SEMAFO makes strong case on Niger gold mine agreement
Canadian junior miner, SEMAFO, has vigorously defended itself against allegations that the host country for its Samira Hill gold mine had so far received no benefit from the operation.
Posted: Tuesday , 13 Jul 2010
As Mineweb noted in its report yesterday (Could SEMAFO be facing an African gold take-away?) on a new investigative committee put in place in Niger investigating Canadian junior gold miner SEMAFO's agreement to operate the Samira Hill gold mine, the statement put out by the committee's chairman that the country had effectively received zero benefit from SEMAFO's Samira Hill gold mine, despite holding a 20% stake, was a simplistic, and misleading, representation of the true picture. The committee was established by the transitional (military) government which was set up following a coup in February, to review the agreements endorsed by the previous regime, more specifically with regard to the economic benefits to the country.
Given the committee has the power to recommend annulment of old agreements should they be found lacking, if it should find against SEMAFO that could be serious for the Canadian junior with Samira Hill providing about a quarter of its annual gold output. (The company also operates mines in Burkina Faso and Guinea).
The company has thus come up with a strong statement supporting its position in Niger. While the company may not yet have paid out dividends, and will only do so when its capital expenditure on the mine has been fully recovered, Benoit La Salle, SEMAFO's President and Chief Executive Officer, pointed out that the company had already paid more than $24.8 million in taxes, royalties and local salaries from 2004 to 2009, $14 million of which represented royalty payments. In addition during this period, the local operating subsidiary company, Société des Mines du Liptako (SML), spent more than $153 million on locally-purchased goods and services.
SEMAFO points out further that in 2003, and with the approval of the SML shareholders (which includes the Niger government), SML with SEMAFO as guarantor undertook a hedging program with bank Société Générale to obtain debt financing for construction of the mine and infrastructures. Since then, SEMAFO has invested in excess of $80 million in SML. Further, the company notes that in compliance with customary mining practices, SML intends to pay dividends to its shareholders once the capital has been reimbursed to its funding shareholder. In this regard, it is important to note that according to West African corporate-governing regulations, dividends can only be paid to shareholders once the accumulated deficit has been cleared in full.
La Salle further commented "We have always upheld transparent business practices. Our organization is governed by strong ethics and values and we certainly welcome any enquiries or comments in this regard. Our financial reporting and obligations are of the highest standards. We are confident that the Niger committee will confirm this fact and that there will be no major repercussion on SML as a result of this inquiry."