Goldplat (LSE:GDP) — Q4 Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the GOLDPLAT PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen, please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it is appropriate to do so.

0:29 Before we begin, as usual, we would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to CEO, Werner Klingenberg. Werner, good afternoon, sir. Yeah. Good evening, James. Good evening to to everybody that's dialed in. I must say it's a lovely spring evening here in the Southern Hemisphere. I'm looking, yeah, I'm looking forward to give you an update on the fourth quarter and also bring you up to speed with current events at GOLDPLAT PLC. I think it's for the for all the the new listeners, I would just want to give you a quick overview of GOLDPLAT.

1:19 The business is a cash generative business, and I would like to talk a little bit more about that later. Our focus is on recovering value from previously mined material on behalf of current and historical mining industries. We get different types of feed material. And when we go through a slide later, I'll I'll indicate to you what that exactly is. And we've got operations in Ghana as well as in South Africa. Both of those operations have three different types of material, all coming out of the gold industry. South Africa, we do a little bit of PGMs. And the material that we treat is being sourced, throughout Africa as well as South America.

2:08 It's quite a niche operation. It's been going for more than twenty years. It's been listed since 2006. And we we've got quite a good experienced management team throughout all management levels that's built expertise in terms of how to handle the material that we treat. I think most of you is aware of our tailings facility and the job resource we've got on that facility that was done back in 2016. It's a tailings facility in South Africa at our Benoni operation, which is basically the material that we have deposited over the last twenty years.

2:54 It's got 82,000 ounces of gold on it as per the 2016 assessment. What needs to be noted that at that point in time, was roughly 1,500,000 tonnes of material on that facility. That has grown to 2,300,000. So obviously, the expectation is that those ounces contained has increased. The grade of that facility is running for the jalk resource at 1.76 grams a tonne. It might be slightly lower now around 1.5 grams a tonne, although that has not been evaluated apart from our understanding of what we put onto the facility after 2016. As indicated, the material we do process comes from either the historical mining industry or the current mining industry and is by products that in a way will become waste if not handled or treated for those suppliers.

3:53 And for that reason, we believe we are a green gold producer that is assisting the mining industry to maximize the the value they recover from their activities throughout. So if we then look at what that means for the last quarter, which ran from April to June 2024, you'll see that we had quite an excellent not a quite, we had an excellent quarter. Specifically in Ghana, achieved operating profit of $4,300,000 for the group. That needs to be noted that this exclude head office cost, listing costs in the group, which as well as then foreign exchange costs that we'll talk about now as well as interest charges and tax.

4:47 Most of these profits was derived out of Ghana, a 3,700,000 operating profit, and South Africa turning an operating profit of GBP 600,000 for the quarter four, which is good news after the loss they experienced in quarter three. Now all of this transpired into, for the two operating entities combined, a profit before tax of CAD 2,900,000. So that now includes foreign exchange losses interest costs, which you could see if you it's around CAD 1,300,000 for the period. And we'll talk a little bit about what those foreign exchange costs relates to in a bit. The net cash position at the end of the period was $3,800,000 and remained strong, but has been invested into working capital subsequent to June 30, and we'll touch on that a little bit later as well.

5:48 Now apart from the good results in the quarter, there was a few other events that needs to be noted. I think most importantly in Ghana, apart from the good results, we also got to a point where, from the authorities in Ghana, they are looking for more local beneficiation of material. They don't want concentrates to be exported, and our focus has turned towards beneficiating our concentrates to Dorobar in South in in Ghana. That will require, and we submitted the proposal to authorities roughly around £900,000 of investment to enable us to recover that value in dore form for export.

6:35 As indicated in our RNS, this means that in the interim well, not in the interim. Actually, our business model in Ghana will will be changing. We will see that our debtors in future will reduce because you can turn Dore bars into cash a lot quicker, within a week or two. But, obviously, we need to upgrade our facility to be able to process materials. So we'll see a bigger increase into inventory on hand and on-site over time. Our focus is to be able to find a way where we increase our ability to process to an extent that actually we are going to be turning the raw material faster than what we've done in the past.

7:22 If you recall, normally from smelters, we we only got paid roughly a hundred and twenty to a hundred and fifty days later. That's excluding shipping time to those facilities. So this change will result in us being able to, as we establish better processing facilities in Ghana, to turn around our material a lot quicker. But in the interim, it does mean that we are investing a lot of working capital into inventory, whilst we start recovering those value in Dore. There is some changes required. Some of it is easier. If I say some of it is easier, some material can be recovered quicker and easier through our current infrastructure.

