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Executives

Robert LaVallière - Vice President, Investor Relations

Benoit Desormeaux - President and CEO

Martin Milette - Chief Financial Officer

Michel Crevier - Vice President, Exploration and Mine Geology

Patrick Moryoussef - Vice President, Mining Operations

Analysts

Leily Omoumi - Scotia Bank

Cosmos Chiu - CIBC World Markets

Don Blyth - Paradigm Capital

Paolo Lostritto - National Bank Financial

Kerry Smith - Haywood Securities

Pierre Vaillancourt - Macquarie

SEMAFO Inc. (OTCPK:SEMFF) Q3 2013 Results Earnings Call November 13, 2013 10:00 AM ET

Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to SEMAFO’s 2013 Third Quarter Financial Results and Operations Review Conference Call. At this time all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time to queue up for questions. (Operator Instructions)

Please note that today’s call is being recorded. I will now turn the conference over to Mr. Robert LaVallière, SEMAFO’s Vice President, Investor Relations. Please go ahead, sir.

Robert LaVallière

Thank you, France. Good morning. Members of the senior management team joining me for the call today are Benoit Desormeaux, President and Chief Executive Officer; Martin Milette, Chief Financial Officer; Michel Crevier, Vice President, Exploration and Mine Geology; and Patrick Moryoussef, Vice President, Mining Operations.

I would like to remind listeners that some of the matters to be discussed during today’s call may contain forward-looking statements. Forward-looking statements include but are not limited to items such as our expectations regarding the market price of gold, timetables, mining operation expenses, capital expenditures, guidance and resources and reserves estimates.

Such statements are given as of the date of this conference call and involve risks and uncertainties. A number of factors and assumptions were made in preparing such statements and actual results could differ materially. Accordingly, you should not place undue reliance on forward-looking statements.

For additional information with respect to forward-looking statements, risk and assumptions, please consult our 2012 annual MD&A as updated in our first, second, third quarter’s MD&A and other fillings made with Canadian Securities Regulatory Authorities and available on SEMAFO’s website at www.semafo.com.

SEMAFO disclaims any obligation to update or revise any forward-looking statement except as required by law. I make this cautionary statement on behalf of all SEMAFO's spokesperson who may address you during this conference call today.

With that said, I would like to turn the call over to Benoit Desormeaux. Benoit?

Benoit Desormeaux

Thank you, Robert. I am delighted to be able to announce today that we have received authorization to begin development at our Siou and Fofina deposits. This means that pre-stripping and road construction work at Siou will commence in the coming months and that production at Siou has been brought forward to second quarter of 2014, six months ahead of our most recent schedule. Siou now bodes a discovery production timeline of less than two years.

Through the resolute commitment of our team to fast track the Siou deposit, we now anticipate bringing Siou in production more than one year ahead of our original schedule of the first quarter of 2015.

In line with our commitment to discipline capital allocation, we have held the capital expenditures required to bring Siou in production in 2014 from $25 million to $12.5 million. Since Siou is only located 15 kilometers from the Mana processing plant, there is no need to relocate villages, invest in new infrastructure or other significant ancillaries.

In addition, production startup at Fofina is now anticipated in 2015, one year ahead of schedule. Fofina hold estimated reserves of 2.8 million tonnes at 2.7 granted tonne for 237,000 ounces of gold.

The highlight of the quarter was our announcement of Mana reserves and resources update as of June 30, 2013. Mineral reserves and inferred resources at our high grade Siou deposit totaled 769,000 and 795,000 ounces of gold, respectively.

Proven and probable reserves of 4.8 million tonnes at 4.94 gram per tonne were estimated using a conservative gold price of $1,100 per ounce, demonstrating the robustness of the deposit. Siou has effectively increased the average reserve grade at Mana by 20%.

Our flagship Mana Mine produced 38,700 ounces of gold in the third quarter at a total cash cost of $799 per ounce, compared to $913 per ounce in the third quarter of 2012. For the nine month period ended September 30, 2013, production totaled 122,900 ounces at a total cash cost of $725 per ounce.

