Goldplat mulls diversification into coal, posts lower interim profit

31st March 2023 By: Marleny Arnoldi - Deputy Editor Online

Aim-listed gold recovery company Goldplat has reported a lower operating profit of £2.8-million for the six months ended December 31, 2022, owing to the impact of loadshedding on production in the second quarter and a decrease in the valuation of a net smelter royalty (NSR) related to its now sold interest in Kilimapesa, in Kenya.

This compares with an operating profit of £3.3-million reported for the six months ended December 31, 2021.

Goldplat explains that it took a £45 000 knock on its sale of Caracal shares and suffered a £107 000 impact from a decrease in the NSR.

At the start of the financial year, the company held a 5.52% interest, indirectly, in Caracal, valued at £727 000, and a 1% NSR capped at $1.5-million in Kilimapesa – the Kenyan gold mining company that Goldplat sold to Caracal – valued at £698 000.

During the period, Goldplat sold all its Caracal shares for £682 000, at a loss of £45 000. The company also had to review and decrease the valuation of the NSR by £107 000 as a result of the lower-than-expected production profile at Kilimapesa, despite the outlook for the future gold price being good.

Notwithstanding these impacts, Goldplat still generated a net profit from continued operations attributable to owners of the company of £1.7-million, compared with net profit of just over £2-million posted in the prior comparable period.

The company managed to keep its diluted earnings per share (EPS) at 1.02p for the six months under review, against diluted EPS of 1.19p in the prior half-year period.

Bear in mind that the company spent £802 000 on capital expenditure in the period, mainly on the construction of a new tailings storage facility in South Africa and refurbishment of a circuit.

The new facility will be completed by the end of June, weather permitting.

Goldplat had £2.8-million of cash on hand at the end of December.

Goldplat’s core assets comprise two gold recovery operations in South Africa and Ghana, with plans to operate in Brazil as well.

The company explains that, although production in the second quarter of the period was impacted by electricity cuts, revenue only decreased by 1% year-on-year to £10.4-million, owing to more higher-grade byproduct sourced from suppliers, which is processed in batches and impacted less by power cuts.

The lower-grade, continuously-running production circuits, however, had been impacted, resulting in an increase in Goldplat’s cost per ounce of gold.

CEO Werner Klingenberg says the company has delivered a pleasing performance despite difficult circumstances having been experienced during the period. Goldplat is still assessing the full impact that loadshedding had on its production in the second quarter of the financial year.

The company remains committed to research and development to identify alternative processing methods and equipment to maximise value from resources and identifying opportunities for growth.

In continuing to look beyond its current operations for growth opportunities, Goldplat has made a strategic investment of £150 000 to obtain the use of a small spiral plant for its gold operations in South Africa.

The company also acquired a 15% shareholding in a fine coal recovery technology company.

Goldplat has the option to invest an additional £1.5-million to increase its shareholding in the business to more than 50%.

The board is still evaluating this option, which would diversify the company into a different commodity – coal – of which South Africa has significant resources available.

The technology used by the fine coal company is designed to extract fine coal from preciously mined and processed material and should have a neutral impact on the environment, says Goldplat.