South Africa based Goldplat Recovery, a 74% owned subsidiary of AIM-listed gold recovery specialist Goldplat, says it has concluded the toll-treatment for the batch of silver sulphide material as specified in the contract and has issued invoices, some of which Rand Refinery has not paid and are disputing.
Further to legal advice, Goldplat Recover issued a demand letter to Rand Refinery for unpaid invoices for approximately R13.5 million (circa £628 000 based upon the average conversion rate for the year).
Goldplat Recovery says it will institute processes forthwith to resolve the issue and, on the basis of legal advice received, the Goldplat board is confident that its recovery subsidiary will recover the money owed to it in full. Goldplat will keep the market informed as to progress regarding the dispute with Rand Refinery over the contract.
Goldplat seeks alternative refiner
In addition to the above, the subsidiary has been notified that Rand Refinery will not be able to accept by-product materials for treatment in their smelter during the month of August, for operational reasons.
As previous issues with the Rand Refinery smelter have placed the Group’s companies in very difficult positions operationally, financially and with regards to their relationships with its clients, Goldplat has taken strategic steps to mitigate what the company referred to as “single refiner risk”.
Alternate plans are in place to treat the bulk of the Group’s products. Whilst this will have timing and cost implications, the directors do not expect the use of alternative refiners to have a significant impact on its business.
The Group had a very active month of June, with its South African operations performing ahead of expectations.
In light of the strong end to the financial year, marked exchange rate movements, which have worked in the company’s favour, and lack of certainty as to the recoverability and consequential accounting treatment of the disputed debt, Goldplat is not yet in a position to advise whether its annual results for the year ended 30 June 2016 will be in line with market expectations.
However, it is currently reviewing the possible financial impact of these matters, and will announce as soon as possible any material variation to market expectations of its results for the year ended 30 June 2016.