An increase in gold prices has buoyed Wishbone Gold PLC (LON:WSBN), which has moved into precious metal trading, since the end of 2015, it told investors.
The group announced the paper acquisition of Precious Metals International (PMI), which has a precious metal and gem trading licence to operate in the UAE, in February and its wholly owned subsidiary is Black Sand FZE, which has a gold, precious metals and gem trading licence.
Gold prices gained more than 16% in the first four months of 2016 and tested the US$1,300 per ounce in May 2016, the firm noted.
"Though they have fallen back a little, the upward trend remains as China, India and Russia continue to shore up reserves.
"Margins in the trading business are essentially fixed so a rise in the gold price leads to a corresponding increase in profitability for the trading.
"This offers Wishbone Gold plc an increasingly optimistic outlook, as the dual approach of exploration and trading in precious metals offers additional options in terms of achieving profitability and cash flow," it said.
In addition, this month it struck a two year US$3mln loan deal with Sanderson Capital to support the gold trading business.
The loss before tax for the year was US$1.12mln compared to a loss of US$2.5mln in 2014.
Chairman Richard Poulden added that Wishbone had continued its exploration in Australia during the year and in particular benefited on its main properties of White Mountains and Wishbone II from the Industry Priorities Initiative of the Future Resources Program - a Queensland government funded piece of work with a brief of correcting existing geological mapping and comparing like systems.