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Posts tagged ‘SEMAFO Inc (SMF)’

SEMAFO reports Burkina Faso Assays up to 5.14 g/t Gold over 16m

February 3rd, 2012

Resource Clips - essential news on junior gold mining and junior silver miningSEMAFO Inc TSX:SMF announced results from its Mana Property in Burkina Faso. Highlights include

5.14 g/t gold over 16 metres
2.87 g/t over 26 metres
2.71 g/t over 27 metres
10.32 g/t over 6 metres
8.05 g/t over 8 metres
4.21 g/t over 13 metres
10.05 g/t over 6 metres
3.63 g/t over 15 metres

VP of Exploration and Mine Geology Michel Crevier stated, “SEMAFO’s exploration team will have brought its first 2010 discovery to the stage of economic assessment in two years. Considering the size and complexity of the mineralization, our teams have demonstrated their ability to successfully and optimally fast-track a priority target while continuing to generate new discoveries and targets.”

View Company Profile

Contact:
Sofia St Laurent
Communications
514.744.4408
888.744.4408

Read feature story on SEMAFO Inc.

by Greg Klein

Treasure Islands

January 30th, 2012

Miners Face Increasing Danger from Crime, Social Unrest and Violence

By Greg Klein

With 22 years’ experience in the British Special Forces, 10 of them with the Royal Marines and the other 12 with the SAS, Alan Bell is no stranger to conflict. Since founding the Toronto-based security company Globe Risk International in 1996, he’s provided his expertise and active involvement to a number of exploration and mining companies overseas. And he’s seen a few changes over the years.

“I remember when I started out in the 1990s, the old VPs of exploration used to go out into the mountains with their hammers and their boots and their trousers tucked into their socks. The old-school guys would go out there and say, ‘We don’t need any security.’ Well the world has changed dramatically since then.”

Miners Face Increasing Danger from Crime, Social Unrest and Violence

His admonition would apply to all resource companies but especially those of Canada, “the global leader in mineral exploration,” according to the Prospectors and Developers Association of Canada. Rising prices and limited supply push exploration into increasingly dangerous places, in a world that is itself becoming more troubled.

Companies often turn to Globe “when things go wrong,” Bell says. “They’ve got to spend a lot more time researching where they’re going and what they’re going to do. They’re running out of places to go, and the places that are left are where there’s problems.”

Bell’s company will visit the site of a proposed project to assess certain types of risk—not so much political risk, which might involve expropriation or a sudden and onerous tax/royalty regimen, but conflict in the form of crime, social unrest, sectarian violence or terrorism.

“There could be anything from suicide bombers to vehicle-exploding devices. We talk about what’s in the area. Can you get helicopters in there; what type of security do you need; who can assist you? We assess the local population, aviation, flight clearances, landing sites. Basically we develop a report for the client so they can see what their problems and options are before they bid on these contracts.

“We’ve had many clients who have looked at our reports and said, ‘Well this looks like an option, we’re willing to take a certain amount of risk,’ and they go in. Others say, ‘Shit, we’re not going to get involved in this, it’s too dangerous.’”

Bell started out with assignments in Latin America and Africa. In 2004, he began working on Canadian government contracts in Afghanistan. He employs a number of former Canadian military but trains locals to work as onsite security.

“We just finished a major project in northern Afghanistan for a Chinese company looking to start in March or April. What we will do, if they wish, is provide them with security to do their work. We’ll get a camp built for them, train the security team, get the vehicles. When they come over and start carrying out their exploration, we’ll support them from a security perspective as well.”

Precautions notwithstanding, not everything can be predicted, let alone prevented.

Last September, for example, Semafo TSX:SMF shut down its Kiniero Gold Mine in Guinea and evacuated its expatriate employees after protests about foreign workers turned violent. The mine still hasn’t re-opened, although exploration resumed in late October.

In December 2010, Luna Gold TSXV:LGC lost 1,500 ounces of gold, worth over $2 million at the time, to an armed gang at its Aurizona Mine in Maranhao State, Brazil, about 2,000 kilometres north of Rio de Janeiro. Robbers failed in a second attempt last November, however, despite taking hostages. The captives were released unharmed, an outcome which the company attributes to precautions taken after the initial heist.

