Kemin Resources Regulatory News (KEM)

RNS Number : 5471T

GMA Resources PLC

29 September 2010

 

 

 

 

 

29 September 2010

 

 

GMA RESOURCES Plc

("GMA" or "the Company")

 

Half-Yearly Results for the six months ended 30 June 2010

 

CHIEF EXECUTIVE OFFICERS STATEMENT

 

It is my pleasure to provide you with an update on the operating, exploration and financial results of GMA Resources plc for the six months ended 30 June 2010.

 

Amesmessa Gold Project

 

The first six months of 2010 marked a significant shift in the direction of the Company's operations with a focus on rationalisation of the existing operation. It was also a period of renewed focus, in an effort to better understand the potential of Amesmessa, through the commencement of metallurgical test work and the initiation of a new exploration program.

 

Gold Sales

 

Gold Sales of 12,311 oz were recorded during the first half of 2010 (H1 2009: 20,918 oz). The revenue from gold sales was equivalent to US$13,959,044 (H1 2009: US$19,125,118) for an average realised price of US$1,134 per oz (H1 2009: US$914.29).

 

Approximately 82 per cent. of sales in the first half of the year were achieved in Algeria and the remaining 18 per cent. in export markets. It is expected that these percentages will remain relatively constant during 2010 as a gold refinery in Algeria, an existing customer of the Company, has stated its desire to take the majority of ENOR's gold production. The cost to the Company of domestic sales is less than export sales, due to reduced transportation and related insurance costs. The Company also benefits from being able to offset its accumulated VAT asset, incurred through the purchase of machinery and spare parts, with VAT gained on local sales.

 

The Company has no gold price hedges in place.

 

Mining Operations

 

Whilst during the first half of 2010, the majority of the Company's mining operations occurred in veins contained within the Amesmessa area, the Company also undertook some opportunistic mining of oxidized veins north of Amesmessa. Combined high grade and heap leach ore tonnages mined were below budget for the period under review and the combined grade mined was 3.09 g/t versus a budget of 4.10 g/t. Management postponed the commencement of the mining of Vein 15 until the commissioning of the Tirek CIL so as to ensure maximum gold recovery of these high grade ores although this negatively impacted on the overall grade for the first half of the year.

 

Key Performance Indicators	Unit	H1 2010	H1 2009
High Grade Ore Tonnes ex-Mine	dmt	11,250	37,770
High Grade Ore Grade ex-Mine	g/t Au	12.92	12.97
High Grade Ore kg Au	kg Au	145.4	489.9
Heap Leach Ore Tonnes ex-Mine	dmt	249,180	309,420
Heap Leach Ore Tonnes ex-Mine	g/t Au	2.65	3.13
Heap Leach Ore kg Au	kg Au	660.3	968.4
Waste Tonnes Mined	dmt	1,997,745	2,901,390
Strip Ratio		7.37	8.54
Blasthole Drilling	mlinear	140,564	121,435

 

Heap Leach & CIL Operations

 

Unfortunately, due primarily to the failure of a key component and its replacement, the re-commissioning of the Tirek CIL plant at Amesmessa did not take place in the period under review, as previously hoped, but was commissioned on 14 August 2010. A replacement unit was ordered and, in an effort to prevent similar issues arising in future, an additional new unit has been subsequently ordered. During its commissioning process, the CIL plant indicated that it was capable of delivering an additional 1,000 oz per month by allowing selective processing of high grade material from the existing mine plan.

 

During the period, the heap leach operation averaged 1,971 oz of gold per month and recoveries were as expected at 44 per cent. This was due to the increasing percentage of mining of higher grade fresh material less amenable to heap leaching that, in the future, will be processed by the CIL plant. Crushing was below budget primarily due to crusher availability. The primary variation between H1 2010 and H1 2009 was the very high grades to the heap leach operation in H1 2009.

