London, England — MININGREVIEW.COM — 25 September 2008 – GMA Resources plc – incorporated in Australia and listed on the London Stock Exchange’s Alternative Investment Market – has had a disappointing first half of 2008, with gold production at its Amesmessa mine in southern Algeria dipping sharply in the second quarter. The downward trend is expected to continue in the third quarter.
Publishing its interim results for the six months ended 30 June 2008, the company revealed that production had amounted to a total of 10 536 ounces of gold.
The results statement said that, following the start-up of commercial operations at the company’s Amesmessa mine, production had shown a very promising start. The first quarter’s output of 5 906 ounces had exceeded expectations, however production during the second quarter had been disappointing, mostly as a result of inadequate supply of explosives, which had prevented proper stripping of waste in order to access higher grade mineralisation.
This led to total production for the second quarter amounting to 4 630 ounces – well below the projections in the Amesmessa feasibility study. “While some progress has been made on assuring adequate supplies of explosives and other key consumables,” said the statement, “it is expected that third quarter production will not reach expected levels.”
The company generated a loss of £3,986,000 or 1.1p per share for the first six months of 2008, according to the results statement. “Losses for 2008 are directly attributable to the slower than expected ramp-up of production from the Amesmessa mine,” it explained, “and the company now expects to generate a loss for the full year 2008.
Higher than expected gold prices have partially offset the impact of lower gold production volumes. Sales revenue for the first half of 2008 reached £4.3 million (almost R65 million).
“Prices have come down from recent highs and this will moderate the positive impact expected from improving production,” the statement continues, “nevertheless, the long term outlook for gold prices is still strong.”
CEO Douglas perkins commented: “while the production start-up difficulties we have experienced to date this year have been disappointing and frustrating, the technical and economic fundamentals of the Amesmessa project are still strong. In particular, the long term production cost at US$400-500 per ounce still appears very favourable, in comparison to other gold mining companies, and the exploration potential on the concession is still exciting. We remain confident of achieving planned production targets in the near future,” he concluded.