MONTREAL, QUEBEC — (Marketwire) — 03/21/13 — SEMAFO (TSX: SMF)(OMX: SMF) today reported its financial and operational results for the fourth quarter and year ended December 31, 2012. All amounts are in US dollars unless otherwise stated.
2012 – The Year in Review
Fourth Quarter Review
(1) Cash flow from operating activities excludes changes in non-cash working capital items.
A Word from the CEO
For SEMAFO, 2012 was a year of transition on many levels. Although disappointing in terms of shareholder value, it nevertheless gave rise to numerous positive aspects with regard to our core business, from both strategic and operational perspectives. We achieved production and cost guidance for a fifth consecutive year. Our production totalled 236,100 gold ounces, just slightly below our 2011 results. Our annual revenues from gold sales posted only a 2% decrease from 2011 to stand at $388.5 million.
The highlight of the year from our standpoint was the discovery of the new high-grade Siou Sector at Mana. This vastly prospective area located approximately 15 kilometers east of our processing plant holds one million ounces of initial in-pit inferred resources at an average 4.62 g/t Au and a gold recovery rate of over 95%. Based on results to date, the Siou Sector where ongoing exploration work is being carried out has already become SEMAFO-s most important find ever.
Another important event was the conversion of the Mana underground project to a super-pit. This decision, although it led to a $17 million write-off, was purely an economic decision based on the best return on investment as capital expenditures are spread out over the life of mine.
SEMAFO-s reserves and resources decreased slightly to 6.6 million ounces in 2012. This is due to the removal of refractory sulphides from the south sector at Mana and the revision of Samira Hill-s reserves and resources that became uneconomic following the review of technical and economic parameters. The revision at Samira Hill resulted in a non-cash impairment of $60 million in the fourth quarter of 2012. At Mana, the inferred category grade, however, almost doubled to 3.18 g/t Au as we included the high-grade Siou Sector in this category.
A comprehensive strategic review of the Corporation conducted during the latter part of the year facilitated the establishment of a realistic plan to move forward. We validated our top ensuing long-standing priority: to create value by generating future cash flow, while maintaining our solid operational performance. As the world economy continues to change shape, we will continue to focus on quality ounces as part of our strategy and ongoing efforts to reduce costs and optimize cash flow.
Our short-term priorities are to bring the Siou Sector to reserves by the third quarter of 2013, initiate the permitting process and begin mining by the end of 2014 or early 2015. We also intend to focus exploration activities within the 20-kilometer radius of the Mana processing plant and carry out exploration on the 30-kilometer Kokoi Trend, host to the high-grade Siou Sector.
Today, with ore sourced almost exclusively from the super pit, we can sustain operations at the plant at full capacity for the next eight to ten years. Owing to the Siou-s high-grade mineralization, however, development of the sector could represent an opportunity to reduce our operating cost, boost production and ultimately increase cash flow within the next 18 to 24 months. Moreover, the south sector has yet to be added to the scenario. We believe that the Corporation-s fundamentals and potential for creating shareholder value are as strong as ever.
We believe that SEMAFO represents an undeniable investment opportunity. Today, our Corporation-s share price is significantly undervalued and far from indicative of the numerous opportunities on the horizon. We are cognizant that our Mana property will serve as the cornerstone of our Corporation-s evolution and approach to intelligently grow our business.
SEMAFO is financially sound, has a solid cash position, is debt-free and completely unhedged. Since November 2011, our Corporation has paid out three dividends. We continue to strive for excellence in health and safety and lead the way in corporate responsibility. Our dedicated team continues to pull together in the pursuit of excellence and an overall commitment to simply doing more. We are determined to optimize operations at all levels, improve efficiencies and contain costs.
We are optimistic for 2013. We have established a clear strategy to identify new quality ounces, expand reserves and resources, and build future cash flow. The task at hand is to create value and, moving forward, we are confident that we have the assets, the talent and the ability to do just that.
2012 Mineral Reserves and Resources
SEMAFO-s 2012 year-end mineral reserves totalled 36.7 million tonnes at an average grade of 2.08 g/t Au for 2.5 million ounces compared to 37.9 million tonnes at 2.18 g/t Au for 2.7 million ounces in 2011. The decrease in reserves is mainly due to 2012 production and the reduction in Samira Hill-s reserves.
The 2012 measured and indicated resources average grade increased by 15% to 1.89 g/t Au for a total 4.2 million ounces as compared to 4.7 million ounces in 2011. The decrease in resources is due to the Samira Hill revision as well as the removal of most of the refractory sulphide material from the south sector deposits (Yaho, Fofina and Fobiri), which was uneconomical according to various metallurgical tests conducted during the year. The 2012 measured, indicated and inferred resources in Mana-s south sector are mainly composed of oxide and transitional mineralization and are not refractory.
Total inferred resources amounted to 36.3 million tonnes at an average grade of 2.57 g/t Au for 3.0 million ounces as compared to 61.4 million tonnes at 1.51 g/t Au for 3.0 million ounces in 2011. A slight gain in inferred resource ounces and the 89% increase in grade, despite the removal of the majority of the refractory sulphide material from the 2012 inferred resources are due to the inclusion of the initial in-pit inferred resources from the high-grade Siou Zone. Discovered in August 2012, Siou hosts 6.7 million tonnes at 4.62 g/t Au for close to one million ounces.