Operationally, it was a difficult quarter. The lower head grade in the third quarter 2013 is mainly attributable to the month of September where a head grade of 1.45 gram per tonne was attained in narrower lower-grade veins due to the pushback in the upper-benches of the Wona center pit leading to higher dilution. In addition, larger amounts of ore sourced from low grade stockpiles were processed during the quarter.

However, the situation has already improved in October, and we anticipate an average head grade of 1.90 gram per tonne for the fourth quarter of 2013. We maintain our annual production and total cash cost guidance of between 153,000 ounces and 168,000 ounces at a total cash of $805 to $855 per ounce at the Mana Mine.

During the quarter, we generated cash flow from operating activities from continuing operation of $15.6 million or $0.06 per share, representing an increase of almost $1 million compared to the same period last year. This increase transpired in spite of $318 per ounce decline of our average realized selling price, compared to the third quarter of 2012.

At the end of the third quarter, cash and cash equivalents from continuing operations stood at $82.6 million plus $2.5 million in cash from our discontinued operations. Our short-term priorities include commencing pre-stripping activities and road construction at Siou in the coming month, starting production at Siou in the second quarter of 2014, continuing exploration in the vicinity of Siou and maintaining our focus in cost containment and operational efficiencies.

On the exploration side, our focus remained on the high-grade Siou sector. For the fourth quarter, we have allocated $3.5 million remaining in our 2013 exploration budget, to finding and defining new drill targets for 2014 in the Siou vicinity. Exploration will consist mainly of 120,000 meters of auger drilling, geochemical surveys and field proofing as well as 8,500 additional soil samples.

We continue to focus on capital allocation and optimization program and we have taken additional steps to further reduce capital expenditures. In addition in the third quarter, G&A expenses declined by 36%, compared to the same period in 2012 and by 19% since the beginning of the year due to our optimization efforts.

Early in 2013, we made reference to the consideration of strategic alternatives for our two non-core assets due to their extreme sensitivity to downturns in the price of gold. In this regard, during the year, we recorded impairments for the Samira Hill and Kiniero Mines. Consequently, during the third quarter, we placed the Samira Hill Mine on care and maintenance and will wind-down operations at the Kiniero Mine to an eventual care and maintenance status in the coming months.

Both properties are available for sale and in our third quarter 2013 MD&A, we would consider these two assets as discontinued operations as at the end of September and present gold sales, costs, profits and cash flow from operations for the Mana property only.

In light of the uncertainty and ongoing volatility in the price of gold and considering that bringing Siou into production and continuing exploration are the key to value creation and constitute a priority, we decided not to declare a semi-annual dividend at this time. SEMAFO remains financially sound with a healthy cash position, is debt free and completely un-hedged.

This concludes our presentation portion of this call. I would now like to open up the lines for question-and-answer session.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question from the line of Leily Omoumi from Scotia Bank. Please go ahead.

Leily Omoumi - Scotia Bank

Thank you. Good morning and congratulations on the achievements in particular with Siou. I just have a couple of questions on operations in particular for Q4. Strip ratios in Q3 were, I guess, operating strip ratios were lower than we had expected, I think had guided to 5 to 7 for Q3 but you are definitely lot lower than that. Can you just comment on that and also what we should expect in Q4?

Benoit Desormeaux

Yes, as you said, we thought it would be closer to 5, when we announced the guidance for the last six months of the year. But where we are mining, we achieved 3.5 based on the accounting rules. And we’re expecting to remain at the same level in the fourth quarter of the year, so something between 3.5 and 4.

Leily Omoumi - Scotia Bank

Okay. Great. And it might be new MD&A, I haven’t had a chance to find it. Can you tell us how much stripping or pre-stripping was capitalized for the quarter?

Michel Crevier

Yes. We probably have that…

Benoit Desormeaux

In Q4.

Michel Crevier

At least in the third quarter.

Leily Omoumi - Scotia Bank

Was that comparable to Q1 and Q2?

