Semafo hits new high on drill results (June 28, 2010)

VANCOUVER — Semafo’s (SMF-T, SEMFF-O) share price has hit its highest level in over a decade following on-time facility upgrades, completion of a major round of financing and new high-grade gold hits at its Mana gold mine in Burkina Faso.

Most recently, the company announced the discovery of several new mineralized zones at its Mana property as part of a $9-million exploration program on the site this year. The company is using three diamond drills, two reverse circulation drills and five auger drilling rigs for geochemical sampling as it explores the property.

At the new Fofina zone, hole 51 hit 30 metres grading 4.12 grams gold from 53 metres depth. Hole 50 cut 24 metres carrying 2.16 grams gold from 114 metres and hole 89 intercepted 14 metres averaging 2.22 grams gold from 139 metres.

The Fofina zone is found within a 50-metre-wide deformation zone situated at the contact of a sequence of shale and minor volcanoclastic rocks, and intermediate to mafic volcanic flows. The zone is characterized by strong sericitesilica alteration and pyrite-arsenopyrite mineralization.

Zones V1 through V4, starting 200 metres to the northeast of the Fofina zone, returned a number of high-grade short intercepts. In the V1 zone, hole 52 cut 7 metres carrying 5.48 grams gold from 45 metres and hole 90 hit 7 metres averaging 1.99 grams gold from 69 metres depth. In the V3 zone, hole 68 intercepted 12 metres grading 10.32 grams gold, or 17.21 grams uncut, from 92 metres downhole. Hole 70 returned 9 metres carrying 10.84 grams gold from 44 metres depth.

The latest results helped propel the stock up 58¢ or 7.4% to $8.47 on 2.9 million shares traded, setting its highest closing price in recent memory. Semafo’s stock has made a steady climb from $1.85 a year ago to the new high.

The company’s stock price has only been higher in 1996, when it spiked above $10.80 before making a steady decline and trading at under $2 by the end of 1997, where it remained for much of the past decade.

Earlier in June, the company’s stock price jumped 56¢ or 8.1% to $7.49 in two days after the company released an update on its phase II plant expansion at Mana. Semafo is on schedule with the installation of a 26-ft. by 10-ft. semi-autogenous grinding mill, and is replacing a two-stage crushing circuit with a 400-tonne-per-hour single jaw crusher. The upgrades should increase hard-rock production capacity from 4,000 tonnes to 6,000 tonnes per day.

The Mana mine currently hosts reserves of 8.32 million tonnes grading 2.9 grams gold.

Semafo also owns 80% of the Samira Hill mine in Niger with reserves of 8.57 million tonnes grading 1.92 grams gold and 85% of the Kiniero mine in Guinea with 1.59 million tonnes grading 3.65 grams gold.

Semafo recently closed a $119.9-million financing that will be used to fund the purchase of a mining fleet for its Samira Hill mine, and mining activities at its Mana mine. The bought-deal offering included 17.25 million shares at $6.95 apiece. The company has 269 million