 Dear Board of Directors of Goldplat PLC,
Dear Gerard,
I am writing to you as a long-term shareholder who has maintained a position in Goldplat since 2013. While I acknowledge the company's achievements under current management, including significant profit improvements and strengthening of the net cash position under Werner's leadership, I must express serious concerns about several aspects of corporate governance and strategy.
A fundamental issue has been the lack of clear communication regarding the company's prospects and strategic direction. While operational metrics have improved, shareholders have been left without a comprehensive framework to evaluate management's performance and capital allocation decisions. Several investment choices, viewed through a conservative lens, appear to have eroded shareholder value – including what seems to be an excessive price paid for the South African minority stake, investments in generators and the coal venture.
The challenge shareholders face is in establishing reasonable expectations for performance when the company's long-term vision and strategy remain inadequately articulated. While the company has generated significant cash, shareholders have seen little of this reflected in returns. This might be acceptable if retained earnings were generating strong returns, but the evidence for this is questionable at best. What's missing is a clear, measurable set of objectives against which stakeholders can evaluate the Board and Management's performance.
These communication and capital allocation concerns reinforce my belief that we have reached a critical juncture requiring fundamental change. When Goldplat initially listed, the vision was to become a mid-tier mining company. While management has wisely abandoned this strategy, we now face a different challenge: the company's scale makes it increasingly difficult to justify the costs and complexities of maintaining a public listing. The evidence of this structural challenge can be seen in our share price, which despite certain operational improvements, trades below its level from 13 years ago.
I believe it is time for the Board to initiate a comprehensive strategic review focused on finding a suitable acquirer for the company. This would serve several critical objectives:
1. Risk Reduction: Operating in our current jurisdictions carries inherent regulatory and operational risks that would be better managed within a larger organization
2. Cost Synergies: My analysis suggests potential synergies of at least £500,000 through the elimination of listing costs and operational consolidation
3. Shareholder Value: A sale to a strategic buyer would likely better reflect the true value of our assets than the current market capitalization
The status quo of remaining a small, independent public company is becoming increasingly untenable in today's market environment. While I appreciate that change can be difficult, I believe the Board has a fiduciary duty to explore all options that could enhance shareholder value.
Should the Board decide to maintain independence, then at minimum, shareholders deserve:
- A clearly articulated long-term strategy with specific, measurable objectives
- Transparent criteria for capital allocation decisions
- Regular, detailed communication about progress against stated goals
I would welcome the opportunity to discuss these matters in detail with the Board. As a long-term shareholder, my goal is to ensure the best outcome for all stakeholders.
Thank you for your consideration of this matter.
Sincerely, |
Gold at record high. Next report will be much better profit figures |
That article is a reasonable summary from someone looking at the company for the first time. However, they seem to fall for an institutional mindset, which is that you can be purely guided by a broker's note, or that metrics such as PEG matter for a company on a P/E of 3. The unfortunate bit of investing at this market cap level is that you have to do your own work, even if it is simply putting the quarterly results into a spreadsheet. The fortunate part is so few actually do this, so anyone able to do so gains an advantage over those who just read brokers' notes. |
The report from 'Oak Bloke' is I suspect just from a reading of the research report and the AR, rather than any incites from management.
While there is nothing new though he does end up asking the same questions that many of us ask.
The decrease in next year's t/o is due to a remarkable increase in Ghana this year - up from £12m to £43m. I suspect a lot of this is ad hoc, rather than contractual, so they have plucked a lower figure out of th air.
The real problem is in the £1.6m in prefinancing sales. I know that they have lost material because of financing in the past, so it is not something that they can avoid easily.
Hopefully producing gold bars in Ghana would sort this problem, which raises the question of why they haven't done it before. |
Napoleon
Thank you for this - some good some bad some ugly
Highlights that the board of goldplat are just not so very good at communication
They say little explain virtually nothing and keep shareholders in the dark over so much which is crucial to our understanding of the business and its future
Alm |
This turned uo in this a.m.'s emails...
You need to subscribe & get it direct if you want the calculations 'cos cut & paste
won't do it.
"Goldplat GDP - Gold on a plate? Or Fools Gold on a plate?
The Oak Bloke, Jan 19 2025.
Dear reader,
Goldplat (ticker GDP) is a precious metal recovery specialist operating for over 20 years which mines nothing but works with miners to recover metals from their tailings. A “Freddie Dodge” specialist but rather than turning up with his mate Juan (oh), advising on and improving their operation instead Goldplat ships the materials back to its recovery plants in South Africa and Ghana for processing. Its future plan is to add a third plant in Brazil.
Its approach is not dissimilar to Jubilee in some ways, although it is interesting that GDP appears to achieve something similar without vast levels of investment, and of course focuses solely on gold. The reason for this is GDP’s annual production of 37,466 ounces is 1.06 tonnes of gold. Jubilee are processing around 2 million tonnes of chrome concentrate per year by comparison.
