…outlines Algerian gold plans

Source: Mining Journa, London, August 8, 2003 .

This week, GMA also announced that it has assumed management control of "Entreprise d'Exploitation des Mines d'Or" (ENOR), the Algerian gold producer and explorer in which GMA holds a 52% interest. The other owners are all state-owned organisations, and GMA is in initial discussions with the Algerian authorities regarding a possible increase in its share in ENOR. As part of the process of taking operational control, GMA has strengthened its own management team, appointing Phil Davies (formerly general manager at the Siguiri gold mine in Guinea) as operations manager and Jan van Graan (ex-Billiton) as exploration manager. Apart from Mr Ikin (who was formerly executive chairman of Australian nickel laterite developer Preston Resources NL), GMA's board includes Richard Linnell (formerly Billiton plc's head of exploration for Africa) as non-executive chairman, and Bobby Danchin (formerly head of mining business development for Anglo American plc) as a non-executive director.

The property lies some 400 km west-southwest of Tamanrasset, in the far south of Algeria. ENOR's assets include the Tirek and Amesmessa deposits, within the wider 1,400 km² exclusive mining authorisation, plus a pilot plant at Tirek and US$3 million in cash. GMA's 52% interest was won in a tender initiated in September 2001, shortly after the Algerian Government changed the mining regulations that had hitherto restricted foreign investors to minority interests. (Full details of the new regulations may be found in the August issue of Mining Magazine.) The terms of the tender comprised an investment of US$12.5 million, all of which goes into ENOR; US$3.6 million has already been paid and the balance of US$8.9 million is due over three years.

The authorisation is valid until 2013, but there are automatic renewal rights for a further ten years. The fiscal regime includes an income tax 'holiday' until 2011, and 15% thereafter; a state royalty of 3.3%; environmental fees at 0.5% of net earnings; and various holidays on wage-related taxes. Gold may be sold abroad, but Mr Ikin said that thus far sales have been made within Algeria, as national import restrictions on gold mean that the company has secured an average US$20/oz premium over international prices. GMA also has the right to repatriate its profits, and there is no withholding tax.

Mr Ikin said that GMA plans to start a three-month drilling program in September, comprising 3,000-4,000 in of diamond drilling and 15,000 m of reverse-circulation drilling, in 300-350 holes. The main aim is to upgrade the resources established by the state-owned geological survey, "Office National de la Recherche Géologique et Minière (ORGM), and to convert some to reserve. Mr Ikin added that GMA hopes also to undertaken a US$200,000 airborne magnetic survey before the end of this year to identify new targets under sand cover (the previous operators mainly used outcrop to guide their drilling), with a view to drilling the targets next year.

The geological setting is a major shear zone, over 200 km long (running essentially north-south) and 2-3 km wide, and targets have been identified over the 80 km of the structure exposed. Mineralisation is found in quartz veins, 0.8-2.5 in thick and dipping at an average of 70°. The Tirek deposit lies towards the northern end of the exposed portion of the structure. ORGM calculated resources totaling 1 Mt at 17 g/t Au (based on the Russian classification system). The Amesmessa deposit, at the southern end, has 2.4 Mt at 18.0 g/t (also on the Russian system). The consultant Behre Dolbear has calculated a resource at Amesmessa of 2.1 Mt, at 15.8 g/t (to a depth of 200 m). Resources totaling 1.2 Moz have also been identified by ORGM at various prospects in between these two deposits.

A trial mining project was commissioned at Tirek in July 2001. Thus far, 200,000 t has been mined from small open pits and treated, and 30,000 oz of gold has been produced and sold.

MDM of South Africa has constructed a 200 t/d carbon-in-leach pilot plant. GMA is evaluating various expansion options, including expanding the Tirek plant and building a second at Amesmessa; trucking ore from Amesmessa to Tirek; and building a regional 500,000 t/y plant, Mr Ikin believes that such a plant could be established for around US$10 million using second-hand equipment. Work would include a pipeline to bring water from a bore field 42 km distant (it is currently trucked). The power supply would remain diesel generators, as there is no grid, but, according to Mr Ikin, diesel costs just US$0.15/litre delivered.