Semafo buys Etruscan’s Samira Hill stake

Etruscan Resources (EET-T) is selling its 40% participating interest in the Samira Hill gold mine in Niger to its partner and mine operator Semafo (SMF-T).

The interest being swapped is comprised of preferred shares, common shares and loans.

Etruscan will receive US$3 million in cash and a 1.5% net smelter return royalty on additional gold produced from the Samira project in excess of 750,000 oz. gold, as from July 1, 2009.

Semafo now owns 80% of the mine while the Niger government holds the remainder. Semafo also retains right of first refusal on Etruscan’s new NSR.

The mine, located 90 km west of the capital Niamey, has been in production since 2004, and has so far produced more than 340,000 oz. gold from two pits named Samira Main and Libiri.

At the end of 2008, the Samira Hill project held 631,000 oz. gold of reserves, 1.3 million measured and indicated oz. gold plus 608,000 inferred oz. gold.

Etruscan says the sale will allow it to better focus on optimizing operations at its new, 90%-owned Youga gold mine in Burkina Faso, which has been in production since July 2008.

For its part, Semafo says the deal will positively affect its balance sheet by reducing long-term debt by $6.1 million and contributing a $3.1-million non-cash gain to the income statement. Both items will be recorded in Q3 2009.

Semafo operates three gold mines in West Africa: Samira Hill; Mana in Burkina Faso; and Kiniero in Guinea. The company produced 195,000 oz. gold last year and hopes to produce at least 60% moiré this year.