8:10 Others will take a little bit more time. And and and we're doing good work and do good progress with that and keeping on engaging with authorities to make sure they're comfortable with the changes that we are implementing on-site. Apart from from the changes, I think what's also important to mention around Ghana and the quarter that's passed is that the good numbers was as a result of good supply out of West Africa, Ghana, well as South America during the quarter. Some of those was unique, and although we have remained and received a steady supply from different areas, it doesn't necessarily all indicate to material that will be repetitive quarter by quarter.

9:05 And some of them might be over a longer period of time, but we won't see some of those material coming through every quarter. And we can talk about that maybe in a bit more detail later. I think further to that, if we look at South Africa and the performance in South Africa, it's I think the results in South Africa has been driven with by a lot of improvement efforts from management side trying to realign cost in terms of the current supply of material we get. In South Africa, we've got three main supplies. One is surface sources that normally comes from historical mining activities that's contaminated either soil or left some waste rock dumps or other types of dumps that still contains value, but that needs specific processes that you normally find at bigger mine sites to recover the value.

10:09 We also receive wood chips from underground that comes from pillar support being used in industry, underground as well as the byproducts, which predominantly is fine carbons, but it can also be anything else that ends up being contaminated in the current mining industry in their plants and operations. So, over the period, we have seen a decline, on the wood chip side and the byproduct side, And that's mainly just because we're seeing a lot of underground shelves being closed by our clients, focus being placed on on reprocessing some surface sources material that's available. We are looking at ways of realigning the business to make sure we we we cover maximum value from the surface sources we still get as well as from the wood chips and byproducts that we're currently getting.

11:03 And that will require some some refocus, realignment on on our site. I think then, obviously, the elephant in the room and has probably been for a couple of years, the main processing of our tailings facility. As you're aware, the good news is that, I mean, over the last year, we have not been depositing on this facility. We've moved to our new facility adjacent, meaning that this facility is now a resource that can be reprocessed. Now although there has not changed a lot from the previous quarter in terms of where we are, there's been a lot of activity. There's been a lot of energy around actually moving this forward.

11:52 We've engaged with DRD on a regular basis. There's a lot more synergy and alignment in terms of what needs to be achieved and done. The big outstanding remains approvals around the pipeline. So the pipeline is basically five kilometers plus minus to the nearest facility where we can join up with current infrastructure. And the in in the past, there has been surface like permits and things in place. However, this has run through some areas that is sensitive, and for that reason, we needed to change the route. That means we will require some servitudes to be put in place as well as then getting a general once.

12:42 It's it's basically just one water use license for the pipeline for the five kilometer pipeline, and we're working closely with with DRD in terms of establishing all of that. I think in terms of the tailings facility, obviously, we want to aim to get to a point where we've got commercials secured with DRD. We we've got clarity around the pipeline, and that will make it a lot easier for us to provide numbers and details in terms of what the expected recovery sees. Until then and until we don't have commercials, the figure can vary quite significantly in terms until we've we've embedded that there.

13:31 But we'll talk about that slightly later, I know, to one of the questions as well.

13:40 Before we maybe talk about the key data, I think what we also need to look at is the impact of some of these changes and on on some other areas that we need to consider on behalf of shareholders. I mean, obviously, the company has been doing well, but there has been factors that's also impacting on our cash flow, on our cash flow forecast. At the end of the day, we've got the £900,000 we need to invest into Ghana. We also have the working capital lockup due to the change in processes and business model in in Ghana as well. And then we also have South Africa going through interim step of change in terms of the type of feed and how we process and realign there. This has impacted management in terms of their ability to to look at declaration of dividends in the short term. We hope that most of well, I think we believe that we'll see that that will be released over the next four months, and we can start looking at at allocation of of money to shareholders in whichever way or form.

15:00 I think I I can make a statement in terms of the board, in terms of management that the nature of the business, the fact that that it fluctuates based on supply and is very much supply focused rather than processing focused means that as we do generate and find free cash flow, we need to look at sharing that with investors. And that has been the plan for the last eighteen months, and, we can can find a period. I think I mean, to to to say in terms of that, if we look at the changes in Ghana, because we're moving to a place where we can process the material ourselves when more of what needs to happen is inside of our control, that will increase visibility tremendously.

15:51 And in time, we'll make it a lot easier for us to see cash flows coming through to plan and to enable us to to share cash going forward with with shareholders.

16:08 K. For those that's new to the call in terms of GOLDPLAT, just to give you a perspective, we our current share price is just over 6p, trading at a market cap over just over £10,000,000. That obviously gives the last quarter some perspective in terms of how well we have done. I think the next step around that is that we can't say we've done well in terms until we have shared value to shareholders, whether that's increase in share price or whether that is through sharing some value through dividends or share buybacks or whatever needs.

