Goldplat Share Discussion Threads

[wigwammer] 29/1/2017 14:32

I bought under 3p and it went up a lot.Just saying.

[sea7] 29/1/2017 12:46

Yes, they will want to prove it up first. As you say, costs will be skewed by the artisanal material, which will be to the benefit of the mine.

[kimboy2] 29/1/2017 12:32

Yes I remember reading that the cash cost of kili was $1,050 and thinking it was dead in the water. Once you get a full AISC it wouldn't make a profit with a long term gold price.

However the last we heard, which was in one of those live events, the cash cost would be in the lower quartile. I think that is around the $650/oz mark.

A $650/oz cost makes each ton of ore cost $52.

The test of this will come with the new CIL. It was originally planned just to use its own ore which would produce 2,300 ozs pa.

I suspect taht before phase 2 gets the go ahead they will want to prove the cost estimates are correct.

The costs will be slightly confused because of course they are getting some artisanal material from Migori, and this will have a much higher grade.

[sea7] 29/1/2017 12:03

Incidentally,

SP Angel had this to say in that brokers note of four years ago...

Valuation and Financials
 We value Goldplat on a sum of the parts basis – applying an EV/EBITDA
multiple of 5x for the gold recovery business which on a projected EBITDA of
£5.6x puts a valuation on recovery of £28m – this accounts for 80% of the
value of the business.
 The Gold Production business has been downgraded with a £2.5 m value for
Kilimapesa based on 5,000 oz of production at a cash cost of $1,050/oz over
15 years based on long term gold prices of $1,250/oz.
 The other exploration assets are valued at £1m

[sea7] 29/1/2017 12:01

Back in 2013 inventory was shown as (at end june 2013)

consumable stores £1.725m
raw materials £957k
precious metals on hand and in process £1.755m

giving a total of £4.437m

In the brokers note of 8th march 2013 share price angel stated...

Stockpiles provide a cushion to operations amounting to 7 years of installed
capacity

Around 786 kg of gold (around 28,000 oz) is contained in materials on site
giving around several years of potential inventory. This includes wood chips
of 60,000t equivalent to 500kg of gold at 8g/t

The company have sufficient tailings material to contribute to at least five
years of growth without further purchases.

[kimboy2] 29/1/2017 11:47

I think they have done well with Ghana where, as you say, 90% of the business was wiped out by the authorities. The tolling and CIL used to make well over £2m pa. Once the elution column is up they will be making well over £2m pa again.

There was talk of reinstating the tolling at one stage but that seems to have disappeared. I never thought it likely to be a long term trade.

Another thing we don't hear much about is stockpiles of material. These were said to be about 30koxs of woodchip at one time. The cost of the inventories has gone down. This could be because they have paid less, or because there is less of it.

ISTR there was something about the increasing inventories recently as a result of the efforts on sourcing.

[sea7] 29/1/2017 10:50

Looking back over those four years we see that, up until september 2012 things appeared to be going great, then demetri suddenly left and the kenyan authorities gazetted the new local ownership rules in the october, one month after demetri stepped down.

The business had to contend with board room battles, the collapse of the gold price in 2013, which exposed the flaws in the contractual arrangements and purchasing of material, the strikes, fires and upgrade interruptions at rand refinery, which prevented concentrate being processed and the realisation the kili had to go on care and maintenance with numerous staff retrenched and the acceptance that the other exploration projects were not going anywhere.

The troubles were amplified when the ghana authorities demanded a cessation of the CIL plant in ghana, citing environmental issues, a fine was levied against GRG and the govt changed the rules on 3rd party tolling, which meant that stopped as well, this amounted to a 90% loss of business in ghana.

The troubles with rand continued with their inability to accept material and the recent issue over payments is still ongoing.

Issues with the tax authorities in the UK and Kenya also cropped up, with the kenyan matters still ongoing.

South african production was impeded by the responsible gold audit.

I do not think I have missed anything out!!

The company has come through all of the above and is stronger and in better shape than before, this will all be reflected in the results as we move through this year.

[sea7] 29/1/2017 10:29

Looking at the numbers for SA, that you have given kb, excluding Q4/16 as it has a much larger number of ounces than what would be the norm, we can see that the average across four quarters was 5,528 oz, a profit of £576k, at £104 per oz

Looking at ghana, excluding the same quarter, which also happened to make a loss, we get an average of 2416 oz per quarter, an average profit of £763k at £315 per oz.

