The Goldplat share price is down 35% over the past year despite recent half-year and quarterly operating profits rising compared to the same periods a year ago.
There have been a number of disruptions in operations in recent months, yet one could argue not to the degree that would justify the low valuation.
Goldplat is profitable. Yes, profits have fallen away in recent years but Goldplat is still an entity operating profitably. Indeed, profits grew in H1 2024 compared to H1. Ghana is the standout unit with an ‘exceptional’ operating profit of over $1.8m in Q2 alone. Low recovery rates in South Africa offset otherwise strong performance in Ghana. H1 profit increased to $3.3m.
“This was a bitter-sweet quarter with good results in Ghana alongside losses on estimated gold receivable in South Africa. I’m confident that the team has implemented the necessary controls to eliminate these losses going forward,” said Werner Klingenberg, CEO of Goldplat.
“Ghana continues to benefit from engagements and marketing efforts over the last 5 years and we aim to build on the momentum into Africa and South America.”
The company specialises the the recovery of gold from what would otherwise be classed as waste. A vital part of mining’s circular economy, one may question why the stock is flying under the radar of many investors.
WH Ireland recently lowered its EPS forecast to 1p per share from 2p which would mean the stock still trades at 6x forward earnings. Arguably good value.
Costs may be a concern. The company has said they are required to spend £500,000 on upgrading its facilities, and £750,000 on generators, but this is well covered by cash in the bank. There is a low risk of additional funds being required should operations continue as they have been.
Delays in the delivery of diesel generators have knocked output, but this will likely prove to be transitory and shouldn’t impact the valuation over the long term.
The disappointing Goldplat share price performance may just be the result of the company not receiving the coverage it deserves. For many investors, this is a stock they simply won’t be aware of.
There is also a vagueness of what comes next for Goldplat. The CEO alludes to a declining South African gold market and says they wish to leverage their strengths into new minerals and metals but stopped short of detailing what they could actually be. Small-scale operations with the cash resources of Goldplat have the means to set out a clearly defined growth strategy, which seems to be missing.
Again, this is possibly a breakdown in communications resulting in investors being left unsure about the company’s future.