 

Key Performance Indicators	Unit	H1 2010	H1 2009
Ore Crushed Heap Leach	dmt	262,095	260,608
Ore Stacked to Heap Leach Pad	dmt	262,095	262,204
Crushed Ore Grade	g/t Au	3.18	5.33
Gold Stacked Heap Leach	oz Au	26,799	44,937
Total Gold Production ENOR	oz Au	11,827	18,544
Recovery	%	44	41

 

Currently, 78,299 oz of gold remains available for retreatment in the existing heap leach stockpiles. During the period particularly rich high grade ores were segregated on the heap leach pads and will be selectively retreated through the CIL plant opportunistically to increase gold recoveries of these high grade ores in the second half of the year.

 

Exploration

 

During the period, the Company revisited the work conducted by Earthscan and began the process of mapping the 76 anomalies previously identified and conducted a geochemical soil sampling program of the most prospective anomalies. In total, 35 anomalies were sampled and a number were found to contain significant gold in soil results. These areas will be infilled in the second half of the year to further delineate potential mineral zones, followed by the trenching of more significant mineralised areas and finally, exploration drilling will test the best anomalies.

 

In June, the reverse circulation exploration drill was commissioned, with an initial focus of identifying additional resources in the existing Amesmessa mining area for the next two years. Subsequently, following the identification of high potential mineralised zones from the geochemical program and trenching, in H2 2010 the drill will be relocated to drill these targets.

 

It is planned, that in the second half of 2010, the samples will be pulverised in Algeria and resulting 'pulps' sent to an accredited laboratory in Perth, Australia for assaying and reporting. There is an expectation that there will initially be a lag between drill samples being taken and final results of drilling being reported, as the local laboratory begins to increase its pulverisation production capacity.

 

Financial Results

 

The Company reported a loss attributable to the GMA shareholders of £1,003,000 or 0.22p per share for H1 2010. This compares with a profit of £1,096,000 or earnings of 0.29p per share in H1 2009. The factors which led to the lower than expected returns realised in the first six months of 2010 were the delayed commissioning of the Tirek CIL plant, reduced crusher availability and ongoing issues of poor Heap Leach gold recoveries, however, these were clearly offset by a better than budgeted gold price.

 

Financing arrangements

 

On 30 June 2010, the Company announced that it had entered into subscription agreements with Sahara Gold Limited ("Sahara Gold"), a wholly owned subsidiary of ASCOM Precious Metals Mining S.A.E. ("APM") and Ken Crichton, the Company's Interim CEO and an employee of APM ("the Agreements"). Pursuant to the Agreements, Sahara Gold agreed to subscribe or procure that members of its group subscribe for up to 120,000,000 new ordinary shares of £0.01 each ("Ordinary Shares") at 1.25 pence per share and Ken Crichton agreed to subscribe for up to 8,000,000 Ordinary Shares at 1.25 pence per share (together the "Subscription Shares"). The Subscription Shares are to be issued in four tranches, the first of which comprised 40,400,000 Ordinary Shares which were issued on 26 July 2010. The three remaining tranches are to be issued on or before 21 October 2010, 21 January 2011 and 21 April 2001.

 

 

Outlook

 

Looking forward to the second half of the year, once the Tirek CIL is commissioned, the Vein 15 high grade area should provide a good feed for processing, which can be supported by the remaining high grade ore in parts of Vein 9. The RC drill should help delineate other zones of better grades of oxide ore for the heap leach operations going forward. The Company's primary goals for the next six months are to;

 

·; Achieve a consistent 3,000 ounce per month production rate from the Tirek CIL plant and from the existing Heap Leach operation;

·; Focus on drilling the most prospective mineralised zones identified through exploration by Earthscan, in order to increase the resource base;

·; Complete the trials on the existing heap leach of the 'wobbler sprinkler system' with the aim to produce a larger and higher volume overall irrigation footprint and a more effective coverage between individual irrigation points as compared to the existing dipper system- the aim is to achieve a higher gold recovery of the heap leach operation by increasing the volume and effectiveness of fluid circulating through the heap leach.