This allows us to see that across four profitable quarters, the recovery ops generated on average 7944 oz per quarter, showing an average profit of £1.33m at an average price of £168 per oz. This equates to about 20% of the gold price when using £864/$1200. The business, as you know, is modelled on a margin of 20%.

Looking out further and allowing for kili to be at breakeven and nothing much else changing we should have no real problem seeing £5.3m profit from the recovery ops before admin and taxes, which should give us around £3m after tax.

Kili's numbers show the drag that it as been having..

average production, excluding the same quarter as above, we get an average of 514 oz, an average loss of £112k, with an average loss per oz at £355.

This shows that the kili mine is having, on average about a 12% impact on the profitability of the recovery ops.

Just getting kili to breakeven should allow us around a 12% uplift in profitability across the group.

The business is growing again and expanding after four years of turmoil. Once we see kili over the line then the support that the recovery plants have provided will no longer be needed and the growth phase should move up a gear.

[danielmiller1] 28/1/2017 20:23

See the terrible twin are still at it...ramping hell out of this dawgie
Lololololo

[kimboy2] 28/1/2017 19:49

Numbers are difficult to determine as the quarterly results are variable;


£m SA £m Ozs £/oz Ghana£m Ozs £/oz Kili£m Ozs £/ozQ1/17 0.769 5,418 141 0.305 3,088 98 -0.1 623 -160Q4/16 0.57 12,083 47 -0.021 304 -69 -0.21 570 -368Q3/16 0.845 4,864 173 0.156 1,885 82 -0.169 503 -335Q2/16 0.275 5,690 48 0.146 1,897 76 -0.217 289 -750Q1/16 0.415 6,141 67 0.156 2,797 55 -0.115 643 -178



I reckoned that the elution column would add £1m to profitability and I think that £250k per quarter can be seen from Q3/16.

[kimboy2] 28/1/2017 17:21

I don't think we will get many numbers with the various developments.

[danielmiller1] 28/1/2017 15:55

Poggy who said gold mining was easy? Of course there are risks and the Unknown.

But the gold is there all the surveys show that it is. All it takes is competent management and that is what GDP has not had since Demi left.

One drunken bum and a figure dyslexic running the show meant it was doomed to fail.

As for my 2p call well this again is easy just do the fundamentals GDP,is currently two widely spread and if the RR thingamejig turns nasty the share price will crash. Will 2 p support a crumbling share price MAYBE MAYBE NOT?

[sea7] 28/1/2017 13:13

As long as we have some numbers along with it, then the share price should be up around that level.

[kimboy2] 28/1/2017 12:51

Well if GDP said;
1. The CIL at Kili was up and running
2. RR was sorted
3. The pit had been secured for the stock dam
4. The Ghana elution column would be operational by Dec 2017

I think that would get us past 10p. All are in the pipeline.

[sea7] 28/1/2017 12:44

Yep, as far as I see it, £5m at 10p is not a big ask and does not have a too much of a detrimental impact on existing shareholders, from a dilutionary perspective.

I do not think Gerard would find it too difficult to place shares, the difficulty at the moment is getting the share price up to that level, which would generate some interest from players that currently see the price too low, too much of a dilutory effect and a thin market, when considering a figure of £5m.

[kimboy2] 28/1/2017 12:35

If he has a placing to raise £5m then GDP will be going ahead with the investment in Kili phase 2 and probably the third elution column.

This may raise profit by about £2m from Kili and £1m from SA - a net £2.5 after tax and minorities.

This takes profit to £5.5m and takes us to 15p at a p/e of 6.

[sea7] 28/1/2017 12:03

Of course, one of the difficulties with trading multiples is the number of shares in issue, if Gerard does go for an equity raise as we pass 10p per share, then where would we be, based on a £3m a year profit?

Lets say it is a £5m raise at 10p adding another 50m shares to the total in issue.

If the share price at the time of the announcement was 12p, with 167,441,000 shares in issue, we would have a cap of £20,092,920. Add 50m shares at 10p, we end up with
217,441,000 shares in issue and a starting share price of 11.5p, which gives us the cap of £25,092,920.

On an existing profit of £3m the p/e would adjust to 8.36 with the new shares in issue.

I would expect to see the share price drop to around the 8p to 9p range off the back of placee selling and market adjustment, which would take the p/e back down to the 5-6.5 range.

All speculative I know, however, scenario planning on investments is a worthwhile exercise in my view.

