desjardins comments on Burkina FasoBurkina Faso update
In the last few weeks, there has been increasing newsflow about unrest in Burkina Faso, West Africa. The unrest was
initially caused by protests against rising food prices and a demand by the military for unpaid housing allowances. Some
military personnel have since begun mutinying, looting and causing disruptions in various cities. Some of the more
recent updates follow:
In response to ongoing protests, President Blaise Compaore began the process of replacing several top army officials
and cabinet members. We have been told by our contacts on the ground that the army generals have been replaced
by ones loyal to the current president. Yesterday, the army commander announced that the government would
work with the soldiers to resolve their grievances.
It was reported that the government was “dissolved” last Friday (April 15). To clarify, the president is still in power and
is in the process of selecting his new cabinet. Regarding the new cabinet, it was reported to us a few days ago that it
seemed likely that the minister of mines would not be replaced.
Yesterday, it was announced that a new prime minister had been installed. The appointee, Luc-Adolphe Tiao, is the
former Burkinabé ambassador to France.
A spokesman for the rebel soldiers yesterday called an end to their revolt, which has been ongoing since April 14. On
Monday, a member of the elite presidential guard released a statement apologizing for the recent unrest.
One of our contacts on the ground in Burkina Faso said that the situation is being sensationalized, and is not
comparable to Libya or Egypt. The president is acting quickly to resolve ongoing problems and has confirmed that
this will be his last term in office.
Companies with significant operations in Burkina Faso include SEMAFO, Orezone, Volta, Riverstone Resources, Avion
Gold, Avocet Mining, Cluff Gold and IAMGOLD. Many of these have recently issued press releases stating that their
operations have not been impacted by the unrest.
As the situation unfolded last week, SEMAFO’s shares traded down by as much as 18% on Friday and have recovered only
slightly since. We continue to believe that although the situation in Burkina Faso has certainly not been resolved, SMF’s
currently depressed price represents a strong buying opportunity.