·; Delineate additional resources in the Amesmessa mining areas over the next 2 years;

·; Continue working with engineering companies to establish a feasibility study in order to progress the possible expansion of the Company's operation with a larger CIL plant;

·; Work closely with our existing key suppliers to find ways to overcome the significant delivery delays including working with the ENOR Spa team to better manage the process for the generation of letters of credit required by the Bank of Algeria to purchase foreign spare parts and consumables with our suppliers banks; and

·; Look to ways to maximise local purchases of spare parts and consumables from Algerian sources.

 

The Board views 2010 as a transitionary period for GMA in which it will focus on undertaking the necessary ground work and restructuring required to fullfil the long term objective of becoming a significant presence within the precious metals mining spectrum.

 

The Board would like to thank the Company's shareholders, employees and partners for their continued support.

 

Kenneth Crichton

Interim Chief Executive Officer

29 September 2010

 

 

Enquiries:

 

GMA Resources Plc	Ken Crichton	+20 (0)10766 6118
Merchant Securities Limited (Nomad)	Bidhi Bhoma	+44 (0) 20 7628 2200
Mirabaud Securities LLP (Broker)	Jonathan Colvile	+44 (0) 20 7484 3510

 

 

 

Consolidated statement of comprehensive income for the six months ended 30 June 2010

 

					Year ended
			6 months to	6 months to	31
			30 June	30 June	December
			2010	2009	2009
	Note		£'000	£'000	£'000
			Unaudited	Unaudited	Audited
Revenue			8,829	11,973	20,361
Cost of Sales			(8,046)	(9,030)	(25,383)
Gross profit / (loss)			783	2,943	(5,022)
Administration costs			(916)	(411)	(1,523)
Operating (loss) / profit			(133)	2,532	(6,545)
Finance costs			(948)	(1,436)	(2,077)
Finance income			-	-	-
(Loss) / profit before income tax			(1,081)	1,096	(8,622)
Income tax expense			-	-	-
(Loss) / profit for the period			(1,081)	1,096	(8,622)
Other comprehensive income:
Exchange differences on translating foreign operations			785	(2,569)	(1,618)
Total comprehensive loss for the period			(296)	(1,473)	(10,240)
Loss for the period attributable to:
Equity holders of the parent undertaking			(1,003)	(1,473)	(5,221)
Minority interest			(78)	-	(3,401)
			(1,081)	(1,473)	(8,622)
Total comprehensive loss attributable to:
Equity holders of the parent undertaking			(218)	(1,473)	(6,839)
Minority interest			(78)	-	(3,401)
			296	(1,473)	(10,240)
Loss per share
Basic and fully diluted loss per share		3	(0.22p)	0.29p	(1.27p)

 

 

Consolidated statement of financial position for the six months ended 30 June 2010

 

		30 June 2010	30 June  2009		31 December 2009
	Note	£'000	£'000		£'000
		Unaudited	Unaudited		Audited
ASSETS
Non-current
Intangible assets		10	20	13
Property, plant and equipment		36,529	36,880	36,906
Non-current assets		36,539	36,900	36,919
Current
Inventories		19,594	14,864	16,422
Trade and other receivables		9,646	17,727	7,169
Cash and cash equivalents		33	1,445	1,324
Current assets		29,273	34,036	24,915
Total assets		65,812	70,936	61,834
EQUITY
Equity attributable to owners of the parent:
Share capital		4,690	4,263	4,477
Share premium account		26,862	25,400	26,116
Share based payments reserve		322	451	318
Loan stock reserve		1,235	923	1,235
Currency translation reserve		1,816	80	1,030
Retained earnings		(27,792)	(20,609)	(26,789)
		7,133	10,508	6,387
Minority interest		14,142	-	14,220
Total equity		21,275	10,508	20,607
LIABILITIES
Non-current
Long-term borrowings		8,204	7,206	7,951
Long-term finance leases		4,309	1,135	1,638
Unsecured convertible loan stock		5,988	7,175	795
Loan from minority shareholder		-	16,930	-
Non-current liabilities		18,501	32,446	10,384
Current
Trade and other payables		16,656	19,342	15,065
Short-term borrowings		6,627	2,243	2,660
Short-term finance leases		2,753	6,397	7,925
Unsecured convertible loan stock		-	-	5,193
Current liabilities		26,036	27,982	30,843
Total liabilities		44,537	60,428	41,227
Total equity and liabilities		65,812	70,936	61,834

