Goldplat Share Discussion Threads

[dangersimpson2] 27/9/2016 10:35

My guess for the change in production profile is it's to do with taking the RR silver feedstock which is different material than they normally process, although when in the year that actually went in is not defined. The other factor that has a big impact is grade. With low grade resources the sheer volume of stuff you can put through the crusher, incinerator, shot blast facility is the bottle-neck. Increasing the input grade has a big impact on production when the process is primary stage limited.

In terms of going back to mining I think the key is that they have a competitive advantage. That could be process or metallurgy knowledge from the recovery ops or Kili. What I won't support is them going out of their core competency again purely to pursue growth. Often the best times to buy assets is at the end of the downside of the underlying commodity cycle - you have to be counter-cyclical tho and save enough cash in the good times to take advantage.

Also raising debt, even against a known production profile with hedged pricing, adds risk to the business. If GDP had debt when they had the RR issues they wouldn't have survived. So again I would would only support this if there was a very clear definition of the benefits from faster capex implementation.

[sea7] 27/9/2016 09:12

Ghana got its gold licence renewed, so we just need the EPA licences and some clarity over the timetable for the elution column.

[sea7] 27/9/2016 09:09

Over the next few months I am expecting the:-

NEC approval and appointment
announcement of S american partners
Kili moving into 1st stage production at new plant - milling before end december 2016,
then getting the crushing front end up and running early next year.
resolution with rand refinery.

The Q1 update in the next few weeks, should give us a much clearer picture of what we can expect as a normal run rate, without the rand contract clouding the view.

The one difference between Gerard and Demetri is that Gerard is expanding the recovery side as well as the mining side, however, I do not expect him to make the same mistakes.

I see that Ghana had £4.4m of precious metals purchases from GPL, which is a significant uplift from the £1.8m last year. These purchases are not shown in the
table of production.

The CIL plant, is shown as a sale to kili at £225k. It does say "sale of asset" so I presume they mean the CIL plant.

[kimboy2] 27/9/2016 08:50

I am finding GDP very difficult to predict. The virtual doubling of capacity at SA seems to have come out of nowhere (was anyone aware of this), yet despite production going up 2.5X in the last quarter SA profits fell 30%.

If production in SA is going to be 36-40kozs, which it is apparently, then a profit of $200/oz doesn't seem outrageous. Anyway only a month to wait till the next quarter which will give us a better idea.

The question of funding is interesting. Funds are basically either raised from debt or equity. He seems to have ruled out an equity raise at GDP level, though they have been trying to JV Kili.

I was surprised at the suggestion that the company should be looking to mine 40kozs pa. I thought we had been there. he did suggest that good opportunities were difficult to find so perhaps it won't happen.

The lesson of the Manolis years is to make sure that the bread and butter is bulletproof, and then gamble the profits on mining adventures if you have to.

I see that SA also had a funding agreement similar to Ghana earlier. I think that once they get the stock dam is going they could in effect mortgage that income to raise a cash sum if they wanted. £5m would take 3 -4 years to pay back.

What I am hoping for this year in terms of profits is;
SA £6m
Ghana £1m
Kili £0

That would work out at an eps 2p per share.

[sea7] 27/9/2016 07:48

With all the work going on at kili, the new mining bill in place and the amount of equity to cede to the government entity known, the attractiveness of the kili project will have become far more appealing to other players in the sector. The likelyhood of a j/v will get more of a boost when the project arrives at operational profitability.

I knew from the moment the kenyan authorities announced their initial plan to make foreign companies cede 35% of equity to locals back in October 2012 that the project was effectively "dead in the water" until some clarity over goldplats position regarding kili was known.

We are four years down the line from this and still some way off making the project work, although it does seem like we are closer than before.

Gerard is keen to explore other mining opportunities as well as additional recovery plans, which is in line with goldplats stated strategy in the listing document.

Based on the new teams track record to date, I am fairly confident of the correct funding solutions being presented.

[dangersimpson2] 26/9/2016 23:56

Kilimepesa has been a bit of a millstone tbh. It's been important to get it to a state where it is cashflow positive so that it isn't a risk to the group if the gold price turns down at any point. But it isn't necessarily the capex that generates the highest return or shortest payback. So I can sense a bit of frustration that they haven't been able to spend as much as they would have liked on the recovery operations. But we are where we are and successful investments are never made by dwelling on the past.

Given the comments about not being willing to raise equity anywhere near the current price but a desire to bolster the balance sheet to invest more heavily in the quick pay-back recovery operations I think they view an equity investment in the Kilimepesa subsidiary as the preferred option. The deal with Ashanti shows there are companies out there that may be willing to do a deal on explo/early production assets.

