A security official said the explosion came as dozens of residents were inside the factory helping themselves to whatever ammunition was left after Sunday`s raid by suspected Al-Qaeda fighters.
A local official, Nasser al-Mansari, told AFP between 75 and 80 were killed but that the death toll could rise further.
Many of the bodies were incinerated by the explosion, which occurred at a factory near Jaar, a city in the restive province of Abyan, an Al-Qaeda stronghold.
In line with with Islamic tradition for swift interments, several bodies or remains of the victims have already been buried.
It remained unclear if the cause was accidental or the result of a booby-trap.
Yemen is a country where carrying firearms is a national passion and guns outnumber the 24-million population by more than two to one.
With the region falling into the hands of Al-Qaeda militants on Sunday, around 30 armed and hooded gunmen looted the factory and made off in four vehicles with cases of weapons, witnesses said.
The incident, two months into a nationwide revolt against President Ali Abdullah Saleh, came as a security official said suspected Al-Qaeda militants had seized control of Jaar and its surrounding villages.
Lawless regions of southern Yemen provinces have turned into a base of operations for Al-Qaeda in the Arabian Peninsula (AQAP), the network`s franchise in the unrest-swept and impoverishd country.
Washington warned on Sunday that the fall of the embattled Saleh, a key US ally in its war against Al-Qaeda, would pose a "real problem" for the United States.
"I think it is a real concern because the most active and at this point perhaps the most aggressive branch of Al-Qaeda, Al-Qaeda in the Arabian Peninsula, operates out of Yemen," said US Defence Secretary Robert Gates.
"And we`ve had counter-terrorism cooperation with President Saleh and the Yemeni security services," he said.
"So if that government collapses, or is replaced by one who is dramatically more weak, then I think we`d face some additional challenges out of Yemen, there`s no question about it. It`s a real problem," Gates said.
Saleh himself said that the opposition demanding his ouster should resort to dialogue in order to avoid chaos and a Somalia-style "civil war" in Yemen.
"If we do not act, along with good-willed and friendly countries, to close the rift and start a political dialogue, there will be a devastating civil war that will disturb the whole region," he warned in a television interview.
Saleh has reportedly offered to step down by the end of 2011, a proposal snubbed by the opposition. But his ruling party on Friday said he should serve out his current term until a scheduled presidential election in 2013.
Defections from his regime have multiplied since a bloodbath in Sanaa on March 18 when 52 protesters were gunned down by Saleh loyalists, drawing widespread international condemnation.
Amnesty International said a total of 95 people have been killed in clashes between security forces and protesters. (M014/K004)
Editor: Kunto Wibisono
Copyright © ANTARA 2011
