Goldplat plc / Ticker: GDP / Index: AIM / Sector: Mining & Exploration
27 August 2014
Goldplat plc ('Goldplat' or 'the Company')
Operations and Trading Update
Goldplat plc, the AIM listed gold producer in Africa, announces an operations update for its two market leading gold recovery businesses in South Africa and Ghana, its Kilimapesa Gold Project in Kenya and Midas Gold initiative in Burkina Faso.
Trading Update
Goldplat operated profitably in the second half of FY 2014 ('H2 2014'), with the operating profit eliminating the H1 2014 operating loss. The full year results, which will be announced on 22 September 2014, indicate an overall operating profit. As per the previous operations and trading update dated 13 June 2014, the operating profit was reduced by short-term factors at the Company's Ghanaian Gold Recovery operations, including the temporary suspension of toll treatment activity relating to its agreement with Endeavour Resources ('Endeavour') and a delay in sales of fine carbon contracts; and in addition, the continuing losses incurred at the Kilimapesa gold mine in Kenya whilst the Company identifies a joint venture partner to increase the milling capacity. Goldplat's South African gold recovery plant maintains a robust and profitable operation.
Operations Update
Gold Recovery Ghana Ltd ('GRG') - Ghana
GRG's gold recovery operation, which enjoys a tax free status until 2016, is headquartered in the free port of Tema in Ghana and continues to generate revenues for the Company by recovering gold from by-products of the mining process.
Processing at Tema is divided between two distinct areas of operation, one comprising spiral and incinerator sections which recover gold from fine carbon and rubber mill liners, and the other a carbon-in-leach ('CIL') section, primarily processing artisanal tailings.
The spiral and incinerator sections remain the most profitable business unit for GRG and the current production plan includes several high grade batches received from clients recently. Goldplat is in the process of expanding this side of the business by importing material for processing from outside West Africa. For the year ended 30 June 2014, the spiral and incinerator section accounted for 69.4% of GRG's total revenues with the Endeavour contract accounting for 20.5% and the CIL section for 10.1%.
On 18 July 2014, GRG was issued with an enforcement notice by the Environmental Protection Agency ('EPA') requiring GRG to halt all operations at Tema due to the identification of certain operational and environmental breaches of the Company's permit conditions. The EPA subsequently issued an enforcement notice on 19 August 2014 requiring GRG to cease operations at the CIL treatment section which has been re-processing the onsite tailings, whilst enabling operations at the spiral and incinerator sections to continue as normal. GRG was also fined 75,000 Ghana Cedi (approximately £12,000). It is not intended that GRG will seek to recommence CIL operations at Tema. It is expected that GRG will now work together with the EPA to find a new site for an engineered tailings facility and the CIL section so that GRG can restart the processing of tailings. Such a site is likely to be situated in an area where artisanal tailings are available for processing, so reducing transport costs which have reduced profitability up to now.
In order to ensure that all operational activities at GRG are consistent with best practice, preserve the integrity of the environment and protect other adjacent land users, GRG is required to submit a new Environmental Management Plan ('EMP') to the EPA within two months that will, amongst other things, consider water treatment options, include a strategy to decommission the tailings facility on site and identify one or more third parties with engineered storage facilities to process the current tailings onsite. GRG is confident that the grade of the tailings will be attractive to potential third party processors to realise value from the tailings and subsequently fund the decommissioning and removal costs.
Following submission of the EMP, operations at the spiral and incinerator sections will be monitored on a quarterly basis for a period of 18 months by the EPA for any negative environmental impact. Should any negative impact be found to be occurring that cannot be resolved, the Company will be given one year to decommission and relocate following Environmental Impact Assessment studies and the obtaining of an environmental permit.
The third profit stream for GRG arises from its agreement with Endeavour Resources ('Endeavour') to purchase tailings from artisanal and small scale miners, for processing by Endeavour. Following the EPA's drive to change the application of regulation on toll-treatment at third party processors, GRG is still in the process of applying for the necessary permits. GRG is confident that this will be secured in the near term to allow the toll-treatment to continue to operate at its standard capacity.
GRG has built good relations with the EPA over the last two months and looks forward to continuing this relationship to ensure best practice at its Ghanaian operation.
Fine carbon produced by GRG in Ghana is sold to a refinery in South Africa for further processing. Due to operational issues at the refinery in South Africa, GRG has had to delay shipping fine carbon to them. The effect of this will be that sales which would normally have occurred before now have been delayed until late in 2014.
Goldplat Recovery Pty Limited ('GPL') - South Africa
Goldplat's GPL recovery plant in Benoni, South Africa, which processes by-products of the mining process, including woodchips, mill liners, fine carbon, slags, sludges and waste grease, continued to generate revenues and operated profitably for FY2014. Gold pours are conducted every fortnight and in the week ending 15 August 2014, a new record production was achieved at 703.6 ounces of gold, compared with an average of 338 ounces every fortnight during the year ended 30 June 2014.
Three additional mining companies have signed contracts with GPL to process their by-products and the Company has also signed an agreement to process precious metals from a refinery in South Africa that serves the jewelry industry. The number of GPL's clients has doubled during the past 12 months and the Board believes this new business will add to the overall profitability of the operation.
During the second and third quarters of 2014, the Company signed an agreement and commenced the clean-up of two liquidated mining operations that gives GPL access to higher grade surface material that will increase the production output in the various CIL sections of the operation.
Test work results have also been received from a South African University that is researching a process to retreat GPL's current tailings. The initial results are very encouraging and indicate that a new process can be developed and introduced that will improve the current plant recovery significantly and allow the retreatment of the tailings at GPL and other similar tailings resources.
Kilimapesa Gold Mining - Kenya
Whilst Goldplat's cash generative, niche, gold recovery businesses remain the Company's primary focus, Goldplat continues to progress discussions with joint venture partners to advance the development of Kilimapesa.
The continuing losses incurred at the Kilimapesa gold mine in Kenya have negatively impacted overall Group profitability. Since 1 July 2014, further plant improvements at a minimal cost have increased the recovery and gold production at Kilimapesa despite the limited milling capacity.
Indications are that the increased gold production will enable the mine to operate near breakeven despite the current plant design limitations.
Midas Gold SARL - Burkina Faso
As stated previously, the Company intends to extend its gold recovery operations into Burkina Faso under the name of Midas. The Environmental Study for the site in Dano was completed at the end of August 2013, and the Company is pleased to announce that the Government of Burkina Faso has awarded Midas Gold SARL an operating license which covers artisanal semi-mechanised gold mining and gold reprocessing of by-products. The Board believes Burkina Faso has great potential to expand and build a sustainable gold recovery business.
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For further information visit www.goldplat.com or contact:
| Ian Visagie, CEO | Goldplat plc | Tel: +27 (82) 671 2078 |
| Ewan Leggat/Katy Birkin | SP Angel Corporate Finance LLP | Tel: +44 (0) 20 3463 2260 |
| Andrew Raca/Justin McKeegan | VSA Capital | Tel: + 44 (0)20 3005 5000 |
| Felicity Edwards/Charlotte Heap | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
Notes:
Goldplat plc, is an AIM-listed, debt free gold recovery services company with two market leading operations in South Africa and Ghana. The Company's strategy is focussed on utilising its cash flow generated from flagship gold recovery operations in Africa to self-fund sustainable growth and expansion of niche gold recovery business model. 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.