Goldplat plc LON:GDP, the AIM listed gold producer, with international gold
recovery operations located in South Africa and Ghana and a gold mine in
Kenya, gave DirectorsTalk today its interim results for the six months ended 31
December 2016.
Overview
-- Continued increase in profitability with a profit before tax of
GBP1,334,000 for the six months ended 31 December 2016 (6 months ended 31
December 2015: profit of GBP395,000)
-- Overall gold and gold equivalent production for the six-month period of
21,317 ounces (six months ended 31 December 2015: 17,457 ounces)
-- 16,653 gold equivalent ounces were sold and transferred during the six
months ended 31 December 2016 (six months ended 31 December 2015: 17 875
ounces)
-- Completion of installation of the first stage of the new processing plant
at Kilimapesa Mine
-- Resolution of the preliminary findings by the Kenyan Revenue Authorities
into specific Kilimapesa tax affairs
-- The renewal of the gold license at Gold Recovery Ghana for the standard
period of three (3) years
Chairman's Statement (Matthew Robinson)
I am delighted to report that Goldplat has continued to improve its
profitability during the period under review. Our portfolio of core
assets consists of two gold recovery operations in South Africa and
Ghana, recovering gold from by-products of the mining process and the
Kilimapesa gold mine in Kenya.
Key issues and initiatives during the period under review have been the
implementation of the decision to proceed with an additional, larger,
processing plant at Kilimapesa; the renewal of the gold license in
Ghana; progress towards the conclusion of the dispute with the Rand
Refinery; continued focus on sourcing of material including progress on
the evaluation of the viability of importing material from South America,
and seeking resolution on the tax claim by the Kenyan Revenue
Authorities over Kilimapesa.
I am pleased to report a profit before tax of GBP1,334,000 for the six
months ended 31 December 2016. This marks a 238% increase from the
GBP395,000 reported for the comparable six-month period ended 31
December 2015 and compares extremely favourably to the GBP1,942,000 we
reported for the full year (FY 2016). At the operating level the profit
was GBP1,009,000 (compared to an operating profit of GBP245,000 for the
six months ended 31 December 2015 and an operating profit of
GBP1,172,000 for FY 2016). Cash and cash equivalents at the end of the
period stood at GBP885,000 (compared to GBP729,000 at the end of
December 2015 and GBP2,148,000 at end of FY 2016).
With regard to group production and sales, overall gold and gold
equivalent production for the six-month period ended 31 December 2016
was 21,317 ounces (compared to 17,457 ounces produced in the period
ended 31 December 2015 and 37,666 ounces produced in FY 2016). Total
gold and gold equivalent sold and transferred for the period was 16,653
ounces (compared to 17,875 ounces in the period ended 31 December 2015
and 40,763 ounces in FY 2016). The difference between the gold and gold
equivalent produced and the total gold and gold equivalent sold and
transferred during the six months ended 31 December 2016 is primarily a
result of the material being held back in Ghana pending the renewal of
the Gold License, which was received on 23 December, 2016. The following
table summarises gold production, transfers and sales for the period per
operation:
6 Months December 2016 6 Months December 2015 12 Months ending June 2016
Goldplat Plc Equivalent Gold Equivalent Gold Equivalent Gold
Consolidated oz oz oz
Gold and gold
equivalent
Production
Gold Recovery
Ghana 7 588 4 694 6 883
Kilimapesa
Gold 1 190 932 2 005
Goldplat
Recovery 12 539 11 831 28 778
Total 21 317 17 457 37 666
Gold and gold
equivalent
Sold
Gold Recovery
Ghana 2 443 5626 8 964
Kilimapesa
Gold 1 093 932 1 999
Goldplat
Recovery 9 838 8 198 16 575
Total 13 374 14 756 27 538
Gold and gold
equivalent
Transferred
Goldplat
Recovery 3 279 3 119 13 225
Total 3 279 3 119 13 225
Gold and gold
equivalent
Sold and
Transferred
Gold Recovery
Ghana 2 443 5 626 8 964
Kilimapesa
Gold 1 093 932 1 999
Goldplat
Recovery 13 117 11 317 29 800
Total 16 653 17 875 40 763
Goldplat Recovery (Pty) Ltd ('GPL'), South Africa
Key initiatives for the period at GPL:
-- Sourcing of sufficient quantity of the right quality material
-- Resolution of the Rand Refinery dispute
-- Progressing discussions regarding the use of an old disused pit on
adjacent land, for tailings deposition
-- Renegotiation of contracts with most clients to mitigate the effect of
changes introduced by Rand Refinery
Production of 12,539 ounces of gold and gold equivalents for the
six-month period ended 31 December 2016 was up when compared to the
11,831 ounces of gold and gold equivalents for the six months ended
December 2015 but down compared to the 28,778 ounces of gold and gold
equivalents produced during FY 2016. However, based on the amount of
consignment material on site and the production schedule the produced
ounces for the FY 2017 is expected to exceed that of FY 2016.