We knew that this was going to happen based on intelligence-gathering by our security people. We advised the local police. The police were on site at the time the outsiders came. And the police just stood by while they vandalized the place —Donald East

In March 2011 Torex Gold TSX:TXG suspended work at its Morelos Project in Guerrero State, 200 kilometres southwest of Mexico City, after the armed robbery of several of its trucks. No one was hurt, but employees were evacuated nonetheless. Operations have since resumed.

Last June Torex President/CEO Fred Stanford explained, “We’re in a little town that had no police, and it had never needed them. I think we injected enough money into the community that we attracted a criminal element…. There are now police, and we’re back and moving forward. The government’s been very good; the community wants the mine; and we’re negotiating now for land. No doubt there will be issues, but we’ve got a great partnership with the community.”

Other companies work in the thick of cartel country. US Gold’s TSX:UXG El Gallo Silver-Gold Project is slated for mid-2012 production in Sinaloa State on Mexico’s north-central coast. Senior VP Ian Ball said, “We have been very active there for three or four years and have been able to establish a pretty good relationship—and this might sound strange—with the cartel. You have to know who they are and inform them what you’re doing and where you’re moving to…. They don’t want you near their marijuana crops.”

When it comes to Colombia, Sunward Resources TSX:SWD COO David Forest can’t say enough good things about the country. “Geologically, there’s nothing like it,” he told ResourceClips.com last August. “There’s nothing on the planet with that kind of potential that’s so underexplored. Nothing happened there for 50 years. It’s phenomenal terrain, completely underexplored.”

He added that his flagship Titiribi Gold-Copper Project is in Antioquia Department, a region of northwest Colombia “which has very strong rule of law and tradition of order. We don’t have any security at site.” That confidence seems to be borne out by the presence of others. Neighbours include AngloGold Ashanti, Gran Colombia TSX:GCM, Colombian Mines TSX:CMJ, Continental Gold TSX:CNL, Bellhaven Copper and Gold TSX:BHV and Batero Gold TSX:BAT.

But while Forest emphasized, “The security and safety situation is fine in 90% of the country now,” there is that other 10%. It includes Sunward’s former Murindo-Mande Norte Project straddling the border between Antioquia and Choco departments. “There’s a number of issues including FARC [the Revolutionary Armed Forces of Colombia] and indigenous groups,” he said. “If you can name an issue in Colombia, that region’s got it. The prize, if and when we can get in there, is enormous. It’s an anomaly the size of Yaletown [a high-density Vancouver neighbourhood], with copper sticking out of the ground. For 30 years, everybody’s known about this unbelievable anomaly, but it’s remained a place where nothing happened. We’re working on getting in there and, if we can, it’ll be a lot of fun.” By December, however, Sunward had divested itself of the property.

Speaking from Bogotá, Gran Colombia COO Donald East waxes enthusiastic about his company’s Marmato Gold Project, now in prefeasibility and projected for 2015 production. If all goes to plan, it will be the company’s seventh operating mine in northern Colombia. Last October, however, the company shut down its Mazamorras Project in Nariño Department, in the southwest corner of the country, after a mob demolished the buildings.

“We knew that this was going to happen based on intelligence-gathering by our security people,” says East. “We advised the local police. The police were onsite at the time the outsiders came. And the police just stood by while they vandalized the place. We then complained to the government about that. In any country in the world you have to rely on some sort of legal protection for your assets. So I think that created a bit of a wake-up call for the government.”

There’s nothing remarkable about the security company’s presence, East maintains. “Obviously on any mine you have security because you have assets. It’s just a local security company; that happens on every mine.”

East says he still doesn’t know who’s responsible for the attack or what motivated them. But he believes they were from outside the region and the attack was somehow linked to the local and regional elections that were about to take place. The local population, he says, supports the project for the sake of jobs as well as the social work the company performs. “We’re just going to let the thing wait until we feel the risks aren’t too great for any of our people to go back there. So it’s probably going to be next year before we start to re-visit that project. Mazamorras is not really critical to our current planning.”

Read Part II of this story here.

