Financing in hand for Samira Hill project (October 30, 2002)

The African Development Bank (ADB) has approved a US$12.5-million loan to La Societe des Mines du Liptako (SML) to finance the Samira Hill-Libiri gold mining project in Niger.

SML is 80%-held by African GeoMin Mining Development (AGMD), with the government of Niger holding the remaining 20%. Montreal-based Semafo (SMF-T) holds a 50% participating interest in AGMD; the other half is held by Etruscan Resources (EET-T).

Semafo and its majority-owner, ONA/Managem, Morocco’s largest mining company, intend to raise the balance of the US$26 million required to finance the project.

Plans call for construction of a 6,000-tonne-per-day, carbon-in-leach processing plant at Tiawa, about 130 km west of the Nigerian capital of Niamey. The partners have already built roads, a landing strip, a surface water dam, a storage reservoir, a water pipeline, and an electrical power station.

Open-pit mining will target the Samira Hill and Libiri deposits. The average stripping ratio is expected to be 3-to-1. Combined, the two deposits host measured and indicated resources of 15 million tonnes grading 1.6 grams gold. Reserves stand at 10.1 million tonnes grading 2.23 grams gold. Beginning in the second year of operation, ore will be blended from the upper portions of the Libiri pit.

The operation is expected to churn out 135,000 oz. gold in its initial year of production. Cash cost are projected at US$165 per oz. Over about 6.3 years, the mine is expected average 100,000 oz. of gold annually at US$188 per oz. The project has an internal rate of return of 33% at a gold price of US$300 per oz.

None of the mine’s production is hedged.