Semafo pours Guinean gold (April 15, 2002)

Montreal-based Semafo (SMF-T) has made the leap from explorer to miner by opening the Kiniero gold mine in Guinea.

The open-pit operation, formerly known as Jean Gobele, was built at a cost of US$12.4 million. Managem, a Moroccan company that owns a 50.5% equity stake in Semafo, covered the bill.

Based on a 10% discount rate, the internal rate of return rings in at 50%; the net present value, US$6.5 million.

Miners are extracting 888 tonnes of ore daily at a stripping ratio of 9-to-1, which translates into annual production of 60,000 oz. gold. Reserves are expected to last four years, with stripping ratios pegged at 9-to-1.

The life-of-mine cash cost is expected to be about US$168 per oz., or US$11 more than originally predicted. Semafo has sold 160,000 oz. forward at an average price of US$292.50 per oz.

Semafo continues to explore for deposits near the mine site, mainly along a prominent topographical ridge known as Sabili Hill, where a vein system in andesitic tuffs and lavas has already been discovered. Dubbed Gobele D, the vein system strikes to the northeast and dips flatly to subvertical, similar to the producing Jean and Gobele zones. Silicification is also present.

So far, reverse-circulation and diamond drilling has outlined oxide and sulphide mineralization over a strike length of 350 metres, from surface to at least 150 metres below ground. Mineralization remains open at depth.

Recent drilling returned from 1.27 to 61.43 grams over 1.4 to 51 metres. Highlights include:

– hole RC262, which averaged 9.18 grams over 2 metres of oxides, starting at 62 metres down-hole;

– hole RC283, which averaged 1.78 grams over 11 metres of oxides, starting at 20 metres;

– hole DD318, which averaged 4.23 grams over 5 metres of oxides, starting at 29 metres, and 17.11 grams over 2.1 metres of oxides, starting at 38 metres; and

– hole RC525, which averaged 5.5 grams over 2 metres of oxides, starting at 64 metres.

Several holes returned two or more intercepts. The shortest interval, 1.4 metres, averaged 61.43 grams and was part of the longest interval reported — 51 metres, which averaged 2.85 grams.

Semafo is also active in Ghana, Niger, Mali and Burkina Faso. Last fall, the junior advanced the Mana project, in Burkina Faso, by outlining an indicated resource of 3.4 million tonnes of oxides grading 2.38 grams gold per tonne.

The resource, which is based on a 0.5-gram cutoff grade, has been outlined by 2,851 metres of reverse-circulation drilling and 22 trenches. Mineralization remains open in all directions and is projected to continue on to the newly acquired Kona concession.