Beyond 3Q

December 7th, 2011

Avion Mines, Finds West African Gold

By Greg Klein

Avion Gold TSX:AVR has its sights set high in West Africa. Open-pit gold mining underway, a new mill to be commissioned, underground production about to begin and continued drilling to build the resources. The plan is to more than double its annual output to 200,000 gold ounces by 2013 and then maintain that rate for a decade, reaching two million ounces. All that is projected to come from Avion’s Tabakoto and Segala mines and Kofi Property in Mali and its Houndé Project in Burkina Faso.

The market remains unimpressed, however. With the release of Avion’s 3Q results, which reported the production of 21,687 gold ounces at $925 per ounce, share prices plunged from $2.04 November 15 to $1.54 10 days later. Then began an unsteady rise to the December 7 open of $1.73. The plunge isn’t surprising, perhaps, since 3Q net profit fell to $US7.2 million or $0.02 a share, exactly half the amounts for the same quarter in 2010. So what happened?

Avion Mines, Finds West African Gold

The 3Q report attributes additional costs of $4.2 million for taxes related to employee benefits and other obligations from earlier periods. In addition, there were higher fuel costs, transportation delays for parts and equipment and unexpectedly low-grade ore that’s since been mined out.

Beyond 3Q, pessimism is far from universal. Among the analysts who came to Avion’s defence were Steven Butler of Canaccord Genuity, who pronounced the company oversold, and Tara Hassan of National Bank Financial, who set a target of $2.95 and an outperform rating.

Yes, the company is “a growth story,” declares IR Manager Michael McAllister. That growth is fed by revenue from Avion’s Mali project, Tabakoto, which includes the Segala zones less than five kilometres away. Avion holds an 80% interest in Tabakoto, with the Mali government holding the remainder.

At Tabakoto South, mining has just finished off the open pit, and underground production is about to begin. “We’ll probably start stoping there in early January,” McAllister reports. Tabakoto’s Djambaye II open pit is also nearing production.

At Segala, the Dioulafondu open pit will be joined by underground production, probably in 3Q 2012. “At that point we’ll have two undergrounds and several open-pit targets as well,” he adds.

Including Segala, the Tabakoto deposits host July 2011 proven and probable reserves of 913,100 gold ounces, a measured and indicated resource of 149,100 ounces and an inferred resource of 1.07 million ounces.

“That’s to an average drilling depth of maybe 225 metres,” points out Senior VP of Exploration Don Dudek. “Every single zone is open down-plunge and some are open along strike. There’s a likelihood that in the next 250 metres we’ll add another two million ounces of resource. So our 10-year plan is 200,000 ounces of production a year for 10 years, about two million ounces.”

Central to the expansion plan is Avion’s new SAG (semi-autogenous grinding) mill, which will take in 4,000 tonnes per day, up from the current 2,300 tpd to 2,500 tpd capacity. “We’ll commission that by the end of 1Q [2012],” McAllister says. “By the time we work out the bugs, we’ll be at a 200,000-ounce run rate probably around the middle to end of 2Q. We’re forecasting about 160,000 ounces [for 2012] and then 200,000 going forward.”

A convenient 38 kilometres away, Avion drills its 81.25%-owned Kofi Property. Back in 2007, AXMIN TSXV:AXM estimated its resource at 293,000 gold ounces indicated and 368,000 ounces inferred. “I’m hoping our resource update is released this year,” Dudek says. “Kofi’s a lot more complicated, and I’ve got consultants working on it.”

Assays released December 5 include

7.52 g/t gold over 40.8 metres
4.85 g/t over 5.7 metres
11.61 g/t over 21.3 metres
12.92 g/t over 6 metres
22.84 g/t over 2 metres
6.42 g/t over 15 metres
4.6 g/t over 12 metres

“What these new results indicate to me is that there’s still a significant opportunity to the north, with two intercepts specifically being open to the north,” Dudek explains. “When you step back and look at the broader geophysical response, in this case the IP conductivity, it’s obvious that the pattern continues and so we’re hoping, and expecting, that the mineralization will continue as well.”

