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Gold recovery specialist Goldplat (LON:GDP) is making progress in clearing the backlog of by-product material waiting to be processed, thus improving cash flow.
As previously announced, the inability of its third party refining partner in South Africa, Rand Refinery, to process certain by-product material for Goldplat has had a detrimental effect on cash flow and profitability, but the company has taken various actions to achieve its target of clearing the backlog by the end of the year.
Goldplat said it has started to receive cash from the Aurubis Refinery in Germany, which has been contracted to process a pipeline of by-product material, while Rand Refinery has started to process a small amount of certain categories of backlog materials.
The company told investors that operational and engineering efficiencies have been introduced to the elution plant at Goldplat Recovery (GPL) in South Africa, which is now eluting three tonnes of material per day, compared to two tonnes per day previously.
Capacity for elution – the process of extracting one material from another – at GPL is in the process of being increased after the company purchased a plant facility from DRDGOLD and shipped it to Johannesburg.
The first of two four-tonne columns are expected to be installed at GPL by October, which should increase capacity to eight tonnes per day. The second four-tonne column is planned to be shipped to Gold Recovery Ghana (GRG) and the third thereafter is to be installed at GPL in South Africa.
The company’s GRG unit, meanwhile, is once again receiving new material for processing, enabling the division to return to “business as usual”.
Gerard Kisbey-Green hailed the progress the company had made since he took over as chief executive in February 2015, and said the Goldplat team has worked hard on finding alternative ways to progress backlogged material and reduce the company’s dependence on Rand Refinery.
“Numerous other improvement initiatives, such as a new wash-plant, new mill, tailings facility upgrades and extensions, to name a few, are all progressing very well and Goldplat will report on further progress of these initiatives in the near future. As a consequence of the steps we have taken and the initiatives we are implementing, I am confident with the outlook for all areas of our business and look forward to keeping the market updated on our progress going forward," Kisbey-Green said.
“By increasing internal elution capacity GDP reduces its reliance on third party processors such as Rand Refinery to produce bullion, which we believe is a positive decision,” observed VSA Capital.
“The recent weakness in the stock has followed the announcement that having signed an LOI [letter of intent] for the acquisition of a private gold exploration company talks have been discontinued; however, we believe that today’s update demonstrating the continued turnaround at the core operations should provide support,” the broker added.
Shares in Goldplat were up 13.3% at 2.125p in late morning trading.