Semafo is a Quebec-based company that produces gold from three mines in West Africa. The mines are in Niger, Guinea and Burkina Faso.
2008 was a breakthrough year for Semafo. It had three mines operating and the Company turned profitable. It produced a record 195,400 ounces of gold, up 84% from 2007.
Financially, Semafo achieved net income of $39.5 million or 19 cents per share and record cash flow from operating activities of $56.4 million. (note: this included a one-time non-cash gain of $ 17.8 million on disposal of an investment in a subsidiary).
In the first quarter of 2009, Semafo produced 58,100 ounces of gold with cash operating costs of $ 460 per ounce. Net income was $ 8.9 million ($0.04 per share) and cash flow from operating activities was $ 18.5 million.
The stock currently trades at Price/Earnings ratio of 13.1, based on 2008 earnings.
The Company has a current ratio (Current Assets divided by Current Liabilities) of 1.24 and a Debt/Equity ratio of 0.31.
Importantly, Semafo established an action plan to eliminate its gold hedge position and in 2008 successfully closed out 57,000 ounces of gold sales contracts. By June 30, 2009, the Company is scheduled to retire all outstanding gold sales contracts, therefore allowing the Company to benefit completely from rising gold prices.
This should have a significant positive impact on future profitability, if gold prices stay steady or keep rising.
The Company is well positioned for the future, with gold production expected to reach up to 240,000 ounces for 2009.
Semafo is poised to grow production to 250,000 ounces of gold in 2009. With a growing production profile, a de-hedging program in place and the prospect of rising gold prices, it is well positioned to benefit from this bull market in gold.
For more information, please visit the Company website at:
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