Narok gold miner reports Sh153.8m loss despite rise in output


Mining gold. FILE PHOTO | NMG

Output at the Kilimapesa gold mines in Narok, operated by UK’s Goldplat, increased 69.98 per cent in the year ended June 30, 2017, but the mining firm reported a higher net loss of about Sh153.8 million (£1.1 million) for the year compared to a loss of Sh99 million (£711,000) the previous year.

Kilimapesa produced 3,408 ounces of gold in the period, up from 2,005 ounces a year earlier, after expanding its processing plant.

The firm in February commissioned a new plant with a view to raising production. It pumped in $2 million (about Sh206.6 million) last year for expansion of its processing capacity at Kilimapesa.

“An increase in unrealised foreign exchange losses of £177,000 (about Sh24.7 million) on inter-company payables contributed to the increased loss,” said the firm in a statement. It added the benefits of increased production capacity were only realised during the second half of the financial year, with the firm making operational profits during the last two months of the financial year, the first time in the 10 years since acquisition.

In the year ended June 30, 2017, revenue increased to £3,150,000 (about Sh440 million) compared to £156,000 (about Sh21 million) a year earlier.

“This has been made possible primarily due to the substantial completion during the year of an additional processing plant, but also as a result of continued cost cutting and process efficiency improvements across the operation,” it said. Out of the 3,408 ounces of gold produced 3,215 ounces were sold compared to 1,999 ounces sold in the period a year earlier.

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“Significantly, 1,254 ounces of gold was produced during the last quarter of the year and an annualised production rate of roughly 5,800 ounces of gold was achieved in the last two months of the year — a rate which is sustainable with current infrastructure,” it said.

The firm said a tax probe by the Kenya Revenue Authority (KRA) had been “substantially finalised.” “Of the original preliminary assessment of £1,288,540, (Sh180.1 million) £55,000 (about Sh7.6 million) has been paid and £51,000 (about Sh7.1 million) still remains under dispute,” said finance director, Werner Klingenberg.

It is demanding a balance of £812,000 (about Sh113 million) in Value Added Tax refunds from KRA.

“Despite clear provisions in the Kenyan legislation regarding the recoverability of VAT, and two audits and continuous consultation with the Kenya Revenue Authorities the balance due remain outstanding,” he said.

The firm is eyeing conversion into a mining licence next year for the neighbouring Teng Teng area where it has been conducting exploration.