16:54 And that's the main aim. And I think that's that's become the key focus to the executive board is that we need to make sure that the shareholder see value, not just the bottom line. And if we look at our board, we've got extremely experienced board with a lot of experience in mining, a lot of experience in Africa, And we also have our main shareholder earning 29% who is part of the board and obviously driving the interest of of shareholders as well.

17:31 I've spoken a bit of what GOLDPLAT does a little bit earlier in the call. I think this slide probably breaks it down quite well. Our clients is mainly blue chip listed mining entities and groups from where we receive byproducts. Our Ghana operation is only focused on current mining industry. And in South Africa, we are also focused on on remnants of the historical mining industry as well as the current mining industry supply. And that's specifically in South Africa is where we're seeing the decline is on the current mining industry supply of byproducts.

18:17 The types of material we get is fine carbons. It's mill liners, wood chips, grease. It's really anything that's been contaminated in the industry. We have done a lot of cleanups at old mine sites. We're actually doing we're busy with some in in South America as well. So we really look at at extracting value from anything that ended up being contaminated and containing gold. Our process is is extremely diverse to be able to deal with a diverse set of material that comes to us that includes normal milling gravity leaching circuits, but we also have abnormal plant in our circuits that you won't find in in normal gold mining industry like jig like a jig that helps and assist with removing the amount of carbons that's in the in the material that's being supplied to us. We've got wash plants to pre treat the material we do receive.

19:25 Routine kilns do also deal with some of the carbons and and some of the contaminants. And then we've got various other circuit shot blasts and some other incineration units as well as dilution plant. And in the end, we generate dore bars as well as concentrates. Obviously, in Ghana, the focus is now on generating as much as possible dore as what we can. As indicated, we see ourselves as a green gold producer. We also because of the nature of our industry, it's quite focused on making sure our sourcing is responsible. We follow the l b a LBMA guidelines as far as possible, and we're also getting audited on a regular basis by a big auditing firm to make sure we align with those guidelines, although we're not a member of the LPMA per se.

20:23 If we then look at gold recovery, I think these slides we've already dealt with indicating to you what the performance for the last quarter was. But I like the heading saying that our gold production is definitely different than what you'll see any place else. If we then look at where the main focus for the two operations is, in South Africa, the focus, same as Ghana, is on supply. Supply is extremely important in terms of maximizing our recovery at the end of the day. When walking through our plant the other day in South Africa, I just noticed the beginning.

21:08 We really have very good kit. We have good people and staff. We've got the ability to recover. The focus is really on maximizing the supply and sure and ensuring we we process it through the right circuits to optimize recovery. In South Africa, obviously, as indicated, the main focus remains on monetizing the tailings, and I've already discussed that. We're still looking at ways of diversifying into other commodities, although we haven't spent any capital on that in the last 0.5 per se. In Ghana, the focus as in South Africa is in supply of material. But in in the recent quarter, obviously, that has also been towards upgrading and changing our plan to make sure we can deal with concentrates and upgrade that to Dore for export.

22:09 And we have actually progressed quite well in terms of that. We also, again, utilizing some unique processes that we want to optimize to a point that we potentially can extract further value from that, whether taking it to areas where we can't currently source material from. Maybe there's a way of treating some of those material closer to source and to maximize the value we can provide for clients. International sourcing, as indicated, we're putting a lot of effort in it, has made a lot of good progress in South America. And as a result, we're still aiming to see if we can, and we'll do on a measured basis, increase our footprint and our operating capacity in Ghana going forward.

23:05 So I think in in conclusion, the focus for the next quarter will remain on sourcing as I've indicated. It will remain on marketing efforts in West Africa and South America. The two key ones for me is the local beneficiation in Ghana, making sure we can extract as quickly as possible the value of material we do receive. It's obviously also on the tidings facility that we've discussed, and then return of surplus cash flow to shareholders. It's become a talking point in our board meetings, and it's definitely the aim. And, actually, sort of the key indicator if we're achieving what we're setting out to achieve.

23:58 Profit is one thing. If we can't share cash, then, obviously, we're just making things turn in circles and not adding value. Okay, James. I think, that's sort of a quick summary of of where we are and about GOLDPLAT and where our focus is. I'm happy to move to questions if Perfect. Perfect, Werner. That's great. And thank you very much indeed, for your presentation this afternoon. If I may, what I'll do is I'll just bring back up, your camera there. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I would just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard.

