VANCOUVER (miningweekly.com) – Canadian gold producer Semafo on Wednesday rallied strongly in Toronto after it confirmed its revised production guidance for the year, on the back of grade stabilisation at the Siou satellite pit of the Mana mine, in Burkina Faso.

The West Africa-focused miner reiterates its 2017 outlook of between 190 000 oz and 205 000 oz of gold, at a total cash cost of between $685/oz and $715/oz and all-in sustaining costs (AISC) of between $920/oz and $960/oz.

Based in Montreal, Quebec, Semafo advised during the first quarter that the mined grade was impacted on by the geological interpretation of the upper portion of Zone 9, a mineralised zone in the south-west sector of the Siou pit that was first included in the 2017 mine plan. The upper portion presents a complex geometry as the area comprises the junction of three different zones: Zone 9 itself and two subsidiary zones known as zones 55 and 56.

This resulted in misleading ore outlines and led to a significant variation in grade. However, Semafo has subsequently changed its method of grade control from channel sampling to reverse-circulation (RC) drilling, resulting in a new block model for the Siou pit.

The results of the in-pit RC drilling are in line with our 2016 reserves and confirm the company’s expectation that the geometry is simpler and more rectilinear.

The new reserves block model for the Zone 9 area now comprises 668 000 t grading 4.52 g/t gold, for 97 000 oz of contained gold, compared with the previous 2016 reserves block model that contained 98 100 oz of gold in 633 500 t grading 4.82 g/t.

Semafo reported that it had exited the complex portion of upper Zone 9 in May, and that the ore mined in the months of May and June was in line with the new block model.

However, the grade-control issues weighed on second-quarter output, sending gold production down 23% year-on-year to 47 600 oz of gold.

As a result, gold sales suffered, driving revenue down 22.6% to $59.3-million, and cash costs up 28.5% over the same period of 2016 to $703/oz. AISC rose 45% year-on-year to $1 074/oz.

For the three months ended June 30, Semafo reported a headline loss of $2.9-million, or $0.01 a share, compared with an adjusted net income of $14.4-million, or $0.05 a share, a year earlier. Net income totalled $9.3-million, compared with $7.1-million for the same period in 2016.

Cash flows from operating activities totalled $23.6-million, or $0.07 a share, down some 37% year-on-year compared with $37.4-million, or $0.12 a share, for the same period in 2016.

Meanwhile, construction of the new Boungou mine is on schedule for a third-quarter 2018 start-up, with construction of the mine 35% complete. Pre-stripping of the deposit has started, and construction of supporting services is ongoing.

The company’s TSX-listed stock rose 14% on Wednesday to C$3.10 a share, a far cry from its 52-week high of C$7.19 apiece.