Semafo Shaking Up Kiniero

Unsatisfactory production from the Kiniero gold mine in eastern Guinea has led Semafo (SMF-T, SEMFF-O) to put a new mining plan in place.

Kiniero, which produced only 8,600 oz. gold during the second quarter of 2007, exploited narrow veins in a single pit. Its second- quarter cash operating cost was US$726 per oz., up from US$357 a year before.

Structures in the 2007 mine plan have proved to be less predictable, with a significant increase in the stripping ratio: it has risen to 17 from 10. Semafo reckoned that the increased stripping ratio added US$135 per oz. to its cash cost, with another US$233 contributed by lower grades and US$101 by higher fuel costs.

Semafo will move mining to the comparatively low-strip West Balan pit for the balance of the year. The pit has a stripping ratio of 7 and a projected cash operating cost of US$350 to US$375.

Scheduled maintenance, which had been planned for year-end, has been moved up to take advantage of mining downtime and to provide full mill availability for when West Balan is brought on-stream.

Semafo has revised its 2007 production guidance for Kiniero to 30,000 oz. and expects to pour 45,000 oz. there in 2008.

The company reported production of 30,200 oz. in the second quarter of 2007, with 21,600 oz. coming from the Samira Hill mine in Niger, where it and Etruscan Resources (eet-t, etruf-o) each hold a 40% interest (and the remaining 20% is held by the government of Niger). Samira’s cash cost during the quarter was US$373 per oz.

Semafo lost $2.1 million on revenue of $18.1 million in the quarter, compared with a loss of $384,000 on revenue of $15 million in the second quarter of 2007. For the first six months of 2007, the company is showing a loss of $5.3 million on revenues of $36.7 million.

Meanwhile, progress at the Mana gold mine in Burkina Faso continues, with completion of the buildings scheduled for November. Stripping at the Wona open pit has taken out 1 million tonnes of overburden and the ore is now exposed. Stripping should start at the nearby Nyafe pits in October.