ASCOM Acquires Minority Stake in Gold Miner GMA Resources.

Byline: [e-mail] (Staff Writer)

The deal comes as part of ASCOM's strategy to grow its precious metals mining division and expand its mining operations throughout North and East Africa. GMA, whose shares are traded on the London Stock Exchange's AIM (AIM:GMA), has a controlling 52 per cent stake in ENOR, a highly-promising Algerian gold exploration and production operation located in the country's southern Tirek-Amesmessa region.

"The acquisition was a perfect fit for ASCOM as the company looks for regional expansion opportunities," said Karim Sadek, Managing Director at Citadel Capital, the region's leading private equity firm with investments worth more than $8.3 billion. "We already have five gold mining concessions in Ethiopia and are in the process of negotiating additional concessions in Sudan and Egypt. Acquiring a stake in GMA was the perfect opportunity for us to expand our presence in Algeria, a country where Citadel Capital and ASCOM see outstanding growth potential in a number of sectors."

Citadel Capital's platform investments in cement production and construction and engineering, among others, are already very active in Algeria. Although founded in Cairo, the firm today maintains a second office in Algiers headed by Managing Director Alaa El-Afifi. Citadel Capital will have investments of some $800 million in Algeria by the end of 2009.

The ENOR concession is a 1,425 square kilometer plot of land located in mineral rich-region southern Algeria. ENOR, an Algerian operating company, is 48 per cent owned by Sonatrach, the state-owned Algerian oil and gas company.

ENOR produced 18,500 ounces of gold from the concession in 1H09.

Under the terms of its deal with GMA, ASCOM will have the right of first refusal on the sale of additional equity in the company until August 2010. ASCOM will also have the right to appoint one member to the GMA board.

Commenting on the deal, APM CEO Kenneth Crichton said, "The acquisition has just taken us one step closer to our goal of becoming a regional leader in the mining of precious metals. The fact that GMA has a production facility located directly within the concession raises our level of confidence in what future exploration will reveal."

Crichton, a 23-year veteran of the global mining industry, was hired by ASCOM in February to consolidate and streamline APM's operations in the region.

"We are pleased to have been able to conclude this funding and to have attracted an important strategic investor such as APM," said GMA CEO Douglas Perkins in a company statement.

Research to date suggests that ENOR's property offers considerable potential for the development of additional prospects that would be amenable to the open-pit mining techniques being deployed on the site.

With an established and experienced operating and exploration team already in place, ENOR shareholders have approved management's gold exploration plans. The company is now quickly working to identify new resources, with the intention of starting work on a five-year expansion plan. This provides the ASCOM group with a unique opportunity to invest in GMA during a phase of planned growth and expansion.

The deal will allow the ASCOM group to acquire 42,636,624 newly issued ordinary shares at 4.5 pence per share to be paid over four tranches spread over the coming four months. The transaction is structured through Valencia Services Ltd BVI, a wholly owned subsidiary of ASCOM Precious Metals Mining S.A.E. in which Asec Company for Mining - ASCOM owns 99.9 per cent.

2009 CPI Financial. All rights reserved.

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