Goldplat plc, (LON:GDP) the AIM quoted gold producer with two market-leading, international gold recovery businesses in South Africa and Ghana, and primary gold mining interests, including the Kilimapesa Gold Mine in Kenya, has today provided an operational update.
Changes to the South African Mining Charter
On 15 June, 2017 the Broad Based Socio-Economic Empowerment Charter for the South African mining and minerals industry, 2017, (the ‘2017 Charter’) was announced and gazetted in South Africa. The 2017 Charter aims to introduce far-reaching, new, and in some cases, radical measures and requirements on the industry. Goldplat Recovery (Pty) Limited (‘GPR’) is compliant with the preceding Charter, and if the 2017 Charter is implemented, certain changes will be required to maintain compliance, primarily in respect of: (i) the increased mandatory Black Economic Empowerment shareholding which is currently set at 26%, but is proposed to be increased to 30%, and (ii) in the required make-up of management demographics. The Chamber of Mines of South Africa has publicly rejected the unilateral development and imposition of the 2017 Charter and plans to take legal action on behalf of the industry to interdict the implementation of the 2017 Charter on a number of grounds. Goldplat and GPR will monitor this issue and will keep shareholders informed as to progress and the possible impact on the Company as the process unfolds.
Kilimapesa new processing facility installation and commissioning
Installation of Stage Two of the new processing plant at the Company’s Kilimapesa Gold Mine in Kenya (‘Kilimapesa’) was completed in mid-June 2017. This comprised a new crusher circuit and three additional leach tanks. Although installation was slightly delayed due to difficulties getting certain steelwork and electrical supplies to the site, the Company is pleased to report that commissioning has begun and is expected to be completed by the end of June 2017. Furthermore, despite the delays, planned mill throughput rate for Stage Two of 120 tonnes per day of ore was achieved during May 2017. This was made possible by treating previously stockpiled fine material which did not require crushing, as well as by the relocation and installation of a spare crusher as a temporary measure.
A strategic decision has been taken to bring forward the switch over to grid power in order to overcome ongoing difficulties with the generators, primarily a result of poor diesel quality. In order to facilitate the financing thereof, an agreement has been reached with the Kenya Power and Lighting Co. Ltd (‘Kenya Power’) to allow payment of the installation cost of approximately US$200,000 to be spread over 12 months. Installation is expected to begin towards the end of June 2017 and is expected to take 6-8 weeks. Major improvements to the supply of grid power have also been completed by Kenya Power making this source far more reliable, both for the old as well as the new plants. This should have a positive impact on costs as fewer switch-overs to diesel back-up power will be required. Once consistent planned production and profitability have been achieved with Stage Two, a decision will be taken regarding the Stage Three expansion. The Board has however approved the installation of the second mill (originally planned for Stage Three), specifically as a standby to mitigate downtime risk.
Ghana elution plant
A complete, second-hand 3-tonne elution plant was recently acquired by the Company’s gold recovery operation in Ghana, Gold Recovery Ghana (‘GRG’), from a producer in South Africa for ZAR 2 million (approximately US$155k). This plant is modular, complete with all ancillary equipment and will more than meet the requirement of the Companies expanding Ghanaian operations. As such, it was deemed a better option than moving an existing 4-tonne plant from GPR to GRG and the purchase of the required ancillary equipment and infrastructure. It is estimated that the final cost of installation will now be in the order of US$1m, compared to the initial estimate of US$2m for the plant from GPR. The acquired elution plant has been dismantled, moved to GPR for refurbishment and is now in the process of being shipped to Ghana. Installation and commissioning is expected to be significantly quicker than per previous plans, with commissioning now planned for the end of December 2017, six months ahead of the milestone date stipulated by the Ghanaian Government in accordance with the Company’s gold licence renewal terms.
South America contract
The Company has been sourcing and shipping material on a regular basis from various individual suppliers in South America since the second half of 2016 and good progress is being made on contract negotiations. The first significant recurring contract was signed recently with initial shipments of 360 tonnes of carbon underway to Ghana and shipments of rubber mill liners being finalised.
Gerard Kisbey-Green, Goldplat Plc CEO commented, “Kilimapesa is now operating profitably and at the increased rates targeted for Stage Two. This, together with continued steady and positive progress in South America, means the overall performance of the Group remains positive and in line with market expectations. Looking closer at South Africa, as we do not expect the new 2017 Charter to have a significant impact on our business, GPR will leave the ongoing negotiation process in the hands of the Chamber of Mines and the larger industry players, and we will continue to focus on issues over which we have more direct control, including continued focus on increasing operational efficiencies and ultimately profitability.”
