Process of change excites Goldplat

South Africa-based Goldplat, which recently celebrated a 79 per cent increase in annual pre-tax profits to £3.4 million, is an AIM mining company with a difference.

Chaired by entrepreneurial sector financial veteran Brian Moritz (former luminary of accountant Grant Thornton and now a serial mining company director), Goldplat produces gold by processing bullion-bearing by-products from the mining operations of other companies, as well as looking for gold in its own right.

The company hoisted turnover 80 per cent to £19.6 million in the year to June, with its gold recovery plants increasing output 31 per cent to 28,185 oz at a time of continuing strength in the gold price. Chief executive officer Demetri Manolis stresses a 48 per cent increase in operating profits to £3 million as a fairer performance measure than turnover, which can be lumpy with uneven reprocessing deal flow.

Only the other day, Manolis and Moritz had another reason to cheer, when one of Goldplat’s own projects, Nyleme in the West African state of Burkina Faso, revealed a 61 per cent increase in estimated resources to 93,589 oz at a modest grade of 2.06 grammes of gold per tonne of ore.

The company said it had discovered four new mineralised zones in the project and Manolis declared that Goldplat expected to increase the new resource figure ‘significantly’ by implementing its planned development programme.

During 2010-11, the company renegotiated several recovery contracts in South Africa and won new ones with major mining groups AngloGold Ashanti, Simmer & Jack and others, adding DRD Gold after the financial year-end. In Ghana, the company’s recovery operations thrived, with new contracts won and gold production boosted 138 per cent to 9,995 oz.

Manolis says Goldplat has ‘definite plans’ to expand its processing operations in Ghana, Mali and Burkina Faso, though he says the market in South Africa, where the company is ‘well established’, is looking mature.

For that reason, and because (in his exasperated opinion) the City does not understand the complicated processing and recovery business, Goldplat’s primary focus in the future will be on exploration and mining, aided by cash flow from the other business.

On the mining front, Manolis declares that the company has set itself the target of establishing a formal gold resource estimate of one million by the end of its current financial year in June next year.

With luck, half of that will be attributable to Goldplat’s Kilimapesa gold project in Kenya, where it says the aim is to double annual gold production from 5,000 oz to 10,000 oz within 12 months of receiving its mining licence (which Manolis expects shortly) and to increase the current resource estimate there of 129,000 oz at a fairly low grade of 2.44 grammes of gold per tonne of ore towards the 500,000 oz mark.

Drilling starts soon at the Banka gold project in Ghana. Goldplat paid £1 million for the project and Manolis argues that there is ‘significant potential’ to upgrade Banka’s present formal resource estimate of 262,107 oz.

Goldplat, which raised £5.5 million in December at 10p, ended June with £3.1 million cash. Floated at 7p in 2006, the narrowly held shares, which hit 14.25p during the past year, now trade at 11.5p, at which they value the company at £19.2 million.

There is little immediate prospect of a dividend, since the company’s present policy is to plough cash back into expansion. However, with encouraging medium- to longer-term prospects, the shares offer growth potential for the bold.