January 27, 2011 / 3:12 PM / 7 years ago

UPDATE 2-Semafo says 2011 gold output to remain flat; shrs fall

* Forecasts 2011 output of 238,000-263,000 ounces

* Says Samira Hill mine to impact growth

* Shares down 3 pct (Adds details, updates share movement)

Jan 27 (Reuters) - Canadian gold miner Semafo Inc (SMF.TO) expects production to stay flat this year and growth to be constrained by expansion work at its Samira Hill mine in Niger in West Africa.

The company said it will be processing transitional and lower grade ore as it carries out a pit wall pushback at the Samira Hill mine in the first two quarters, and expects to complete the process by mid-year.

The Quebec-based junior miner expects to produce 238,000-263,000 ounces of gold at a cash cost of $540-$580 per ounce this year.

The company said it set aside $39 million for exploration, more than two-thirds of which will be spent on its flagship Mana mine in Burkina Faso, also in West Africa.

The Mana mine will contribute more than 72 percent to total production in the year.

West Africa is seen as one of the world’s fastest growth regions for gold production over the next three years.

U.S. gold futures for February delivery GCG1 were flat at $1,332.80 on Thursday, but a recent Reuters poll quoted analysts as saying the precious metal is expected to build on last year’s stellar run to hit record highs in 2011.

Gold prices are expected to average $1,450 an ounce this year.

Shares of the company were down 30 Canadian cents at C$10.63 on Thursday morning on the Toronto Stock Exchange. They have risen nearly 56 percent in the last six months. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon, Unnikrishnan Nair)

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