Goldplat (LON:GDP)
Goldplat (LON:GDP) has announced that it has received a renewed license from the Ghanaian Government to purchase and deal in gold. The new license is valid for three years and its receipt was expected given GDP’s long operating track record in the region.
The terms of the new license include a 5% royalty on all minerals and a commitment to install an additional elution plant as previously announced. The timeframe stipulated in the license agreement is that the plant should be commissioned by June 30 2018, in line with our expectations. The additional capacity will enable GDP to progress with its strategy of sourcing additional feedstock from overseas and expand the group’s gold output.
The receipt of the license enables a small inventory of by-products which require further processing outside of Ghana to be shipped which will positively impact earnings, most likely, in H2 FY 2017. Despite the recent weakness in the gold price, the shares have remained supported and within their recent trading range and we continue to expect the turnaround at Kilimapesa to support earnings in FY 2017.
We reiterate our Buy recommendation and target price of 11.2p/sh.