Goldplat (LSE:GDP) — Investor Presentation

0:02 Good afternoon, ladies and gentlemen, welcome to the GOLDPLAT PLC Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab company may not be in a position to answer every question it receives during today's meeting. However, the company review all questions submitted today and we'll publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we'll notify you by email when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you'd be so kind as to give you, give that your kind attention, I'm sure the company will be most grateful. And I'd now like to hand over, if I may, to Werner Klinenberg, CEO from GOLDPLAT.

0:48 Good afternoon, sir. Thank you very much, Mark, thank you to all the investors that's joining us tonight or this afternoon depending on where you are. I'm looking forward to sharing a bit of the GOLDPLAT story and current developments and some future prospects to everyone. I think yes. I mean, GOLDPLAT PLC essentially is two market leading gold recovery operations. The one located in South Africa where we've got a 10% minority shareholder and one located in Ghana focusing on the West African and South American market, which we are 900%.

1:33 And they focus on recovering and not just metals, but value for the gold industry in the in their respective areas. Now before I discuss or I give you some overview and some key sort of data, I think it probably will be of value for those investors that's not familiar with GOLDPLAT and to just get a bit of a sense of what is gold recovery and what do we do at GOLDPLAT PLC. If we look at slide number five, in essence, we provide a service to various clients, specifically the gold and PGM mining groups and industry, as well as any land owner who's got property, which has been contaminated by the mining industry historically.

2:32 And we source from these specific clients various types of material, and that includes fine carbons utilized in the CIL circuits, milliners from the milling circuits at at the operations, wood chips that comes from the wood support beams, underground grease, as well as contaminated surface oil, and then any any other concentrates generated within the mining industry that needs some sort of a solution. We process these materials through various types of circuits, and I'm gonna list them all. It's quite a mouthful, but we've got milling circuits. We've got jigging and screening circuits to help us improve the recoveries of the material, gravity concentration circuits, carbon and lead circuits, wash plants, file circuits, rotary kilns, and other incinerators, shot blasting, flotation, illusion circuits, electro running, and smelting.

3:35 Now I'm naming all of them just to make it clear that we get various types of materials from clients that that you that we require not just different circuits, but actually different processes to recover the gold and the PGM from from that material. And as a result, you'll also see that our contracts and deals per client can differ quite significantly due to that material differing quite significantly. Now in the end, we do produce gold dore and silver dore bars. We we produce gravity concentrates and other concentrates that we sell to the finest and smelters downstream, and we normally return a portion of that metal or the value of the metal back to the suppliers of this material.

4:34 Now importantly, that after processing this material, we do then dispose of the tiles, which still contains gold onto tilings facilities. And we've therefore built up about 2,000,000 tons worth of material at South Africa on our tilings facility, and we'll we'll talk a bit more about that. I think in the end, our focus is really to do all of this on environmental friendly manner. We do see ourselves as a green gold producer, which provide a solution for the mining industry for the byproducts and the waste they do produce. We don't just return value. We're also providing that environmental benefit.

5:24 And we're quite proud of also receiving a green economy mark from the London alternative investment market. And I think going forward, our focus will be to build on that credentials, specifically if we look to the new tailings facility in South Africa, we'll definitely utilize current best practices in terms of lining those facilities. And based on the the geographical areas we source material from and also the elements and metals we deal with, it's quite important for us that we do that in a responsible manner. We therefore do adhere to the London Bullion Market Association's responsible gold guidelines and and try and ensure we we keep the provenance of the material as far as possible through the process.

6:22 Now if we go back to overview of what the group the GOLDPLAT PLC group is all about. And the two recovery operations is cash generators, and we've got a clear strategy in terms of how to build production from the gold industry as well as PGMs. If we're also covering a big geographical area. We source material in South Africa, specifically West Africa as well as Central Africa, and is also expanding quite significantly over the last three to four years into South America.

