TSX:MMP.UN - Post by User
Post by
spazzmanon Oct 11, 2011 3:16pm
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Post# 19138119
Boost for MMP
Boost for MMP
Semafo is MMP.un’s largest holding (27+%), this should helpsupport a raising n.a.v.
Not that we need a boost today, up over 6½% and golddown today. I am guessing we are just chasing up to yesterdays gold rally.
Semafo Inc.
By MPL Staff Writer
UBS Investment Research analyst Dan Rollins maintains his “buy” rating for Semafo Inc. (TSX-SMF; $7.80). He also reiterates his 12-month target price of $13.75.
Semafo, which produced 261,100 ounces in 2010, is an intermediate gold producer. (Intermediate gold firms churn out 200,000 to one million ounces a year.) The Montreal-based firm operates three mines in West Africa: one each in Burkino Faso, Niger and Guinea. It also engages in exploration and development work in West Africa.
Semafo’s flagship asset is its Mana Mine in Burkina Faso. Last year, Mana produced 179,700 ounces of gold: more than two-thirds of its total output. However, Mana is currently not connected to Burkina Faso’s electricity grid. Instead, the mine uses its own gasoline-powered generators.
Last week, Semafo announced that its has reached an agreement that will lead to the construction of a 73-kilometre power line that will connect Mana to Burkina Faso’s electrical grid. The deal calls for Semafo to lend Sonabel, the country’s national electricity company, half of the $19 million budgeted for the project.
The new power line, which should be completed in the second half of 2013, is expected to slash the mine’s power costs to US
.18 per kilowatt hour from the current level of
.31 per kilowatt hour. Mr. Rollins says that, all else being equal, this should reduce Semafo’s production costs by $40 an ounce.
The analyst has made no changes to his estimates as his model already assumed that Mana would be connected to the local power grid in 2013. For his target price, Mr. Rollins is assuming a gold price of US$1,900 an ounce.