JOHANNESBURG (miningweekly.com) – Aim-listed gold producer Goldplat has narrowed its operating profit for the year ended June 30 by £1.89-million to £2.6-million, largely on the back of a decision to put the Kenya-based Kilimapesa mine on care and maintenance, driving substantial losses of £983 000 for the operation over the 12 months.

Coupled with a £2.34-million asset impairment charge for Kilimapesa, this drove profit before tax down dramatically from £5.24-million in 2012 to £207 000, which the company believed “was misleading and did not truly represent the results of the period”.

Similarly, Goldplat’s net cash position tumbled from £4.58-million in the prior year to £2.36-million.

Meanwhile, the underlying profits of the company’s gold recovery business in South Africa and Ghana were largely maintained at the same level as the previous year, with the mature South African gold recovery operation emerging as the group’s most cash-generative division, owing to a recent rapid decline in the value of the rand largely mitigating the reduction in the gold price.

Production from Ghana and South Africa totalled 35 099 oz, generating a gross profit of £5.3-million.

Goldplat’s Ghanaian gold recovery operation, while still profitable, had seen some operational difficulties, which impacted on its growth during the period, including unlawful competition, which reduced the material available for processing.

‘The Ghanaian government has recognised this and has put in place stringent practices to curtail such activities. In both countries, therefore, Goldplat's operations are in a better competitive environment than last year,” the company said in a preliminary results statement on Wednesday.

Goldplat remained focused on maintaining each plant's operational efficiency, with cash generation and stable margins remaining a key focus.

The robustness of its gold recovery operations was further highlighted by a strategic review undertaken earlier in the year, which focused on maintaining strong revenue growth and stable margins in the uncertain gold price environment.

The company said this review confirmed gold recovery as the most profitable and core facet of Goldplat’s business.

“Accordingly, we deprioritised our exploration and development portfolio in Kenya, Ghana and Burkina Faso during the period, and wrote down a portion of the preproduction expenses for Kilimapesa,” the company stated.

The company also anticipated “significant development potential” for its gold recovery operations and was examining the potential to expand its gold recovery business across the continent to generate new revenue streams and capitalise on this prospective opportunity.

“While the first half of the current financial year remains a difficult trading period, we expect the improvements to show in the second half of the year.” Goldplat stated.

The gold miner has proposed a gross dividend of 0.12p for the period.