Commodities

The initiation of coverage comes with a Buy recommendation and a target share price at 26p, our last quote on the company's share price is at 13.82.

The following factors have resulted in the bullish call by Fairfax:

A highly cash generative gold recovery business with leading market share in South Africa and Ghana.
 
Potential to keep growth momentum in gold recovery by tapping more high value streams.
 
Cash flows from gold recovery have been used to invest and develop brownfield gold mining assets which will give greater visibility on revenues.


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Profits from Gold Recovery are expected to continue to grow with operating profits increasing to £4.75m for FY 2012, £6.5m for FY 2014 and £7.5m for FY 2014.
 
Production from gold mining makes a maiden contribution to profits of £780,000 for FY 2012 and adds £1.5m for FY 2013 which increases to £3m by FY 2014
 
Goldplat is a holding company of a group, which produces precious metals in South Africa and Ghana.

The Company’s South African subsidiary, Goldplat Recovery (Pty) Ltd (GPR), produces gold, silver and platinum group metals from metallurgical materials produced by the primary producers.

During the fiscal year ended June 30, 2010 (fiscal 2010), its South African and Ghanaian gold recovery plants produced totaled 21,461 ounces of gold.

During fiscal 2010, the Company expanded into Burkina Faso in West Africa, by acquiring an option over the 246 square kilometers Nyieme project, which includes quartz vein structures.

Its Ghanaian subsidiary, Gold Recovery Ghana Ltd, produces gold from metallurgical materials and processed ores.

In September 2009, the Company acquired the remaining 50% interest in Kilimapesa Gold (Pty) Limited, thereby acquiring 100% interest.