SEMAFO Releases Second Quarter 2014 Results Montreal,

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News Desk 2018
SEMAFO Releases Second Quarter 2014 Results

Montreal, Quebec, August 7, 2014, 08:00 EDT – SEMAFO (TSX, OMX: SMF) today reported its financial and operating results for the three-month period ended June 30, 2014. All amounts are in US dollars unless otherwise stated.

Second Quarter 2014 in Review

As a result of reworking our mine plan sequence in the first quarter, we delivered the expected strong second quarter in terms of production and total cash costs by achieving the full mining rate at Siou and Fofina.

  • Gold production of 72,700 ounces at a cash operating costs1 of $475 per ounce compared to 41,500 ounces at $604 per ounce for the same period in 2013
  • Gold sales of $87.8 million, a 63% increase compared to the same quarter in 2013
  • Operating income from continuing operations of $20.7 million, a 124% increase relative to the same period in 2013
  • Net income from continuing operations attributable to equity shareholders of $13.0 million or $0.05 per share compared to net loss of $12.8 million or $0.05 per share for the same period in 2013
  • Cash flow from operating activities from continuing operations 2 of $37.6 million or $0.14 per share 3 compared to $21.2 million or $0.08 per share for the same period in 2013
  • Initial Siou infill drilling results in line with expectations
  • Commenced exploration activities on the Banfora Gold Belt

During the second quarter, we achieved gold production of 72,700 ounces at the Mana Mine at a cash operating cost 1 of $475 per ounce produced and a total cash cost 4 of $602 per ounce sold.

Mining Operations

Mana, Burkina Faso

    Three-month period      Six-month period   
        ended June 30,     ended June 30,  
        2014  2013 3 Variation   2014  2013 3 Variation
  Operating Data                
  Ore mined (tonnes)    617,700   741,100   (17%)    1,084,900   1,416,300   (23%)
  Ore processed (tonnes)    723,900   712,100   2%     1,365,900   1,424,000   (4%)
  Head grade (g/t)    3.37   2.00   69%     2.69   2.10   28% 
  Recovery (%)    93   85   9%     91   87   5% 
  Gold ounces produced    72,700   41,500   75%     107,800   84,200   28% 
  Gold ounces sold    68,200   39,400   73%     97,600   84,300   16% 
                   
  Statistics (in dollars)                
  Average realized selling price (per ounce)    1,287   1,365   (6%)    1,293   1,499   (14%)
  Cash operating cost (per ounce produced) 1     475   604   (21%)    631   611   3% 
  Cash operating cost (per tonne processed) 1     48   36   33%     50   36   39% 
  Total cash cost (per ounce sold) 2     602   675   (11%)    748   693   8% 
  1. Cash operating cost is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using ounces produced and tonnes processed. See the “Non-IFRS financial performance measures” section of the Corporation’s MD&A.

2        Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and the government royalties per ounce sold.

3        Amounts have been restated for the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine .

The 69% increase in head grade in the second quarter of 2014 reflects the higher grade extracted from our two new open pits, Siou and Fofina. For the corresponding period in 2013, ore was sourced exclusively from the Wona-Kona pit. The head grade at Fofina in the second quarter was higher than anticipated due to the occurrence of an enriched zone (supergene) on surface. In the coming quarters, we anticipate that the supergene layer will have a lesser impact at depth. The 9% increase in the recovery rate is due to the processing of ore sourced from Siou and Fofina compared to bedrock from the Wona-Kona pit during the second quarter of 2013.

Considering the notable quarter and despite the rainy season in the third quarter, we expect to attain the upper end of our 2014 production guidance of between 200,000 and 225,000 ounces of gold and the lower end of our 2014 total cash cost 2 guidance of between $695 and $745 per ounce.