Michel Crevier

Yes. It is comparable amounts for sure.

Martin Milette

It’s a $13.4 million of stripping capitalized in Q3.

Leily Omoumi - Scotia Bank

Great. And should we expect similar amounts in Q4?

Martin Milette

We expect a little bit less at $12.5 million.

Leily Omoumi - Scotia Bank

Great. And then just lastly on depreciation, it went quite a bit in the third quarter relative to the previous quarters. Can you just comment on that please?

Martin Milette

This is mainly due to the stripping. So when we capitalize our stripping activities, it have to go back into P&L. So now we have the expense in the P&L of what we capitalize over the last year.

Leily Omoumi - Scotia Bank

Okay. So is that a good run rate going forward then on the dollar per ounce basis?

Martin Milette

Yes.

Leily Omoumi - Scotia Bank

Okay. Great. That’s it for me. Thank you.

Benoit Desormeaux

Thank you.

Operator

And our next question from the line of Cosmos Chiu from CIBC World Markets. You may begin.

Cosmos Chiu - CIBC World Markets

Good morning guys.

Benoit Desormeaux

Good morning.

Cosmos Chiu - CIBC World Markets

Good morning. Got a few questions here, maybe first off on Siou, again congrats on getting the authorization. You’ve -- it's quite the achievement to be able to kind of have the CapEx budget here. Could you may be walk us through in terms of how you were able to bring that down from the $25 million initial budget to the $12.5 million that you are looking at right now. Does that include on a pre-stripping and all the equipment and everything that you would need?

Benoit Desormeaux

Okay. First answer that does not include the pre-strip because the $25 million was not including the pre-strips. We’re really comparing apples with apples.

Cosmos Chiu - CIBC World Markets

Okay.

Benoit Desormeaux

But it includes equipment and this is big part of savings that we’ve made from $25 million to $12.5 million. We’ve got the authorization over here. So we’re changing the mine plan for the last part of the year and let’s say the first part of 2014 to be able to get equipment from the Wona-Kona bit to be able to pre-strip at Siou avoiding then to buy large part of the fleet that was expected in the $25 million.

And there is also other savings like debt on the infrastructure what we were planning to do at the Siou pit. So we’ve reduced the infrastructure and reduced the cost of the road. So there is a bit of saving but the main part is the equipment.

Cosmos Chiu - CIBC World Markets

Okay, can you remind me again the pre-stripping. Have you given out the number in terms of how much debts going to go off?

Benoit Desormeaux

Yes, it’s going to be about $5 million before we get access to the ore.

Cosmos Chiu - CIBC World Markets

Okay, Cool.

Benoit Desormeaux

$5 million, not 5 million tonnes.

Cosmos Chiu - CIBC World Markets

Okay. And then maybe if I can move to the Wona Mine pit, Benoit you mentioned that Q3 had great, was impacted but it sounds like Q4 things improved. How should we look at 2014, should we kind of assume what you’ve kind of said it in the past that this is sort of -- it’s going to get worked out, these issues that you saw in Q3. It wouldn’t really impact 2014?

Benoit Desormeaux

Yes. It’s difficult to answer the question for 2014 as we are in the budget process and you can imagine that having received the Siou authorization, it changed everything. So Siou will definitely be our focus. So we will mine as much Siou as we can in 2014 and reduce the Wona-Kona debt as much as we can.

So it’s difficult to comment on what will be the rate because it depends on where we will be mining and how much tonnes we will be mining from Wona, Kona but we do not expect to have the some -- like I said in the third quarter, its really September if you look at the average grade and you understand that we have 1.45 in September you will see that we had about two grams for July and August.

So it’s really September and we don’t anticipate to be in this situation any longer. And also you can see that we have processed much more tonne depend that what we’ve been able to mine, reason why we had to process stock file. And we are a very great throughput in -- especially in September but during the third quarter. And of course, it has affected the grade but difficult to comment what the grade will be, but we won’t get back to (inaudible) we then did in September.

