LONDON (ShareCast) - Shares in Goldplat dived on Tuesday after the AIM-listed African gold producer announced it had put its Kilmapesa Gold Mine in Kenya on care and maintenance following a strategic review of the business.

In an update issued on Tuesday, the company said it remained focussed on realigning Goldplat's business model to primarily concentrate on its strong cash generating capabilities of its gold recovery operations in South Africa and Ghana and the growth potential of this business across the continent.

In order to eliminate losses which it said had been caused by continued operational constraints and the current uncertain gold price environment, the company said it had put the Kilimapesa Gold Mine in Kenya on a care and maintenance programme until the project economics could justify the reopening of the mine.

The company said that the Kilimapesa Gold Mine had retrenched a further 50 employees and was now maintaining the mining operation on a skeleton staff. The processing plant would continue to process stockpiles of ore at the plant to cover the costs of the care and maintenance programme, it added.

In terms of the company's gold recovery operations, which recover gold from waste products of the gold mining process, Goldplat said that it had also completed a review of Gold Recovery Ghana, its Ghanaian operation in Tema.

Following this process the company said that it would be looking to re-focus its recovery model to replicate its successful South African operation, which secures waste-products predominantly from blue chip mining customers.

Accordingly, due to the continued margin pressures sustained primarily from purchasing materials from artisanal and small scale miners, the company said that it had stopped procurement of material for Gold Recovery Ghana's Carbon in Leach (CIL) plant and was in the process of closing this section down and would remain so until material that meets the company's margin criteria is sourced on a sustainable basis.

The company said that its South African gold recovery operation continued to produce "strong cashflows" with particular emphasis on fine carbon processing which had expanded significantly over the past six months with new supply contracts recently signed with major South African gold producers.

New capital projects were also underway to continue increasing gold recovery production, the company said

Goldplat's Chief Executive Officer, Russell Lamming, commented: "The strategic review launched when I took over the role of Chief Executive Officer in September 2012, is focussed on creating long-term sustainable value for shareholders while continuing to generate cash.

He added: "It is always disappointing to suspend any operation but it is of paramount importance that we make sure that all our operations are profitable and do not represent a drain on the resources of the rest of the company."

Goldplat’s share price was down 33.77% to 6.38p at 09:28 on Tuesday.

MF

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