Semafo Inc. (SMF.TO) announced that it will include a non-cash impairment charge of about $60 million in the fourth quarter of 2012.
The impairment charge is related to the Samira Hill mine in Niger and was prompted by the re-assessment of future cash flows to be generated by the mine following the review of technical and economical parameters. The revision takes into consideration increases in sustaining capital expenditures, consumables and operating costs as well as escalating energy costs related to the poor reliability of the Niger power grid.
The company stated that the non-cash accounting charge will not impact its cash balance or normal day-to-day operations.
As part of strategy and on-going efforts to reduce costs, optimize cash flow, capital allocation and return on investments, the company said it will focus on quality ounces. Accordingly, Samira Hill''s 2013 capital expenditures budget has been reduced to $17.5 million from $27.5 million, mainly due to lower stripping costs.
The company said it expects to add the Siou Sector to reserves during the third quarter 2013 and begin mining the area in late 2014 or early 2015.
The company noted that it will continue to review strategic alternatives for the Samira Hill and Kiniero assets. The company stated that it has a strong cash position of approximately $140 million as at December 31, 2012, is debt-free and unhedged.
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