Goldplat’s second-quarter profit falls on loadshedding impact

Aim-listed Goldplat has reported a 41% year-on-year drop in operating profit from its two gold recovery operations in South Africa and Ghana, to about £1.38-million for the quarter ended December 31 – the second quarter of its 2023 financial year.

The company reported that its business in Ghana is doing well because it has a consistent supply of materials. It made a profit of just over £1-million in the second quarter, which is slightly higher than the profit recorded for the second quarter of the prior financial year.

However, Goldplat’s business in South Africa was affected by power outages implemented by State-owned utility Eskom. Despite this, the company still made an operating profit of £356 000 in the second quarter, but this was significantly lower than the £1.34-million reported for the prior comparable quarter.

“Our solutions have always been flexible . . . and I believe the team will find a way to handle the impact of electricity cuts in South Africa, while reducing their impact on our results,” Goldplat CEO Werner Klingenberg said on February 20.

Electricity cuts have continued into the third quarter and are expected to continue to some extent at least until the end of calendar year 2023. Goldplat said it has been evaluating its options to manage the situation.

“Generating our own electricity through the use of diesel generators or renewable energy sources currently does not prove to be feasible and we will instead focus on easing the bottlenecks created as a result of the reduction in electricity supply and increase output during periods of electricity availability through focussed management and initial capital outlay of less than £50 000,” the company stated.

It added that it would also adjust its processing methods on some material to increase capacity through its plant to limit the impact that this has on production through the incineration units.

Not all of Goldplat’s production circuits have been impacted to the same extent, however, with the company’s by-product circuits having more capacity to deal with supply of material. Regarding the by-products, Goldplat said that it received a large supply of material during December last year, which was processed during December and January. The company expects to see the sales of this material coming through during the third quarter.

Goldplat said that, while it could not predict the level of electricity supply for the rest of the year, should the electricity cuts in South Africa continue at the current level, it believes that it is unlikely the company will be able to meet market expectations for the current financial year. Regardless, the company said it expects to generate operating profits over the next two quarters.

Meanwhile, Goldplat said its application for a pipeline to gold miner DRDGold’s premises was still under evaluation by the authorities. The company had previously stated that it expected to receive approval for the pipeline by June; however, it is uncertain when approval will be granted.

The pipeline, if approved, would allow Goldplat to process tailings storage facility (TSF) materials at DRDGold’s processing facility. The TSF is estimated to contain about 82 000 oz of gold.

Negotiations regarding the terms and conditions of processing the TSF at the DRDGold processing facility are still ongoing and need to be finalised.

Goldplat has also identified and, to an extent, secured material in the Economic Community of West African States (Ecowas). However, the export and processing of these materials remains dependent on approval from government officials.

“We continue our engagement with the governments and mines in Ecowas to agree processes and controls on the export of gold–bearing products and remain encouraged by the value we have identified that we can offer in these countries,” Goldplat said.

Most of the material processed in Ghana during the second quarter was from clients inside the country. However, Goldplat said it had secured a larger consignment out of South America during December and would hopefully see the returns from this during the last two quarters of the current financial period.

“We continue with our expansion into South America on a measured basis and we have identified a location and property, which we are negotiating to procure for less than £100 000,” the company stated.

“We still see opportunity for supply in West Africa and we continue to increase our supplier base in South America, supporting further investment in the region,” Klingenberg said.

The construction of a new TSF started in the second quarter. While Goldplat indicated that it aimed to have this completed by the end of June, some delays may result owing to the local rainy season and additional preparation work required.

During the period under review, Goldplat made a strategic investment of £150 000 to obtain the use of a small spiral plant for its South African gold operations and acquired a 15% shareholding in a fine coal recovery technology company.

Goldplat has an option to invest an additional £1.5-million, which will increase the company’s shareholding in that business to more than 50%. This investment would be used to operationalise the technology through the construction of a fine coal washing plant in Mpumalanga.

“Management is still evaluating this option, which would provide us diversification in our recovery operations into a different commodity, namely coal, of which significant resources are available in South Africa, with opportunities not just for processing but also for environmental rehabilitation,” the company said.

During the second quarter, Goldplat also incurred a capital cost of £253 000 and has estimated that it will require a further £1.5-million during the next 12 to 18 months. This will be spent on repairing and maintaining current operations, as well as on improved lining of the new TSF and improving the environmental impacts of its current processes.

Goldplat’s cash balance was reported at £2.9-million at the end of the second quarter, up from £1.45-million a year prior.

The company still has significant balances invested in inventory and debtors with main exposures to smelters in Europe and South Africa.

“Our aim remains to increase visibility of earnings through becoming a partner to the mining industry, by maintaining and increasing our value offering to clients, improving our environmental management and processes and expanding our processes to increase the types of by-products and waste we can beneficiate and also through identifying and securing previously mined resources,” Klingenberg said.