SEMAFO Announces a 125% Increase in Reserves at Mana Pre-feasibility Results Contribute to Updated Reserves Total of 1.7 Million Ounces at Mana
Pre-feasibility Results Contribute to Updated Reserves Total of 1.7 Million Ounces at Mana
MONTREAL, QUEBEC -- (Marketwire) -- 06/28/10 -- SEMAFO (TSX: SMF) is pleased to report updated mineral reserves totaling 1.7 million ounces for its Mana Mine in Burkina Faso. Pre-feasibility study ('PFS') of the Wona underground deposit combined with revised open pit reserves resulted in a 125% reserves increase, representing an additional 961,000 ounces at Mana. The increase in reserves is attributable to the addition of 850,000 ounces from the underground and 111,000 ounces from the open pit deposits. The PFS was conducted using SEMAFO's December 2009 resources model and is exclusive of all inferred resources and exploration work conducted to date in 2010. All amounts are in US dollars unless otherwise stated.
Reserves include 7,920,000 tonnes at an average grade of 2.8 g/t Au for 707,000 ounces in the proven category and 10,517,000 tonnes at an average grade of 2.9 g/t Au for 958,000 ounces in the probable category.
Highlights of the pre-feasibility study (using a $950/oz base gold price) include:
-- Total proven and probable mineral reserves of 9.24 million tonnes at 2.9
g/t Au representing approximately 850,000 ounces
-- Average annual production from the underground of 76,500 ounces at a
cash operating cost of $554 per ounce
-- Underground mine life of more than nine years at 3,000 tpd
-- Mining methods: long hole transverse and longitudinal retreat
-- Initial capital expenditure of $93 million and ongoing capital
expenditure of $24.4 million
-- Pre-tax operating cash flow of $273 million with a 23% internal rate of
return
-- 3.5-year payback period
The positive PFS results, in conjunction with Mana's ongoing open pit operations and existing infrastructures, further confirm the economic viability of an underground mining operation. Gold production from the underground is estimated at 688,000 recoverable ounces at a cash operating cost of $554 per ounce or $41 per tonne. This represents a nine-year mine life at a processing rate of 3,000 tpd from the underground. Study parameters include a 2.0-g/t Au cut-off grade, a processing plant recovery rate of 81% and energy costs of $0.13 per kWh.
The Wona Underground project is particularly attractive owing to the 6,000-tpd processing plant and infrastructures currently in place. The PFS allows for increased underground production of 3,000 tpd compared to 2,000 tpd in the Preliminary Economic Assessment (''PEA''). In order to sustain the plant's throughput capacity of 6,000 tpd, 3,000 tpd will be sourced from the open pits.
Gold Price Sensitivity Analysis (Pre-tax)
Price of Gold
$950 $1,100 $1,200
IRR 23% 35% 42%
Operating Cash Flow $273,000,000 $373,000,000 $440,000,000
PEA - PFS Comparison Highlights
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Parameters Units PEA PFS
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Production M&I Probable
Gold Price $US/oz 800 950
Processing Plant Recovery % 76 81
Production Rate tpd 2,000 3,000
Total Mineable Tonnage t 4,400,000 9,240,000
Average Grade(i) g/t 3.2 2.9
Cut-off g/t 2.8 2.0
Reserve Ounces oz 460,000 850,000
Recoverable Gold Ounces oz 343,000 688,000
Mine Life yrs 6 9
CAPEX - Initial(ii) 52,000,000 93,000,000
CAPEX - Ongoing(ii) 5,500,000 24,400,000
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(i) Average grade decreased in accordance with the cut-off grade, mainly
due to a higher gold price.
(ii) Capital expenditures have increased to accommodate for a larger
mining fleet, increased development and a mining rate of 3,000 tpd.
Commenting on the study results, Benoit Desormeaux, SEMAFO's Executive Vice-President and Chief Operating Officer said, 'We are extremely pleased with the results from the pre-feasibility study, which confirmed our expectations of doubling PEA recoverable gold ounces. Furthermore, the underground potential is still open at depth and we have yet to include the results from the current Wona SW Zone. We are confident that we will continue to add underground ounces to further increase the project's cash flow and internal rate of return.'
