Goldplat (LON:GDP) has released a trading update which highlights a contract dispute with Rand Refinery. Rand Refinery is disputing payment relating to a contract for silver sulphide processing. The unpaid amount is ZAR13.5mn which translates to c£628k based on an average conversion rate over the period. GDP expects to receive the full amount, however.
Given the uncertainty over recoverability of the amount owed it is not yet clear what financial impact the dispute will have on FY 2016 earnings. Due to recent market volatility affecting precious metal pricing and exchange rates there is further uncertainty relating to the potential financial impact.
Furthermore, GDP has been informed that Rand Refinery will not accept material for smelting during August. However, due to the problems relating to Rand Refinery in 2015, GDP has taken steps to reduce its reliance on the refinery and consequently may use alternative refiners. There is therefore unlikely to be a significant near term impact on GDP’s operations