Goldplat has undertaken a strategic view of its business aimed at generating cash from its mines in South Africa and Ghana and placing its Kenyan operation on care and maintenance.
In order to eliminate losses caused by continued operational constraints and the current uncertain gold price environment, AIM-listed African gold producer Goldplat has put its Kilimapesa gold mine in Kenya (KGM) on a care and maintenance programme until the project economics can justify its reopening.
KGM has retrenched a further 50 employees and is now maintaining the mining operation on a skeleton staff. The processing plant will continue to process stockpiles of ore at the plant to cover the costs of the care and maintenance programme.
In terms of the company’s gold recovery operations, which recover gold from waste products of the gold mining process, Goldplat has also completed a review of Gold Recovery Ghana (GRG), its Ghanaian operation in Tema. Following this process, the company is looking to re-focus its recovery model to replicate its successful South African operation, which secures waste-products predominantly from blue chip mining customers.
Accordingly, due to the continued margin pressures sustained primarily from purchasing materials from artisanal and small scale miners, Goldplat has stopped procurement of material for GRG’s carbon-in-leach (CIL) plant and is in the process of closing this section down which will remain so until material that meets the company’s margin criteria is sourced on a sustainable basis.
GRG continues to procure material to supply the Nzema mine in Ghana as per its tolling agreement that processes tailings off site with Endeavour Resources. On a wider level, the incinerator section, which processes fine carbon from the major gold producers, is operating well notwithstanding the refractory failure in one of the fluidised bed incinerators, which is currently being re-commissioned. As a result of the matters set out above and the continued low gold price, the board advises that EBITDA for FY2013 is likely to be materially lower than market expectations.
The company’s South African gold recovery operation continues to produce strong cashflows with particular emphasis on fine carbon processing which has expanded significantly over the past six months with new supply contracts recently signed with major South African gold producers.
New capital projects are also underway to continue increasing gold recovery production including the recent commissioning (March 2013) of an additional tailings retreatment CIL plant, which will help process five years of tailings on site; and the purchase of a second rotary kiln which is still on target to be commissioned in July 2013 and is expected to increase the processing of high grade wood chips currently estimated at seven years.
“The strategic review launched when I took over the role of CEO in September 2012, is focussed on creating long-term sustainable value for shareholders while continuing to generate cash. It is always disappointing to suspend any operation but it is of paramount importance that we make sure that all our operations are profitable and do not represent a drain on the resources of the rest of the company.
With regards to Kilimapesa, we will continue to assess the viability of the operation and engage with all the stakeholders including the local community and the Kenyan government to map the way forward. In Ghana, GRG will look for alternative sources of CIL material that meet our margin criteria and continue discussions with the gold majors to build the traditional recovery business in west Africa,” says Goldplat’s CEO Russell Lamming.