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Amara Mining's Cash At Record Levels As Production Hits Target

Amara Mining (LON:AMA, TSE:AMZ) expects to produce between 50 - 60,000 ounces of gold in 2013 as first production from its Sega project in Burkina Faso comes on stream.

The group, which is focused on west Africa, produced 54,900 ounces in the year just ended, 53,500 of which came from the Kalsaka mine in Burkina Faso.

Annual gold production was weaker than in 2011, which reflected Kalsaka's approach to the end of its minelife and an unusually heavy wet season in Burkina Faso.

Amara expects the average headgrade of the ore processed in 2013 to strengthen as material from Sega becomes available and as the higher grade transitional ore is processed at Kalsaka.

The Sega project is next door to Kalsaka. Trucking of material from Sega is expected to commence in mid-2013, before Kalsaka's remaining reserves are exhausted, ensuring production continues uninterrupted, the miner added.

An environmental permit for Sega is expected this quarter, although management said it recognises this is an aggressive timeline given the recent change of government. A mining licence should follow shortly after the environmental permit.

Amara's average price for gold sold in 2012 rose by 5% to US$1,666 and with Kalsaka generating strong cashflow the miner ended the year with a record US$36.2 million in cash and liquid assets.

Peter Spivey, Amara's chief executive, said 2012 was a defining year for Amara, with transformation across the company.

"We are pleased to begin the New Year by announcing that our revised FY2012 production guidance has been met, despite challenging conditions in Burkina Faso, and we look ahead to uninterrupted production in 2013 as the Sega project comes online.

"With a resource update expected for Yaoure in Q1 and the feasibility study for Baomahun anticipated later in H1, we will move closer to our goal of becoming a mid-tier producer."

The company added that exploration at the Kalsaka-Sega complex is also a primary focus for Amara with plenty of scope to increase resources further especially after the encouraging intercepts logged at the Touli prospect.

An exploration update for Kalsaka/Sega will also be released in the current quarter.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.