Goldplat Share Discussion Threads

[sea7] 23/5/2018 21:20

may have been posted before...




As Kisbey-Green put it to us: ‘On most metrics, we would be seen to be undervalued. I think the market is waiting to see something significant in our growth. This could come from some big contracts in South America on the recovery side or a mining acquisition to add significant ounces on primary mining side. I think that if we did that we could re-rate and be more in line with where our true valuation should be.’

[sea7] 23/5/2018 19:42

yeh, they aren't overly impressed about that.

[kimboy2] 23/5/2018 19:36

I believe that the pilot plant is running. It seems to me that the main problem for the committee is keeping the locals calm when outsiders come in and start taking their gold away.

[sea7] 23/5/2018 18:25

They are waiting for the steering committee to have finished what ever it feels it needs to do and then perhaps they will let goldplat press ahead with their part of it.

[kimboy2] 23/5/2018 17:50

That is pretty much my understanding apart from taking the material to Tema as I expect they will need some sort of CIL to extract the gold.

The question is when will it happen. I think that they have given up giving us dates as they tend to be factors beyond their control which holds things up. It may well be the case with the stock dam or the Ghana clean up that they come out of the blue, as stage 3 at Kili did somewhat.

[sea7] 23/5/2018 16:20

thanks DS, that sounds right!

[dangersimpson2] 23/5/2018 16:11

Both I believe. I expect Ghana will be active on the clean-up front first, depending on governments of course.

My understanding is that the trial plant is something like a Knelson Concentrator which will remove the heavy materials like mercury & gold. This will require a more processing to separate gold from mercury which will be the bought in kit.

I may be wrong but how I picture it is that Goldplat will have a mobile plant that can be moved around the country that they will feed all the artisinal tailings into. This will gravity/centrifugally remove the mercury and gold into a concentrate and then the tailings will be clean enough to be dumped back where they came from. The government will then be responsible for land rehabilitation i.e. moving teh dirt to fill the holes in. Goldplat will then take the heavy concentrate back to Tema (or Kili for Kenya) and process the material to separate and sell the metal content.

[russman] 23/5/2018 12:17

Until gdp knock in some decent eps; the share price will languish.

[1rodson] 23/5/2018 11:56

Look at the area surrounding Kili, the gold is there all it needs is proper extraction and processing management, you know the kind that GDP had when manoles was running the show.

[kimboy2] 23/5/2018 11:50

Was the bit of mercury tackle they needed for Ghana or Kenya?

[sea7] 23/5/2018 11:12

in addition to Dangers comments,

When the company listed, its primary feedstock was woodchips, a by product of underground mining. As the market in SA is declining, the amount of woodchip available is reducing, hence the shift of focus to the CIL section, which is now the most profitable section in SA.

There is not the scope to expand in SA, as already alluded to in DS post. The decision to make ghana an international hub is the right move and the installation of the elution column negates the need to send any material to south africa for eluting. They then send material to aurubis for refining and not rand. This removes the link between the two operations completely and ensures that the ghana plant is not reliant on the same channels as the benoni operation.

[sea7] 23/5/2018 11:06

as far as I know nothing has changed from this statement by the company some years ago...

Competition

The Directors are not aware of any competitors within South Africa who have the ability to process the range of precious metal bearing materials which Goldplat Recovery is currently able to process.

[shareholder7] 23/5/2018 11:05

Thanks Danger

[dangersimpson2] 23/5/2018 10:53

There are other companies that do tailings re-processing in SA. Places like rand refinery may take some by products but I don't believe anyone else does the full spectrum of materials like Goldplat do.

South Africa is a great profitable operation and has effectively funded the rest of the group. In some ways it was too profitable because it funded Manolis' wasted explo efforts. However it is never going to be a high growth area. The political climate in SA means that less gold mining is occurring. They are doing some full mine clear ups and more PGM recovery which is taking up the slack but you are never going to see double digit growth here.

