GMA Resources to restart exploration at Amesmessa Gold Mine to support further mine ramp up

For GMA Resources (AIM: GMA) and its CEO, Douglas Perkins, 2008 was a challenging year. After commencing production at the Amesmessa Gold Mine in Algeria, the mine ran into supply chain difficulties which hampered production for most of the year. 

Fortunately for investors and the company alike, the supply chain issues now appear to be resolved, and as a result, gold production has markedly improved in 2009.

Full y ear results for year ended 31 December 2008 carried few surprises for investors, with the company posting a wider loss as it commenced production but struggled to meet production targets. However, today, it was the outlook for 2009 that lifted spirits and the share price.

GMA Resources owns a controlling 52% interest in the 1,425 square kilometre Tirek-Amesmessa gold concession in Southern Algeria. The other 48% is a participating interest owned by Sonatrach, the state backed energy and mining conglomerate.  Amesmessa is Algeria’s only operational gold mine.

The junior gold producer confirmed this morning that in the first four months of 2009 it achieved an average gold price of US$902/ounce, well ahead of management expectations.  All of the group’s gold production is unhedged, allowing the company to maximise the robust gold price.  GMA also confirmed this morning that it had approved a 2009 exploration budge of US$3 million, after recently appointing Michel Cormier as VP of Exploration.  The commitment to exploration signals to the market that GMA Resources is more comfortable with the operational performance of the gold mine and now needs to divert some of its capital towards expanding the resource before committing to a further mine expansion.

“Our primary aim is to prove up further resources within the Amesmessa project area to justify the near doubling of the operation's capacity to over 100,000 ounces gold per annum. A scoping study has been initiated on the proposed expansion, including the study of various processing options, which is expected to be complete in late June 2009,” GMA stated. “Over the broader ENOR concession, we have begun work on the hypothesis that there is a wider mineral zone running the length of the concession, amenable to large open pit mining. This compares to the narrow high grade vein system thesis we are currently operating within.”

As part of the scoping study, GMA is reprocessing all of the historical data and combining it with its own information to produce an updated 43-101 compliant resource statement.  “One of the main reasons we chose this standard is that it is recognized worldwide and a valuable tool for future expansion and potential financing related to project expansion. It is also available completely in French which will aid us in the training aspects of bringing Algerian geological staff up to world standards.”

On the production front, the company said it was continuing to work with its Algerian partners to ensure future supply chain issues were avoided.

Shares in GMA Resources climbed in response to the broadly positive outlook for 2009.