on the following:

· The installation of density separation unit at our largest milling circuit has been completed and we are currently in the process of commissioning the unit. The purpose of the unit is to increase gold recovery and margins achieved from the processing of lower grade material, containing significant amount of carbon. If successful material that previously was not commercially viable may become payable and add additional sources of material.

· Engagement with authorities is continuing on our water use license application required for future deposition of tailings;

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:

· improving our gold recoveries from lower grade contaminated material, effectively reducing the grade of the material we will be able to source economically. Reserves of lower grade materials are more readily available and help to alleviate the sourcing risk;

· Building strategic partnerships within the mining industry;

· Evaluating the investment into larger tailings storage facility and additional mill and leaching capacity to enable us to reprocess our current TSF; and

· Increased investment into sourcing initiatives and test work on a wider range of materials, including PGM discards.

The company's production has remained satisfactory, to date, during the second half. The profitability for remainder of the period will however remain dependent on sourcing of quality material and the gold price.

Matthew Robinson

Chairman

5 March 2021

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

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU No. 596/2014) which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHES ENDED 31 DECEMBER 2020

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2020

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

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

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

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

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

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 2020 were approved by the Board of Directors and have been delivered to the Registrar of Companies. The audit 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

(a) Statement of compliance

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

(b) 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.

In reaching this conclusion, the Group also assessed the impact of the current Covid-19 pandemic might be on the business. Similar to other businesses, we have no background experience on how to manage the Covid-19 pandemic's impact on the business. Although we are seeing the rollout of vaccines across the globe the uncertainty remains over the outlook, and revisions to trade projections are likely. The sector the Group is involved in has been judged by the various governments as an essential service which ensures that material it sources could still be generated by the mining sector, supplied to its premises and processed. It further also maintained the ability to export and sell the products it produced during the Covid-19 pandemic. The Covid-19 pandemic however brought on new challenges to operating our facilities in South Africa and Ghana in a safe way for all our employees and local communities. With the assistance of relevant regulatory authorities, the Directors believe sufficient procedures have been implemented to assist in safeguarding our employees and local communities. We are, however, comfortable that these various impacts of the Covid-19 impact will not change our ability to continue in business for the foreseeable future.

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 2020. Three restatements were accounted for in the 30 June 2020 annual financial statements and therefore the 31 December 2019 comparative figures were also restated as part of these interim financial statements. 

4. Operating segments

Information about reportable segments

For the six months ended 31 December 2020 (unaudited)

For the six months ended 31 December 2019 (unaudited)

For the twelve months ended 30 June 2020 (audited)

5. Seasonality of operations

The Group is not considered to be subject to seasonal fluctuations but revenue and cost of sales does fluctuate based on the material received from suppliers and this is variable

6. 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 and on declaration of dividends from South Africa. The effective income tax rate in GPL was 26% (six months ended 31 December 2019: 29%) and the withholding tax rate on dividends declared was 20% (six months ended 31 December 2019: 20%).

7. Property, plant and equipment

During the six months ended 31 December 2020, the Group acquired assets with a cost, excluding capitalised borrowing costs of £458,000 (six months ended 31 December 2019: £356,000; twelve months ended 30 June 2020: £356,000).

8. Intangible assets and goodwill

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 2020 the goodwill balance has not been impaired (six months ended 31 December 2019: £nil; twelve months ended 30 June 2020: £967,000).

During the 12 months ended 30 June 2020, the Groups mining rights and pre-production expenditure was impaired with £145,000 (six months ended 31 December 2019: £nil) and the £2,382,000 (six months ended 31 December 2019: £nil) of cost and £1,676,000 (six months ended 31 December 2019: £nil) of accumulated amortisation reclassified under disposal group classified as held for sale or other disposals. As a result the opening balance of the six months ended 31 December 2020 for mining rights and pre-production expenditure was £nil and no other changes were made during the period.

During the 12 months ended 30 June 2020, £1,464,000 (six months ended 31 December 2019: £nil) of cost relating to exploration and development assets and £726,000 (six months ended 31 December 2019: £nil) of accumulated amortisation relating to exploration and development assets were reclassified under Assets in disposal groups classified as held for sale. As a result the opening balance of the six months ended 31 December 2020 for exploration and development assets was £nil and no other changes were made during the period.

The carrying value at the end of the period was:

9. Inventories

10. Trade and other receivables

11. Cash and cash equivalents

12. Capital and reserves

Dividends

No dividends were declared or paid by the Company during the periods.

13. Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 December 2020 was based on the profit from continuing operations attributable to owners of the Company of £1,256,000 (31 December 2019: restated profit £536,000; 30 June 2020: Profit £2,133,000), and weighted average number of ordinary shares outstanding of 169,774,333 (31 December 2019: 167,441,000; 30 June 2020: 167,441,000)

Diluted earnings per share

The calculation of diluted earnings per share at 31 December 2020 was based on the profit from continuing operations attributable ordinary shareholders of £1,256,000 and weighted average number of ordinary shares outstanding after adjustment for the effect of all dilutive potential ordinary shares of 173,312,428 (31 December 2019: 168,548,000 ; 30 June 2020: 171,561,000)

14. Leases

During the six months ended 31 December 2020, the Group acquired right-of-use assets with a cost of £32,000 (six months ended 31 December 2019: £143,000; twelve months ended 30 June 2020: £362,000). During the six months ended 31 December 2020, the Group made lease payments to the amount of £138,000 (six months ended 31 December 2019: £135,000; twelve months ended 30 June 2020: £191,000)

15. Interest bearing borrowings

Six months ended 31 December 2020 (unaudited)

Six months ended 31 December 2019 (unaudited)