The other option would be debt/convertible/preferred stock but all of those have a downside whereas diluting the Kilimepesa interest only limits the upside form a successful turnaround. It may be wishful thinking and in reality they may have to move more slowly with capex purely from internal generated cashflow. The good news is that we know there is more to come operationally from the recovery operations and TSF when that capital is available to be directed that way.

[discodave4] 26/9/2016 20:33

Thanks S7, only listened to the stocktube interview (cannot recall payables).Mixed messages though S7, with reference to POG:"We don't need it to stay where it is. At the beginning of the year [the price] was a lot lower than it is now, and we were making money," He also said:"It'd be very nice if it stays where it is because it allows us to finance our projects internally".DD

[sea7] 26/9/2016 20:24

Gerard mentions in the interviews that the net cash position at year end does contain a lot of payables, meaning a lot of it has been paid out since.

The current cash generation is being spent on non cash generative capex in kenya and he feels that this is the wrong way round. So it seems to me that they want to bolster the balance sheet to use for such capex and retain most of the cash generated for other things.

This does indicate that kili may end up being a go it alone venture for the foreseeable future, the TSF project, the 2nd elution column and expansion in ghana, the third elution column in SA and the possible south american plant all need funding. If they can bolster the balance sheet one way or another, then a lot of this capex could be brought forward and the balance sheet would not be under so much pressure all the time.

[discodave4] 26/9/2016 20:12

Thanks S7,Just wondering why they feel that they need additional capital funding (debt) when they have generated at least £3.3m internally and only spent c £1.3m. Looks like a lot more is going to be spent on Kili, and / or an acquisition perhaps in Brazil?.Net off bad debt (RR) and poor sterling and pbt would have been only £500k..........just saying!.KB2,Can you explain why the RR dispute was not contractual (your point 9).DD

[sea7] 26/9/2016 19:31

In both the interviews Gerard alludes to the capital structure of the group and the fact that cash generation is primarily in South Africa, which is funding kili. He indicates that the capital structure needs looking at and they may look to strengthen the group through some sort of financing. He did say that at this share price they would not look at equity issue, so other options are being investigated.

He said that he would like to reward the shareholders that bought in at 10p-12p in the same way that those of us who bought in at 1.8p have been. He would be happier then.

It will be interesting to see what they decide to do on this point

[sea7] 26/9/2016 19:09

Another interview with Gerard

[kimboy2] 26/9/2016 16:22

VSA upped their target price from 7.1 to 11.1p. Their previous analysis was ridiculously conservative, let's hope this is as well.

I suspect that Nick Gomersall is still selling and keeping a lid on the share price

Thought the share price Angel comments were very amusing.

[kimboy2] 26/9/2016 15:12

Well clearly a good report though I was a bit disappointed with the numbers as I make £600k of the profit in H2/16 was from finance which I tend to treat as irrelevant to the operating performance.

A few points that strike me;

1. I make the profit at the plants in Q4/16 as;
SA £0.57m
Ghana -£0.21m
Kili -£0.21m

I am not certain of these numbers but what I have got so far.

2. I als omake SA production 1kozs more than in the trading update.

3. SA made £0.845m in Q3/16 with production of 4,864ozs, but only £0.57m with production of 12,083ozs. Not sure why.

4. Gross profit was 19% of turnover in H2/16

5. Brazil seems to be the country and a new partner signed but no details. Thinking of a plant over there. The partner said to be in a similar line of business.

6. I had expected Kili to break even in the period which clearly was not the case. I think one problem was that the artisanal material from outside the area was a much higher grade.

7. The CIL at kili confirmed at 2,500tpm. Expected to be running this half and will eliminate losses. Not sure where material will be coming from but it sounds as though most from own mine.

8. Seems as though stock dam has been delayed by trying to get use of open pit next to plant. It is apparently the best economic solution so clearly transporting the material is a significant cost.

9. The RR dispute is because RR thought they were going to get more precious metal than materialised rather than some sort of contractual dispute.

10. South Africa entered into a pre payment agreement as well as Ghana

11. Seems to me if they are going to source material for Ghana and build an elution column they will need to build processing capacity.

12. Potential to procure tailings in Kenya look interesting.

13. Vat problem in UK was resolved satisfactorily.

14. Notice that inventories are up despite the additional gold sales. Presumably the 'gold in process' has been replaced by increase in 'raw materials'.

15. Also notice a big increase in trade payables. Presumably this is due accrued expenses from material on hand, which is basically stocks they haven't started work on yet which are owned by a client. Seems good news that they have good stocks of material to feed the plant.

16. It looks as though they have started PGMs gradually.

Anyway a good set of results with lots of developments still to come.

