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Gold rush: Goldplat targets expansion plans in Africa

16 October 2009

A visit by Demetri Manolis to London this week came less than a month after he took full control of a mining operation in Kenya that promises open a new chapter in his company’s hitherto rapid growth story.

For the accomplished mine manager and chief executive of AIM listed Goldplat plc, a £2.7m deal to buy out its partner in the Kilimapesa Gold operation has handed the company a business that it reckons can turn a profit by this December.

Indeed, while Manolis was happy to see the details of a new JORC-compliant resource estimate for Kilimapesa’s Lolgorien gold project recently, he says there was never any doubt about the potential of the project.

That resource estimate totalled 1.65 million tons at 2.44 grams per ton of gold, which means the mine could produce 129,000 ounces at a cut-off grade of 1 gram per ton of gold in all categories. Manolis thinks that further exploration work will eventually make the reality much better – with the high grade resource eventually capable of delivering between 500,000 to 1 million ounces.

Events in Kenya are a boost to the progress Goldplat is making at its existing operations in South Africa and Ghana, where it reprocesses the tailings from old mines and already kicks out a healthy profit. Last year those profits topped a record £2.4m, but Manolis is keen to drive the operations forward.

“Between the two companies we produced more than 21,000 ounces of gold last year – starting from nothing three years ago,” Manolis said. “In the next three years I wouldn’t be surprised if we produced 100,000 ounces, not just from the recovery operations but across the group. We are very actively looking for acquisitions now.”

In South Africa, Goldplat’s strong relationship with its Black Economic Empowerment (BEE) partner, which owns 15% of the SA business, is expected to see the two sides working together on new mining operations in the future. Here, again, Manolis says the expansion plans are focused on mining rather than recovery.

It is a similar story in Ghana, where the company runs another, mature recovery operation but is now looking further afield into mining. “We have a lot of support within the Ghanaian Government because we are unique and we are showing them something new; something they did not have before,” Manolis said. “We have shown them that we can create jobs and wealth from nothing.

“The operation performed very well, we almost doubled production last year and I think that very soon there will be news on how we are going to increase production even further. That will have a very positive impact on the profitability and cash generation of the company.

“In terms of timings, we are in discussions – in some cases very advanced – and the signs are very positive. The desire from other parties to do business with us is there, so something will happen soon.”

While Manolis continues to toy with expansion plans in South Africa and Ghana, the deal to buy out Kilimapesa Gold marks the true start of mining operations at Goldplat.

With a mining licence expected within weeks, the company has plans to reorganise the mine’s production system, increase the milling capacity at the plant and, in doing that, triple the current production levels.

“In other words, we want to make Kilimapesa something a bit more substantial and bring it up to 7,000, 8,000 maybe 10,000 ounces of gold per year – and that will take a year to achieve,” Manolis said. “At the same time we are going to look to further develop the Kilimapesa project and look at other targets we think might be productive. At the same time, we have also set our eyes on certain other targets in Kenya that we think could be a good proposition for us.”

While Manolis is guarded about when and where future deals in Kenya will take place, he says that he has got specific projects in mind. Indeed, it is clear that Goldplat is now keen to expand its operations across the group.

“The first phase of expansion will involve two or three more projects – anything from 200-300,000 ounces up to 1 million ounces – under Goldplat in certain countries,” Manolis said. “And we would like to do that by using our own cash.

“The first phase will hopefully take production close to 100,000 ounces per year in the next two years or so. After that we will look for something bigger – but if the right deal comes along sooner then of course we would go for it.”

Ben Hobson, SmallCapNews.co.uk