Aim-listed mining services group Goldplat has noted the impact of ongoing electricity shortages in South Africa on its local operations, confirming to shareholders in a May 31 statement that it had lost 28% of hours available during the first two months of the fourth quarter of its financial year.

That compared with 20% of hours lost in the third quarter.

Owing to the increased uncertainty of supply in the medium term, Goldplat has made a decision to invest in diesel generators, which will be able to sustain operations in South Africa during electricity cuts.

“The diesel generators will not just reduce the impact of electricity cuts, but also give control back to operational teams to improve efficiencies and maximise gold production and provide a sense of normality which we believe is important for the morale of our employees,” he added.

The capital cost of these investments will be £750 000 and will be financed over 36 months through a local bank, Goldplat said, estimating that it will take 12 to 14 weeks to receive and install the generators.

Based on 25% of available hours expected to be lost during the next 24 months, the company said it expects the capital cost will be recovered within 24 months.

During this period, Goldplat will continue to investigate other options to secure electricity supply; for example, additional connections to the local municipality grid or a new direct connection to State-owned utility Eskom.

However, the timelines of these options remain uncertain and unclear, the company said.

Meanwhile, in Ghana, the renewal of gold recovery operation Gold Recovery Ghana’s gold licence has been finalised and the export of product has started.

However, the company expects most of this material to only arrive at customers in July.

As a result, the sales will only be recognised in the next financial period.

To help resolve the challenges it is facing, Goldplat has appointed COO Douglas Davidson to focus specifically on improving and strengthening the company’s current operations. Davidson is a metallurgical engineer with 26 years of experience in the mining industry, of which 23 years have been spent in the diamond industry, mainly in Namibia and Lesotho.

Davidson has extensive operational experience built up in operating large plants for De Beers, Namdeb and Namakwa Diamonds. He has held various senior positions including group metallurgical lead and mine manager at these companies, as well as serving on the executive committee at Namdeb.

He has led multi-disciplinary operational teams to identify, develop and implement value accretive and risk mitigating initiatives to improve overall business performance.

“[Davidson’s] operational strength will be extremely valuable in securing the current operations and production, whilst we continue to look to investigate diversification and growth opportunities,” Goldplat CEO Werner Klingenberg said.

He noted that the delay in receiving a gold licence in Ghana had impacted on the company’s ability to export and that, although the company had experienced good production in Ghana, the margins would only be realised during the last four months of the year.