Cosmos Chiu - CIBC World Markets

Sure. And with the Siou deposit now, I mean in terms of timing, where would you expect to kind of let us know what you’ve come out with on the budget sometime early next year?

Benoit Desormeaux

Yes. We’re probably going to issue our guidance somewhere in the third week of the January.

Cosmos Chiu - CIBC World Markets

Okay. And then maybe talking about your dividend, Benoit certainly if I look at the cash outflow that would have resulted from the dividends if it was to stay at the same level as previously. It’s not huge and so I guess from that perspective, are you just being conservative and I guess longer term what would you need to see to kind of “bring it back”?

Benoit Desormeaux

Yes, I would say its we are prudent taking that decision. And as we said bringing Siou in production is the priority. We’ve always said that we strongly believe in exploration because this is really how you create value. So we think that continuing to do so is and with the property the potential we have in the Siou vicinity and on the properties we have, it is the best way to create value for shareholder.

So for us it’s a prudent approach and we don’t know what the gold price will be and we just want to be prudent. So it was based on this that we took that decision. And -- but I cannot really comment on what the board will decide in the next coming quarter and years.

Cosmos Chiu - CIBC World Markets

Sure. And maybe if I can -- one last question here on Kiniero, I just wanted to confirm I couldn’t see in the press release or the MD&A. There was no production in Q3 right, coming from Kiniero, but nothing substantial as you wanted?

Benoit Desormeaux

There was production but actually not at the same level, as we were achieving in the first two quarters. We did not provide the details of operations because it is for us, held for sale and discontinued operations even if they are still producing. So we have good production as usual from Kiniero, as usual meaning as we had in the previous quarters and it’s still operating today.

Cosmos Chiu - CIBC World Markets

Okay. So you sold the gold, you thought the cash balance which is not classified as revenue?

Benoit Desormeaux

Exactly. And you will find -- if you look in our MD&A on Page 15, Cosmo, you will see some information on both Kiniero and Samira, because Samira produced a bit as well in the third quarter.

Cosmos Chiu - CIBC World Markets

Okay. Thank you. That’s all I have. Thanks a lot.

Benoit Desormeaux

Thank you.

Operator

And our next question is from the line of Don Blyth from Paradigm Capital.

Don Blyth - Paradigm Capital

Congratulations again on a decent quarter and certainly kudos to the whole team for the pace at Siou, quite a transformational discovery and probably a record time discovery into production. Moving for a moment to the discontinued operations again, whether first -- were there any significant closure costs such as severance in the quarter and will there be anything moving forward into Q4?

Benoit Desormeaux

Yeah. Since Samira Hill has been put on care and maintenance, there was costs associated with working capital of course, because there -- since the (inaudible) was shutdown we had accounts payable to pay. We paid severance but I think it’s been paid in October.

Martin Milette

At the end of September.

Benoit Desormeaux

At the end of September, it was about a $1 million.

Martin Milette

Yeah.

Benoit Desormeaux

Kiniero is still running. It’s still running, so no severance has been paid and no costs associated with the care and maintenance so far. We said that keeping these two in care and maintenance will probably be $2 million each a year -- $2 million each a year.

Don Blyth - Paradigm Capital

Okay. Second would be the potential sale of Samira sell-through in part due to not receiving the initial government approval. There have been rumors that the government is looking at perhaps acquiring that 100% stake themselves, also it was a bit of an uneasy proposition when the government can potentially stacked the deck facility. There will be only buyer vacancy approval. Now that that one is on care and maintenance, is there any further indications, when you might be able to salvage some value from Samira?

Benoit Desormeaux

In terms of the timing, very difficult to say. Of course it’s still in the -- it’s still our goal to try to get Samira out and trying to get equipment. So it’s still sell process, whether we are going to be successful, difficult to say. But we would like to sell Samira of course as quick as we can, but difficult to say when it is going to happen and if we are going to be successful.