GDP works with a wide variety of “wastes” ranging from wood chips to machine grease and uses a tailored processing approach to each feed, and uses a series of interconnected recovery circuits to recover further precious metal from the wastes.
Top Line:
A reader strongly recommended I look at GDP, and for sure it is cheap.
What struck me though when I looked at GDP was its forecast slow growth according to the broker. A P/E of just 2.8 and discount to NAV of ~25% but its profits would stagnate in FY25 (to June 2025). Hmmm. When gold prices are rising? Why might that be? And how accurate is that? That slow growth especially in rising gold prices takes the shine off things - potentially.
Customer (Suppliers of Feed) & Growth
GDP have an expanding breadth of customers across Southern and West Africa, plus are expanding into Brazil. This reduces risk of dependence of too few customers and lumpiness of flow.
It also diversifies from the challenges of power intermittency which has plagued South Africa and associated rising energy costs.
Gold Operations
Ounces. Usually you would head straight to production info and see how many ounces were produced. Very strangely GDP only reveal this in the latest annual report (37,466 ounces for the year) whereas we have to assume perhaps 24,000 ounces (taking the midway of “operations recover between 1,500 ounces and 2,500 ounces monthly) the year before (FY23) and perhaps 28,800 ounces in FY22. This must mean a realised price per ounce of $1,940 and an AISC of $1,597 in 2024, $1,745 and an AISC of $1,436. Explains why GP margin is only 17.7% and hasn’t increased in 2024/2025.
2023 annual report
2024 annual report
So there not nearly as much margin, since the revenue is shared with the customer (who provided the feed) and costs are high because of the processing involved.
There is potential for GDP to expand its PGM recovery (it’s unclear whether there are any since they only announce gold ounces) and it also has a know how for a fine coal recovery process where it says it is not currently the best time to pursue these ideas.
Since mine materials have to transported to either Ghana or South Africa, new sources of feed need to be approved for export, and licences to operate expire - some yearly. GDP’s operations tends to tie up working capital since customers want to be paid far faster than smelters are prepared to pay GDP. You can see working capital getting swallowed up as operations have grown.
It’s also noticeable that margins are declining since 2021 due to higher energy and people costs.
Cashflow:
+ Strong cash generation: GDP generated strong cashflows in FY24 - its P/OCF (price to operating cash flow) is 2.5x and FCF 6x.
Capex:
Ongoing investment appears set to continue via further investment in Ghana and then Brazil. There’s always something to spend the money on. It’s fair to say that GDP appears close to being debt free and there is talk about dividends in 2025 but my assumption is there’s more capex (perhaps £2m a year) to upgrade Ghana to produce Dore Gold and to establish an operation in Brazil.
Compensation & Management:
Director compensation seems reasonable at £420k (inc fees). Management has been delivering on its promises and has a clear and achievable strategy.
Sales:
The 2024 revenue performance is far higher than 2023. This is in part to fewer blackouts in South Africa (aka load shedding), but also due to improved gold prices and growth in the Ghanian operation.
The broker’s view that sales will drop in the year to June 2025 (FY25) to just £48m (from £72.7m) has spooked me somewhat. Why? No explanation is given for this contraction? The gold price is now higher than it was in the year to June 2024. The 1Q25 result appears to show a £14.8m revenue till 30th September by working backwards from the disclosed operating profit. Annualised that would be around £60m turnover. So do they believe the remaining 9 months will deliver just £33.2m? Their guess is in a report dated the 20th December 2024 so a full month after the 1Q25 results so it appears they believe sales will contract by about a 1/3rd in the remaining 9 months (£48m - £14.8m = £33.2m).
Another aspect I’m not comfortable with is sales were £72.69m and 37,466 ounces were produced and sold at $2,076 per ounce. But this doesn’t add up. 37,466 ounces over £72.69m is $1,940 an ounce - $136 per ounce less, or if an average $2,076/ounce is accurate then production must have been 35,014 ounces. I suspect the answer is tied up in minority interests and the like (the Ghana operation is 91% owned by GDP), and/or the reconciliation between their “group” and “company”; reporting. I’m struggling to understand their disclosures, and ultimately why obfuscate your performance?
Cash:
Analysing their cash flows debt is or will be paid down now or in the coming months, leaving just lease liabilities. There is clearly growing operational cash flow, which is a positive sign and despite the forecast drop in sales I’ve made some estimates on what cash flows could look like, assuming a £4m budget to address capex for Ghana and Brazil’s operations.
I suspect that any dividend will not be until later in 2025 but a prospective £1.7m would equate to 1p per share. Assuming a 40% of FCF dividend i.e 0.4p equates to a very decent 5.4% yield. That could grow to a 10%+ yield with rising cash flows in time.
