London-listed Goldplat hunt for Migori mine investor fails

London-listed Goldplat Plc has failed to secure new investor and funds for its Migori gold mine, a move that is expected to hurt production at the facility.

The multinational says prospective strategic investors whom it had approached more than a year ago have walked away, leaving it to start the fundraising process afresh.

“Disappointingly, the possible transaction referred to in the previous quarterly update was terminated, but other possibilities are still being aggressively pursued,” Goldplat said in a trading update.

The company added that it has initiated talks with other parties and the outcomes will be communicated in due course.

The multinational’s local operations, held through the subsidiary Kilimapesa Gold, needs to invest in new plant and equipment to boost production to a level that would allow it to make a profit.

The search for new investors started after the multinational’s shareholders declined to provide additional capital to the venture. The funding gap has led to losses at Kilimapesa whose production has dropped significantly.

Gold output at the Migori mine stood at 569 ounces in the three months ended March, down from 1,241 ounces a year earlier. Sales of the precious metal also fell to 639 ounces from 1,380 ounces.

The firm was the first to be issued with a commercial gold production lease in November 2011, and targeted to produce 5,000 ounces of gold per annum.

It was also expected to catapult the country, which has artisanal and small-scale miners, to mainstream gold producing nation.

“Production for the quarter was in line with revised plans aimed at reducing losses while continuing production during discussions to secure financing,” Goldplat said.

The company did not say how long it is willing to absorb losses as it awaits to secure new funds.

Goldplat had planned to cease operations by November last year if it had not received the additional capital by that time.

This would have seen it place the mine under care and maintenance, meaning that 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 21-year gold mining lease will expire in November 2033.