The Critical Investor
Long/short equity, Deep Value, natural resources, medium-term horizon

SEMAFO: Transforming Into A Low Cost Producer But Increasingly Overvalued

1. Introduction

SEMAFO Inc. (OTCPK:SEMFF) is a Canadian based gold producer with two operating mines in West Africa. The company owns one small mine in Guinea and a large mine in Burkina Faso. Don't let Burkina Faso trouble you too much at first sight, as it is one of the relatively stable democracies in Africa and it belongs to the top three of mining friendly countries in Africa.

As the small mine isn't very profitable at current gold prices, the company is selling it, and is almost finished in the process of placing it in care and maintenance at the moment. SEMAFO is currently focusing on the large mine which is part of the prospective Mana project, and...

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