Don Blyth - Paradigm Capital

Right. And maybe just following up a bit on Cosmos’s question on dividend, obviously you said you are being relatively maybe ultra conservative. You certainly see a lot of good potential diverting, say diverting some of those dividend dollars to exploration spending. Are you looking at any other potential M&A type acquisitions, or do you see anything -- obviously a lot of stuff eaten up? Do you see anything out there that’s as good as just doing -- continuing doing exploration on your ground?

Benoit Desormeaux

As we said all along the year, our first priority is to continue doing exploration of our own properties because we think that that’s the best -- this is where the best potential is. And we demonstrate that with Siou and we demonstrate like you said with a record time of getting the approval from discovery to production that’s our properties.

If we find something in Siou vicinities, it could be cash flow, much quicker, so it’s the priority. That doesn’t mean we don’t -- we are not getting information. But as I said, if we were to do something it would probably be on a ground field and so it would be because we believe -- strongly believe in the exploration potential, but as I said, that’s definitely not the priority.

Don Blyth - Paradigm Capital

Great. Thanks.

Benoit Desormeaux

Thank you.

Operator

(Operator Instructions) And our next question from the line of Paolo Lostritto from National Bank Financial. Please go ahead.

Paolo Lostritto - National Bank Financial

Good morning, guys. Thank you for hosting the call. Most of my questions have been asked already, but maybe if I may, Benoit, just come back to the whole concept of what we should look at Mana, now that you are kind of diverting equipment from there to Siou, which I agree the right call, but is there any guidance you can offer us some in term what the potential impact is over Wona-Kona or should we just wait for the update in the near?

Benoit Desormeaux

Yes. I think to give answer, we will definitely ask to wait for the guidance in January, but if you want to have an idea, again, if you look in our 43-101 report that we have issued in September it can give you an idea of what forecasted in the first year.

Of course, it’s not going to be exactly the same because we are probably going to start mining, stripping mining, Siou quicker. And therefore we will be reducing the pace in the Wona-Kona sector. We are looking at reducing let’s say the total strip ratio at Wona-Kona to be able to get equipment out for Siou…

Paolo Lostritto - National Bank Financial

Okay.

Benoit Desormeaux

… but that should give you an idea.

Paolo Lostritto - National Bank Financial

Okay. Thank you.

Benoit Desormeaux

And the other good stuff, Paolo, if you looking in our 43-101 you will see that Fofina was scheduled in 2016.

Paolo Lostritto - National Bank Financial

Yeah.

Benoit Desormeaux

Now we are bringing this upfront in '15. So that’s -- our real achievement will not be what we have in our 43-101 but it’s a good base.

Paolo Lostritto - National Bank Financial

Yeah. And the fact that you are accelerating more than offset these issues. It's just function of refining estimate but I will wait until January then.

Benoit Desormeaux

Yes. Excellent.

Paolo Lostritto - National Bank Financial

Thank you.

Operator

Our next question from the line of Kerry Smith from Haywood Securities. Please go ahead.

Kerry Smith - Haywood Securities

Thanks, Operator. Ben, in the past you’ve talked about a $40 an ounce saving when you got connected to Grid Power, is that still roughly what the cost saving would be?

Benoit Desormeaux

Yes. That would -- that is probably still good. We haven't done calculation lately, but that would probably be in the same range.

Kerry Smith - Haywood Securities

Okay. Okay. Thanks. And on the $12.5 million of CapEx received that you plan to spend, I am presuming that’s from October 1st on a go-forward basis to the middle of next year, roughly how much of that would get spent this year in Q4?

Benoit Desormeaux

I would say very few. Yes, we -- since we got the authorization, in fact we got the authorization very lately. Of course the budget of $12.5, we got the approval for that but really in November and December only small amounts will be spent.

Kerry Smith - Haywood Securities

Okay. So if we assume next…

Benoit Desormeaux

Yes. Go ahead.

Kerry Smith - Haywood Securities

If we assume 90% next year and that would -- would that be reasonable or…

Benoit Desormeaux

Yes. Yes. Definitely.