The Independent review of the Rand Refinery dispute is nearing
completion, and the board remains confident of a favourable outcome.
Discussions continue to progress regarding the use of an old disused
open-pit, on land adjacent to our plant, for tailings deposition. All
stakeholders have agreed to sterilise the open-pit adjacent to our plant,
and the Department of Mineral Resources has agreed to issue a directive
for the pit to be used for tailings deposition. It is our plan that the
pit will be used as a final deposition site for current production and
will also enable the reprocessing of the estimated 80,000 ounces of gold
resource in our stock dams. Final approval is expected during FY2017.
Towards the end of the interim period Rand Refinery changed the
repayment terms of our contracts and GPL is in the process of
re-negotiating terms with suppliers to mitigate the effects of these
changes. This process is proceeding well and continues.
As a result of the strengthened Strategic Sourcing team, smaller
precious metal producers are now being visited to source by-products in
addition to those received from the large mining companies. Volumes at
the smaller operators are lower compared to the larger mining companies
but increases our footprint as service provider of choice.
Goldplat Recovery Ghana ('GRG'), Ghana
Key initiatives during the period at GRG:
-- Renewal of the gold licence
-- Removal of material from on-site tailings dump to address rehabilitation
requirements and create significant space for plant expansion
-- Sourcing of material, including the evaluation of the viability of
importing material from South America
Production for the six months to 31 December 2016 was 7,588 ounces of
gold and gold equivalents (compared to a total of 6,883 ounces produced
during FY2016 and 4,694 ounces produced for the six months to 31
December 2015). Gold and gold equivalents sold during the period
amounted to 2,443 ounces (compared to 8,964 ounces during FY2016 and
5,626 ounces for the six months to 31 December 2015). The decrease in
sales was due to GRG keeping back containers which were ready for export
pending the renewal of the gold license.
The gold license was renewed and officially signed on the 23(rd) of
December 2016 by the Honourable Minister (announcement 20 December,
2016). The licence is valid for a period of three (3) years provided
certain milestones are achieved relating to the construction of an
elution plant.
One of the two spare 4-tonne elution columns acquired from DRD Gold
(together with the 4-tonne elution column installed at GPL in FY 2016),
will be installed in Ghana. The costing of the project has not been
completed, but is estimated to be around USD2,000,000. The new license
conditions require that the elution plant be commissioned by June 2018.
Planning of the project is in progress and initial shipments of
materials and equipment were made during the period.
During the period under review, roughly one third of the decommissioned
tailings storage facility was successfully removed as part of our
rehabilitation plan for the site. This process is ongoing and once
completed will have addressed an environmental rehabilitation
requirement, and will free up a significant land footprint to be
utilised by GRG for additional plant as and when required.
Marketing efforts in Ghana are focussed on expanding our client base in
West Africa.
In addition to treating material from within the region, we plan to
position our Ghanaian plant as an international hub to treat material
from other parts of Africa and South America in the medium term.
Proposals sent to clients in South America are currently pending and we
look forward to providing feedback during the next operational update.
Trials on material from South America are ongoing and continue to yield
positive results
Kilimapesa Gold
Significant progress has been made at our Kilimapesa gold mine in this
period. Production of 1,190 ounces of gold and gold equivalents for the
six-month period ended 31 December 2016 was up when compared to the 932
ounces for the six months ended December 2015 and 2,005 ounces for FY
2016. The increase in production is a result of improved efficiencies
in the existing plant.
The decision was taken during FY2016 to invest in increased processing
capacity at Kilimapesa in order to bring the operations to profitability,
including the construction of an additional processing plant, in three
discrete stages, and a new tailings facility both in close proximity to
the Kilimapesa Hill. This has been the focus of attention during the
six-month period and progress on the key work streams to achieve this
turnaround have included:
-- The shipment to Kilimapesa and installation of substantial parts of the
Ghanaian plant during the period under review.
-- The purchase of two matching used mills, one of which was installed at
the new plant (with the second planned to be installed during stage three
and the mill from Ghana serving as a spare).
-- The completion of stage one installation, which does not include the
crusher circuit, during the period with commissioning having commenced on
23 December, 2016.
-- Establishing a stockpile of crushed material suitable and sufficient for
processing through the new plant until stage two commissioning is
completed.
