Goldplat Share Discussion Threads

[sea7] 09/4/2017 19:04

Yep, that is what I mean by the issues being worked through and the profitability feeding through to these numbers. The inventory in the containers in tema, awaiting shipment were an issue that has been rectified, however, yet to feed into the numbers.

[kimboy2] 09/4/2017 19:00

I presume we are remembering that Ghana had 5kozs of gold sitting on the quayside.

[sea7] 09/4/2017 18:53

With regards to cash dropping.

The figure of £2m cash at end june dropping to £835k six months later can be explained by the fact that they spent £1.19 million in investing activities in the period.

Although, if you strip out that £1.2m and look at the figure in isolation it gives a picture of the cash position being virtually unchanged in six months. This means every penny coming in was being spent as soon as it did and at the end of the six months they haven't been able to increase the actual cash position at all.

I like to take out investing activities to see whether we get a positive position or not. Negative could indicate problems, which if not rectified would be a serious issue.

If we look at cash generated from/(used in) operating activities we get

end june 16 - £2.44m
end dec 16 - (£61k)

This tells me that in the six months since the end june 2016 figures they have generated nothing from operating activities and in reality have actually spent £61k more than they had coming in, whereas six months earlier they generated nearly £2.5m.

For the record at end june 2012 they generated £5.41m from operating activities.

This is the first time since listing that the group has shown a negative balance for cash generated/used in operating activities. Whilst all subsidiaries may be profitable, this profitability needs to feed through to these numbers as, in my opinion there are still issues to work through.

[kimboy2] 09/4/2017 18:49

Hi Shareholder7
I said note 35 not 45.

The main reason for the increase in payables is that they are getting better quality material with higher grades. That is how they are getter more output from the same machinery.

The result of this is that payables increase.

[shareholder7] 09/4/2017 18:20

Thanks Sea I found some of this information on companies house web site in the Group of Companies house June 2016Notes that are of interest are 35 36 there is also £225k that Kili owes Ghana for the sale of equipment Don't know where KimB gets note 45 fromAs each company have to be treated as a separate entities I can now see why Gerard was keen to sort this all out (If he has)The numbers are interesting and I think the balance sheet says a lot more than the P&L

[sea7] 09/4/2017 18:15

Another reason for increase/decrease in payables will be the fact that rand wouldn't accept product in august for its smelter, shortly after disputing the rand silver sulphide contract. This caused delays to customer shipments no doubt, even though Gerard said it wouldn't affect business.

I agree it probably didn't affect business, however, I bet it caused some delays though with some clients having to wait longer for payment or goldplat to be paid.

I guess it depends on your definition of "not affecting business"

[sea7] 09/4/2017 17:56

I have deleted my earlier post shareholder on intercompany loans, as I inadvertently included all the related party transactions that were not classed as loans or borrowings as well.

inter company loans and borrowings as shown are

goldplat plc is owed £4.6m by gold mineral resources

Kili owes £3.3m to gold mineral resources
Nyieme owes £1.19m to gold mineral resources
anumso owes £79k to gold mineral resources

Goldplat recovery is owed £44k by gold mineral resources

[sea7] 09/4/2017 17:33

With regards to payables/receivables, I think we are seeing the effect of the increased pipeline time at aurubis showing up here. Rand was 3 - 4 months whereas aurubis is 5 months. The amount sent to rand in 2016 was down to 80% of product, whereas the year before it was nearer 98%.

They did have £1.1m advanced from auramet on product that had left goldplat, but not processed at the refiners, so when that cash came in, it was returned to auramet with the interest added.

All these issues are clouding the picture and there was £679k in receivables for the rand contract that is disputed.

[kimboy2] 09/4/2017 17:29

Hi shareholder7
1. The inventory isn't that subjective. It is explained in note 9. Most is precious metal in process and consists of the amount spent on processing so far, or market value, whichever is less.

The increase is due to the increased throughput.

