News

June 16, 2008

GMA Resources Waits For The Explosives Delivery Man

By Rob Davies

Waiting for a new mine to start production can be very tense. After months and years of work, with everything about to come together and cash set to start rolling in, imagine then the disappointment for shareholders in GMA Resources when the company issued a profit warning rather than a statement that production was ramping up well. To be fair the mine in question, the Amesmessa mine in southern Algeria is producing, but 2,000 ounces in April and 1,235 ounces in May is well below the 3,000 ounces a month needed for the project to breakeven. Consequently, chief executive Doug Perkins had to advise the market that revenues and earnings for this year will be substantially below market expectations.

Talking to Mr Perkins one got the sense that he was treading a fine line in this press release balancing the listing requirements of the London Stock Exchange and the sensitivities of the Algerian authorities. The issue that has caused the delay is a simple one, but one that is crucial to any mining operation: the supply of explosives.

The Amesmessa mine is not far from the border with Mali, and Mali has recently experienced some little local difficulties. Moreover, the mine is further from...