Goldplat Share Discussion Threads

[kimboy2] 09/10/2017 14:39

It will be out of their receivables and bottom line but not their cash balance.

The word outlay implies they have to pay something, rather than an accounting loss for something they have already done.

[sea7] 09/10/2017 13:58

In my view DD, when I spent a bit of time quantifying the risk to goldplat should the case go against them, it took me about about 5 seconds, to say, well if goldplat want ZAR13.5M, then rand will put a claim in for the same amount, or thereabouts.

My scenario one was - goldplat lose completely and no negotiation, they pay circa £1m to rand, which would be on a payment plan, as they will not be able to cough up £1m in one hit, or at least they couldn't when I looked at it.

scenario 2 - goldplat partially lose and are required to pay rand a percentage of the amount claimed plus costs.

scenario 3 - goldplat partially win and rand are required to goldplat a percentage of the invoices owed plus costs

scenario 4 - goldplat win completely and no negotiation, rand pay goldplat about £1m in instalments, as they are not too strong in the cashflow department themselves, or they weren't when I looked.

scenario 5 - the court cannot find either way and dismiss it completely due to insufficient evidence - effectively a rand win.

In all but one of the scenarios's rand either win outright or have a partial victory. Goldplat only prevails in one out of five completely.

From an evidence standpoint, scenario 4 looks good at this time. Rand are banking on the ambiguity of everything and the balance of probabilities, in either paying less or nothing.

The ones gambling are rand refinery. Goldplat feels it is owed, has a strong case and is pursuing it.

If rand can argue it down to a point that is exceptionally difficult to prove one way or the other, then goldplat may not get everything they expect to recover and will have to suck it up and learn from it.

If goldplat did not feel that the balance of probability is in their favour based on the evidence they have, they would not be pursuing this under any circumstances.

[kimboy2] 09/10/2017 13:44

Obviously GDP will not get the money owed if they happened to lose the case against RR. However I don't think that this constitutes an 'outlay'.

[russman] 09/10/2017 13:42

Mogdiliani & Miller did some very boring thesis on capital structures.The debt / advance is short term.The liabilities are longer.

[sea7] 09/10/2017 13:35

The London good delivery matter did not end well for rand refinery..


A solution to reduce the formation of buttons and plug-like defects at a cost-effective and in a timely fashion was not found. Since the LGD bar is produced at a zero profit to refineries, LGD bar production is avoided and production is completely dependent on market conditions. Investing €500,000 to find a technical solution was not feasible.

They did change from hand pouring to a continuous induction furnace, which ended the 97yr old process of hand pouring which improved the quality of LGD bars

[discodave4] 09/10/2017 13:33

"Rand Refinery has subsequently offered a settlement whereby they expect Goldplat Recovery (Pty) Ltd ('GPL') to pay a net amount to them"APPROXIMATELY £740k, plus court costs and legal fees plus net amount, say APPROXIMATELY £1m cost to GDP.

[sea7] 09/10/2017 13:27

Goldplat, to my knowledge only has this dispute with rand in its history, where real issues with customers have arisen.

rand on the other hand..

had been putting up artificial barriers to entry into the primary kurggerand dealers market. they lost the case.

they "lost" 1.2bn in gold

they lost a case against a guy who was using the word kruggerand in his URL, as they felt it was their word - they were told they do not have the rights to the word kruggerand.

They have had fires and explosions in recent years.

in feb 2016 they had several London good delivery bars returned to them, as they had not complied with visual guidelines. These were classed as "non good delivery bars" and had buttons and plug like defects. Most of rands order book is LGD bars and the defects affected 50% of bars produced.

what was said...

It must be noted that buttons and plug-like defects were a historical defect at Rand Refinery, with at least 50% of all LGD bars produced showing this defect. Internally, there was also a problem with layering and this was a further challenge for which a solution was already being sought.

