Semafo looks to the sun for Burkina’s future

Already a key player on Burkina Faso’s mining scene, Montreal-based Semafo (SMF-T) is positioning itself to play a prominent role in the country’s energy sector as well.

While the vast and arid West African country is mineral rich, it lacks most of the resources necessary to generate power. It has no natural gas reserves, no oil reserves, and no real water systems for hydro power.

That has left it with little choice other than to import diesel to run its power plants — at a considerable cost to both its coffers and its air quality.

But the country doesn’t lack all energy producing resources. Situated almost entirely within the climatic region of the Sahel, just south of the Sahara desert, Burkina Faso has an abundance of sunshine, and the government’s ambition to tap that resource led it to Semafo.

“We are the go to company there,” says Semafo’s president and chief executive Benoit La Salle. “The government looks around and it’s not going to be SNC-Lavalin or Bechtel that will go to the government and say we will build a $1 billion project.”

So when the government made it clear that it was pursuing solar power as a priority, Semafo stepped up.

“We saw the need, and with an entrepreneurial spirit we presented a protocol to the government,” he says. “Using expertise in Canada we submitted the outline for a 20 mega watt solar project and they liked the concept.”

That led to the government signing a partnership with Semafo to undertake an official pre-feasibility study on a 20 mega watt (MW) solar power station.

La Salle says the study will likely cost $500,000, and if successful would be followed up with a feasibility study at a cost of close to $2 million. Semafo and the government have agreed to split the costs of the studies.

Both studies could be finished in 12 months, after which point, La Salle says Semafo would look to bring in a partner from the energy sector.

He says Semafo would maintain an interest in any solar project to come out of the process, and that early systems would likely be set up near Semafo’s operations.

“You’re never going to kick start a ball mill with solar panels,” he says “but you can sure get a village and our mining camp going with solar.”

La Salle says the company’s recently completed Mana mine — its largest gold project  — needs 12 to 15 megawatts of power that could be supplied by solar.

And while helping to progress a solar project could be good for Semafo’s bottom line in the future, and is certainly good for its corporate responsibility profile in the present, the company continues to rack up impressive numbers from its main business – mining.

First quarter results showed record gold production for the fourth consecutive quarter thanks in large part to Mana. Gold production overall was 102% higher than for the same period last year with 58,100 oz. of gold produced at a cash operating cost of US$460 per oz.

Gold sales generated $49.5 million for company coffers — a 94% increase over the same period last year and helped to push net income up to $8.9 million or 4¢ per share

The company also showed strong liquidity through cash flows from operations of $18.5 million compared to $6.1 million for the same period the year prior.

Semafo says it is still on track to meet its 2009 production guidance of between 220,000 and 240,000 oz. of gold.