24:49 Verna, we obviously received a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Werner, if I may, at this point, just hand back to you to read out those questions and give your responses where it's appropriate to do so. And then I'll pick up from you at the end. Thank you. Yeah. Thank you, James. I think I want to start in just saying that, I've I've just realized the value of these investor meet company engagements. I think from the questions that's been submitted before the event and even the the questions that's submitted afterwards, it's it's clear where the market is. It's clear where the uncertainties is. It's clear what the market are looking for.

25:43 And I think there's been a lot of detailed questions that has been submitted beforehand. I think some of them probably we will not be able to deal with in detail tonight, but I have had a discussion, and and I think it's it's it's a lot of those are things that we need to find a way, and we'll find a way of making sure we address those questions so that we can start getting to a point where your views and our understandings are are aligned a lot closer. I'm gonna go through the questions. I'm gonna try and sort of summarize the general themes that is coming out of these questions. And then if there's anything that that we haven't addressed, I apologize for that. But we definitely gonna make some effort to try and and get more clarity to you, if if not tonight, in the near future.

26:38 I think starting, obviously, the focus again is on the tidings facility that we've discussed. I think the the call from a lot of you is to try to get more clarity in terms of, well, what is the detailed financial plan, what are we looking in terms of recovery from those. And and I think the question is more around, well, can we make any commitments? There's obviously a lot of test work that's been done. There is a lot we know, a lot we understand. I think, obviously, those are only possible if we have pipelines in place, if we have commercial finalized. And the only reason for the delays in the commercials is because if we don't have all of these others in place in perspective in perspective of those that's gonna process the material, finalizing the commercials is is less important in their lives.

27:35 We do have a good view in terms of what we're looking at, and we will engage and see if if if there's a way we can we can share that with you because all of this will need to be caveated with the fact that it depends on what the final arrangements is and and what we do have in place. But I I appreciate the concern, and it's definitely something we need to to look at giving you some more detail on. I think, I mean, on on the dividend side, I've already discussed where the position is. And I think it's it's important for management to get to a point where we can add value to shareholders, not just to the bottom line. Obviously, if you look at the quarterly announcement, you see the $3,800,000 cash.

28:25 You see the good numbers out of Ghana. There's a feeling that some of that can be shared. But with the changes in Ghana, with the requirements around inventory and the investment in inventory at the moment, this is unfortunately sort of a period we are looking at making sure we we deal with this interim requirements. And once we're there, we probably will have a lot more clearer and solid base from where we can look at dividends and dividends declaration. So I think there's been questions around, well, what is the the new norm and, or is this the new norm in Ghana in terms of results for the quarter? I think I've already indicated that that some of it might not repeat, but, we do have a steady supply in Ghana of material. And we and I think, I mean, for me, the main focus is get to a point where we have a stable base that's on which investors can actually start making some future assumptions and make make the assessment of of the current performance a little bit easier.

29:42 I'll move on to further questions. There's been questions around exchange losses. I think what is important to understand is is that we mainly deal in dollars, specifically in Ghana. So supplies in dollars, sales is in dollars. It's gold related. And that a lot of the foreign exchange losses that you are seeing is actually trading related. And if you look at the numbers, you actually need to combine the two. We actually have views of saying where we should potentially put it in the future, meaning that a loss has probably been as also has additional benefits in your operating margin on top.

30:30 So you probably need to set them off against each other to get actually the right margin at the end of the day, because you should not be you should not be seeing impact on margin, because both supply and and the and the cost side, is basically based in dollars. Okay. Let me look here. There's more questions around dividends. Some there's there's a question, and and I guess this is is probably going to be a bit more subjective to answer around, well, is there any risk of mining companies could decide to duplicate? I've always said that probably our greatest competition will either be mining companies, but we've never seen that really happened. We've seen some people trying stuff.

31:22 But, you you need scale, you need focus, else it's probably not not worth it.

31:31 So I don't see that that that is a risk factor in the near future. There's a question around constraints in Ghana. I think I've already mentioned it as part of the presentation. You probably will see in the historical presentations that we say that Ghana has the ability to handle what we source. And that is true to the point of how we actually did business before. Now that we need to convert to Dora, there is a bit more extra investment that will be required. We've mentioned the £900,000, and that's something that we will be looking at in terms of getting that.

32:16 There's questions around whether we should replicate what we're currently doing in Ghana and Manoni. Again, I've I've indicated that the processes in South Africa looks totally different than in Ghana. There might be some advantages in terms of what we're doing. That being said, the the volume of byproduct getting received in South Africa is a lot lower. So the the benefits in terms of doing that will need to be evaluated, but it's definitely something we keep on considering.