Balance Sheet
The nature of the business, and one to get your head around is that your customers (mine owners) are the suppliers and want generous payment terms for their materials.
The smelters are a supplier but you supply the processed ore for smelting and they offer slow payment terms.
So the nature of this business is lots of working capital gets tied up and there’s not an easy solution here where customers are typically very large, smelters are also large and GDP is the piggy in the middle.
Having said that the group balance sheet is solid, and feeds in to the company balance sheet where net assets are 9.6p per share (so at a discount to the share price by 2.2p).
Other upsides:
A final aspect is the MRE from 2016 where today about 2.3 million tonnes of tailings contain 82koz plus an estimated 50% more? of gold plus silver and uranium at 1.5g/t (?). Building a second tailings storage has now been completed and is a stepping stone towards processing the older tailings.
Conclusion:
A £12m market cap at a discount and delivering a £4.3m profit after tax should be a dream come true. But how much could and one day will translate into returns for its owners? After you strip out minority interests, and try to account for production that doesn’t appear to quite add up to the revenue, a high AISC, a fairly heavily discounted gold price (so a limited net margin and upside to gold prices), ongoing capex requirements, quite a bit of past bad luck, a PEG of 2.66, geographic risk and crucially the prospect of a FY25 33% sales drop according to the broker’s estimate for absolutely no apparent reason…. an uneasy feeling prevails.
Perhaps I’m overthinking this one and just need to get comfortable. I’ll be paying close attention to the interims and the truth of the broker forecast.
Regards, The Oak Bloke." |
Yes Its gone quiet on the mercury front.
They did have a place on the committee which was meant to be sorting the issue. They'd also bought a mobile unit for testinf various procedures.
They had funding froma UN agency but I don't think they have made much progress on the illegal miners, so is perhaps fairly pointless trying to clean it up.
I can understand why they may be stumm about it, but a useful iron in the fire. |
The production of dore bars in Ghana is almost certainly driven by the government preference in the short term. I think the reason they haven't done it before is that it requires capital upfront, and the stated shareholder preference has been for capital returns, not further capital investment. Their hand has been rather forced on this, but I do expect it to be positive for the business once the hump of capital investment and working capital works its way through the system.
Process changes are not without risk, either. They will be managing construction in challenging environments, perhaps disruption to production, as well as the different sourcing strategy and probably the increased need for security on site and for transportation (gold bars are a lot more desirable to steal than a truckload of concentrate with only a few places in the world that will refine it into gold!) So I can see why a perhaps overly cautious management were not rushing to do this until the government twisted their arm.
Keeping the government sweet is vital for their business as they currently enjoy very favourable tax rates in Ghana. There is also the possibility that they may get asked to clean up the waste from artisanal mining that we all know needs doing but has been a bit of a political hot potato. The possibility of free gold-bearing material for GRG and turning land that is currently poisoning drinking water into gold in-country for the Government is surely a win-win that may prove difficult to ignore. |
DS
The only thing that I may disagree with is the gold bars in Ghana. It seems a no brainer, but of course we haven't been given the numbers.
If it is such a no brainer 2 questions occur to me;
1. Why haven't they done it before, and do it in SA?
2. Why haven't they made more of it enhancing profitability?
IIRC GDP spent £1.6m on financing of material, so anything that reduces that has to be welcome. |
well said Dangers. |
It seems like we go around in circles on this, so let me reiterate:
1. All the signs are that Martin Ooi is an investor and has no desire to run this, nor the funds or willingness to take this private, at any price.
2. When you own close to 30%, there is no way he's selling in the market, which means for him to generate a return he either needs to receive dividends or engineer a takeover.
3. He can block a takeover, so this is only happening at a valuation that he is happy with. Probably needs 20-30p for him to consider selling now, given that he knows the cash generation and the potential value of the TSF, even if it has been slow going here.
4. MO almost certainly wants to receive a large and ongoing dividend stream, but when you have a big chunk of your wealth tied up in an investment, you want it to be run extremely conservatively. There is no way you risk killing the golden goose for a couple of golden eggs in the short term. Management have convinced him that in the short term, capital has been better off retained in order to make sure the business can adapt to a changing industry landscape.
5. Perhaps due to the conservatism, or because they are just not very proactive, management has made a number of missteps. For example, they seem to have bought generators in the midst of an energy crisis, believed a supplier who told them they could be delivered quickly, and that supplier has actually delivered them as the crisis ended.
6. With hindsight, this sort of thing may be poor decision-making, but none of this is because management is intentionally holding back dividends and wants to pay themselves salaries forever at the expense of shareholders. This is one of the things that MO's holding actually guarantees, and now he sits on the board, he presumably sees the cash flow projections. If he thought they could have paid a large sustainable dividend a while back he would have certainly made it happen.