Kerry Smith - Haywood Securities

Okay. Okay. And then $3.5 million that you have left to spend this year on exploration that’s all going to be spend at Siou, a lot of the work that you did this year was sort of geo camp and other drilling, will there be any RC or core drilling in Q4, is that budgeted at all?

Benoit Desormeaux

Fourth quarter

Kerry Smith - Haywood Securities

No.

Benoit Desormeaux

No. It's not going to happen in the fourth quarter. We will mostly work with other drill. We are in the Siou vicinity, we are not just beside Siou, but we are in the vicinity. We had identified some targets that we are following up and we want to be able to add new targets for 2014 where are the best places to go and drill, so that’s really the focus of our fourth quarter exploration program.

Kerry Smith - Haywood Securities

Okay. And then at Mana in 2014, it sounds like you would mill or mine less tonnes of ore, I think in your 43-101 it was roughly reserve grade, would that still roughly be the case for next year that you probably kind of mine around reserve grade but it would just be less tonnes or is it likely might be happen…

Benoit Desormeaux

You mean that…

Kerry Smith - Haywood Securities

At Mana…

Benoit Desormeaux

You mean that Wona…

Kerry Smith - Haywood Securities

Yeah. Yeah.

Benoit Desormeaux

Wona-Kona only.

Kerry Smith - Haywood Securities

Yeah, yeah, yeah.

Benoit Desormeaux

Yeah. Definitely we’ll be mining less ore and probably with less waste as well. But, yes, the grade, like I said, it's difficult to comment, but we -- it should not be much different with what we have this year.

Kerry Smith - Haywood Securities

Okay. So similar to 2013 on average?

Benoit Desormeaux

Yes. I would say.

Kerry Smith - Haywood Securities

Okay. Which should be slightly below reserve grade then?

Benoit Desormeaux

Yeah. Depending on ore grade.

Kerry Smith - Haywood Securities

And then -- okay and just the last question then on Fofina, when in 2015 do you think that you would start having ore available to be mill, would it be the first like say the first half or is going to be the second half.

Martin Milette

Would probably say in the first half.

Benoit Desormeaux

Because the first half -- there is not much pre-stripping, so assuming when we are starting pre-stripping let say in the first quarter. We will definitely have ore coming in -- definitely at the latest at the end of the second quarter.

Kerry Smith - Haywood Securities

Okay. That’s all my questions. Thank you.

Benoit Desormeaux

Thank you, Kerry.

Operator

Our next question from the line of Pierre Vaillancourt from Macquarie. Please go ahead

Pierre Vaillancourt - Macquarie

Yeah. Just a follow-up on Kerry’s question, the spending you are saying 90% is to be spent next year regarding a few and you -- so an additional $12.5 million, the $5 million in pre-stripping, I guess, that's the expense, that you are not capitalizing that?

Martin Milette

It’s capitalize. Yeah, the $5 million will be capitalized as it grade strip before we’re getting excess ore. So it going to be capitalized but it’s now at $12.5.

Pierre Vaillancourt - Macquarie

Okay. So it is a capital expenditures different from…

Martin Milette

Yeah.

Pierre Vaillancourt - Macquarie

Okay.

Martin Milette

Yeah, yeah.

Pierre Vaillancourt - Macquarie

Yeah. Just wanted to understand that. And then just looking forward, can you give a rough estimation of what the CapEx would be to develop Fofina?

Benoit Desormeaux

We don’t have…

Martin Milette

The road -- there will be a bit of the road to build because we’re going to use the Nyafé road and then have another couple of kilometers to continue. We have club compensation, probably we might need a bit of mining equipment, bit of pre-strip. So, shouldn’t be much more than what we have seen.

Pierre Vaillancourt - Macquarie

Okay. So maybe a little bit more though. It’s a little further than the crop compensation but -

Benoit Desormeaux

Not more compensation. No, there is no more compensation and the road will be shorter because we’re using the Nyafé road, so Siou has 15 kilometers to do and there is 6 kilometers to do to Fofina.

Pierre Vaillancourt - Macquarie

Okay.