Every single zone is open down-plunge, and some are open along strike. There’s a likelihood that in the next 250 metres we’ll add another two million ounces of resource. So our 10-year plan is 200,000 ounces of production a year for 10 years, about two million ounces —Don Dudek

Farther southeast, Avion’s drills its Houndé Project in Burkina Faso. Results released November 22 from the Vindaloo Zone include

3.74 g/t gold over 61 metres
4.86 g/t over 38.5 metres
3.75 g/t over 44.9 metres
2.52 g/t over 47 metres
(including 3.69 g/t over 23 metres)
3.03 g/t over 35.2 metres
2.2 g/t over 30.4 metres
2.31 g/t over 21.1 metres

“It’s been a very prolific zone,” McAllister says. “We’ve had a lot of success there. It’s just 60 kilometres south of SEMAFO’s TSX:SMF Mana Mine and we’re on the same trend. So we’re having some great success, and the infrastructure’s terrific… Our goal is to have a million-ounce resource released just before Christmas. If we can do that, we’re looking to do a PEA and hopefully feasibility. Our goal is to have that as a producing mine in three to four years’ time.”

Dudek says he’ll be asking Avion’s board for a 2012 exploration budget of $26 million, compared to 2011′s $16 million. “That’s quite a bit of money. But I’m hoping that we’ll substantially grow the corporate resources and also get a very clear indication of when we can bring on additional production.” As of September 30, the company had $49.2 million in cash and equivalents.

Apart from production revenue, Avion boasts strong institutional investment. “Eric Sprott owns about 16%,” McAllister says. “Sentry Investments about 14%. Fidelity Asset Management about 12%. Overall, we’re about 75% institutionally owned.”

He concludes, “We did have some setbacks in the last quarter, but we worked through them, so it’s a great time to get in right now. There’s a lot to look forward to with Avion.”

At press time, Avion had 440.2 million shares outstanding at $1.73 a share for a market cap of $761.6 million.

Mana From Heaven

July 25th, 2011

SEMAFO Expands its Burkina Faso Flagship

By Greg Klein

According to the Book of Exodus, God’s provision of manna sustained the Israelites through their 40-year journey to the Promised Land. But there’s no final word on how long nature’s provision of gold will sustain SEMAFO’s Mana Mine. A $30-million exploration program expands the mine as it produces. That’s the surprising outcome of a charitable mission to Burkina Faso.

In 1994, Benoit La Salle travelled to West Africa on behalf of Plan, a charity dedicated to developing countries. He met Burkina President Blaise Compaore, who invited him to return and study the country’s gold-mining potential. La Salle was a chartered accountant with no mining background. “I knew nothing about it at all,” he told the Financial Post last year. Now he’s CEO of SEMAFO, a mid-tier producer with two other African producers—Samira Hill in Niger and Kiniero in Guinea—besides its flagship Mana. Talk with him, and it’s evident that mining’s gotten well into his blood.

SEMAFO Expands its Burkina Faso Flagship

“The Mana Mine is a very large district, 2,000 square kilometres in Burkina Faso,” La Salle says. “It’s a district that has a very strong magnetic signature and that has been normally a very good indicator of where the sediments are. We have over 200 kilometres of magnetic signatures that are very easy for us to identify with the new tools. So in early 2000 we discovered a structure which we call the Wona structure, which currently hosts over two million ounces [in reserves]. That’s where we built the first [open pit] mine.

“Last year, as we were following a similar signature south of the permit, we discovered the Fofina-Fobiri structures,” La Salle continues. “They were showing about a million ounces inferred. Fofina is more of a high-grade system and not as wide. It will go from a couple of metres up to sometimes 10 metres wide, but the grade will go from 3 grams up to 15 grams per tonne. Fobiri, which is a parallel zone to Fofina, a couple of kilometres to the east, is a longer system. It’s a lower grade but wider, and these are two very nice systems which currently show about one million ounces.”

Fofina assays released July 18 include 19.46 grams per tonne gold over 8 metres, 4.29 g/t over 25 metres, 7.49 g/t over 7 metres, 17.22 g/t over 2 metres and 7.49 g/t over 4 metres.

Assays from Mana’s Yaho Zone, 4.5 kilometers from Fofina and 20 kilometers from the Mana mill, were released June 28. Highlights include 1.56 g/t over 19 metres, 1.9 g/t over 14 metres (including 3.4 g/t over 5 metres), 1.16 g/t over 21 metres (including 1.72 g/t over 10 metres) and 1.19 g/t over 19 metres.
May 12 results from Wona’s SW Zone include 4.17 g/t over 32 metres, 4.45 g/t over 10 metres, 2.27 g/t over 51 metres (including 6.25 g/t over 6 metres), 3.49 g/t over 28 metres (including 3.6 g/t over 25 metres) and 2.41 g/t over 25 metres.