[sea7] 26/9/2016 13:50

www.proactiveinvestors.co.uk/companies/stocktube/6039/goldplat-ceo-we-dont-need-high-gold-price-to-make-money-6039.html

Interview with Gerard.

[sea7] 26/9/2016 13:02

DS,

It just goes to show that the results were that good they had to resort to bitter sideways comments, where in reality they did not have to comment on goldplat at all.

Their final comment about the south african industry in decline and the sourcing of material is a weak attempt at putting a dampner on what is a great set of results, considering the last few years of turmoil that the company has been through.

[dangersimpson2] 26/9/2016 12:58

s7,

Yeah the use of adjectives in the share price Angel report is hilarious. The 80-year old retiring Brian Moritz is 'displaced'!

I think they shoot themselves in the foot with that sort of report. Would you hire them to represent your company on the back of that sort of behavior?

[rolo7] 26/9/2016 12:37

Q4 numbers rough attempt,
SA 600k£
GU 0k£
Ken -110k$ loss
Sa down 200k£ on q3, Gu -156k£, ken up 50k£
so 500k q4 =2m for next year add back reduced kenya losses looks okay.

[sea7] 26/9/2016 12:08

sp angel view....you can sense the bitterness from them, since they were replaced.

Goldplat* (LON:GDP) 6.25 pence, Mkt Cap £10.5m – Results improve as Goldplat recovers from disastrous year
• Goldplat report year end results for the year to 30 June 2016 adding to information released at end August.
• The team managed to turn the business around from what was a disastrous 2015 to show a modest £1.4m post-tax profit for the year vs a loss of £0.9m a year earlier.
• Admin expenses rose to £1.836m vs £1.679m indicating less focus in this area than some others.
• Gold sales rose to 37,666oz of gold from 30,524oz a year ago with the gold recovery operations producing 35,661oz vs 28,246 yoy.
• Operating profits rose to £1.172m from £0.711m yoy and Pre-tax profits rose to £1.942m vs £0.796m.
• The Gold Recovery plant in Ghana reports an operational profit of £0.437m for the year vs a loss of £641,000 yoy
• The very small, loss making Kilimapesa gold mine in Kenya lost £0.711m for the year vs a loss of £753,000.
• Goldplat has improved its cash position to £2.056m from £0.630m a year earlier
• New chairman Matthew Robinson has taken over from displaced Brian Moritz.
Conclusion: Goldplat is recovering from a disasterous 2015. The group is still trying to generate a profit at its only gold mine at Kilimapesa in Kenya but has returned to profit at its gold recovery plant in Ghana.
The slow demise of the South African gold mining industry may make the sourcing of gold bearing waste materials, such as wooden packs, increasingly difficult.
*SP Angel analysts have visited the Goldplat’s recycling plant at Benoni in Johannesburg

www.proactiveinvestors.co.uk/columns/sp-angel/26120/goldplat-highland-gold-kodal-minerals-gemfields-kefi-minerals-savannah-resources-solgold-26120.html

[russman] 26/9/2016 10:52

I cannot see the provision for the Rand doubtful debt in the accounts.

[dangersimpson2] 26/9/2016 10:43

I wonder if we will start to get some more interest here following these results since common investment metrics like P/E, EV/EBIT, P/FCF, net cash etc. now look very good value on historic values.

Those who do the Q4 maths and maybe even a broker or two will also be able to infer the further progress next year that will improve these metrics further on a forward looking basis.

[discodave4] 26/9/2016 09:33

Just read over again, looks like the fall in sterling has added £734k to pbt. DD

[discodave4] 26/9/2016 09:18

Looks good (phew!). Still feel the RR issue will hold this back until its resolved, the disputed amount has increased £50k already! (ok possibly exchange rate movement?).There's no buy order in the background IMV, people selling because it's fair value:DiscoDave4 - 20 Sep 2016 - 01:42 - 2782 of 2812 - 0Rev approximately £20m, pbt around £2m less RR debt plus costs say £1.35m, margin 6.7%, eps 0.8p?, PE 6.3, share price 5p.2011 revenue £19.6m, pbt £3.4m, margin 17.3%, share price 12p, eps 1.9p, PE 6.3.DD

[michaelfenton] 26/9/2016 08:57

Level of sales indicate a largish BUY order?

[sea7] 26/9/2016 08:26

The dispute at rand appears to be over the processing costs, from the results...

The value of the gold equivalent ounces produced from the silver sulphide
toll-treatment project was not recognised as revenue, but only the fees
received for processing, of which approximately GBP679,000 is now being
disputed by Rand Refinery.

Good to see the dispute over vat with the uk HMRC has been withdrawn and payments are
being received again.

[mrmoneybags123] 26/9/2016 08:25

Why are people taking profit so early..?