7:09 And on that point, we're planning to invest roughly $300,000 into a company and site in Brazil to give us a footprint to bolt on our marketing efforts over the last four to five years. We've got a good team in South America, and I believe this site will give us the ability to focus on lower grade material providing a better range of services to the clients we currently have there and potentially also then increase our market share over the long term. I'm also quite excited about the developments on the PGM side, specifically in South Africa.

7:56 We our focus has been on sourcing PGM bearing material over the last few years, and some of it we've processed. And on some, we've built up a stockpile to justify investing into further capital equipment, specifically upgrading our flotation plant to give us the ability to deal with some of the byproducts being generated by the PGM industry. And that will give us the ability not just to recover the value of the material we currently have on-site, but also help us to be a bit more aggressive in terms of sourcing in the market going forward. We remain a niche business, a niche recovery operation, and we've got experienced management team that's been with a with a group for a very long time.

8:49 And and we're continuously looking at upgrading and building on our infrastructure to improve efficiencies and recoveries, not just of the material we're currently sourcing, but focusing on what material we see available in the market at the moment. I've indicated earlier that we do have a training facility in South Africa. That facility is reaching capacity, and we'll talk a bit about the new facility later, but we've done a jaw compliant resource in 2016, and at that stage, it contains roughly 82,000 ounces of gold. Furthermore, we currently own 9.2% interest in an African focused gold miner, Caracol Gold PLC, that's listed in the London Stock Exchange, and we got that interest through the sale of our only operating mine during the current period, and which we sold to Caracol Gold PLC.

9:52 And at both, the net 9.2% interest is is currently valued at roughly £1,800,000. And on on the market. We also still retain a net smelter royalty of 1%, which is kept at 1,500,000 in Kilimepa, and which we'll see sort of a nice royalty stream coming through over over the next couple of years. If we then look at just some key data, we've been listed since 2006, and I'm not gonna go too much into history. But currently, our share price is trading at 7.22 p. We had a market cap of 12 from a £43,000,000.

10:41 And as of today, we've got a strong board, and our non executive board members has got a lot of experience on AIM and on the listed markets within executive or non executive role. We're also privileged to have one of our major shareholders, Martin Oi joining us on the board in October with a specific focus on making sure that the cash utilization on capital decision and making around that is evaluated as well as finding ways of creating maximum value of a per share intrinsic value of the company, essentially.

11:28 If we go and look a bit more at the numbers in terms of what all of this means, and I want to just add, I mean, we the the June 2021 numbers is still on audited. We're probably gonna get numbers out during yeah, in the next few weeks. But I just wanna share with you just for you to get a sense of what we currently generating on operating level. The results from the recovery business over the last five to six years, you'll see that the operating profit before finance cost on average was higher than £4,000,000, and it averaged above £5,500,000 during the last two years.

12:16 And that is basically just the recovery operations. It it excludes all our mining and exploration discontinued operations. It excludes taxes, foreign exchange movements, finance costs, as well as our group related listing and administrative costs. Now if we if we look at at the tax expenses in Ghana, we're quite privileged in the free zone. So we've got a beneficial tax rate of roughly 15%. In South Africa, we tax on a formula tax basis whereby the tax rate increases and decrease decreases depending on your performance and the capital investment during the current period.

13:07 But on average over the last few years, it probably were around 22%. If we look at our finance cost going forward, after the restructuring of the business and acquiring some of the minority interest in in September of this of this year, 2021, we're sitting worth 3,000,000, roughly £3,000,000, just a little bit less of debt in the South African subsidiary that's repiable over three years in carrying interest of circa 9%. We further do incur some working capital interest on a year to year basis that's been averaging around 250 to £300,000 on a yearly on a yearly basis.

14:03 Now if we if we go and evaluate our current market cap of £12,400,000 against the £1,800,000 value we've got in Gareco Gold, the net smelter royalty, our net cash that's fluctuating between 1.5 to £3,000,000 on a regular basis. The cash flow generator ability that we're seeing of the recovery operations as well as the optionality in the 82,000 ounces resource contained in the tailings facility in South Africa.

14:48 I think the the investment case in GOLDPLAT PLC is quite quite easy to see.

