WH Ireland retains 'speculative buy' for Goldplat, says stockpiles guarantee revenues

WH Ireland issued a report on Goldplat (AIM: GDP), retaining its 'speculative buy' recommendation for the Africa operating gold and platinum miner and calling it the world’s only fully funded independent exploration junior with large feedstock samples that guaranteed revenue for a number of years.

The broker said that the company was an excellent proposition for risk tolerant investors due to its stockpiles and cash flows, which it said were substantial for a company of this size. The stock was given what WH Ireland said was a conservative after-tax NPV (net present value) of £21.3 million or 19 pence per share fully diluted compared to the current market price of 9.75 pence.

Goldplat posted a 4% increase in revenues in its interim results to £5.44 million due to higher commodity prices. Gold production declined 31% to 8,309 oz (ounces) in the first half, yet the cash costs were “reasonable” at US$794/oz. As a result, the broker adjusted its NPAT (net profit after tax) projection for the full year 2010 downward by 13% to £1.92 million, largely retaining its original estimate after the management said that H2 production would be higher than the for the first half.

These production variations were called a “normal course of business,” which in Goldplat’s case is strongly cash-generative with such variations expected even with the plant running at full capacity, the broker said.

At the same time, WH Ireland noted the company’s tendency to “under promise and over deliver,” which led to its decision to generate an NPV despite its historic avoidance to attribute such valuation given the management’s desire to reinvest funds into either exploration of judicious acquisitions.

WH Ireland projected the company to post revenues of £10.57 million for this year, which will then stay above £13 million through 2013, while EBIT (earnings before interest and taxes) will increase from this year’s £3.29 million to £5.06 million in 2011 and amount to £4.85 million and £4.50 million in 2012 and 2013 respectively.

Results from previous exploration at Goldplat’s recently optioned Nyieme gold project in Burkina Faso included values of between 1 and 100 g/t (grammes per tonne) gold over a strike distance of over 2 km (kilometres) and intersections of 3 m (metres) graded at 17.48 g/t gold, 1 m at 16.76 g/t gold, 1 m at 4.46 g/t gold and 1 m at 17.83 g/t gold from a 2,015 m RC (reverse circulation) drilling programme. To prove up the Nyieme Gold project, the company have budgeted US$500,000 for a 2,500m diamond hole drill programme, as well as localised geochemistry and mapping, to be completed sometime in 2010.

Goldplat has also recently purchased the remaining 50% interest in Kilimapesa Gold project for US$2.7 million, from their previous partner, International Gold Exploration. A JORC compliant resource was calculated for the deposit, entailing Measured and Indicated Resource totalling 409,000 t at 2.39 g/t for 31,400 oz gold, and an Inferred Resource of 1.24 Mt at 2.43 g/t for 98,000 oz of gold.

http://www.proactiveinvestors.co.uk/companies/news/13801/wh-ireland-retains-speculative-buy-for-goldplat-says-stockpiles-guarantee-revenues-13801.html