Our Flagship Mana Mine, Burkina Faso
Highlights:
Mana-s mineral reserves total 25.1 million tonnes at an average grade of 2.31 g/t Au at year-end 2012 compared to 25.7 million tonnes at an average grade of 2.40 g/t Au in 2011.
Total measured and indicated mineral resources at Mana increased by 8% in 2012 to 48.6 million tonnes at an average grade of 1.93 g/t Au, representing 3.0 million ounces. This compares to 51.4 million tonnes at an average grade of 1.69 g/t Au for 2.8 million ounces at the end of 2011. The slight increase in ounces, despite the removal of the majority of the refractory sulphide material in the south sector is due to the higher grade material at Kona at depth and the inclusion of the high-grade mineralization from the Fofina Zone.
Mana-s 2012 inferred resources totalled 18.3 million tonnes at a grade of 3.18 g/t Au, representing 1.9 million ounces as at December 31, 2012. The higher grade is due to the inclusion of the initial in-pit resources of our high-grade Siou Sector discovered in August 2012, representing 6.7 million tonnes at a grade of 4.62 g/t Au. The decrease of the overall inferred tonnage, despite of a higher resource grade is due to the removal of most of the inferred refractory sulphide resources from the south sector deposits (Yaho, Fofina and Fobiri).
Metallurgical Tests
In 2012, metallurgical tests showed that the sulphide portions for the Fofina, Fobiri and Yaho deposits had low recoveries (20% to 48%) with CIL treatment. Consequently, SEMAFO decided to investigate other process routes such as sulphide flotation, sulphide concentrate regrinding and ultimately oxidation to seek better gold recoveries. Although a combination of ultrafine grinding followed by oxidation at Fofina significantly improved recoveries to 88%, the tests also indicate that the capital expenditures and consumable costs required to achieve optimal results are not justified at current gold prices.
The Corporation, however, is currently conducting heap leaching tests on the oxide portion of the Yaho deposit to seek better economics for the south sector. The results should be available during the third quarter of 2013.
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 . These and other corporate reports are also available on the website maintained by the Canadian Securities regulators at .
2012 Fourth Quarter and Year-End Conference Call
SEMAFO will host a conference call today, Thursday March 21, 2013 at 10:00 EDT to discuss this press release. Investors are invited to call the following telephone numbers to participate in the conference:
Tel. local & overseas: +1 (416) 641-6715
Tel. North America: 1 (800) 616-7436
The conference call will be archived for replay until April 10, 2013. To access the archived conference call, please dial 1 (800) 558-5253 and enter pass code 216461101 followed by the number sign (#).
A live audio webcast of the conference can be accessed through SEMAFO-s website at . The webcast will be available for replay for a period of 90 days.
Annual Shareholders Meeting
SEMAFO-s Annual General Shareholders Meeting will be held on Monday, May 13, 2013 at 4:00 p.m. (EDT) at Le Centre Sheraton Montreal, Salle Drummond, 1201 Rene-Levesque Boulevard West, in Montreal, Quebec. Attendees will have the opportunity to ask questions and meet the management team and members of the Board of Directors.
About SEMAFO
SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation currently operates three gold mines: the Mana Mine in Burkina Faso, the Samira Hill Mine in Niger and the Kiniero Mine in Guinea. SEMAFO is committed to evolve in a conscientious manner to become a major player in its geographical area of interest. 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 „ongoing“, „being carried out“, „move forward“, „priority“, „create“, „generating“, „future“, „will“, „strategy“, „increase“, „added“, „potential“, „optimistic“, „expand“, „committed“, „evolve“, „become“, „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 generate future cash flow, the ability to deliver on our strategy, the ability to bring the Siou Sector to reserves by the third quarter of 2013, initiate the permitting process and begin mining by the end of 2014 or early 2015, the ability to sustain operations at the Mana plant at full capacity for the next eight to ten years, the ability of the Siou Sector to reduce our operating cost, boost production and ultimately increase cash flow within the next 18 to 24 months, the ability to expand reserves and resources and build future cash flow, 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 2012 Annual MD&A and other filings made with Canadian securities regulatory authorities and available at . These documents are also available on our website at . 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.
Table 1
MINERAL RESERVES AND RESOURCES (As at December 31, 2012)
Table 2
We are presenting 100% of the reserves and resources of the mines in the above table. Regarding open pit reserves, cut-off grades are established with the Ultimate Pit software in consideration of the rock type and haulage distance.
The mineral reserves and resources were estimated as at December 31, 2012 in accordance with the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum and incorporated into National Instrument 43-101 – Standards of Disclosure for Mineral Projects („NI 43-101“). Mineral reserves and resources estimates for the Mana Mine were carried out internally under the guidance of Michel Crevier P.Geo MScA, Vice-President Exploration and Mine Geology and SEMAFO-s Qualified Person who has reviewed this press release for accuracy and compliance.
Consolidated Results and Mining Operations
Fourth Quarter Financial and Operating Highlights
Contacts: SEMAFO Robert LaValliere Vice-President, Investor Relations Cell: +1 (514) 240 2780
Sofia St Laurent Communications & Investor Relations Tel. local & overseas: +1 (514) 744 4408 North America Toll-Free: 1 (888) 744 4408
Maria Bang Brunswick Group Stockholm +46 (8) 410 32 189
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