32:57 Just making sure I'm not missing stuff here. Okay. There's a question around the pipeline and whether the new Tidings facility can also be processed through that facility.

33:50 There is the options of looking at doing that. There is some metallurgical questions around for what the recoveries will be. I mean, the one advantage is where you've got a little bit of all the tsfs is that through certain oxidation, you probably will find that that recoveries does improve over time. But it is something that we'll we'll evaluate, but it's not something to consider in the short term. Okay. There's some further questions around dividends and maybe trying to do smaller dividends on a regular basis. I appreciate that comment, and it's something we do consider.

34:49 Then there's a question around evaluation of financial plan in terms of what the capital expenditure and working capital investments are needed for the next three years. We have been trying to sort of give a sense to the market in terms of what will be required. The focus at the moment is really to ensure that we invest staying business capital as much as possible. Obviously, the requirements in Ghana is is is unique and ad hoc. And once we've got that in place, we would be in a position to actually give a bit of a clearer view. I think the I can say that the focus is really on trying to maximize what we've got at this point in time. We haven't spent a lot of additional capital on trying on growth at this point in time. It's more about making sure that we're maximizing cash flow and starting to ensure that we return value to shareholders in the near term.

35:59 K. I apologize. There's there's there's a lot of questions. Some of them are repetitive. Just type it in a different way. There's questions around PGMs and how similar that is to gold. I think the easiest way to answer it is the PGM metallurgy is totally different than gold. Meaning, the byproducts being generated is totally different, and the ways of processing it will also be be different, and there's a lot of evaluations that needs to be done. Most of the byproducts being generated in the PGM industry is lower grade and is more volume, meaning you'll actually need a new facility closer to source to deal with it. We we're more focused on on smaller volumes, higher grade that we can handle, and that's what we've been doing over the recent past.

37:07 K. There's questions around share buyback. I think in the past, I've also always indicated the first focus is to make sure we've got free cash to be able to share with shareholders. Once we get to that point, at that point in time, we'll focus on saying what is the best value for the shareholders. Is it to return dividends, or do we think at that point in time, the share price is of such a nature that buying back shares might be of more value?

37:35 And there might be also other terms to be evaluated at that point in time. So, unfortunately, that is only a question that can be answered at the point in time that we decide to to allocate capital back to shareholders. With your production improvements, do you return already processed material and give it a second pass? Thank you for this question. I guess, as as a rule, well, it it differs from material to material. We've indicated that we have implemented the float plant in Ghana, last year that's actually doing extremely well, where we're trying to increase the value from lower grade material that remains from clients to maximize recoveries.

38:35 So there is instances where we try and improve and try and maximize value from clients. In terms of the split between GOLDPLAT and PGNs, I think at this point in time, the assumption should be that most of the revenue is coming from GOLDPLAT in South Africa. Just to answer that question, What is the lead time to make investment changes in Ghana? As indicated, some of those changes has already happened, and some of it probably will take closer to to to six months and depending on on one or two lead times. There's some approvals that we also need from government just to get their basing in terms of what we're busy with that might impact some of these changes.

39:32 But a large portion of it, we're already making use of our current facility to to turn around material in country. K. K. Sorry. I'm just going up quickly to make sure I haven't missed. There's been so many questions. K. Yeah. I think most of the questions has carried the same line. A lot of them is around the TSF. A lot of them is around dividends.

40:28 And I think I've probably also addressed some of these during the presentation itself. There is some detailed questions that, I think is important to handle and treat. And I think the best is going to probably be to prepare some sort of a response and make sure we share with all shareholders just for everybody's comfort and certainty. As indicated, at the beginning, I really, really appreciate these interactions. Sometimes the focus on our side as management is is trying to deal with certain operational matters, and we we we forget that that you probably have some questions that you're not in the know of. And we might say stuff in the RMS that maybe needs some some more clarity.

41:20 So I really appreciate your questions, and we definitely will look at at giving you a bit more detail and comfort and certainty around some of these. Perfect. Vern, if I may just jump back in there. And thank you very much indeed for addressing all of those questions that you can from investors. And of course, we will be able to give you back all of the questions that were submitted today just for you to review to then add any additional responses, of course, where it's appropriate to do so. And and we'll publish all those responses out on the platform. But, Werner, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yes. Thank you, James. I think, I mean, I probably mentioned it at the end of my presentation is that the focus I think that the main areas for us at this point in time, TSF, local beneficiation, maximizing feed, and putting all of that together to get to a point where we can start adding value to shareholders. Because until we've done that, any profits, any good quarter is actually not of any value, and that's and that's really the focus from our side.

42:41 Perfect, Werner. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of GOLDPLAT PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good evening to you all.