London-based Goldplat Plc’s Kenyan subsidiary Kilimapesa sold gold worth Sh152 million in the quarter ended December, marking a 23.4 per cent drop from Sh198.4 million the year before on the backdrop of lower production.
The royalty rate the company pays to the Kenyan government was not immediately clear but the State is likely to book lower revenues from the drop in exports.
The company reduced production at its loss-making Migori mine last year as it continued to search for a strategic investor to provide new capital to fund operations and upgrade equipment.
Output in the review period, as a consequence, declined 28.9 per cent to 27 kilos from 38.
Unit sales, on the other hand, declined to 36 kilos from 47.
Goldplat had also considered shutting down the mine but postponed the decision after it entered into promising talks for new capital injection.
“In the last update it was reported that a strategy had been implemented to put the mine on care and maintenance by the end of November 2018 should a transaction to secure funding not be in progress,” the multinational said in a trading update.
“Progress in respect of a possible transaction during the quarter enabled management to take the decision not to proceed to care and maintenance to date.”
When a mine is placed under care and maintenance, production stops and only a few employees are needed to make sure the site remains in a safe and stable condition.
The plan is to ensure that future production can resume quickly and more efficiently.
Goldplat said it has further reduced production and intensified its cost-cutting measures at the Migori mine in order to minimise losses as the financing discussions continue.
It was not immediately clear if the moves have resulted in job losses.
“Unfortunately, Kilimapesa continues to report poor results and the company hopes to progress financing discussions to a point where plans can be shared with the market and our investors during the current quarter,” Goldplat’s CEO Gerard Kisbey-Green said in a statement.
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Note: The results are not exact but very close to the actual.