Benoit Desormeaux

So it’s going to be less for the road. I think it’s less for crop compensation, so it should be less than what we have foreseen.

Pierre Vaillancourt - Macquarie

Less than what you guys have seen. Okay. And following up on Kerry’s question, when is grid power, when do you start realizing on this $40 an ounce savings?

Benoit Desormeaux

It is expected to be in the third quarter of next year. 2015.

Pierre Vaillancourt - Macquarie

Okay. So, I mean it is as simple as just chopping up 40 bucks an ounce on your Mana operating cost, is that?

Benoit Desormeaux

Yes. If we have good availability that would be the result, yes.

Pierre Vaillancourt - Macquarie

Okay. So, you are very sure you may not have good availability, is that what you are saying?

Benoit Desormeaux

No. But we don’t know whether we are going to have one of the decent availability, but in our model when we announced two years ago it was $40, $50. We have assumed 75% availability.

Pierre Vaillancourt - Macquarie

Okay. Okay.

Benoit Desormeaux

So, paying on the grid $0.19 and paying on the gen’s, that $0.30 something.

Pierre Vaillancourt - Macquarie

Okay.

Benoit Desormeaux

$0.36.

Pierre Vaillancourt - Macquarie

Okay. And that’s the fact that’s into your $40 an ounce saving.

Benoit Desormeaux

Exactly, exactly.

Pierre Vaillancourt - Macquarie

And lastly, I mean just a tonne of the way you are talking about Wona-Kona. Are these zones -- are they getting narrower and are you ultimately heading toward just a more waste rock to with -- with your -- I mean, we’re getting into more of a mature operation here. Is that is that to be expected?

Benoit Desormeaux

The more mature operation I would say is coming -- the demonstration of it is coming as we will be mostly in dead rock. But the ore body is pretty much the same. What -- what is really happening you know that -- you know our project (inaudible) Wona North is our large structures and we have a smaller vein, let say, when we are in Wona Centre and Wona South, still we have -- we still at the main zone but we have also color zones that are smaller structures.

And when we are mining these structures, of course, they are -- they are smaller and we were mostly mining in September in Wona Centre and it’s not the same grade as well. The grade is not the same everywhere in the pit. The higher-grade portion is definitely in the Wona North and Kona. So this is what we’ve been mining in October, Kona but all along the Wona-Kona pit which is 5 kilometers long. We don’t want to have same grade and it’s not exactly the same structure.

Pierre Vaillancourt - Macquarie

Okay, okay.

Benoit Desormeaux

So if we can have -- if we always can have a mix of large structure and same time being mining at smaller structure, let say Wona South then you won’t see anything. It's when we are mining essentially in the small structure that can have the situation.

Pierre Vaillancourt - Macquarie

Okay. So in terms of planning going forward, you are still confident about having an optimal mix that can more or less maintain the grade and the strip?

Benoit Desormeaux

Yes, on a yearly basis, yes.

Pierre Vaillancourt - Macquarie

Okay. One last question regarding the plant, any thoughts on, on a plant expansion or is that pretty much where it's at right now?

Benoit Desormeaux

For now, we’re not thinking about any expansion what could change that is of course a new discovery, sizable discovery in the Siou vicinity that -- that could lead to something like that but today we’re not -- we're not there. What we have to do, we have 10-years mine life at the current throughput.

Pierre Vaillancourt - Macquarie

Right. Okay. Thanks.

Benoit Desormeaux

Thank you.

Operator

Speakers, we have no further question at this time. I will be turning the call back to you for your closing remarks.

Benoit Desormeaux

Thanks France. Once again I would like to take this opportunity to remind listeners that SEMAFO’s third quarter MD&A and unaudited financial statements are available on our website or on the SEDAR at sedar.com. The audio webcast of this conference call will also be available for replay on our website for a period of 30 days. Our 2013 fourth quarter financial and operating results are currently scheduled for publication around March 13, 2014. Thank you very much and have a good day.

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you all for your participation and kindly ask that you please disconnect your lines. Have a great day everyone.

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