6. Retaining capital to produce more gold bars instead of concentrate in Ghana is likely a very good move that frees up capital in the long term, even if it has a short-term cost. It is things like this that MO & the board see as maximising the NPV of the dividends that we will receive and minimising the risk in the business.
7. Other shareholders can gnash their teeth and try to force them to pay a dividend regardless of whether it is the best long-term use of capital, but at the end of the day, if MO says he'd rather they protected the long-term health of the business and maximise the dividends received over the long-term, they are going to listen and implement what MO wants.
I say all this as a long-term holder who thinks a large and sustainable dividend should be possible to pay soon. However, given the underlying P/E is 2-3 at the moment, I'd also like to see a pretty big buyback implemented first. |
Legitimate concern is absolutely part of the process of deciding when to buy and sell...for me the multiples involved in the TSF, Martin's commitment and the progress made so far justify my position, but there are no certainties for sure. |
Agree Shill, moaning does not achieve anything. Legitimate concern does. The TSF is a game changer, but you dont want to believe it until you see it with the track record of GDP. However, it is worth waiting for it for some more time.... |
see Pog I take a different view post Martin- there has been massive progress on the old and new TSF since Werner came in- what was once truly a pipe dream is now very much a likelihood , with timing partly out of the company's hands as above. But as mentioned before, moaning will achieve absolutely nothing, the choice is come along for the ride with Martin or sell. |
Shill, yes could be that. But, with the track record of GDP you kind of expect failure in everything they do. The only thing consistent with GDP is banana skins, for more than 12 years... cant be all bad luck.... |
Thanks Lowtrawler. Can we trust MO or will he try to shaft us all? |
Or, tank the share price and purchase the whole for a song just before the TSF gets unleashed. |
or Pog, far more plausible to me, the Landowners where the pipe to DRD crosses have been demanding what Martin considers too much and hence the delays in both the application and the terms with DRD. Given Martin bought in when Gold was sub $1,600, he would have to be extremely incompetent to not be able to profit substantially now Gold is over $1,000 higher, time will tell. |
If I am Martin Oii and have invested a substantial amount in GDP, owning almost 30% I would consider the following:
Is my investment long or short term (medium) - can not be anything but long-term based on how he has acted so far. Thus;
Is he confident the TFS will materialize? If yes, just stick with it and push management to deliver!
If no, will the underlying business generate good profits?
If yes, try to get an acceptable dividend, or a byer to realize an exit.
If no, find a way to exit without tanking the share price.
What I see is that he must think the TFS is achievable but has been poor to push management. Alternatively, he could also be incompetent... |
Well it appears that contrary to opinion Martin Oii must have some motive or he is a fool. I assumed that he would represent the shareholders rather than the useless longterm scallywags. Who knows what is going on? |
Pog1234, I think the fundamental fault is they don't act like a listed company. They act as if it is owner managed - everything is fine so long as the salaries keep being paid and they don't go out of business. Hence, they prioritise activities that keep everyone occupied and busy rather than those which provide a return for shareholders.
The TSF is a hidden asset which they see no reason to accelerate into money.
New business ventures, such as coal recovery, are important because they keep the workforce active rather than making cutbacks.
This type of problem is very common on AIM and only corrected if shareholders become active. I don't understand what Martin is doing behind the scenes. As our major shareholder, you would have expected him to quickly address these issues and for us to have already seen the benefits. Ultimately, we need GDP to acknowledge and act like shareholders are every bit as important as the employees and need to be rewarded. |
MF, Alm, LT et al, could not agree more. This is getting ridiculouos. There is obviously a huge underlying value in GDP that is not reflected in the share price (including a huge cashflow for dividends). The lack of progress speaks volumes imho, the management does not seem confident that it will materialise due to:
Poor communication - little progress
Lack of planning for dividends
The mgmt is not confident in the current cashflow being sustainable
Just my 5 cents... |
Well said Lowtrawler. The plain inefficiency and lying is hard to swallow. Yes the latest figures look good but of no real benefit to shareholders. At least a special dividend would have been warranted. As for the long expected news re the TSF this is shocking and makes me wonder why I still own any holding at all. How long do we have to wait? |
Low -will consider
Alm |
alm2, absent of surprises, we are going to stay in the trading range until at least Q4 this year. I take it you are not interested in pursuing the requisition of a resolution?
It is not something I had intended to support until post 2024/25 year end but being lied to with the Q1 update telling us they expected all TSF approvals by June and the annual accounts revealing they hadn't even submitted year long applications was a final straw. If this were to be pursued, you would be the main party due to your sizeable holding and so would need to determine the content of the resolution. Apart from MF, nobody else appears to be interested and so a bit of effort would need to go into generating that interest. |
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
Hot Features
Premium