15:00 If we then look at how we're planning to unlock the value for of this over the next couple of years, I think for for me, really, which is key, it reminds our strategic partnerships and relationships in industry, specifically in West Africa. We might in a lot of headway in terms of building a relationship with the mining groups in the variance ECOWAS countries, And that you can also see in the results for the Ghana operations during the 2021 financial period, which basically more than doubled the operating profits year on year.

15:58 And I think more importantly is that that is continuing into the next financial period where the efforts we're putting in is showing encouraging results in terms of feedback we're getting out of the markets, out of the countries, and hopefully, we can see and share some of that in in in the near term with the market. Further to that, I think it's gonna be important for us to keep on sustaining our sourcing efforts specifically in South Africa on the lower grade material. We've been maintaining the material on-site and in contract above twenty four months for the last two years, and we've been able to maintain that. And and we're also looking at well, not just increasing it, but looking at different ways of of building relationships in industry to giving us a continuous source.

17:04 We've announced last month that we've entered into arrangement with, which is mining entity listed on the ASX in Australia, and we're gonna be generating a premined ore come next year, and we're looking to process probably for six months from quarter four some of that material.

17:29 And, hopefully, we can build on that going forward. I've already indicated the importance of diversifying into other metals and elements, specifically the PGMs, and we will continue to build on that in regards with the reprocessing of the tailings facility in South Africa. As indicated to the market before, we believe the base value would be in reprocessing that through a third party, and we have applied for when all this application in for environmental approval of a pipeline to a facility in the area. And that might potentially in the future give us the ability to move the material to a site where it can be processed.

18:20 The environmental approval process is gonna take twelve months, so the reprocessing of that facility is still

18:31 a year or two away. I think further to that, I've already indicated that we wanna expand and move into South America and also bolt on the on on the on the marketing efforts we've put in over the last three to four years there. And I think all all in all, by putting these efforts together, we will then get the value or retain the value we've been seeing over the last four to five years being generated from the recovery operations. And I think for me, we are if we look at the nature of the business and I've explained it and how we are quite a unique player in the market processing all the material that that normal price processes finds complicated or or too small to warrant the effort to to to process the material.

19:34 And for us, the cash flow we're gonna generate, we're gonna look more and more aggressively in terms of sharing back to the market. I know there's been a question pre the presentation asked around when do we plan to distribute the the first dividend or to buy back shares. However, we decide to to allocate that cash flow back to shareholders. And I mean, I think the intention is to, on a yearly basis, now assess and declare as we feel we have the ability to do considering capital requirements requirements at that point, and then, obviously, the debt repayments

20:16 that we need to make in South Africa. But we definitely well placed off the the sale of Kilimapesa, the restructuring of the group, the movement of GOLDPLAT PLC.

20:34 We've reduced the withholding tax requirements on on dividends to cleared upwards. We should be in a position to start looking at giving value back to shareholders quite soon. That's great. Thank you very much indeed and apologies for delaying coming in, but thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab that's on the right hand corner of your screen. Just type in your questions and press send. Just while Verna takes a few moments to review those investor questions submitted already, I'd like to remind you that the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investment company dashboard, and we'll send you an email when that's ready for your review.

21:22 Finally, I'd like to remind you that your feedback is important to the company. And immediately after this presentation's ended, we'll redirect you in order that you can provide the company with your thoughts and expectations. Then I hope hopefully, you can see the q and a tab on the right hand corner of your screen. If I could be so bold, if I could ask you to read out those questions, who it's from, and give a response where it's appropriate to do so, and I'll pick up from you at the end. Okay. Yes. Thank you, Mark. I think it's it's important that we spend some time on the questions. The first question we've received was what is the typical time lag between agreeing a price for the gold containing material you buy and the sale of the processed and recovered gold? I can see GOLDPLAT making a lot of money in rising gold market, but also losing a lot in the falling market. As you are processing, not a gold trader, do you hedge for the exposure?

