UK based Goldplat is in trouble with Kenyan tax authorities for under declaring the value of gold it has been producing in the country, adding to the woes its Kilimapesa Gold Mine in Migori has been facing.
The Kenyan operation, which has been reporting losses since it started gold production in 2012 and at one point suspended operations at the mine, is under investigations by the Kenya Revenue Authority (KRA) and expects to be hit with a higher tax bill if found not to be complying with tax requirements.
In its annual report for the 2015/16 financial year, the firm said KRA was looking at its books and expects this to result in more taxation.
“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 in the report.
The Company commenced mining at Kilimapesa and poured its first gold in January 2012. It is Kenya’s first gold mine to be commissioned since independence in 1963. Mining has previously been undertaken by small scale miners without requisite equipment and never resulted in any meaningful production before.
Goldplat produced 2 000 ounces of gold from its Kenyan during the last financial year but posted a net loss of £711,000 (Sh91.7 million), a slightly better position than last year. It others operations in Ghana and South Africa are profitable.
The Kenyan operation has been thorny for the firm, which has previously said losses incurred at incurred at Kilimapesa have negatively impacted the overall Group profitability. It has also been seeking a joint venture partner for the Kenyan operation with little success.
“Improving the performance of the Kilimapesa gold mine in Kenya has proved more difficult. The plan is to eliminate losses at the mine prior to bringing in a joint venture partner to provide the funding required to increase production to a materially profitable level,” the firm said in previous reports.
The firm however exudes confidence that it will report a profit in 2017 following an upgrade of its plant in Kilimapesa. It has previously said the loss making has been due to limited capacity at the plant. It said the new equipment would be ready for use by first half of the 2016/17 financial year, which would help Kilimapesa become profitable at an operational level by close of the current financial year.
“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,” said Goldplat.
“The initial stage being to erect a new processing facility… which will increase processing capacity to 3,000 tonnes per month. Site preparation for the new treatment plant was largely completed during FY 2016 and construction and installation is expected to be completed during the first half of FY 2017.”