Semafo releases ‘attractive’ PEA for Nabanga in Burkina Faso

A preliminary economic assessment (PEA) for Semafo’s (TSX:SMF) Nabanga gold project in Burkina Faso envisions an open-pit and underground mining operation that can be developed with modest initial capital.

The Nabanga gold project, 250 km southeast of Ouagadougou, is located in the Birimian gold province, which hosts most of West Africa’s major gold deposits.

The PEA tables total gold production of 571,000 oz. at all-in sustaining costs (AISCs) of US$760 per oz. and a 92% gold-recovery rate over an eight-year mine life. Initial capex is estimated at US$84 million with a payback period of 4.4 years, an after-tax net present value of US$100 million at a 5% discount rate and a 22.6% after-tax internal rate of return.

Semafo’s president and CEO Benoit Desormeaux said in a statement that the PEA highlights the project’s “attractive economics,” which he believes can be improved through additional cost-saving measures in mining operations and development. The project also has the potential to extend resources through additional exploration drilling, as some mineralized zones remain open, he adds.

The PEA is based on inferred resources of 3.4 million tonnes grading 7.7 grams gold per tonne for 840,000 contained oz. gold.

The PEA projects a 2.5-year open-pit operation, including the pre-production period. The top portion of the mineralized zone can be recovered by conventional truck-and-shovel open-pit mining down to a maximum depth of 60 to 70 metres. Open-pit production would be at a rate of 16,000 tonnes per day for a total of 14.7 million tonnes of material, including 616,000 tonnes of mineralized material at an average grade of 6.45 grams gold per tonne. Drill and blast would be required at the beginning of the excavation work, as there is almost no overburden.

For the mineralized zone below the open pit, the PEA envisions an underground-mining method of sublevel long-hole stoping using cemented rock fill.

Development of the underground mine will start in the second year of operation, starting from one of the small satellite pits located near the central portion of the Nabanga deposit. More than 9,600 metres of underground development is planned over the project’s mine life to unlock the different mineralized zones.

The mineralization at the Nabanga deposit is predominately hosted within a granodiorite intrusive. The mineralized structure dips 65 degrees towards the northwest and has an average horizontal thickness of 4 metres.

Combined open-pit and underground production is estimated at 2.98 million tonnes at an average grade of 6.47 grams gold per tonne at cut-off grades of 2 and 3.7 grams gold per tonne for the open-pit and underground mineralization, respectively.

The PEA recommends drilling to move the mineral resources up to the measured and indicated categories and launching a feasibility study as the next steps.

Nabanga is part of the Yactibo permit group, which comprises four other contiguous exploration permits — Ouargaye, Kamsongo, Yacti and Napade. The Yactibo permit group was previously owned by Orbis Gold. Semafo initiated a takeover of Orbis Gold in November 2014, and acquired all of Orbis’ remaining shares in March 2015.

At press time, Semafo’s shares were trading at $4.34 per share with a 52-week range of $2.24 to $5.75. The company has 334 million common shares outstanding for a $1.45-billion market capitalization.