22:18 Steven, thank you for for the question. I think the the easy answer is is that it is complicated. We do have different types of materials that we buy and different context on which we buy it. Some of it, we will the the supplier shares the price risk with us in the sense that they get paid or we get paid at the end. We we saw the price increase obviously quite significant pre COVID, specifically on that lower grade material we sourced. We saw an increase in the prices we needed to pay to get all of that material. So it's not really a price risk.

23:05 It's more a case of the market has moved and what we need to pay for that value has increased with with more activity in the market and more people willing to buy the material to process even if it's quite contaminated. So that that influence to an extent what you've seen in terms of cost increasing in in in sort of a higher gold market and some of the margins coming down, specifically in South Africa. They are instances where we do buy material at a certain gold price. We agreed upfront and we get the value back later. I think the focus for us has been in the recent past to try and reduce and improve the turnaround time from when we do get material process and ship.

23:56 I think the last three years, we've built strong relationships with down downstream processes, smelters, and to be able to take our material. And we also, as indicated, we do have some working capital facilities whereby we do pre sell some gold into the market. And on that point in time, we fix the gold price and and and they the reason is twofold. One is to to fix the price to get payments upfront for from a cash flow point of view, and the other one is just the quicker we do that, the shorter we make the period between when we actually take the risk and when we get rid of the risk. However, because the contracts vary so much and the time frames differ so much, we tend to rather focus on the actual stuff we do have control over rather than hedging some of the exposure we do have.

24:58 I hope that answers the question. K.

25:09 Here's another question. The Ghana recovery operations continue to increase operating profits every quarter. Can we expect further increases here, or all the operations approaching the limits of the amount of material they can process? I think what is important to note is that the Ghana operation in essence is a byproducts processing facility. It's mainly focused on processing fine carbons, liners,

25:45 some lower grade wood chip material. And I think in essence, it can handle most of the material we're currently receiving. Yes. It does have some some limits, but I'm not I'm not concerned that we we reaching sort of a limit from a processing points point of view. For the group, I think the results has always been more depicting of our abilities to source and what we source rather than what we can produce. I think we've got the ability to actually turn it out. Those are those type of data quite quickly within a quarter.

26:31 So that won't be a limiting factor on Ghana. To maintain the results we're seeing in Ghana, it's all gonna depend on our sourcing efforts and opening up the markets in West Africa. There's a question around once you have an agreement to put the pipeline in, how long will it take to process all of the TSF material?

27:20 I think, why be that's that's sort of a difficult question to answer at this moment. I mean, the pipeline is sort of part of the process to give us the optionality to really reprocess the material. I think we probably can do it in in four to five years, but it it it all depends on on on on the other agreements, and there's still thirty third party third parties involved in terms of making the final decision on how we're gonna do and at what rate we will do it. Okay. There's another question around the t s f.

28:05 Yes. If the option of a pipeline to a third party has recently been raised, what would be the cost of the pipeline? Would there be any other CapEx required? What sort of recovery and margins do you think could be achieved via a third party? I'm gonna answer that in the same way, Mark. I mean, we still have this we're still in in discussion still in discussion with the third parties. We obviously has done a lot of models, but we know that the process to to give you sort of an indication, and hopefully, we can get there sooner rather than later, and we can start sharing some information. Another question from Robert, what is the company's expectation for annual operating profits in South Africa?

28:54 What is the current forecast full year operating profit at South Africa, and what is the sustainable run rate going forward? I think I'm gonna answer that question by stating that the same as for Ghana. In South Africa, it's all about what we source and when we source that material. Obviously, there's other factors that play it well. And for us, the key here is to make sure that we recover as much as possible gold to to maximize returns at the end of the day. I'm not I think there is a note out, but I mean, apart from that, I can't give a exact indication of of operating profit numbers going forward for the next two to three years.

29:54 There's another question about ours. There is a minority interest by our price calculated. The evaluation appeared quite high, so would appreciate any feedback. I think on on the valuation side, there's one thing that we need to note that there is an intercompany loan outstanding to South Africa of roughly £4,500,000 that needed to be repaid from the group at some point in time to the minorities. So that needs to be considered when we look at when you look at the valuation of the company in its stand alone ability, whereby from a group point of view, obviously, that consolidates out and is is less relevant. And that might be some of the reason why it might be viewed as high.