-- Starting the construction of the civils and fabrication of three
additional carbon-in-leach ("CIL") tanks for installation and
commissioning with the crusher circuit during stage two which is planned
for completion in April 2017. (The second mill together with a further
three additional CIL tanks will be installed in Stage three, potentially
during H1 2018 to bring total processing capacity to 6,000 tonnes per
month)
-- The construction of the new tailings facility progressed well during the
period with the key cut and a borrow-pit being completed - sufficient for
commissioning of stage one of the new plant and for production during
stage two installation and commissioning.
-- A tailings consultant assisted in the re-design of the tailings facility
at the existing plant, increasing the life of this facility to six-nine
months. This is expected to allow for production at the current plant to
continue at improved recovery efficiencies and better profitability
during FY 2017.
The underground workings at Kilimapesa Hill are being prepared for the
increased production levels required to maintain plant throughput at the
new plant once fully commissioned. This has included comprehensive
sampling and mapping of all existing underground workings in order to
create a 3-D model for planning purposes. A Kempe drill was procured for
underground exploration drilling - this will be commissioned once a new
compressor has been acquired and delivered to site.
At Kilimapesa Hill, good progress was made with underground development:
In Adit Bull, vein three was intersected and a fourth vein was found.
Drives East and West on vein three were started. Fourteen working places
are now available which, given correct machinery and labour, should
provide the ability to develop ore blocks quickly enough to allow
development to stay ahead of production. A front-end loader has been
procured and should be commissioned during H2 2017.
The second outlet at Teng-Teng was completed and a mono-winch installed
which will allow limited underground exploration to continue whilst the
incline shaft is deepened and arrangements are made for direct tipping
of ore into a hopper in the incline. Application for a mining license at
Teng-Teng will begin during H2 FY2017.
Aside from the current operational initiatives, talks with potential
investors or joint venture partners continue, primarily with the aim of
procuring additional resources within the region and for further
exploration drilling to increase the resource on Kilimapesa's
exploration permit.
Investment in the new processing facility at Kilimapesa has been funded
(apart from limited equipment leases) from within Goldplat plc's
subsidiaries and various forms of debt capital raising are being
contemplated to repay these loans and restructure the group balance
sheet.
Preliminary findings by the Kenyan Revenue Authority ("KRA") on the 2010
to 2013 tax affairs has been resolved and the principle amount of
GBP58,000 has been settled during the period.
Exploration and Development Portfolio
An earn-in option agreement over the Anumso Gold Project in Ghana was
concluded with TSX-listed Ashanti Gold Corp during the period (see
announcement of 15 September 2016). The agreement provides Ashanti with
the exclusive option to earn 75% of Goldplat's 90% interest in Anumso in
two instalments expending an aggregate of US$3,000,000 on the project.
Ashanti have a 6-month due diligence period during which they have the
right to terminate the agreement. This period ends in mid-March 2017.
Various parties are reviewing the Nyieme project in Burkina Faso and any
progress in this regard will be communicated if and when appropriate.
Outlook
Significant progress can be reported subsequent to 31 December 2016:
-- The independent expert appointed to review the Rand Refinery Silver
project submitted his report to the two parties in February 2017 and good
progress was made at a working meeting with Rand Refinery to consider the
findings of the report.
-- Commissioning of the first stage of the new processing plant at
Kilimapesa was completed on 6 February 2017 and the plant was officially
opened by the Cabinet Secretary for Mining, Kenya, Honourable Dan Kazungu,
on 15 February, 2017
-- The material held in Ghana, pending issuance of the renewed Gold License,
was all shipped during January 2017
-- Initial planning and design work for the installation of an elution plant
at GRG began following the renewal of the Ghanaian gold license (see
announcement of 20 December, 2016)
-- A further extensive trip to South America was completed in January 2017.
A report will now be compiled which will be used to determine Goldplat's
strategy for potential sourcing of material into GRG and potentially GPL.
Conclusion
The focus, enthusiasm and ambition of Goldplat's management team has
continued to deliver strong improvements in production and financial
results, with good progress on key initiatives. We are mindful that
this progress is made with the assistance of our partners in South
Africa, Kenya and Ghana and we believe Goldplat in turn is making a
significant contribution in terms of employment, skills transfer and
fiscal contribution. Focus for the remainder of FY2017 will be on
completion of Stage two of the new plant at Kilimapesa; concluding the
strategy for sourcing material in South America and West Africa to
deliver the growth strategy for GRG; and continuing to seek efficient
and acceptable alternative sources of debt capital to enable repayment
of goods and services to Group subsidiaries and to restructure the Group
balance sheet.
Matthew Robinson
Chairman