At the time, the order book for Rand Refinery was predominantly made up of LGD bars and the change in the visual guidelines therefore had a major negative impact on the business model. These included reputational damage, gold lock-up, increased costs due to rework, impact on the pouring team due to the high rework rate as well as the risk of missing customer orders. At least 5 tons of material needed to be converted weekly and, with a reject rate of greater than 60% due to zero tolerance of these defects, a solution had to be found as a matter of priority.

full article...



This issue was significant to rand and must have put a squeeze on things.

[sea7] 09/10/2017 13:08

rand refinery will not admit anything, even when faced with facts they still do not.

Look at this piece from their recent loss of the case with the competition commission over their practices...

Wilson added that despite the consent agreement being initiated as a contravention of the Competition Act, the commission and Rand Refinery had agreed that Rand Refinery made no admission of liability although it had altered its conduct. Wilson said the wording in the consent agreement indicated that Rand Refinery had ceased any form of prohibitive practice, suggesting the conduct was in fact prohibited and a contravention of the Competition Act.

“We don’t want that wording in any way to be suggestive and undermine the fact that Rand Refinery is settling on the basis of no admission of liability,” he said. Wilson said Saand membership was a legitimate requirement, but time had moved on and Rand Refinery was happy to put in place different requirements to ensure they were trading with credible principal dealers in Krugerrands.



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

despite settling and changing their practices, rand still wouldn't admit liability.

This is what goldplat is up against and if it is anything to go by, is why it is going to court.

[kimboy2] 09/10/2017 13:06

“There isn't a potential £1m outlay if GDP fail.”

So how much know all?

If there was a £1m claim against them it would be mentioned in the AR. How do you know it is £1m.

“They know the sum being asked for”

Do they?
Approximate definition - adverb, used to show that something is almost, but not completely, accurate or exact, roughly.

That wouldn’t hold up in court now would it, sounds to me like they ain’t got a chuffing clue............bet RR have an EXACT figure to contend.

The amount invoiced IIRC was 13.5m rand. If you convert that to pounds you will get a figure to as many decimal places as you want which will change minute to minute. That is why they say approximate, not because they don't know the number.

It takes opposing views to make a market, clearly some people cannot accept that no matter what.

I accept you have an opposing view, I just don't think your views can be justified or are firmly based. Therefore I try to challenge that view and hopefully learn something if it happens you can stand an opinion up.

That is the point of the board IMV, not just for us all to state our prejudices.

[discodave4] 09/10/2017 12:57

"There isn't a potential £1m outlay if GDP fail."So how much know all?"They know the sum being asked for"Do they?Approximate definition - adverb, used to show that something is almost, but not completely, accurate or exact, roughly.That wouldn't hold up in court now would it, sounds to me like they ain't got a chuffing clue............bet RR have an EXACT figure to contend."I get the impression that GDP are very confident"Well no surprise there. I get the impression that they don't know what they are doing."I am not so confident of RR's financial position"Ditto with GDP.It takes opposing views to make a market, clearly some people cannot accept that no matter what.DD

[kimboy2] 09/10/2017 12:55

RR is not GDPs major customer.

Production at record levels and most lines at full capacity.

Which dots did you want me to join up?

[sea7] 09/10/2017 12:54

Shareholder,

The spare capacity only exists as they installed more than they needed initially for future expansion. The original plan was to simply install the new column, however, they upgraded the existing column and installed one, taking capacity from 1.5 tonnes a day to 8 tonnes a day. iirc.

They do now have the challenge of utilising all this extra capacity and it will become even more evident when the elution column in Ghana is installed, as the purchase of precious metals from the Ghana operation will practically cease.

Kili has its own elution column and has always exported dore.

[shareholder7] 09/10/2017 12:46

RR = GDP major customers Spare capacity not enough materials When will you guys join the dots

[kimboy2] 09/10/2017 12:32

There isn't a potential £1m outlay if GDP fail.

They know the sum being asked for.

I get the impression GDP are very confident.

I am not so confident of RR's financial position.

