Aim-listed mining services group Goldplat has reported an “exceptional” second quarter at its gold recovery business in Ghana, achieving an operating profit of £1.82-million, up from about £1-million a year prior.

In its operational update for the second quarter ended December 31, 2023, Goldplat said the Ghana operation’s performance was driven by strong supplies during the first half of the current financial year and the sale of inventory that built up as a result of the company’s inability to export while its export licence was finalised during the second half of the previous financial period.

While the Ghana business performed well, Goldplat’s South Africa business showed less desirable results, the company revealed on February 7.

The company said the second-quarter performance continued to be impacted on by electricity cuts and a reduction in by-product supply from current mining operations. As a result of delays experienced at the smelter in Europe in the previous financial year, South Africa’s second-quarter results were further materially impacted as an unusually large quantity of material for processing through gravity circuits was held in stock at the end of June last year. This material contained a lower percentage of gold than estimated, Goldplat said.

While the percentage of contained gold varies from month to month, the unusually large quantity of material held in inventory meant that there was a disproportionate effect on the second quarter with a significantly lower quantity of gold than expected recovered from Goldplat’s gravity circuits. This resulted in an operating loss of £315 000 for the quarter, compared to a £356 000 operating profit a year before.

Even with the losses in South Africa, however, Goldplat said the combined operating profit for both operations for the second quarter was £1.5-million, up from 1.38-million year-on-year, and for the half-year £3.36-million, excluding listing and head office costs, interest and foreign exchange movements, compared to the combined operating profit of £2.8-million for the first half 2023. 

“This was a bitter-sweet quarter with good results in Ghana alongside losses on estimated gold receivable in South Africa. I’m confident that the team has implemented the necessary controls to eliminate these losses going forward. 

Ghana continued to benefit from engagements and marketing efforts over the last five years and we aim to build on the momentum into Africa and South America,” Goldplat CEO Werner Klingenberg said.

Goldplat said its Ghana business received the benefit during the second quarter of a good supply of material during the first half of the financial year, with consignments from Ghana, Côte d'Ivoire and South America treated. The company’s focus will remain on building on the momentum in South America and Côte d’Ivoire and opening other jurisdictions in West Africa. 

Towards the end of the second quarter, Goldplat started to commission the lower-grade milling, gravity and flotation circuit in Ghana, which will assist in extracting value from large volumes of lower-grade fine carbon material received at the site.

Meanwhile, Goldplat’s South African operation lost seven operating days, 7% of the total days available in the quarter, compared with the 23% lost in the previous three quarters, owing to electricity cuts and infrastructure-related issues. 

The reduced impact of electricity cuts continued in January but the risk of this increasing to the same levels experienced in the previous three quarters remains, Goldplat said.

Owing to the continued uncertainty of electricity supply in the medium term, Goldplat decided to invest in diesel generators which will be able to sustain operations in South Africa during electricity cuts. 

During January, the company said it became apparent that, owing to miscommunication between the supplier of the generators and the manufacturer, the shipping of the generators would be delayed. Therefore, the project will only be completed in the fourth quarter. 

Apart from the £600 000 shortfall experienced on the gravities, Goldplat said that it continued to see a reduction in by-products received from current mining operations owing to changes in their production profile. The focus therefore will remain on increasing its by-product market share in South Africa and gaining access to neighbouring countries. 

Goldplat said the visibility of supply of low-grade soils for its milling circuits remains strong, with more than 18 months of material for processing on site and more under contract. 

With lower recoveries from low-grade soils (referring to gravity concentrates) and a reduction in by-products received and increases in cost, the various cost elements in South Africa will be reviewed and revised in the short term to conserve cash, the company said.

With a new tailings storage facility (TSF) being commissioned, Goldplat said it would be focussing on the work required to begin the processing at its old TSF, which has a Joint Ore Reserves Committee resource of 81 959 oz, at a DRDGold process facility. 

Goldplat said the processing at its old TSF remained dependent on the approval of the water use licence over certain areas for the installation of a pipeline to the DRDGold process facility. 

The application process was subject to completion of engineering designs which were finalised in December last year. However, areas were identified where the pipeline route needed to be changed from the current servitude. These changes resulted in as-yet unconfirmed alterations to the timelines.

Goldplat said that these changes may affect the way the company processes at the TSF and the returns it can generate. DRDGold and Goldplat are currently in the process of evaluating the different variables that will impact the processing at the TSF, as well as the commercial impact. This process will remain subject to the finalisation of the water use licence, among other things. 

Goldplat has estimated that it will require a further £500 000, not including the investment of £750 000 to be spent on generators over the next 18 months, to be spent on repairing and maintaining current operations, as well as on completing the TSF and improving the environmental impacts of current operations. The company said that it expects this to be funded from internally generated cash flow.

Goldplat’s overall cash balances increased from £1.35-million in the first quarter, thanks to increased sales in Ghana, clocking in at about £1.7-million at the end of the second quarter.

“The requirements and approval of the water use license for installation of pipeline to DRD Gold remain a major focus . . . while we continue to strengthen our relationships, increase market share in a declining gold market in South Africa and leverage our strength and capabilities through partnership into other precious metals and commodities,” Klingenberg said.