10th Mar 2014 09:00
LONDON (Alliance News) - Goldplat PLC Monday said its pretax loss widened slightly in its first half as lower revenues due to weaker gold prices and lower grade recoveries hit company finances as expected.
The AIM-listed gold production and recovery company said its pretax loss widened to GBP912,000 in the six months ended December 31, from GBP814,000 in the same period the previous year, as revenues fell 38% to GBP9.6 million from GBP15.5 million in 2012.
Goldplat said its results from operating activities fell to a loss of GBP694,000 from a profit of GBP2.1 million the previous year.
The company announced in February that its operating profit in the current financial year will be "materially" below the profit it reported last year, after its Goldplat Recovery Ltd gold recovery plant in South Africa was hit by lower gold prices and lower grade recoveries during the fiscal first half.
Goldplat said on Monday that it can reduce its risk during the period by adjusting the price of gold-bearing material it purchases for recovery. But this mitigation takes time, and a major part of Goldplat's costs are in processing costs which do not vary with the gold price.
The company said in February that it has implemented a number of initiatives which it believes will result in a stronger trading period in the second half of the financial year and beyond. It has focused on revising by-product procurement contracts and cancelling low grade contracts with existing suppliers.
Goldplat said that smaller sections of the plant, previously run on a single shift system for security reasons, will be run on 24-hour shifts with additional security measures being taken. It also plans to convert the plant to liquid cyanide supply during the second half of the current financial year following positive cost savings in cyanide consumption since October 2013.
The company added that the plant's profitability during the period was hit by the company having to hold operations as it went through the process of accreditation to become a certified Responsible Gold producer in December 2013. Goldplat said that it expects revenues from by-product sources to return to its usual levels in the near term, and the certification should have a significant and positive impact on future contracts, profits and cash flows at the plant.
It said that with the depreciation in the South African rand against the dollar, more streamlined operations and more cost-effective contracts, it expects the operational and trading outlook for the second half of the year to be much stronger, returning to profitability by the year end.
The company also said on Monday that it continues to examine joint venture opportunities to redevelop its Kilimapesa mine in Kenya, subject to proposed Kenyan legislation which will clarify rules for local participation.
The Kilimapesa mine has been operating at reduced levels to limit costs during the period, but Goldplat said it is talking to potential partners to carry certain capital costs for expansion at Kilimapesa.
Kilimapesa has a mineral resource of 8,715,291 tonnes at 2.40 grams per tonne of gold for 671,446 ounces of gold at a cut- off of 1 gram per tonne.
Goldplat shares were up 13% early Monday at 5.65 pence.
By Tom McIvor; [email protected]; @TomMcIvor1
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