 

 

Condensed consolidated interim statement of changes in equity for the six months ended 30 June 2010

 

	Share capital	Share premium account	Share based payment reserve	Loan stock reserve	Currency translation reserve	Retained earnings	Total	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009	3,680	24,597	448	923	2,648	(21,705)	10,591	-	10,591
Issue of share capital	583	803	-	-	-	-	1,386	-	1,386
Share issue costs	-	-	-	-	-	-	-	-	-
Share based payment charges	-	-	3	-	-	-	3	-	3
Transactions with owners	583	803	3	-	-	-	1,389	-	1,389
Profit for the year	-	-	-	-	-	1,096	1,096	-	1,096
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	-	(2,568)	-	(2,568)	-	(2,568)
Total comprehensive income for the year	-	-	-	-	(2,568)	1,096	(1,472)	-	(1,472)
Balance at 30 June 2009	4,263	25,400	451	923	80	(20,609)	10,508	-	10,508

 

	Share capital	Share premium account	Share based payment reserve	Loan stock reserve	Currency translation reserve	Retained earnings	Total	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009	3,680	24,597	448	923	2,648	(21,705)	10,591	-	10,591
Issue of share capital	797	1,693	-	-	-	-	2,490	-	2,490
Share issue costs	-	(174)	-	-	-	-	(174)	-	(174)
Share based payment charges	-	-	7	-	-	-	7	-	7
Forfeiture of share options	-	-	(137)	-	-	137	-	-	-
Loan note issue	-	-	-	312	-	-	312	-	312
Capitalisation of loan from minority shareholder	-	-	-	-	-	-	-	17,621	17,621
Transactions with owners	797	1,519	(130)	312	-	137	2,635	17,621	20,256
Loss for the year	-	-	-	-	-	(5,221)	(3,401)	(3,401)	(8,622)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	-	(1,618)	-	(1,618)	-	(1,618)
Total comprehensive income for the year	-	-	-	-	(1,618)	(5,221)	(6,839)	(3,401)	(10,240)
Balance at 31 December 2009	4,477	26,116	318	1,235	1,030	(26,789)	6,387	14,220	20,607

 

	Share capital	Share premium account	Share based payment reserve	Loan stock reserve	Currency translation reserve	Retained earnings	Total	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2010	4,477	26,116	318	1,235	1,030	(26,789)	6,387	14,220	20,607
Issue of share capital	213	746	-	-	-	-	959	-	959
Share based payment charges	-	-	4	-	-	-	4	-	4
Transactions with owners	213	746	4	-	-	-	963	-	963
Loss for the year	-	-	-	-	-	(1,003)	(1,003)	(78)	(1,081)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	-	786	-	786	-	786
Total comprehensive income for the year	-	-	-	-	786	(1,003)	(217)	(78)	(295)
Balance at 30 June 2010	4,690	26,862	322	1,235	1,816	(27,792)	7,133	14,142	21,275

 

 

Condensed consolidated interim cash flow statement for the six months ended 30 June 2010

 