That's why they are expanding in Ghana. There is a pan-governmental treaty in place that currently prevents them taking material from other West African countries (they are discussing with governments to overcome this in the medium term.) Hence why South America & North America are key to sourcing. They are much better off focusing their sourcing efforts here than making a big push in South Africa. All their trials are profitable, they just need to sort the technical issues of the exports.

[shareholder7] 23/5/2018 08:47

So is GDP the only gold recovery business in SA Do they have a monopoly

[shareholder7] 23/5/2018 08:36

Sea I thought you said that SA was full and we have stocks of material in the yard so why do we have production issues in Q3Also we should be getting more material from RR as part of the settlement, again this should have been part of the agreement I don't understand the resistance of what I post here by you, a new person on the board with a new outlook would be very good for the company to get them thinking in a different way You would not need to pay a lot Get a retired IBM guy in SA or pay a consultant to review GDP process from a sales perspective If what you say is true, that GDP is in the hands of the mines, then its a very poor investment and Gold ETF's are the way to go Your conclusion that GDP can't do anything to get materials, I don't buy this

[sea7] 23/5/2018 08:21

As I said shareholder, this is the way sourcing works in this business. It is no use having all these different people sucking at the cash balance in the form of salaries, when the very people that supply the material can only do so, when they have generated enough of it, as a result of their mining activities.

Once they have got a large enough consignment together, they send it to goldplat for processing as part of the contractual arrangements that are in place and have been in place for years.

You can send a sales guy in, however, the mine will simply point out that at this time they have about a wheelbarrows worth and to come back in a couple of months, maybe three and they may have enough to justify both parties time and effort of transporting it.

Going after existing waste from abandoned mines and other existing sources is done in a similar way, although Goldplat will either seek them out, or get calls from mine owners that need to deal with it to comply with their environmental obligations.

The focus is continuity of supply at the cheapest acquistion price to keep the circuits fed and a positive cash flow.

[kimboy2] 23/5/2018 08:11

Yes many thanks DS

I had got the impression from the interims that things were happening on the stock dam. This will add about £1-1.5m to the bottom line.

Interesting on Kili. I don't think stage 3 is that expensive - about £0.5m. If they wait till they have generated the cash then the lost potential profit would perhaps have paid for it. I would just borrow the money.

The FX problem needs sorting if the results are to be reported in a comprehensible way. I got the impression from the finance bloke at the CC that it was going to be presented differently at the finals. I think something needs to be done before they pay of inter company loans.

I am pleased if they buy two or three mining assets. It is lower risk and they can be built up. It sounds as though they have ideas in the pipeline, but I have thought that for a while.

On the 'Goldplat way' of buying second hand and making it work saves a fortune on capex and is one of their secrets.

[shareholder7] 23/5/2018 08:06

Thanks for this danger most helpful and thoughtful of you.Overall it does not fill me with confidence which is born out with no buying after the presentation.Kili is handicapped with the difficulties of getting energy and GKG will walk soon if not profitable but if the gold price goes up then it will be OK. Well we might as well invest in a gold ETF if this is the case with far less risk.Thanks for raising the issue about a more aggressive sourcing team and I don't buy Gerard's answer.I could write them a new pricing model based on grade, price of gold and access to materials.Having a business dependent on when your customers want to send you material is as crazy as have the one refinery issue.So when you do a deal you need to tie in when you get material and if you don't get this commitment you walk. So in effect you decide when you get it.Can you imagine being a sales rep at SAP and you have your monthly sales meeting and saying that we are going to miss quarter 3 as the customer is not ready to buy. This is why you employ a sales team.This is what they would doOffer an incentive discount to close. Price goes if not closed by a certain date.Commit implementation resources now so that the go live is met, if they delay then resources will be taken away.Show ROI for getting the ERP system in ASAP for cost savings to the company Etc etc etc Now you need to apply this to GDP's model, it just they have no one that thinks in this way. Its all too cozy.Kick off Robert Smith the consultant and put an IBM, SAP or Oracle sales manager on the board and you will solve your sourcing issues, believe me.Seems to me that they like build capital equipment more than driving business.Thanks again Danger for sharing a very well documented account of your meeting.

