JOHANNESBURG (miningweekly.com) – Aim-listed African gold producer Goldplat continued to operate profitably during the second half of the 2014 financial year, with a substantial improvement expected compared with the first half of the year’s loss of £694 000, the company said on Friday.

Goldplat did, however, state that while it was expected that the second half of the year would more than eliminate the first half’s loss and that the full-year results would show an overall operating profit, it was expected that this operating profit would be materially below market expectations.

The primary reasons for this were the short-term and temporary suspension of toll treatment activity and a delay in sales of fine carbon contracts at the company's gold recovery operation in Ghana, and the continuing losses incurred at the Kilimapesa gold mine, in Kenya, while the company was in the process of identifying a joint venture partner to increase the milling capacity. 

SP Angel said in a statement to clients that 2014 was a year of transition for the company, which had moved from being unprofitable in the first half to being profitable in the second half.

“As the absolute profit base is now lower as a result, any delays in contracts are now having a more material impact,” SP Angel said, adding that this trend could change in future, particularly if a solution was found to the ongoing losses at Kilimapesa.

Meanwhile, Goldplat explained that, as part of the Ghana government’s effort to legalise all mining operations in Ghana, the Environmental Protection Agency (EPA) of Ghana was continuing to increase pressure to better regulate the mining industry.

This drive from the EPA resulted in a change in the application of regulation on toll-treatment at third-party processors and, consequently, Goldplat’s agreement with Endeavour Resources to buy tailings from artisanal and small-scale miners, which were processed by Endeavour, had temporarily been suspended to allow Goldplat to obtain an additional permit from the EPA.

Goldplat said it was confident that this additional permit would be secured in the near-term, which would allow the toll-treatment to continue to operate at its standard capacity.

Further, there had also been a delay in the sales from Goldplat’s third-party refinery in Ghana.

However, it was expected that the treatment and, in-turn, valuation of the company’s fine carbon product would be completed shortly and that the sales from the refinery would be completed after the financial year end.

“While temporary problems incurred in Ghana have impacted anticipated profit levels during the second half of 2014, I am confident that growth in our recovery operations will continue in the near term and believe our ability to remain profitable in these circumstances underpins the strength and robustness of our diverse mining service offering," Goldplat CEO Ian Visagie said.

He added that the company remained focused on building a cash-generative, unhedged, debt-free gold recovery company in Africa for the benefit of all shareholders. 

“In line with this, our primary gold recovery operations in South Africa and Ghana continue to trade profitably and, as a result, we remain highly confident that our final results for the year ended June 30 will still report an overall operating profit,” Visagie said.