La Salle comments on the July 18 results, “They confirm the geology, the width and the grade. We’re extremely pleased because the original results were strong, and we’re pleased that with systematic and very tight drilling we’re able to see the inferred resource moving up into the category of reserve or measured and indicated, depending on the final work done by our geologists.”

The key thing about Mana is that in the past 10 years it’s never missed a beat. Every quarter it’s got good drill results, every quarter it’s got great production. —Benoit La Salle

SEMAFO currently budgets $30 million for its 15-rig drilling program and plans further expansion in 3Q. At 2010 year-end Mana’s reserve estimate showed 25.47 million tonnes grading 2.64 g/t for 2.16 million ounces proven and probable. Mana’s resource estimate showed 23.66 million tonnes grading 1.5 g/t for 1.13 million ounces measured and indicated. Total reserves and resources came to 49.13 million tonnes grading 2.1 g/t for 3.29 million ounces. The company lists its inferred resource separately: 36.47 million tonnes grading 2.28 g/t for 2.68 million ounces.

Mana’s 2Q figures, released July 6, show record production of 47,800 ounces, a 6% increase over 1Q and 75% of SEMAFO’s total gold production for the second quarter.
A feasibility study announced March 31 predicted an underground mine below Mana’s current open pit would produce 942,600 ounces at a cash operating cost of US$589 per ounce or US$42.25 per tonne processed over a nine-year lifespan. The mine would require initial capital expenditures of $140 million, with a pre-tax operating cash flow of $452 million bringing a 28% internal rate of return and a three-year payback period.

La Salle enthuses about Burkina Faso. “The people, the government really are pro-mining. The workforce is pro-mining; the unions are pro-mining. The ministry of mines and finance is open-minded about anything that needs to be done to accelerate the development of mines and projects.”

Last February, however, economic concerns set off a series of strikes and protests that were accompanied by army mutinies. As the unrest continued, SEMAFO announced April 18 that its operations were unaffected. Nevertheless the company’s stock fell close to its 52-week low of $6.54. At press time SEMAFO had 272.7 million shares outstanding at $8.77 a share, for a market cap of $2.39 billion.

La Salle concludes, “I think the key thing about Mana is that in the past 10 years it’s never missed a beat. Every quarter it’s got good drill results; every quarter it’s got great production. The construction of the plant was done in 14 months, the commissioning in 45 days. It just keeps giving the results we’re looking for.”

SEMAFO President Benoit La Salle on Burkina Faso gold assays of 19.46 g/t over 8m

July 19th, 2011

SEMAFO Inc TSX:SMF announced assays from the Fofina Zone of its Mana Mine in Burkina Faso. Results include 19.46 g/t gold over 8 metres, 4.29 g/t over 25 metres, 7.49 g/t over 7 metres, 17.22 g/t over 2 metres and 7.49 g/t over 4 metres.

President/CEO Benoit La Salle tells ResourceClips.com, “The Mana Mine is a very large district, 2,000 square kilometres in Burkina Faso. It’s a district that has a very strong magnetic signature and that has been normally a very good indicator of where the sediments are. Normally we find the gold mineralization along the sediments which are also aligned with the magnetic signatures. We have over 200 kilometres of magnetic signatures that are very easy for us to identify with the new tools. So in early 2000 we discovered a structure which we call the Wona structure, which currently hosts over two million ounces. That’s where we built the first mine.

“Wona is a very strong system, five kilometres long, up to 35 to 40 metres wide, and very well-distributed gold mineralization,” La Salle continues. “It’s currently 600 metres at depth, but we’re really mining the open pit. We’ll be opening up the underground in about two years to take it down to 450 metres. This has a 10-year mine life producing 200,000 ounces a year. It has a very, very strong signature, completely open to the south, to the north and at depth as well.

The key thing about Mana is that in the past 10 years it’s never missed a beat. Every quarter it’s got good drill results, every quarter it’s got great production.—Benoit La Salle

“Last year, as we were following a similar signature south of the permit, we discovered the Fofina-Fobiri structures. They were showing about a million ounces inferred. Fofina is more of a high-grade system and not as wide. It will go from a couple of metres up to sometimes 10 metres wide, but the grade will go from 3 grams up to 15 grams per tonne.

