Interim Results

Goldplat plc / Ticker: GDP / Index: AIM / Sector: Mining & Exploration
20 February 2017
Goldplat plc ('Goldplat' or 'the Company')
Interim Results

Goldplat plc, the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana and a gold mine in Kenya, announces its interim results for the six months ended 31 December 2016.

Overview

• Continued increase in profitability with a profit before tax of £1,334,000 for the six months ended 31 December 2016 (6 months ended 31 December 2015: profit of £395,000)
• 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

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 £1,334,000 for the six months ended 31 December 2016. This marks a 238% increase from the £395,000 reported for the comparable six-month period ended 31 December 2015 and compares extremely favourably to the £1,942,000 we reported for the full year (FY 2016). At the operating level the profit was £1,009,000 (compared to an operating profit of £245,000 for the six months ended 31 December 2015 and an operating profit of £1,172,000 for FY 2016). Cash and cash equivalents at the end of the period stood at £885,000 (compared to £729,000 at the end of December 2015 and £2,148,000 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:

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 £58,000 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
20 February 2017

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHES ENDED 31 DECEMBER 2016

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016

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

The financial statements of Goldplat plc, company number 05340664, were approved by the Board of Directors and authorised for issue on 20 February, 2017.  They were signed on its behalf by:

Ian Visagie, Financial Director

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2015

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016

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

GOLDPLAT PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

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

GOLDPLAT PLC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

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 2016 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.  The condensed consolidated set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

b. Going concern
The directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report.  Accordingly, they continue to adopt a going concern basis in preparing the consolidated financial statements.

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 2016.
             

4. Operating segments

             
Information about reportable segments
For the six months ended 31 December 2016 (unaudited)
             

   For the six months ended 31 December 2015 (unaudited)

For the twelve months ended 30 June 2016 (audited)

5. Seasonality of operations

            The Group is not considered to be subject to seasonal fluctuations.
             
             

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 Group's consolidated effective tax rate in respect of continuing operations for the six months ended 31 December 2016 was 20.00% (six months ended 31 December 2015: 20.00%; twelve months ended 30 June 2016: 20.00%). 

7. Property, plant and equipment

             
            Acquisitions and disposals
            During the six months ended 31 December 2016, the Group acquired assets with a cost, excluding capitalised borrowing costs of £1,377,000 (six months ended 31 December 2015: £623,000; twelve months ended 30 June 2016: £1,365,000).
             
            Assets with a carrying amount of £13,000 were disposed of during the six months ended 31 December 2016 (six months ended 31 December 2015: £73,000; twelve months ended 30 June 2016: £156,000), resulting in a loss on disposal of £8,000 (six months ended 31 December 2015: £39,000; twelve months ended 30 June 2016: £62,000), which is included in 'administrative expenses' in the condensed consolidated statement of comprehensive income.
             
             

8. Intangible assets and goodwill

9. Inventories

10. Trade and other receivables

11. Cash and cash equivalents

12. Capital and reserves

             
Dividends
The following dividends were declared and paid by the Company:

13. Obligations under finance leases

             
            Six months ended 31 December 2016 (unaudited)

            Six months ended 31 December 2015 (unaudited)

             
            Twelve months ended 30 June 2016 (audited)

14. Interest bearing borrowings

             
            Six months ended 31 December 2016 (unaudited)

            Six months ended 31 December 2015 (unaudited)

             
            Twelve months ended 30 June 2016 (audited)

15. Provisions

             
            The provision relates to a requirement to rehabilitate the land owned in South Africa upon cessation of the mining lease.

16. Trade and other payables

17. Share options

Reconciliation of outstanding share options

The weighted average exercise price of the exercisable options is £0.0660 (31 December 2015: £0.0864; 30 June 2016: £0.0660).

The weighted average remaining contractual life of the options outstanding as at 31 December 2016 is 3 years 112 days (31 December 2015: 1 year 360 days; 30 June 2016: 3 years 292 days).

18.              Fair values
             
            The fair values of financial instruments such as interest-bearing loans and borrowings, finance lease liabilities, trade and other receivables/payables are substantially identical to carrying amounts reflected in the statement of financial position.
             
             
            **ENDS**

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

             
            The information contained within this RNS is considered to be inside information prior to its release.
             
            About Goldplat       
                                                                                              
Goldplat plc is an AIM quoted gold recovery services company with two market leading operations in South Africa and Ghana.  The Company's strategy is focussed on utilising cash flow generated from its flagship gold recovery operations to self-fund the sustainable growth and expansion of its niche gold recovery business model. At the Company's gold recovery operations Goldplat is targeting greater market exposure through the sourcing of new material, both from the wider African continent and internationally, for processing at its established recovery operations.  The Company also has a small gold mining and exploration portfolio in Kenya, Burkina Faso and Ghana and is evaluating various opportunities to create value or monetise these assets.