Updated Mineral Reserves
In addition to the PFS, Wona open pit reserves were revised based on new economical and technical parameters to accommodate for the optimal interface between the open pit and underground operations. Reserves updated as at April 30, 2010 totaled 1,665,000 ounces, representing an increase of 961,000 ounces and taking into consideration the 66,000 ounces mined during the first four months of the year.
'Our reserves at Mana have more than doubled and our vision of Mana becoming a mining district is beginning to take form,' said Benoit La Salle, President and Chief Executive Officer. 'Exploration remains ongoing, with the next drill results update on the Wona SW Zone scheduled for release in early July. We are confident that the 2010 drilling program will add more underground and surface ounces to our reserves and resources base.'
April 30, 2010 Updated Mana Mineral Reserves by Sector
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Sectors at Mana Tons Ore g/t Au Oz Au
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Filon 67 52,000 2.9 4,800
Nyafe Total 972,000 5.2 161,300
Wona Total O/P 7,889,000 2.5 632,900
Wona U/G 9,243,000 2.9 849,900
ROM Pad 282,000 1.8 16,100
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TOTAL 18,437,000 2.8 1,665,000
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The full details will be presented in a National Instrument 43-101 ('NI 43-101') compliant report to be filed on SEDAR within 45 days of the date of this press release.
The PFS was conducted by Met-Chem Canada Inc. under NI 43-101 and with the collaboration of SEMAFO's technical group. Patrick Moryoussef, SEMAFO's Mining Operations Manager and a Qualified Person (as defined in NI 43-101) has reviewed this press release for accuracy and compliance with NI 43-101.
About SEMAFO
SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Company currently operates three gold mines: the Mana Mine in Burkina Faso, the Samira Hill Mine in Niger and the Kiniero Mine in Guinea. SEMAFO is committed to evolve in a conscientious manner to become a major player in its geographical area of interest. SEMAFO's strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities in West Africa.
About Met-Chem
Met-Chem is an internationally renowned consulting engineering firm established in 1969 to provide all phases of geology, mining, mineral processing and engineering services throughout the world. From its headquarters in Montreal, Met-Chem offers the mining industry professional expertise that covers scoping, pre-feasibility and feasibility studies, basic and detailed engineering, procurement and construction management, training, start-up, commissioning and operations assistance.
Caution Concerning Forward-looking Statement
This press release may contain forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and assumptions and accordingly, actual results and future events could differ materially from those expressed or implied in such statements. Forward-looking statements include words or expressions such as 'pre-feasibility', 'probable', 'mine life', 'further', 'initial', 'ongoing', 'estimated', 'payback period', 'expectations', 'will', 'update', 'scheduled', 'confident', 'committed', 'evolve', 'become', 'maintaining', 'strengthening', 'increase' and other similar expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include our ability to meet the various results of the PFS, the ability to continue or complete our 2010 exploration program at Mana as scheduled, the ability to add underground ounces to further increase the project's cash flow and internal rate of return, the ability of Mana to become a mining district, the variation in the price of gold and the dollar, mining industry risks, uncertainty as to calculation of mineral reserves and resources, delays and other risks described in the Company's documents filed with Canadian securities regulatory authorities. Although the Company is of the opinion that these forward-looking statements are based on reasonable assumptions, such assumptions may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements. Readers can find further information with respect to risks in the Company's 2009 Annual MD&A, as updated in the 2010 First Quarter MD&A, and other filings with Canadian securities regulatory authorities available at www.sedar.com. The Company disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.
Contacts:
SEMAFO
Benoit La Salle
President & CEO
514-744-4408
Toll-Free: 1-888-744-4408
blasalle@semafo.com
SEMAFO
Sofia St-Laurent
Communications
514-744-4408
Toll-Free: 1-888-744-4408
sstlaurent@semafo.com