2. The receivables has gone up from the y/e 16 from £4.5m to £6.9m. However it has to be remembered that receivables relates to own production and not to gold handed back to suppliers.

In H2/16 the production minus gold handed back was 10,103ozs by my calculations. In H1/17 it was 16,859ozs.

These numbers would indicate that collection was improving and is about 85 days, by my calcs again. It is distorted by the tolling though.

3. Net cash is down but it must be remembered that they spent £1.2m on investment during the period. As well as investing in working capital for increased throughput.

Operating cash flow will be increasing substantially as a result of the investment in Kili as well as the increased throughput.

4. The payables has gone up but is not related to GDP changing its T&Cs. It is the result of increased accrued expenses from the gold in process which has to be paid back to the supplier.

If they get some materials at 20g/t and some at 100g/t and have to give back 80g/t then the 80g/t would go on payables whereas there would be none on 20g/t. It makes no material difference to GDP.

The South Africa operation does not 'need its money back from Kili for a litigation fight'. The SA operation could well make up to £1m operating profit in this quarter. It is more than adequately funded for a minor skirmish in the courts.

The inefficincy of the corporate structure has been reduced with all subsidiaries now being profitable.

The money from South Africa is paid out in dividends. The minority partner still owes GDP over £1m.

The loans to the subsidiaries are in note 35 of the AR.

We don't know how much of the $2m is left because we don't know how much material they are buying in South America. It is clearly controllable though and cash flow is of course mounting.

I hope this view is sufficiently balanced for your tastes.

[sea7] 09/4/2017 17:28

I would expect the loan to be drawn, deposited in goldplat recovery's account and then some loaned to finance the next stage at kili.

They won't be paying any of the inter company loans off with the money at all, in my opinion. It will be spent fairly quickly.

[shareholder7] 09/4/2017 17:14

Thanks Sea I was referring to the inter company loans where there is not a lot of detail in the accounts

[kimboy2] 09/4/2017 17:00

I think it was an MOU so who knows what terms were in it.

[sea7] 09/4/2017 16:47

the loan Is 9.5% plus libor. it has the option of being extended, so they can keep it running for as long as they want it to. It is a revolving facility. Borrow most of it, start making payments, six months later, or whatever time frame suits, borrow some more and continue making payments, they can increase the level of the loan and extend the repayment schedule if they so wish, although they will need to demonstrate that they will meet payments on time and in full before they can start along that road.

It is intended to be an ongoing finance facility that can be tapped when needed.
They also have pre-payment facilities with auramet to front run payments due on material that has left goldplat and gone to the refiner.

[shareholder7] 09/4/2017 16:37

Sea I wonder if you can look at GDP balance sheet Most of the posts have been all about profit but in all businesses "Cash Is King"To me the $2m loan should not have pushed the share price up. In fact I think if GDP did not get this loan they might have been in danger and it's a signal of problems.Looking at the interim accounts and the balance sheet 30th June 2016 the key movements are1. Inventories up by £4m 2. Trade and other receivables up £2.6m3. Cash down by £1.3m4. Trade creditors up by £5.4mThis looks to me like a company with potential cash flow issues.1.Valuation in inventory is very subjective and could have a big swing2. Receivables, some of this can be explained by the increase in sales but GDP are not collecting cash well. Also there will be £750 of RR in there that needs to be provided for as a contingent liability 3. Cash down is significant and if you look at the P&L GDP really only made £933k as there were £1,184k of exchange translations which does not necessarily generates cash 4. Trade creditors up significantly with GDP delaying payments but part explained by the increase in sales but not allI can't find anything in the notes as to the inter company loans but you can understand that these need to be sortedGDP group structure is inefficient as losses from one company can't be off set to another. GoldPlat recovery has been financing Kili and all the other stuff and they need their money back ( especially as they will not have a litigation fight with RR)Also the minority interest 26% would not be happy that their cash is being used to fund other companies that they have no interest in.I wonder what the interest rate has been agreed on this loan?So how much cash is left from the $2m loan after paying back the inter company loans ? I can see this money disappearing very quickly now and as I have said I can see GDP having another cash issue during the last quarter Be interested in a balanced review of this post and I might be way off the mark here

[sea7] 09/4/2017 15:56

I know it is in the contract, I am looking at possible areas that rand might be aiming their case at, other than the metallurgical or operational areas.

