Goldplat (LON:GDP)
Goldplat (LON:GDP) has announced an update demonstrating robust operational progress as well as the potential impacts from the recently proposed changes to the South African Mining Charter. The notable changes that GDP would need to make relate to BEE ownership and board quotas. Currently the required BEE stake, with which GDP is compliant, is 26%. However, the new proposals would increase the stake to 30%. The Chamber of Mines of South Africa had not been consulted on the proposed changes and given the controversial nature of the new Charter; it is taking legal action against the Government to prevent its implementation. This is likely to be a drawn out process.
Operationally, GDP has announced that Kilimapesa is now running profitably, this is a major step for the company and one we expect to unlock significant value in the coming years. Installation of Stage Two at Kilimapesa was completed in mid-June and commissioning of the new crusher and leach tanks should be completed by the end of the month. Target Stage 2 run rate using stockpiled ore was achieved in May 2017 at 120tpd. GDP has found a solution to switch to grid power earlier than planned which should have a positive impact on costs and once production is stabilised on this basis Stage 3 can be commenced.
GDP has altered its plans for adding an elution plant in Ghana, saving US$1m of the original US$2m budgeted. This has been achieved by purchasing a second hand plant rather than moving an existing one from the South African operations. This will also bring forward the planned completion date.
In South America, GDP has reported signing its first recurring contract demonstrating clear positive progress as the company looks to diversify and expand its network of suppliers of processing material.
We reiterate our Buy recommendation and 12.2p/sh. target price.