G-Resources Sees First Profit This Year as Gold Mine Ramp

G-Resources Group Ltd. (1051), the Hong Kong-based miner backed by Blackrock Inc., expects to deliver its first profit since becoming a mining company as production ramps up at its Martabe gold mine in Indonesia.

“We’ll definitely be into profitability this year,” Vice Chairman Owen Hegarty said today in a phone interview from Melbourne. “Our target this year, even though we’re just ramping up, we should be able to hit 90 percent of capacity in terms of the full throughtput,” he said.

The Martabe project, which cost almost $900 million to build, started in July and is expected to produce 250,000 ounces of gold and 2.2 million ounces of silver in 2013. G-Resources may post a profit of $68.7 million this fiscal year, according to average of five analyst estimates compiled by Bloomberg.

“We would expect to see a more buoyant share price given that we’re now well and truly in production,” Hegarty said. “But it doesn’t happen overnight. You’ve got to hit your targets, you’ve got to do what you say you got to do, you’ve got to put a few quarters together underway.”

The stock lost 3.4 percent to 42.5 cents in Hong Kong at 10:57 a.m. It has gained 16 percent this year, compared with a 3.3 percent advance in the benchmark Hang Seng index.

In 2009, G-Resources changed its name from Smart Rich Energy Finance (Holdings) Ltd., which traded electronic goods and sold financial information via mobile phones.

Net Loss

The company yesterday reported an $8 million loss for the six months ended Dec. 31, narrowed from a loss of $9.2 million a year earlier. It booked a $7.2 million one-time charge in the half for a six-week production suspension in September after the local community opposed a water discharge pipeline. The situation has been resolved, Hegarty said today.

G-Resources is aiming to have full-year cash costs of $450 an ounce. That’s lower than the $694 an ounce average cash cost in the third quarter for 10 of the biggest gold miners, according to data compiled by Bloomberg.

Gold prices have dropped about 5.8 percent this year as improving economies curbed demand for the precious metal as a haven asset. Gold for immediate delivery was little changed at $1,580.77 an ounce as of 11:11 a.m. in Hong Kong.

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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