By Lawrie Williams
Reliance on a single client for a key part of its revenues hit AIM Listed, but Benoni-based, precious metals processor Goldplat hard a year ago when the Rand Refinery in Johannesburg was unable to take up a significant element of the company’s gold bearing ash output for refining, leaving a major hole in its revenue stream.
Since then it has managed to diversify its options primarily through a deal with German refiner, Aurubis, while the Rand Refinery is also back taking the material again. Given the material which Rand Refinery couldn’t process last year was stockpiled there should be additional revenues forthcoming from this now it can be refined.
To recap, Goldplat is an unusual entity in the gold space. It describes itself as an African based gold recovery services company with two market leading operations in South Africa and Ghana. Goldplat’s strategy is focused on utilising its robust cash flow generated from its 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.
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In its gold recovery business it mostly takes residues from mining operations which might otherwise have been discarded and extracts the gold (and silver), which had been absorbed mostly in fines form, from materials such as stripped carbon, used filter cloths, recovered underground wooden supports and rubber and steel mill liners. It also toll processes material from artisanal miners in West Africa, although it is trying to reduce this side of its business given the unreliability of government controls and regulation on artisanal mining businesses.
It also has a small underground gold mining operation in Kenya – Kilimapesa – which produces over 2,000 ounces of gold a year with the resource potential to produce far more which would require more capex than Goldplat currently is prepared to try to raise for the project, although it is looking to double production in FY2016.
Its problems with Rand Refinery meant that last year it made its first ever operating loss, but CEO Gerard Kisbey-Green told Biznews in a meeting in London, that these problems are mostly behind it and it can now look forward with confidence to a return to profits in the current year. The major problem in terms of FY 2015 (ended June 30th) revenues was that the company ended the year with substantial unsold gold inventories in raw materials form leading to a loss of £796,000 – but Kisbey-Green reckons the company is already cash flow positive again after the previous hiccup, and will no longer be subject to the risk of a single client refiner being unable to process its materials on hand.
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Looking forward, Goldplat is building its elution capacity (and upgrading other plant) at its Benoni headquarters – and eventually in Ghana too – to be able to produce more bullion on its own account rather than have to rely on third party refiners.
It is also looking to investigate turning its recovery expertise to the platinum group metals sector as well as reviewing longer term options on its Kilimapesa mining operation where it has identified a 670,000 ounce JORC compliant gold resource. It is also planning to develop its West African operations into an area hub for processing gold bearing waste materials from other West African mining operations rather than just from Ghana.
Goldplat is a fairly small company which has developed excellent expertise in a niche market and provided it doesn’t face a recurrence of the problems which caused it so much heartache over the past 18 months, it looks poised for recovery this financial year with growth potential ahead.
