Revised study for Samira Hill

Partners Etruscan Resources (EET-T) and Semafo (SMF-T) have tabled a revised feasibility study for their developing Samira Hill open-pit gold project in Niger.

The new plan calls for the milling of 6,000 tonnes daily by mining both the Samira Hill and Libiri deposits. A 1999 feasibility study, tabled prior to the acquisition and subsequent to the proving up of Libiri, called for the former deposit to be milled at half that rate.

To accomodate the extra feed, Metallurgical Design & Management is refurbishing a semi-autogenous grinding mill in South Africa, prior to shipping it to the property. The mill will be capable of handling 6,000 tonnes of oxide ore per day, or 4,000 tonnes of transitional material.

Commercial production is set to begin in the second quarter of 2001, two quarters later than originally planned. An average of 130,000 oz. are expected for each of the first three years, and between 70,000 and 80,000 oz. are expected for each of the following three years.

The combined operation shows an internal rate of return of 62%, a net present value of US$26.8 million (using an 8% discount rate), and net cash flow (after payback) of US$42 million. All are significantly better than original projections. Capital costs are pegged at US$26 million, compared with the original US$23 million. The low costs reflect the use of contract miners and the out-sourcing of electricity.

Cash costs are expected to average US$136 per oz. in the first year of production and US$194 per oz. over the mine life. This includes a 5.5% royalty to the government of Niger.

Pending an ongoing due-diligence review, International Finance Corp. (a member of the World Bank group) and Rand Merchant Bank are to provide a total of US$18 million in debt-financing. The balance will be provided by Semafo through its acquisition of retractable preferred shares of African Geomin, the Nigerian company through which it and Etruscan hold their interests. The shares will carry an 8% dividend and be repaid out of 60% of the free cash flow after debt repayment.

At Samira Hill, reserves in the oxide and transitional zones total 6.6 million tonnes grading 2.4 grams gold. This is based on an average stripping ratio of 3.06-to-1.

At last report, Libiri hosted total resources of 11.7 million tonnes grading 2.07 grams, based on a 1-gram cutoff grade. A reserve estimate for the oxidized portion of the deposit is being carried out by Resource Service Group of Australia; it will incorporate results from infill drilling but exclude a new zone that was discovered in the process (T.N.M., July 24/00).

Etruscan and Semafo each own a 40% interest in the project. The remaining 20% is held by the government of Niger.