GMA Resources turns a profit but still considering funding options
23 September 2009
GMA Resources is understood to be looking at a number of financing options and opportunities in order to plug the working capital frustrations that have dogged the development of its Amesmessa gold mine in Algeria.
GMA holds a 52% stake in a 1,417 sq km parcel of land in the south of the country which is home to the Amesmessa and Tirek gold mines. The balance is held by the government-owned miner, Sonatrach.
In the six months to June 30, 2009, the company swung to its first ever net profit of £1.0 million – up from last year’s loss of £4.0 million – but said it was still wrestling with production problems.
Indeed, while the mine produced a total of 18,637 ounces of gold in the first half of 2009, compared with 10,620 ounces in the second half of 2008, the supply of spare parts for mining in drilling is slowing things down.
According to chief executive Douglas Perkins, GMA’s cash flow problems have hinged on a patchy supply of explosives, which has held up mining, and also because it is building up inventory levels at Amesmessa to counter a long and complicated supply chain.
The good news is that higher gold prices have partly offset the production problems. Indeed, Perkins noted that while worldwide equity markets still appear to be recovering, the company believes that the appetite for junior gold companies with production is picking up.
As a result, the company said that all drilling over the next 12 months would be focused on the Amesmessa as it tries to hit its substantial goal of a 43-101 resource of over 1,000,000 ounces for the deposit.
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