[sea7] 28/1/2017 11:12

Yep, rating is difficult to determine, so if I carry out that kind of analysis, it is always selective, by that I mean, I extrapolate a period of profitability and look at the range during that time. This will give a good indication of where the market will price the stock once profitability has been restored.

We saw in the 2012 year that the company delivered a £4.6m profit after tax, for the year, the share price reacted accordingly and was at 14p, however the p/e remained around 5, which kept it within that range.

When we look at the 2010 p/e of 10, that was when gold was climbing fast and kili was expected to be moving at a real pace into profitability and production.
We know that the maiden resource for kili was announced in December 2010 and managements plans for 10k oz kili were the goal. The market did not dispute this, as they had successfully listed Goldplat, increased profitability in South Africa and brought the Ghana site on stream as outlined. There was no reason to doubt it and the p/e of 10 reflected that optimism and trust. We know what happened next, the Kenyan authorities gazetted the 35% ceding to locals in October 2012 and Demetri left. The p/e returned to 5 reflecting the change to the business and management disputes/changes and the uncertainty over kili.

I would surmise that without kili the p/e will be in the 5-6 range fairly consistently.

A bit further along the road, with kili profitable and with increased profitability across the group, say £3m after tax for the year, we could see a share price of 12p on a p/e of 6.7

That to me is where I see this going. Last June was £1.4m after tax profit and as long as the trend continues, we are not that far away from £3m after tax profit.

As you can see, a p/e of 6.7 at £3m profit is easily achievable and within historical ranges. Your 20p a share KB, will not be as far away as some may think, if the direction of travel continues as it has been recently.

[kimboy2] 28/1/2017 09:30

There is not going to be a dividend for a good while if the ambition is to have a 40kozs gold mining operation.

Rating is difficult to determine. The thing is if you get a rising profit you will get a double whammy from a rising rating. GDP has suffered from variable and sometimes non existant profits and ratings reflect that. They need a period of steady/rising profitability.

The ambition is to have the recovery operations producing cash of £5m+ for GDP and then investing that in speculative mining ventures.

If GDP ever get themselves into that position then their rating will be well above 5 or 6.

I have no idea if they are looking at Red Rocks Migori license, or even if the legal challenges have been finally completed yet. However if they could get their hands on it I believe it would be transformative for GDP.

[sea7] 27/1/2017 18:39

We won't be seeing a dividend for at least another two to three years in my opinion.

Once they finally get kili to a state where it actually generates profits and there is a clear indication of an increase in resource, along with an acceleration of artisanal processing then we could see the stock re-rate, however, as we know, the recovery side of the business is that of a downstream recycler of waste, which is lower risk and lower reward when compared with traditional mining and on that basis I do not see Goldplat trading on much higher p/e multiples on the recovery side alone.

[kimboy2] 27/1/2017 17:29

Yes the rating of GDP has never been that great and that was why the dividend was brought in to try and increase the rating.

Rating will be a function of security of income and the growth rate, neither has been GDP's long suit.

[sea7] 27/1/2017 15:04

When we look at the years 2009,2010,2011,2012 prior to the problems that occurred pushing the company into loss making territory we can see that around the time of the results, the p/e's were:-

end june:-

2009 p/e 6.5
2010 p/e 10 - gold price increased 40% in this year from just over $1k to $1.4k oz
2011 p/e 5.18
2012 p/e 5.06 - net profit for this year was £4.6m

The figures are obtained from the respective AR's and the share prices are taken from trades around the time of end june each year that I executed - or as near to the 30 jun as I can.

When the results were published last september the p/e was 7.77 against the shareprice of 6.5p at the end of june.

Taking the share price today, the p/e is 6.4

When we exclude the 2010 year and focus on the other three shown, we are currently trading at the upper end of the 5 to 6.5 p/e range.

What this tells me is that the market has given back some of the trust that was lost over the previous few years as the stock is trading around the p/e range it was before and further increases in earnings are expected.

There was no point looking back to 2008 and earlier as ghana only came on stream in jan 2008 and kili was not having the impact it is.

Without any demonstration of an increase in earnings then the shareprice is unlikely to appreciate much more than where it is, based on the above. If there is any real slippage on the CIL plant, coupled with the lower gold prices then I would not be surprised to see the stock dip back into the fours.

None of the above alters my view on the business itself and its future, this is simply a view on why I think the stock trades where it does, today, from a market point of view.