Goldplat plc (LON:GDP), the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana and an underground mining operation in Kenya, has today announced an operational update for the third quarter ended 31 March 2020.
Goldplat Recovery (Pty) Limited (“GPL”)
· The South African operations maintained profitability and achieved an operating profit for the third quarter ended 31 March 2020 of £843,000, increasing operating profit for the 9 month ending 31 March 2020 to £3,444,000 (31 March 2019: £1,544,000).
· Following the directive issued by the South African government in response to the worldwide Covid-19 pandemic, GPL was placed on care on maintenance 5 days prior to quarter-end which impacted production and reduced profitability for the quarter;
· Lower grade contaminated material was processed through one of the carbon-in-leach (‘CIL’) circuits in South Africa for more than half of the third quarter. Although this resulted in lower production and profitability, we were encouraged by the recoveries achieved with further initiatives to optimize recoveries to continue.
· Production at GPL restarted at a reduced output on 20 April 2020 following the care and maintenance directive from the South African government as a measure to reduce the impact and spread of the Covid-19 pandemic.
· GPL is subject to formula-based taxation in South Africa, whereby reduced taxation rates apply in taxable income is low. Based on the current and expected strong performance we believe GPL will be taxed at an estimated rate of between 28 and 30%.
Gold Recovery Ghana Limited (“GRG”)
· The Ghanaian operation maintained its improved production levels achieved during the first two quarters of the year and achieved an operating profit for the third quarter of £210,000, increasing operating profit to £358,000 for the 9 months ending 31 March 2020 (operating loss – 31 March 2019: £669,000).
· The Ghanaian operation was not required to close due to Covid-19 pandemic. However, not all circuits could be operated at full capacity towards the end of March and in April. Operations should return to normal capacity during May we expect that GRG will make up for most of the lost production during the last quarter.
· Apart from regular material supplied from mining companies in Ghana, the Ghanaian operation is now also receiving regular material from Mali and we remain optimistic of future deliveries from other mines in Mali and the Ivory Coast.
· With the increase in stability in supply of raw material to GRG, although the sourcing risk remains high, focus can now shift to improve processing rates, recoveries and margins.
Kilimapesa (Pty) Limited (“KILI”)
· The processing of tailings at Kilimapesa gold plant was stopped from 27 March 2020 as a result of measures implemented by Kenyan government in response to Covid-19. The mine and plant will remain under care and maintenance.
· Operating losses at Kilimapesa third quarter ended 31 March 2020 was £190,000, increasing loss for the 9 months ended 31 March 2020 to £485,000 (Operating loss 31 March 2020: £1,142,000).
· The current Covid-19 pandemic have stalled some discussions with funding partners to re-capitalize this valuable exploration and mining asset.
· We continue to seek a buyer for the Anumso gold project. The initial discussions we had did not materialise and we have engaged other parties that might be interested.
· The Group continues to benefit from the higher gold spot price.
· The impact of improvement in plant operational efficiencies and cost reduction continues, with some of these being invested into analysis and testing to improve recoveries and increase material availability for the future.
· The cash and cash equivalents on hand at date of the announcement was £3,200,000. The Scipion loan balance is £1,523,000 and in accordance with the terms of the facility we plan to assess the impact of Covid-19 on future cashflows before making any substantial repayment. The full balance remains payable by end of November 2020, but we foresee deferring a part of the balance for another 6 months in line with the revolving terms in the agreement.
We remain committed to our strategy of increasing long term visibility of earnings in the recovery businesses through key initiatives and finding an investment partner or buyer for Kilimapesa. We have made progress during the last quarter on all of these key initiatives:
· Improvement in gold recoveries from lower grade contaminated material have been achieved with further initiatives to optimize to continue. In line with this a further 18 to 24 months of material have been secured, increasing visibility to more than 36 months in South Africa.
· We continue to build strategic partnerships within the mining industry and with benefits from these already materialising.
· The investment into larger tailings storage facility (“TSF”) and additional mill and leaching capacity to enable us to reprocess our current TSF have been evaluated. An application has been submitted for a new tailings site, the outcome of which is expected towards December 2020, not considering potential delays experienced due to Covid-19.
· Increased investment into sourcing initiatives and test work on a wider range of materials, including PGM discards, continues with some new, albeit small revenue streams already identified.
More feedback on these initiatives will be provided to the market as outcomes becomes clearer.