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Goldplat plc: THE INVESTMENT CASE

Goldplat reiterates full-year targets; agrees first contract with South American producer

Processing extra material from South America could help to push Goldplat to the next level in terms of production
Gold bars and dollar bills
INVESTMENT OVERVIEW: GDP The Big Picture
Chief executive Gerard Kisbey-Green said the producer is on track to hit its full-year target of 45,000oz

Goldplat plc (LON:GDP) overcame difficulties at its Ghanaian operations to post another set of solid quarterly production figures, compounding what has been a strong year of trading so far for the gold producer.

In its South African gold recovery business – Goldplat’s largest operation – the company produced 4,979 ounces (oz) of gold in the three months to end March.

That takes the division’s total to over 17,500oz for the nine months so far, almost 1,000oz more than at this stage last year.

WATCH: "A good quarter on all fronts", says Goldplat boss

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The company continues to produce more from its Kilimapesa gold mine in Kenya too, with production in the last quarter edging ever nearer to the 1,000oz mark at 964oz. 

The mine – which Goldplat recently raised US$2mln for to fund plant expansion – has now produced more in the first nine months of this year (2,154oz) than it did it in the whole of last year (2,005oz).

Phase two of the expansion is largely on target for completion later this month, the firm added, although the crusher circuit has been delayed slightly due to steel availability in Kenya but that shouldn’t impact production too much.

Goldplat’s other recovery operation – in Ghana – produced 803oz in the first three months of 2017, taking its total for its financial year to 8,391oz.

The drop-off in production was largely down to delay in the business receiving processing material.

In total, Goldplat produced 6,746oz in the third quarter, taking its total for the nine months of its year so far to just over 28,000oz and keeping it on course to meet the full-year target of 45,000oz.

The firm managed to sell 9,260oz in the period though, mainly due to it offloading a large chunk – almost 5,500oz – of gold concentrate as a result of an outstanding licence which was received towards the end of the second quarter.

South America could take Goldplat to the next level

Although those figures represent a decent year-on-year improvement, they’re still relatively small fry in the lucrative world of gold mining and recovery.

To try and take itself to the next level, Goldplat has been working on securing more gold-containing material from producers in South America.

In fact, Goldplat Recovery Ghana has signed its first agreement with a South American miner and expects to take delivery of some 240 tonnes of material in the coming quarter.

With a few more similar agreements from producers dotted around South America, it isn’t crazy to think that overall gold production could edge towards 100,000oz – typically the entry point into the mid-tier ranks.

‘Goldplat on track to hit full-year targets,’ says CEO Kisbey-Green

“I am particularly pleased with progress made on the plant expansion and achievement of targets at Kilimapesa, as well as the positive developments being made with respect to the sourcing of material from South America,” said chief executive Gerard Kisbey-Green.

“Alongside this we have identified new sourcing opportunities within West Africa and are also exploring opportunities in North America. I believe Goldplat is on track to meet planned targets for FY 2017.”

Rand Refinery dispute

Goldplat announced back last July that it had issued a demand letter to Rand Refinery – its primary South African refinery – for around £600,000.

The specific details are a little vague given that legal proceedings are now in process.

The two continue to work with each other on a day-to-day basis and Goldplat delivered concentrates to Rand throughout the last quarter.

The issue has given the company chance to build relations with other refinery firms so that it’s not too reliant on Rand.

To protect itself from this ‘single refiner risk’, Goldplat has been shipping concentrate to another refinery in Germany as well, while it has also identified another refiner with which it is finalising a new contract.

In a note to clients on Goldplat, analysts at VSA Capital said: “Overall, we remain positive on GDP’s operational performance and our forecasts remain unchanged.”

They reiterated a buy rating and 11.2p target price on the stock.

Goldplat shares held steady in lunchtime trading at 8p.

 -- Adds broker comment, share price --

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