State energy firm Sonatrach likely to buy out international partner GMA Resources
Australian mining firm GMA Resources is awaiting an official response from Algeria’s state energy company Sonatrach to its request to withdraw from a major gold mining project in the south of the country, says the head of the company.
Algiers has indicated publicly it is likely to buy out its foreign partner before soliciting interest from major international mining companies to take the project forward.
“We’ve told Sonatrach that we want to withdraw from the joint venture and are awaiting their response,” says Ken Crichton, chief executive officer (CEO) of GMA. “So far, we’ve received nothing.”
GMA has a 52 per cent stake in Entreprise d’Exploitation des Mines d’Or (Enor), which is responsible for the country’s only producing gold mine, Amesmessa. The mine is part of the 1,417-square-kilometre Tirek-Amesmessa concession, 450km from Tamanrasset in the south. Sonatrach owns the balance of the shares.
GMA’s withdrawal from the project is based on the increased development cost of the gold resources. “We have been finding falling grades of ore and reduced exploration success,” says Crichton. “It’s the economics of the project that have dictated our decision.”
The Algerian government, meanwhile, has publicly signalled its intent to take over from its international partner.
“We have taken the decision to take back all of the shares of GMA Resources and all of its interests in the Tirek-Amesmessa mine,” said Youcef Yousfi, Algeria’s energy minister, on 6 December on the sidelines of the 20th World Petroleum Congress in Doha.
Sonatrach will take control of the project and draw up new studies for the mine’s development, which is likely to be carried out in partnership with a large international company.
“We no longer want junior companies like GMA,” said the minister. “We need companies with experience, financing and the necessary technical means. It’s a project in a difficult region, which requires a lot of investment and expertise.”
Since production began in January 2008, gold output from the mine has fallen from several hundred kilogrammes a year to just 1,814 ounces in the third quarter of 2011. To date, GMA has invested $51.7m in the project.
According to the former CEO of GMA, Douglas Perkins, the Tirek-Amesmessa concession is part of one of the largest gold formations in Africa.
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