[kimboy2] 09/10/2017 12:10

One other thing on RR was that there was no mention of the amount that RR is alleged to be claiming from GDP. I would presume it would be mentioned if material.

[sea7] 09/10/2017 11:52

yep. Rand claim a breach of contract which they allude to, yet no facts or anything to back up that claim. Words are cheap.

The only reason I favour goldplat at this time, is the fact that the independent assesors report, in goldplats view validates them and rand have not mentioned the report even once, nor disputed the findings, nor disputed goldplats statements on the report.

Rand have not backed up anything they have said with anything at all.
Golplat have the report which seems to support their case.

Both are saying a lot, however, goldplat have the report which is the basis of the next step.

We cannot say goldplat have breached any contract as we do not have the contract to look at, we cannot say that rand have made errors and are trying to blame goldplat for their mistakes as we do not have any details to work with.

rand claims breach of contract, yet won't say what that breach is, what part and how.

In the absence of any facts, I go to the existence of this independent report and then see what each side is saying. Goldplat is saying loudly and publicly that it supports them, Rand refinery is quiet and avoiding mentioning it at all.

That speaks volumes to me at this stage.

[kimboy2] 09/10/2017 11:47

The upshot is that the 5 month pipeline probably doesn't exist any more, except for some specialist material that they can't elute efficiently for whatever reason.

[sea7] 09/10/2017 11:40

That is right, when I discussed this with Gerard via email, he said that they had no plans at present to install another one of the columns in south Africa as they are running with spare capacity and are working to secure material for this.

[kimboy2] 09/10/2017 11:35

They said they were struggling to keep the SA elution column at 100% already.

[sea7] 09/10/2017 11:28

kb,

yep, goldplat are steadily moving to a position whereby the use of 5 month pipelines and rands 90 day payment schedule for concentrate will be minimal, as they will elute just about everything and have it on quick turnaround.

[sea7] 09/10/2017 11:23

DD tks for the response,

Goldplats board are of the opinion that the independent assessors final report strengthens their position. Even if we do see the report, are any of us, competent metallurgists, capable of assessing the position any better than those at goldplat and rand. I know I am not.

We also know that in this years AR, there is an additional section in the auditors report which wasn't there last year, which shows...

the auditor identified this risk and then its conclusions...

Revenue recognition There is a risk regarding the completeness and accuracy of revenue. These transactions involve complex assay valuations and of high value, as such this area of the financial statements is considered to be of significant risk to the audit. Due to the need for customer to verify these assay reports through their own valuations there is a potential risk in terms of the completeness and accuracy of the revenue being recognised.

what they concluded.....

We have carried out substantive testing to verify the completeness and accuracy of revenue. This testing has included tracing a sample of gold shipments, revenue recognised being based on the Company’s initial assay reports through to final revenue received based on assay reports prepared by the customer to ensure the correct value of revenue is recognised on the sample of shipments selected.

On a sample basis we have carried out reconciliations of individual gold shipments received from third parties to the customer independent assay reports to vouch
completeness and accuracy of revenue.

We have also carried out appropriate cut off procedures to ensure completeness of revenue. This has involved reviewing gold shipments around the year end to ensure revenue is recognised in the correct period.

The above procedures have been completed with no issues being identified.

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

Whilst this is not specific to rands silver sulphide contract, it lends credibility to goldplat's internal processes regarding the recognition of revenue from its work. This strengthens the case for goldplat when its internal processes and procedures are looked at to see if they are running a tight ship.

This audit process will form part of goldplats case.

Rand have not disputed what the independent assessor has said and only claimed that goldplat has "performance failures" and that is has suffered a demonstrable loss, resulting from goldplats breach of contract and failure to perform.

In other words, they did not get as much silver back as they were expecting and dispute the amount of costs involved. They state a demonstrable loss, then that probably means that someone at Rand agreed a figure with the supplier of the feed material and that the reality is they got less back from the deal and they are having to make up the loss.

Someone has messed up and is too stupid or stubborn to admit it, hence the court case, which will drag on.