UK firm to sell stake in Narok gold mine to stem loss streak

UK firm Goldplat has said it will sell a stake in its gold mine in Narok County.

The company, which operates the Kilimapesa Goldmine (KPG), in an operational update for the year to June this year said it was in talks with a number of investors with a view of bringing on board a partner.

It said it has been grappling with a number of operational issues in Kenya that had held the mine back from becoming a profitable venture.

“The board of Goldplat has approved a process to seek an investment partner for KPG so as to enable existing shareholders to realise value from the operation without having to invest any more capital. Although discussions in this regard have begun with a number of interested parties, the focus remains on getting Kilimapesa to produce profitably in the short-term,” said the company in a statement.

“Numerous visits by outside investors were made to Kilimapesa during the quarter in line with the Goldplat board’s decision to initiate a process to find an investment partner.”

The mine has been reporting losses since it started operations, but the firm said it was now nearing break-even.

“Current operational and financial indicators show that Kilimapesa is now operating at close to break-even. However, substantial losses were incurred during April and May 2018 due to operational and processing issues,” said Goldplat.

The operational difficulties did not, however, dampen production of gold at the Narok mine, which increased 50 per cent to 5,112 ounces in the year to June this year compared to 3,408 ounces last year.

Kenya was the only operation where gold production grew, with South Africa’s and Ghana’s recording declines.

Goldplat in May this year completed the installation of a new plant and retired an old one, which sparked fears that the more efficient gold processing unit would render some if its employees in Narok redundant. The company, however, said it had absorbed all the employees from the old plant.

Redundancy fears

“Employees from Plant 1 were redeployed to other sections of the mine to ensure that no jobs were lost,” the company said.

The firm, listed on the London Stock Exchange’s Alternative Investment Market (AIM), has in the past said it plans to expand to Migori County. 

Gold output and earnings more than doubled last year after a change in policy that resulted in the removal of a surcharge on licences.

Earnings from the commodity reached Sh1.5 billion in 2017, from Sh652 million in 2016, according to data from the Kenya National Bureau of Statistics.

The Kilimapesa mine is located in what is termed the Migori Archaean Greenstone Belt, where artisanal miners have over time produced gold.

Other than Goldplat, other commercial miners in the country include Acacia Mining, which in early 2017 said it had discovered gold reserves in Kakamega valued at over Sh150 billion. It said it was undertaking more surveys and putting in place plans to start mining.