Semafo says it’s business as usual in Burkina Faso as military revolts

Montreal-based Semafo (SMF-T) says operations at its flagship Mana gold mine in Burkina Faso have not suffered any disruptions as a result of recent military unrest across the country. Over the past few days, packs of soldiers in several small towns and the capital city of Ouagadougou have looted stores, stolen vehicles and fired their weapons into the air in apparent protests against Burkina Faso’s President, Blaise Compaore, according to several Bloomberg reports.

The reports suggest the president has had trouble paying wages and bonuses promised to several layers of military personnel.

On April 14, thousands of people across the country marched in protest against the current political and economic situation in Burkina Faso, part of an ongoing movement against authorities that began in February, triggered when a student died in police custody and four others were killed in subsequent demonstrations.

President Compaore has since dissolved the government, fired the head of his presidential guard, and dismissed the chiefs of staff of the army, air force and police. He has ruled the country since 1987, after seizing power in a coup.

The deteriorating political situation sent Semafo’s stock tumbling $1.01 on Friday, April 15 to $7.47 on heavy volume of 9.5 million shares traded. Shares of the company are now at an eight-month low, after reaching a high of $14.44 in early December 2010.

Semafo produced 45,000 gold oz. from the Mana mine in the first quarter of 2011, an increase of 9% over the same period last year. The company produced a total of 261,100 gold oz. in 2010, 179,700 oz. of which came from Mana, 51,300 oz. from Semafo’s Samira Hill gold mine in Niger and 30,100 oz. from its Kiniero gold mine in Guinea.

Also in April, transitional military leaders in Niger which had taken control of the country in a coup last year finally handed over power to a newly elected president. The military government had instigated an audit of all uranium and gold mining contracts shortly after taking power, however little has been heard of the results.

Semafo is a long-time believer in running large corporate social responsibility programs in all three of the West African countries in which it operates, including a sustainable sesame produce and processing project in Burkina Faso, a sustainable paprika produce project in Niger, and a fish and millet program in Guinea.

The company has also invested in a solar energy project with the Burkina Faso government, built several schools in each country, and provided food and medical aid for roughly 600 students. It even started a 30-minute weekly radio show its calls “Together for a Better Society,” which gives advice on things from how to care for newborns to running a small business.

Other gold miners with operations in Burkina Faso include Iamgold (IMG-T, IAG-N) and Avocet Mining (AVM-L), both of which say their operations have been unaffected so far by the civil unrest.

At presstime on Monday, April 18, Semafo shares had bounced back slightly and were trading up 14¢ to $7.61 on 2.7 million shares traded.