Goldplat, the UK firm operating a gold mine in Migori County, is under scrutiny by the Kenya Revenue Authority over tax compliance. The company said KRA had queried the taxes paid to the Government by its operation in the country for the 2015/16 financial year.
In a disclosure to its shareholders, the firm, which runs Kilimapesa Gold Mine in Migori, said it may have to pay more taxes when the KRA investigation is concluded.
“The Kenyan Revenue Authority has conducted a preliminary enquiry on the tax affairs of Kilimapesa Gold (Pty) Limited which may result in additional tax liabilities. The directors remain confident of a favourable outcome,” said Goldplat Chief Executive, Gerard Kisbey-Green in the company’s annual report for the year to June 30, 2016.
The firm added that it had made satisfactory progress in resolving issues raised in the preliminary enquiry into the tax affairs of Kilimapesa and that it was “confident of a favourable outcome in this matter.”
Goldplat has had a challenging run in Kenya since it acquired a gold mining licence in 2011, reporting losses since it started operations. In 2013, the firm was frustrated by progress in the country and suspended operations at the Kilimapesa Gold Mine.
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Last year was not an exemption and the company reported a Sh91.7 million loss, which was however an improvement from Sh97.1 million reported in 2015. Kenya is the poorest performing of its subsidiaries, with Ghana, Burkina Faso and South Africa reporting profits during the period under review.
South Africa is the most profitable and reported a net profit of £1.77 million (Sh228.3 million). “The Kilimapesa gold mine in Kenya reported a net loss of £711,000 (Sh91.7 million) for the year under review,” Goldplat said in its annual report.
“Kilimapesa has been loss-making during the year primarily due to plant throughput capacity constraints at its original treatment plant. A decision was taken by the Board to increase processing capacity and production in a staged process, with the aim of bringing Kilimapesa to operational profitability.”
The firm produced and sold 2,000 ounces of gold from Kilimapesa, which would have seen the Kilimapesa’s revenues reach Sh256.8 million going by the average prices of gold in 2016, which was $1,247 per ounce.
“Gold production for the year was 2,005 ounces (compared to 2,278 ounces in 2015) with 1,999 ounces being sold during the year (compared to 2,073 ounces in 2015). The slight decrease in production was primarily due to a reduction in artisanal tailings sourced during the year,” said the firm.
RETURN TO PROFITABILITY
“During the year, Kilimapesa Hill remained the primary source of production with additional gold being recovered from artisanal material and limited amounts from exploration work on the Teng-Teng mine.”
The company plans to expand its mining to other counties neighbouring Migori including Narok. It is also putting up a new plant at Kilimapesa and has appointed sourcing officer to focus solely on sourcing tailings (used in extracting gold) in the country, which are among the initiatives that it said are expected to turnaround the goldmine into profitability.
“The Kilimapesa mine in Kenya, is being expanded by further development of the ore body and the erection of a larger CIL (Carbon-in-Leach) and crushing section to return the mine to profitability,” said Goldplat. The ‘new’ plant at Kilimapesa will be built using equipment bought from its Ghanaian sister company and is expected to be operational in the course of this year.
“To date the project has been financed within the Group, but alternative ways to re-finance this capital investment are being considered,” said Goldplat.