30:45 We're quite comfortable with evaluation in terms of what the transaction was done at. When do we expect an export facility in Brazil to be up and running? I think, I mean, we're currently exporting material out of South America, and we have been doing that over the last four years. And we are planning to probably get something in place over the next six months or so. It it will take some time to construct some of the small facilities we wanna get in place.

31:36 And then I think it's for us, I mean, the key would be, and it's the same way we built up Ghana since 2007, 2008, is to get in small facilities, build up to market. And as we see the material increase from our current clients, we can then increase the the the facilities we put in place in in Brazil. But the initial investment is gonna be quite small, but I think it's key to making sure that we can continue building on on our efforts in South America. Another question has been, has any progress been made with the talent opportunity in Ghana? I'm quite happy, Robert, for that question. I don't think I've mentioned it in the presentation, although it is noted somewhere.

32:29 It's still important for us to look at opportunities of processing tailings in in Ghana or potentially West Africa going forward, but the key has been there to to to build the right relationships. You can't just come into Ghana and start processing tailings. It it is regulated, and you need to have the right authority from the Minerals Commission. And we are currently working with individuals to find ways of entering that market again, which was quite successful in 2011, 2012. It probably will be in a different way. So it's definitely still on the radar. It's still something we're working on.

33:18 And I think the people we're currently engaging is is is probably the best position we've been in over the last two years of of getting something off the ground. Okay. How does GOLDPLAT assure the quality gold content of the material board given this is only known for sure once the material has been processed, or is there an x processing adjustment? Now, Steven, I think this is basically what the GOLDPLAT business is all about.

34:05 We've got a lot of experience in the industry with different types of material, and it gives us the ability to analyze material upfront to understand what the possible risk is in terms of what we can and can't recover. And we, therefore, can make various contracts upfront in terms of what we believe we can or can't pay. And, again, depending on what the grade of the material is, our contracts will differ. Sometimes on the low grade material, we will buy up front at the end of ton, but there you'll have a big margin in terms of to cover your transport cost, to cover your processing cost, and then to make way for possible losses that you didn't see upfront.

34:57 When the material is more high grade, there is some material where we only buy the client once we've recovered the gold, and we know exactly what the quantity is. And then there's certain contracts where it's in between. We get the material. It's not in our homogenic form. We first do some preprocessing, clean it up, separate it, get it into homogenic fractions, then assay it, and then we feel comfortable in terms of what we can buy and settle. And again, there is some some margins in it to say, well, if if the material is lower grade or the recoveries is less certain, you end up buying less, and and and they're saying it in a different way. Our contracts do differ in terms of the risk we do take. And on the extreme end, we might take the assay risk, the sampling risk, the sampling papers, the cash flow risk, and the gold price risk all upfront.

35:59 But, I mean, that is then obviously factored into the price, factored into what we pay, and and that is part of the reason why you'll see some fluctuations sometimes up and down in terms of operating margins. Partly because the material we process differ, partly because sometimes the recovery of the material differ. So it does goes up and down as as as a result of that. But I think that's where the experienced management team comes in that way, you know, various processes come in to make sure we reduce that risks for for the group and the shareholders as much as possible. But that in the end is also our competitive advantage, is our ability to actually buy material and then recover the gold afterwards.

37:00 The agreement will will replace current materials. So it will just give us long liberty. It won't increase capacity per se. There was a question of the agreement. Will this be incremental production profit, or will will this replace processing of other material? The answer is it will replace other material for that six months. K. I've been a shareholder for over ten years, holding 1,500,000 shares in all of this time. I have only had one dividend.

37:48 I think answer to that, Alan, is that obviously, for a long period of time, the group has had strategy of investing and growing its mining portfolio. With that changing with us exiting Kilimanpaso during the current period, and the focus is only on the recovery operations. And I think the recovery operations is obviously a cash generative business, almost a machine, and with that cash flow not required for the mining industry, yes, definitely, it needs to start returning to shareholders. K.