		6 months to	6 months to	Year to
		30 June	30 June	31 December
		2010	2009	2009
		£'000s	£'000s	£'000s
Cash flows from operating activities
(Loss) / profit after taxation		(1,081)	1,096	(7,622)
Adjustments for:
Depreciation		3,147	1,757	4,923
Impairment of VAT receivable		-	-	3,055
Lease refinancing charge		(1,713)	-	1,381
Share based payments		4	3	7
Investment income		-	-	-
Interest expense		948	1,436	2,077
Increase in trade and other receivables		(2,376)	(7,940)	(437)
Increase in inventories		(3,362)	(219)	(2,778)
Increase in trade payables		1,298	4,974	697
Cash generated from operations		(3,135)	1,107	1,303
Interest paid		-	(345)	-
Net cash used in / generated from operating activities		(3,135)	762	43
Cash flows from investing activities
Purchase of property, plant and equipment		(1,571)	947	(691)
Purchase of intangible asset		-	(8)	(8)
Proceeds from the disposal of property, plant and equipment		-	-	38
Net cash used in investing activities		(1,571)	939	(661)
Cash flows from financing activities
Net proceeds from issue of share capital		959	1,386	2,316
Repayment of bank borrowings		-	-	(342)
Proceeds from finance lease agreements		-	(909)	281
Proceeds from the issue of unsecured convertible loan stock		-	1,190	1,190
Repayment of loan interest		-	-	(1,091)
Payments on finance lease		(1,565)	-	(1,452)
Interest paid on loan stock		-	-	(735)
Proceeds from bank borrowings		3,883	(386)	723
Net cash generated from financing activities		3,277	1,281	890
Net increase in cash and cash equivalents		(1,429)	2,981	272
Foreign exchange movements		138	(2,588)	(1,260)
Cash and equivalents at start of period		1,324	1,052	1,052
Cash and equivalents at end of period		33	1,445	1,324

 

 

Notes to the interim financial statements

 

1. Basis of preparation

 

These unaudited interim consolidated financial statements are for the six months ended 30 June 2010. They have been prepared based on the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted by the European Union. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.

 

The financial information for the period ended 30 June 2010 set out in this interim report does not constitute statutory accounts as defined by the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2009 have been filed with the Registrar of Companies. The auditors report on those financial statements was modified by the inclusion of an emphasis of matter.

 

The consolidated financial statements have been prepared under the historical cost convention except for financial instruments which have been measured at fair value. They are presented in UK Sterling and are rounded to the nearest thousand (£000) except where otherwise noted. They have been prepared on the going concern basis and do not include any adjustment that would result from the inability of the Group to raise additional funding if needed.

 

2. Share issue

 

6 months to 30 June 2010

	Number	£'000s
At 1 January 2010	447,684,582	4,477
Issue of shares	21,318,312	213
At 30 June 2010	469,002,894	4,690

 

6 months to 30 June 2009

	Number	£'000s
At 1 January 2009	368,062,493	3,680
Issue of shares	58,303,777	583
At 30 June 2009	426,366,270	4,263

 

Year to 31 December 2009

	Number	£'000s
At 1 January 2009	368,062,493	3,680
Issue of shares	79,622,089	797
At 31 December 2009	447,684,582	4,477

 

3. Loss per share

 

6 months to 30 June 2010	Loss	Weighted average number of shares '000	Per share amount
	£'000s		Pence
Loss for the year attributable to the equity holders of the parent entity	(1,003)
Weighted average number of shares		458,342
Basic and diluted loss per share			(0.22p)

 

 

6 months to 30 June 2009	Profit	Weighted average number of shares	Per share amount
	£'000s		Pence
Profit for the year attributable to the equity holders of the parent entity	1,096
Weighted average number of shares		379,816
Basic and diluted loss per share			0.29p

 

 

Year to 31 December 2009	Loss	Weighted average number of shares	Per share amount
	£'000s		Pence
Loss for the year attributable to the equity holders of the parent entity	(5,221)
Weighted average number of shares		412,253
Basic and diluted loss per share			(1,27p)

 

 

4. Dividend

No dividend has been declared for the six month period ended 30 June 2010.

 

5. Availability of interim results

The interim report is available for download at the Company's website www.gmaresources.plc.uk

This information is provided by RNS

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