Amara Mining (OTCPK:CLUGF) has released its financial results for the first half of the year. The company's Kalsaka/Sega project produced just over 31,000 ounces of gold in the first half of the year. Unfortunately, the company's total cash cost per ounce increased substantially in the second quarter to $1,455/oz, from $1,082/oz in Q1. This resulted in a negative EBITDA in Q2 2014, and looking at these numbers, it's not a surprise that the company decided to stop the gold production from the Kalsaka/Sega mine in Burkina Faso. The site has been placed on care and maintenance and it's expected that the project will only recover gold from stockpiled ore.
These numbers are worse than I expected, but in hindsight it explains why the company decided to cease operations at Kalsaka/Sega. A liquidator will be appointed to oversee the liquidation of the local subsidiary of Amara Mining, but I don't expect this will have a material impact on the company. Amara Mining has a working capital position of $11.3M and this should be sufficient to cover the company's ongoing 80,000 meter drill program at the Yaouré project in Ivory Coast and a low-cost optimization program at the Baomahun project in Sierra Leone.
I'm not expecting much from this optimization program in Sierra Leone, because as you know my attention is entirely focused on the Yaouré project which currently contains 6.3 million ounces of gold. However, after looking at the drill pattern at Yaouré and the planned additional drill holes, I'm pretty sure Yaouré will eventually contain in excess of 8 million ounces of gold and this will put Amara on the radar of every Africa-focused gold mining company.
Disclosure: The author is long CLUGF.
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