Exploration at Mana

The Corporation continues to focus on exploration in the vicinity of the Mana processing plant, more specifically on the Siou sector, Pompoi Nord, Pompoi and in the north, on the Bilakongo and Kana permits. An exploration budget of $18.5 million has been allocated for these areas where currently nine auger drills, two reverse-circulation (“RC”) drilling rigs and four diamond drill rigs are in operation. This budget includes a $4.5 million provision for an infill core drilling program at Siou.

Initial results from auger drilling enabled us to identify targets for RC drilling, which commenced during the second quarter on the 15-kilometer geochemical anomaly trend to the east of Mana. The ongoing follow-up RC exploration program has returned some good results, more specifically on two drill holes 1.2 kilometers apart in the Pompoi village sector: hole MRC14-3615 with 6.45 g/t Au over 4 meters and hole MRC14-3724 with 3.12 g/t Au over 8 meters. Two RC rigs are active in the area, and results should be forthcoming in the second half of the year.

Initial Infill Drilling Results In Line with Expectations

Last week, the Corporation announced results from initial Siou infill core drilling between 180 and 225 meters vertical depth, with the goal of replacing and increasing the in-pit reserves base at Siou before year-end. Initial results to date are in line with expectations and have yielded very strong results that confirm the continuity of the zone widths and grades with some results exceeding our expectations. To date, we have received final assay results from a total of 4,172 meters in 15 holes, and the program should be completed by early fourth quarter in 2014.

Other Exploration - Outside of Mana

During the second quarter, we entered into agreements for the working rights and rights to acquire 10 exploration permits covering 1,446 square kilometers in the Banfora Gold Belt 200 kilometers southwest of Mana. We have allocated $1.5 million to this exploration program, which currently employs four auger drills on the north and south ends of the Banfora Belt. Priority target areas are along the main shear zones where there is evidence of geochemical anomalies and artisanal mining. Drill results are anticipated in the second half of 2014.

Replacement of the SAG Mill Shell

As a precautionary measure, we have initiated a process to replace the used shell of the semi-autogenous grinding (“SAG”) mill at Mana. The SAG mill will be shut down up to five weeks at the beginning of the first quarter of 2015. During the shutdown, we will continue to operate, processing approximately 3,600 tonnes per day of high-grade ore from the Siou and Fofina pits. As a consequence of the shutdown, we will produce approximately 6,500 less ounces from the lower-grade Wona-Kona pit than we would have otherwise produced in 2015. The total cost of the shell replacement will not impact the 2014 capital expenditures guidance.

Connection to the Grid

To date, construction of the transmission line by Sonabel is progressing well, and we expect to be connected to the national power grid in the fourth quarter of 2014.

SEMAFO’s Consolidated Financial Statements and Management's Discussion and Analysis and other relevant financial materials are available in the Investor Relations section of the Corporation's website at www.semafo.com . These and other corporate reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com .


 

Consolidated Results and Mining Operations from Continuing Operations

    Three-month period      Six-month period   
        ended June 30,     ended June 30,  
        2014  2013 3,4 Variation   2014  2013 3,4 Variation
                   
  Gold ounces produced    72,700   41,500   75%     107,800   84,200   28% 
  Gold ounces sold    68,200   39,400   73%     97,600   84,300   16% 
                   
  (in thousands of dollars, except amounts                 
    per ounce, per tonne and per share)                
  Revenues – Gold sales    87,761   53,781   63%     126,234   126,359  –
  Mining operation expenses                
     (excluding government royalties)    37,293   23,863   56%     67,509   52,005   30% 
  Government royalties    3,745   2,731   37%     5,513   6,425   (14%)
  Operating income    20,665   9,240   124%     5,986   30,284   (80%)
  Impairment of investment in GoviEx     –    19,600   –      –    19,600   – 
  Income tax expense    5,421   1,303   316%     4,026   7,911   (49%)
  Net income (loss) from continuing operations                
    attributable to equity shareholders    12,974   (12,812)  –     31   (1,314)  – 
  Basic earnings (loss) per share                
    from continuing operations    0.05   (0.05)  –      –     –  – 
  Diluted earnings (loss) per share                
    from continuing operations    0.05   (0.05)  –      –   –  – 
                     