“Fobiri, which is a parallel zone to Fofina, a couple of kilometres to the east, is a longer system,” La Salle explains. “It’s a lower grade but wider, and these are two very nice systems which currently show about one million ounces. So we did some systematic drilling at Fofina. We tested some areas that had not yet been tested, and we came in with a much tighter grid. Some areas we drilled down to 25 metres, and we’ve been confirming width and confirming grade to move the some of the inferred numbers into the reserve category and some into the measured and indicated categories. So today’s results come from a series of 30 holes. We’ve announced just part of the results. There are more Fofina assays pending.”

La Salle continues, “Today’s results are in line with our expectations of what we know Fofina to be. They confirm the geology, the width and the grade. We’re extremely pleased because the original results were strong, and we’re pleased that with systematic and very tight drilling we’re able to see the inferred resource moving up into the category of reserve or measured and indicated, depending on the final work done by our geologists.

There’ll be more results coming in the next month or month and a half, because we have 15 drills running at Mana right now. Today’s results come from only three drills. There’s 15 running, so there’ll be results coming from other areas of the property even before we get more Fofina results.

“The drilling program is currently $30 million, and it will be expanded some time in 3Q,” he adds.

“These southern structures will probably be treated in a standalone operation. But we know the current plant could be expanded. So in 3Q and 4Q of this year we’re going to be considering the best strategic decision to treat the ore that we will have in the southern area of the Mana district. If we can have a million to a million and a half ounces of reserves in the southern part, then we will do all the calculations to decide on a standalone plant or an expansion of the current Mana plant.

“Burkina Faso is a great country,” La Salle emphasizes. “There’s a reason why the Fraser Institute ranked it the Number 1 mining country among developing countries and in the Top 5 of all countries. The people, the government really are pro-mining. The workforce is pro-mining, the unions are pro-mining. The ministry of mines and finance is open-minded about anything that needs to be done to accelerate the development of mines and projects.

“Infrastructure is very good,” he says. “Burkina is well developed. It’s a very poor country but it has been receiving foreign aid from Canada and Europe for many, many years. They’re also the gateway into Mali and often into Niger, so the road system is very well developed. The legal system is very well structured. Their weakness is their energy grid, but we believe that will be addressed next year. A new electricity line from the Ivory Coast will have enough power for us to buy 16 megawatts from the government. We are just about to finalize the negotiations, and I hope that once that’s done we’ll be up and running within a year.”

La Salle concludes, “I think the key thing about Mana is that in the past 10 years it’s never missed a beat. Every quarter it’s got good drill results, every quarter it’s got great production. The construction of the plant was done in 14 months, the commissioning in 45 days—I mean Mana just doesn’t miss a beat. It’s a very predictable mine, it’s a very predictable country and it just keeps giving the results we’re looking for.”

View Company Profile

Contact:
Benoit La Salle
President/CEO
514.744.4408
888.744.4408

by Greg Klein

SEMAFO reports Burkina Faso Gold Assays up to 2.66 g/t over 22m

February 1st, 2011

SEMAFO Inc TSX:SMF announced results from the Fobiri Zone located southwest of its Mana Mill in Burkina Faso, West Africa. Assays include 3.16 g/t gold over 3 metres, 2.44 g/t over 10 metres (including 3.39 g/t over 6 metres), 2.75 g/t over 12 metres (including 4.9 g/t over 3 metres), 1.84 g/t over 36 metres, 2.78 g/t over 8 metres, 3.38 g/t over 13 metres, 2.66 g/t over 22 metres, 4.48 g/t over 9 metres, 1.7 g/t over 12 metres and 10.6 g/t over 5 metres.

Geology Manager Michel Crevier stated, “The 2010 exploration program was very successful and is expected to add significant mineral resources to the property. We have brought the Fofina-Fobiri area from a conceptual greenfield target to a major discovery area within one year. Our 2011 exploration activities will include a systematic delineation program on both zones in order to upgrade their confidence in order to increase our measured and indicated resources and ultimately bring new reserves at Mana.”

View Company Profile

Contact:
Benoit La Salle
President/CEO
514.744.4408

or Sofia St Laurent
Communications
514.744.4408

by Ted Niles