[sea7] 23/5/2018 07:29

Tks DS - nice write up.

[dangersimpson2] 23/5/2018 01:26

Bit of feedback from yesterday's presentation:

Presentation slides were same as on the Goldplat website so as expected not much new there. The discussions around West pit 3 were described as advanced which IIRC sounds a bit more positive than I've heard in the past.

Got plenty of time to chat to Gerard before & afterwards together with another private investor who seemed pretty knowledgeable. I encouraged them to contribute to the debate here if they get chance. Topics we covered (in no particular order):

Kilimapesa

Kili has to earn it’s own way. Considered shutting it down but it has optionality - if the gold price rises it will be very profitable. For now push to get it generating decent cash at current gold price. No sentimentality, if it doesn’t pay it goes. Plant 1 on care & maintenance should increase profitability even if there is a short term hit in production oz. Electrification is planned but not implemented yet. Plant 1 was on the grid but not plant 2 or mine. Plan 2 & mine will go to electricity. Wasn’t so much the cost of diesel but the variability of supply. e.g. having to service generators much too often due to poor quality diesel.

EPS variability

Complicated earnings reporting due to FX. I suggested presenting adjusted results taking out all FX effects. Company preferred solution probably just to eliminate inter-company loans over time and make accounting simpler. Also suggested could be better to make the reporting currency USD since sales are effectively priced in USD.

Broker Research

Talked about the WH Ireland note not being available. I made the point that having WH Ireland figures in the presentation but no idea how they got to, for example 0.3 EV/EBITDA in FY2020 without large increases in gross profit, doesn't help sell the company to new investors. Tricky with new regs but pushing WHI to solve it. Option to have 3rd party research.

Additional production assets.

Unlikely to get to 50koz through 1 transaction. Preference would be two. Has to be the right ones though. Didn’t get any real detail on why Matala wasn’t a good fit I’m afraid. Go the impression that the seller wanted too much money at the time and Goldplat had already said no so was ruled out a long time ago.

Production Figures

Asked why Q3 always seems to be weakest production quarter. Said it was mainly just chance - no real seasonality. Maybe customers not pushing things as much since this is Q1 for most of them but shouldn’t be a big impact. This highlighted how sourcing works, customers choose to send material as it fits their schedules & operations. Means sending out more aggressive ‘sales’ teams won’t generate more material. It is a relationship business. In South America all three trial batches have been profitable even after all sourcing & shipping costs. Issues here are around technical paperwork details e.g. export taxation treatment. Goldplat have to work through these with customers which are complicated and vary by country. Once they are sorted though with each company this should open the door to continued supply.

General Impression

Gerard seems genuinely passionate about the business, enjoying the challenge of working with, staff, companies & governments to profitably clean up waste materials & build scale in mining. Talked a bit about the ‘Goldplat way’. They don’t like to spend lots of money on new equipment, they like to source second hand and build things together themselves using the skills and experience of staff. They like to come in under budget. Only expensive bit of kit they will need to buy soon is some specialised mercury removal kit since this is not something they currently have set up. Can utilise university partnerships to help optimse like they are for tailings reprocessing. He brings a bit more discipline to enhance the 'Goldplat way', for example, by making sure they know what their most profitable type of recovery is and focusing on those areas. He tries to balance the need for the right level of maintenance since any shutdowns cost more than the repair cost in down time. All good stuff IMO.

Worth the train journey I think.

[sea7] 22/5/2018 16:06

Nothing new - picture of part of plant 2

[russman] 22/5/2018 15:46

Kili - 5k ozs.Must be a lot of junk in Kenya.

[sea7] 22/5/2018 14:12

restructuring of the same workforce.

Making the jobs redundant at plant 1, creates the opportunity to employ plant one staff, on different contracts, with different job titles at different rates of pay at plant 2.

They may also restructure plant 2 at the same time, removing some job titles, re-arranging responsibilities and creating a new structure that hopefully delivers better results overall.

Usually when restructurings are done, the overall wage costs drops a bit.