BULL POINTS:
■ Huge potential in three projects
■ Profitable and cash-generating
■ Lots of good news likely soon
BEAR POINTS:
■ Reputation as a dull company
■ Projects may lack economies of scale
Goldplat is a rare beast - a miner whose shares are quoted on the Alternative Investment Market that makes a profit. It's often perceived as steady but unexciting, although that's a mistake - the potential of its three African mining projects could transform the company. Better still, the potential is not reflected in its share price, though a busy drilling programme could bring it into the spotlight soon.
| IC TIP RATING | |
|---|---|
| Tip style | Speculative |
| Risk rating | High |
| Timescale | Long term |
| What do these mean? Find out in our | |
Goldplat has three advanced exploration projects in Kenya, Ghana and Burkina Faso. True, their disparate locations mean Goldplat may lack some economies of scale. Even so, each has considerable potential. Kilimapesa in Kenya, the most advanced of the three, already produces gold. More compellingly, at each project there is already either extensive mining by locals - so-called artisanal mining - or encouraging results from earlier exploratory drilling. This makes Goldplat's projects less risky.
Artisanal mining encourages exploration for several reasons. First, it confirms the presence of gold. Second, it underpins a minimum grade of ore, since artisanal techniques can't identify grades below a certain level. Third, it confirms that the ore is close to the surface, since artisanal techniques can't penetrate below a few metres, which suggests mining will be cheap. Finally, following the path of artisanal workings across a gold field indicates where the ore will lie.
| GOLDPLAT (GDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10.75p | MARKET VALUE: | £18.0m | |
| TOUCH: | 10.5-10.75p | 12-MONTH HIGH: | 15p | LOW: 8.25p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 5 | |
| NET ASSET VALUE: | 12p | NET CASH: | £6.3m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 7.7 | 1.62 | 0.95 | nil |
| 2009 | 11.1 | 2.41 | 1.67 | nil |
| 2010 | 10.7 | 1.94 | 1.10 | nil |
| 2011* | 16.0 | 4.40 | 1.82 | nil |
| 2012* | 15.1 | 5.02 | 2.15 | nil |
| % change | -5 | +14 | +18 | - |
Normal market size: 10,000 Market makers: 9 Beta: 0.7 *WH Ireland estimates | ||||
The Kilimapesa project in Kenya is close to securing a 10-year mining lease. Goldplat can fill its processing plant with residual material from artisanal operations and has no immdediate need to mine. That said, drilling along unexplored sections of the gold field and along parallel gold veins (highlighted by artisanal activity) should increase the current resource of 129,000 ounces, probably to at least 500,000 ounces.
Goldplat recently completed the acquisition of the Banka project in Ghana, which has an initial resource of 260,000 ounces of gold and extensive artisanal activity. An independent technical report concluded that there is significant potential to upgrade the resource and the company's bosses reckon this could top 500,000 ounces of gold.
At the Nyieme project in Burkina Faso, a drilling campaign aims to add to the existing 100,000-ounce resource. The site has at least as much artisanal activity as Kilimapesa and management thinks the resource could exceed 1m ounces, which could justify an underground mine.
Meanwhile, Goldplat's recovery operations in South Africa and Ghana continue to produce around 1,000 ounces of gold per month, which maintains profits and generates cash to finance the mining and exploration projects.
The three mining projects could lift Goldplat's gold reserves to over 1m ounces, possibly 1.5m ounces by the first half of next year. In the meantime, considerable newsflow - including granting the Kenyan mining licence, drilling results, increased gold resources and, possibly, acquisitions - should raise the company's profile and help correct the notion that Goldplat is simply a boring recovery operation.
