Guinea feasibility study positive for Semafo

A feasibility study on the Jean-Gobele gold project in east-central Guinea has concluded that a 55,000-oz.-per-year open pit mine would be profitable at a gold price of US$260 per oz.

Commissioned by owner Semafo (SMF-T), the study used a minable reserve of 865,600 tonnes grading 6.1 grams gold per tonne, reflecting the deposit’s oxide mineralization only. The open pit would have a stripping ratio of 9-to-1 and be mined out after three years.

The study estimated cash production costs of US$171 per oz., and cash flow models show an internal rate-of-return of 21% based on a 10% discount rate.

The net present value of the project is US$1.7 million.

Capital expenditures are being kept low by designing the operation around a carbon-in-pulp mill Semafo already owns. The mill will have to be moved from Jamaica.

The study also concluded that the deposit’s sulphide zones were not economic with gold at US$260, but that an underground operation could be started quickly with minimum capital costs.

The minable reserve is part of a larger indicated resource, calculated by Pearson Hofman Associates, that contains 1.1 million tonnes of oxide material grading an average of 5.1 grams per tonne, and 811,000 tonnes of sulphide mineralization at 8.3 grams.

Drill holes that had been meant to establish that there was no mineralization in areas intended for the carbon-in-pulp plant site instead discovered a previously unknown vein structure on the property. The new vein, labelled Gobele C, lies between the two principal host structures for gold at Jean-Gobele. The new structure has been traced over a strike length of about 300 metres.

Reverse-circulation holes returned three mineralized intersections. One intersection was 7 metres long, grading 5.6 grams gold per tonne, another 6-metre intersection graded 6.5 grams, and a third was 4 metres long and ran 8.3 grams.

Semafo also concluded an agreement with Managem, a unit of Moroccan industrial group Omnium Nord-Africain (Groupe ONA), under which Managem subscribes for 14 million shares of Semafo at $1.15. Managem also receives 21 million warrants: half are exercisable at $1.25 before Nov. 1, 2001, whereas the other half are exercisable at $1.35 before Nov. 1, 2002.

Regulatory authorities have yet to approve the share issue, and it also requires the approval of Semafo’s shareholders. Semafo plans to use the funds for future acquisitions in West Africa.

Semafo has also released drill results from its Tinga property in northwestern Ghana, where a 1,300-metre reverse-circulation program has just ended. There, a prospect previously trenched by Ashanti Goldfields (ASL-N) showed gold mineralization along 600 metres of a shear zone. The intersections ranged from 1 to 7 metres across, with grades generally between 1 and 7 grams per tonne. The best intersection ran 9.8 grams over a 7-metre interval.