LONDON (ShareCast) - AIM-listed Goldplat revealed a widening of its half-year losses on the back of a steep revenue decline, as sales were hit by a weak gold price.

However, the group was more optimistic about its future, as it revealed that the second half of the year was already performing more strongly and as such it expects, in line with market expectations, to return to profitability by the year-end.

For the six months ended December 31st 2013, the gold price averaged $1,300 per ounce (oz), 400/oz less than the average price for the same period a year earlier, and 300 oz less than during the year ended June 30th 2013.

The group generated a loss of £0.91m (2012 H1: £0.81m) on revenue of £9.64m (2012 H1: £15.48m). Basic losses per share narrowed from 0.73p to 0.54p year-on-year.

It was a "difficult" period of adaptation and restructuring for the company both in terms of gold recovery and efforts to return its mining business in Africa to profitability.

Its exposure to the gold price is mitigated by the fact that it can adjust the price of gold bearing material it purchases, which puts it at an advantage compared with a mine reliant on a finite orebody. However, the group explained this mitigation is not immediate in effect, as it tends to be processing stockpiles purchased some time previously.

Additionally, the major part of Goldplat's costs are processing costs, which do not vary with the gold price, and instead tend to increase with inflation.

During the six months, the company introduced a number of cost efficiencies and as certified as a "responsible gold" producer at its South African recovery operation - something it expects will lead to increased business.

The group said: "Our recovery operations in both South Africa and Ghana are currently trading profitably and at a rate which should more than eliminate the first half trading loss. We also expect to be in a position to continue paying dividends."

NR

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