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Goldplat still trading on low multiple despite strong track record

Goldplat PLC (AIM: GDP) reported record pretax profits for the year to end-June 2009 of £2.4 million, up from 1.6 million a year earlier, with the South African and Ghanaian gold recovery plants performing strongly in the period, increasing production to 21,068 ounces of gold from 19,322 ounces  a year earlier.

The plants’ performance helped lift sales to £11.15 million from £7.71 million previously.

The cash position remained healthy with £2.2 million in the bank at the year-end, up from £1.5 a year earlier.

Goldplat said it has continued to build stockpiles of materials to process at both gold recovery plants.  It has 37,000 ounces of contained gold in stockpiles at the South African plant, with a further 16,000 ounces contractually secured off-site, and 35,000 ounces of contained gold in stockpiles in Ghana, securing future production.

Goldplat’s wholly  owned  subsidiary  Gold  Mineral Resources Ltd is in the process if buying International Gold Exploration AB’s (NYSEARCA:IGE) 50 percent interest in their Kilimapesa Gold (Pty) Ltd joint venture for US$2.7 million. The deal was announced in June 2009. 

In order to start commercial production at the Kilimapesa Hill gold mine, the venture needs to convert its existing exploration licence to a mining licence. The change is with the Kenyan authorities, and is expected to be granted soon.  Goldplat said it will make an announcement regarding its future mining plans on the issuing of the mining licence.  It also expects to be able to announce a JORC compliant resource at Kilimapesa in the near future. 

It is continuing to develop its further four exploration targets at Kilimapesa: Olepoipoi, Meghor, Teng  Teng and Red Ray, as well as investigating other known high-grade areas with  surface mining potential in order to increase the life of mine.

The company is also evaluating  opportunities to acquire  other mining  projects with deposits of between 200,000 and 1 million ounces of gold  with a short lead time  to  production throughout Africa. The focus is on mining assets, rather than building new reprocessing facilities.

Chairman Brian Moritz commented: “Our objective of becoming a mid-tier miner is underway with Kilimapesa Gold moving towards profitable production and other projects under review.  The current favourable gold price environment is enhancing our value and we are in a strong position for growth. 

WH Ireland issued a note on Goldplat in the wake of the results, reiterating its ‘speculative buy’ stance, saying the group has again managed to outperform market expectations.

“What cannot be readily seen by the investor is the efforts by company management to increase stockpiles of treatable resources at both recovery plants in South Africa and Ghana, as well as advancing the Kenyan gold mining operation at Kilimapesa,” the broker said. 

Looking forward, it highlighted that the firm is on an attractive forecast P/E of 5.8 in FY10.