Goldplat reports success in Ghana, struggles in South Africa

(Sharecast News) - Goldplat reported a successful second quarter in Ghana on Wednesday, with an operating profit of £1.82m making for a significant increase from £1,03m in the second quarter of the 2023 financial year. The AIM-traded firm said the growth was driven by robust material supplies in the first half of the financial year, and the clearance of inventory accumulated during the previous period's export licence finalisation.

Conversely, South Africa's performance in the quarter continued to be impacted by electricity cuts and reduced by-product supply from mining operations.

Delays at the smelter in Europe from the prior year further affected second-quarter results due to a large quantity of material held in stock, containing a lower-than-estimated gold percentage.

That led to an operating loss of £0.32m for the quarter, compared to a £0.36m operating profit in the second quarter of 2023.

Despite South Africa's setbacks, the combined operating profit for both operations in the quarter reached £1.51m, up from £1,38m a year earlier.

For the half-year period, the combined operating profit was £3.37m, compared to £2.81m in the same period last year.

Key contributors to the second quarter operating results included efforts in Ghana to capitalise on material supplies from various regions, such as Côte d'Ivoire and South America.

Additionally, the commissioning of a lower-grade milling, gravity and flotation circuit in Ghana was aimed to extract value from lower-grade carbon materials.

In South Africa, despite facing electricity cuts and infrastructure challenges, the operation managed to reduce operating days lost to 7% compared to about 23% in prior quarters.

To mitigate electricity risks, the company said it was planning to invest in diesel generators, although delays in shipment could postpone completion to the fourth quarter of the current financial year.

Furthermore, Goldplat said it was aiming to address challenges in South Africa by revising cost elements and focusing on increasing by-product market share.

The commissioning of a new tailings storage facility (TSF) remained a priority, contingent on water use licence approval and evaluation of processing variables.

Looking ahead, the company anticipated an additional £0.5m investment to repair and maintain operations, complete the tailing storage facility, and improve environmental impacts.

Despite challenges, Goldplat's cash balances increased from the first quarter to £1.71m, reflecting resilience amidst operational headwinds.

"This was a bitter-sweet quarter with good results in Ghana alongside losses on estimated gold receivable in South Africa," said chief executive officer Werner Klingenberg.

"I'm confident that the team has implemented the necessary controls to eliminate these losses going forward.

"Ghana continues to benefit from engagements and marketing efforts over the last five years and we aim to build on the momentum into Africa and South America."

Klingenberg said the requirements and approval of the water use licence for installation of the pipeline to DRD Gold remained a major focus for the group.

"We continue to strengthen our relationships, increase market share in a declining gold market in South Africa and leverage our strength and capabilities through partnership into other precious metals and commodities."

At 1211 GMT, shares in Goldplat were down 2.15% at 5.92p.

Reporting by Josh White for Sharecast.com.