38:57 There's a question around the vision for the company. And I think for for me, both, and as indicated in the presentation is and I think the gold recovery business has has been around for the last fifteen years and even before listing probably another fifteen years. And my key focus has been since taking over is to refocus this group on the recovery business and to build sustainability, transparency, and long liberty into the recovery business. That's really what my key focus is. And as we can deliver and provide certainty of cash flow to the to to the shareholders, we can't just we will not just be able to return that value, but we'll also be able to grow the multiple and grow the share price in itself.

39:56 When do you expect to have agreement for the new TSF in place from Peter? Peter, I think for now, the focus is to get the pipeline and everything in order because that is really extremely important for us to be able to really reach any agreement at the end of the day. Further to that, I noticed that in my presentation, and I wanna address it now, and I will say I haven't discussed our new tailings facility. Obviously, everything we've indicated in South Africa, a prerequisite is that we do get a water use license over our new training facility, which we do expect in the next two to three months after we've done a resubmission two to three weeks ago. So that's going ahead. And once we've got that in place, we can move off the current facility, which then gives us the ability to reprocess, and then the pipeline becomes key, and then afterwards the agreement. So the the pipeline is still obviously twelve months away in terms of getting environmental approval.

41:00 In between, we'll obviously work hard in terms of finding some sort of a resolution of an agreement. Can we get a sense of how much PGM's opportunity could add to the top line? Is it fair to assume it will be at much lower margins than the current operations? I'm gonna answer the question just to indicate that if you look at the way precious metals is recovered in industry, it's totally different than the gold industry. In the gold industry, you you mold the ore and normally, you then load or you leach the gold and load it onto carbon. So you take it from one product to another product, and you sort of upgrade it through that method.

41:57 On the PGM side, you will have a situation whereby you concentrate the PGMs up, meaning your byproducts or your tiles is really getting less and less and less. Meaning, you don't necessarily generate those high grade type of of PGM concentrates at the end of the day. And therefore, we're gonna need flotation and additional processes, and you're probably gonna see higher volumes that needs to be processed to recover the PGM value at the end of the day. So I think you're not it's it's not gonna be similar to the fine carbon business that we've got on the gold side.

42:46 I think it's too early to give you an indication of what the increase on the top line is gonna be. I think for me, the more important thing is is it's gonna be nice in terms of supporting the current base and and solidifying the cash flows and returns going forward. And that's for me is the key. Then I might just jump in there at that point, if I may. I think you've addressed pretty much all the questions that have come in from investors. And, of course, we will make all questions available to you post this meeting in a way for you to be able to review if there's any further additions that you need to make. Then I know investor feedback is particularly important to the company, and I'll shortly redirect investors to provide you with their thoughts and expectations. But perhaps before doing so, if I could ask you for a few closing comments to wrap up with.

43:34 Yes. Thank you, Mark. And I guess from from my side, you for everybody that joined, and thank you for the questions that that they've asked. I think for me, it's been quite beneficial in terms of of looking at the questions even more than than going through the presentation. I know the GOLDPLAT business is quite a unique and a niche business, and it does raise some questions with shareholders, and we're always comfortable to try and answer them in the best way possible. I think GOLDPLAT is well placed. We've we've sold Kilimanpesa. We've moved away from mining. The effort we've put in and the refocus of management on the recovery business is bearing fruit, specifically in Ghana.

44:20 I think from that perspective, I'm quite encouraged in terms of what the recovery business can do and that we can get to a point where the shareholders can see the value coming or or getting the value from the recovery operations that they've been looking for for the last five years, which is obviously being redirected to mining. So, yes, I think we're well placed, and I'm looking forward to to sort of ticking off all the strategic focus and and the boxes that that we've put sort of in place. And again, thank you very much for everybody joining. That's great. Thanks. Thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations?

45:11 This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team at GOLDPLAT, we'd like to thank you very much indeed for attending today's presentation. That now concludes today's session. Good afternoon or good evening to you all.