  Cash flow from operating activities                
    from continuing operations 1     37,618   21,201   77%     39,760   49,232   (19%)
  Operating cash flow per share                
    from continuing operations 2     0.14   0.08   75%     0.14   0.18   (22%)
           
           
                           
  1. Cash flow from operating activities from continuing operations excludes changes in non-cash working capital items.
  2. Operating cash flow per share from continuing operations is a non-IFRS financial performance measure with no standard definition under IFRS. See the “Non-IFRS financial performance measures” section of the Corporation`s MD&A.
  3. Amounts have been adjusted for the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine .
  4. Amounts have been adjusted to reflect the impact of discontinued operations.

SEMAFO’s senior management will host a conference call today at 10:00 EDT to discuss the second quarter financial and operating results, as well as to provide an update on the Corporation’s activities. Investors are invited to call the following telephone numbers to participate in the conference:

Tel. local & overseas:    +1 (647) 788-4922

                                                           Tel. North America:        1 (877) 223-4471

The conference call will be archived for replay until August 28, 2014. To access the archived conference call, please dial 1 (800) 585-8367 and enter pass code 71205172.

A live audio webcast of the conference can be accessed through SEMAFO’s website at www.semafo.com . The webcast will be available for replay for a period of 30 days.


 

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation currently owns and operates the Mana Mine in Burkina Faso, which includes the high-grade satellite Siou and Fofina deposits . SEMAFO is committed to evolve in a conscientious manner through the responsible development of its Mana property. SEMAFO’s strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and assumptions and accordingly, actual results and future events could differ materially from those expressed or implied in such statements. You are hence cautioned not to place undue reliance on forward-looking statements. Forward-looking statements include words or expressions such as “expected”, “goal”, “anticipated”, “up to”, “will”, “progressing”, “committed”, “evolve”, “pursuing”, “growth”, “opportunities” and other similar words or expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include the ability to attain the upper end of our 2014 production guidance of between 200,000 and 225,000 ounces of gold and the lower end of our 2014 total cash cost guidance of between $695 and $745 per ounce, the ability to replace and increase the in-pit reserves base at Siou before year-end, the ability to maintain the shutdown of the SAG at five weeks, the ability to process 3,600 tonnes per day of the high-grade ore from the Siou and Fofina pits during the SAG shut-down, the ability to connect to the national power grid in the fourth quarter of 2014, the ability to  execute on our strategic focus, fluctuation in the price of currencies, gold or operating costs, mining industry risks, uncertainty as to calculation of mineral reserves and resources, delays, political and social stability in Africa (including our ability to maintain or renew licenses and permits) and other risks described in SEMAFO’s documents filed with Canadian securities regulatory authorities. You can find further information with respect to these and other risks in SEMAFO’s 2013 Annual MD&A and other filings made with Canadian securities regulatory authorities and available at www.sedar.com . These documents are also available on our website at www.semafo.com . SEMAFO disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.

The above information has been made public in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act.

For more information, contact

SEMAFO
Robert LaVallière
Vice-President, Corporate Affairs & Investor Relations
Cell: +1 (514) 240 2780
Email: Robert.Lavalliere@semafo.com
 
Ruth Hanna 
Communications & Investor Relations
Email: Ruth.Hanna@semafo.com
 
Tel. local & overseas: +1 (514) 744 4408
North America Toll-Free: 1 (888) 744 4408
Website: www.semafo.com
 
 
 
 


 

  1    Cash operating cost is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using ounces produced. See the ‘’Non-IFRS financial performance measures’’ section of the Corporation’s MD&A.

2    Cash flow from operating activities from continuing operations excludes changes in non-cash working capital items.

3    Operating cash flow per share from continuing operations is a non-IFRS financial performance measure with no standard definition under IFRS.  See the ‘’Non-IFRS financial performance measures’’ section of the Corporation’s MD&A.

4     Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and government royalties per ounce sold.

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