Breach of contract can mean a multitude of sins, as we all know.

[kimboy2] 09/4/2017 15:54

This is all in the contract, not a change in terms

[sea7] 09/4/2017 15:51

They also state...

Note: Payment will not be made until all the contractors’ obligations in terms of the Purchase Order Contract have been met, including the provision of all relevant substantiating documentation as required. Rand Refinery will not be held responsible for any delays in payment due to errors in Contractor’s invoices or statements and EFT delays.

[sea7] 09/4/2017 15:48

Looking at rands basic terms of payment they state...

The contractor, showing a summary of all Tax Invoices issued to Rand Refinery for a calendar month, must produce a monthly statement and deliver same to Rand Refinery before the 20th of the month (or preceding working day). Payment to the Contractor shall be made 30 Days from date of statement. No COD payments will be made unless there are justifiable reasons agreed to by the Financial Director of Rand Refinery or his representative.

........................

Perhaps Ian or one of the team at goldplat didn't file as per the terms and conditions and rand are seizing on this as the breach of contract or failure to perform.

[kimboy2] 09/4/2017 14:16

Well I didn't go along with this stuff about everything being about contracts or the GDP business model is centred around RR. I see GDP as being essentially a customer of RR (or was) and a competitor.

As a competitor I think chaos at RR is good news and GDP may be picking up business as a result.

I had originally thought the logical thing was eventually for RR to takeover GDP to extend its capabilities and reach. However Anglo Ashanti and the rest must be sick to death of the place, and certainly not going to finance that sort of adventure.

Presumably the like of Ashanti are going to want somewhere to refine their gold. In the end, if it is cheaper, they may well end up sending it to Germany as well and close down RR if it can't be sorted.

[michaelfenton] 09/4/2017 13:47

Inefficiencies is such an interesting term? After all it could just mean continuing disappearing Gold?

My own view is that Gerard has done a great job of disentangling from RR and the losses on that front if they prove to be just that, will eventually fade in the memory as we continue to move forwards.

[wigwammer] 09/4/2017 13:28

I suspect it partly explains the muted market reaction also.The market has not historically put a high value on the RR relationship, they have never been a vital or financially secure counterparty, hence the market is not that concerned to see GDP creating some distance.

[wigwammer] 09/4/2017 13:14

Interesting points, kb and sea.My perception had been that RR was the bully in the room, but could not see the purpose of their manoeuvre against GDP.This paints quite a different picture - RR are a company struggling to make ends meet, and highly sensitive to their cash position.Whichever way it goes, kudos to GKG for establishing alternative counterparties in recent years, and kickstarting multiple other value accretive projects which are ticking along favourably in the background.

[kimboy2] 09/4/2017 12:38

We know that RR is losing money. Sibanye says it is because of 'operational inefficiencies', whatever that means. We know that RR is valueless and insolvent. Some of the 1bn rand emergency loans have also been written down.

It looks possible that their change in the T&Cs doesn't just apply to GDP but is general to try and prop up cash flow.

DRD say that RR's investigations still have not found out where the 2 tonnes of gold has gone ( I think I could probably tell them).

The CEO has got to be under pressure. He may have come in after the theft of the gold but it is again losing substantial money 'due to inefficiencies'.

I believe that RR have delayed the GDP investigation as much as possible.

If I was the RR CEO I wouldn't fancy standing in court and answering questions on the RR background and history.

Anyway the most important thing to me is that we are free of what has proved to be GDP's biggest problem. If/when we get some money out of them at some stage all well and good.

[sea7] 08/4/2017 22:31

Miller, I am putting you back on filter, as you still to this day, have no relevance in life.