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Natural resources group Goldplat (GDP:AIM) will start to process gold at its 50%-owned venture in Kenya during the second half of 2008. The company has historically reprocessed mining waste to extract precious metals and now wants to diversify into mining.

Goldplat is refurbishing a processing plant in Kenya. It will initially extract gold from tailings already on site and purchased surface material. The revenue will fund preparations for starting its own mine. An update is expected next month on potential costs and development schedule.

The company increased pre-tax profit in the second half of 2007 by 128% to £624,000, predominately relating to earnings from its South African recovery plant. Profit should increase significantly in the current trading period as a second recovery plant, located in Ghana, begins to contribute revenue.

Chief executive Demetri Manolis said Goldplat currently has three years’ worth of raw materials stockpiled in South Africa, containing one tonne (around 35,275 ounces) of gold. Taking the current gold price of around $920 an ounce, this equates to a value of $32.5 million – almost the same as its £18 million market cap at 16.25p.

In Ghana, the company says it has secured five years of waste material feed and hopes to raise this to ten years by end 2008. The Ghana plant has less capacity than the South Africa facility but higher gold grades are recovered. ‘Ghana mines are open pit and have a strong carbon presence. You tend to get better-quality gold in the waste from these mines, compared with South Africa, where it is mostly wood chip from underground mines,’ said Manolis.

Shares says: Looks undervalued given two recovery operations, a near-term processing facility, large stockpiles, £1 million cash and an exploration project. Less risky than a traditional miner.