SEMAFO Inc.

TSX : SMF
OMX : SMF


SEMAFO Inc.

January 22, 2013 09:30 ET

SEMAFO Achieves 2012 Production Guidance; Provides 2013 Production and Capital Expenditures Guidance

MONTREAL, QUEBEC--(Marketwire - Jan. 22, 2013) - SEMAFO Inc. (TSX:SMF)(OMX:SMF) announced today that the Corporation has met its annual production guidance for a fifth consecutive year. Production totalled 236,100 ounces of gold for the year ended December 31, 2012.

2012 Highlights

  • Strong fourth quarter production totalling 62,400 ounces of gold, a 19% increase over the third quarter of 2012
  • Annual production of 236,100 ounces, achieving 2012 guidance
  • Average cash operating cost is expected to be in line with the lower end of the Corporation's 2012 guidance of between $700 and $750 per ounce
Gold Production (oz)
Q4 2012
(3 months
) 2012
(12 months
)
Mana, Burkina Faso 45,600 172,700
Samira Hill, Niger 12,200 49,800
Kiniero, Guinea 4,600 13,600
Total Gold Production 62,400 236,100

Gold sales for the year totalled 231,500 ounces and resulted in annual revenues of $388.5 million. The Corporation had approximately $140 million in cash and cash equivalents at year-end 2012. SEMAFO is debt-free, unhedged and fully leveraged to the price of gold.

2013 Outlook

  • Production guidance of between 215,000 and 240,000 ounces of gold
  • Cash operating cost1 guidance of between $760 and $810 per ounce
  • Total cash cost2 guidance of between $855 and $905 per ounce
  • Capital expenditures of $114.6 million
  • Exploration budget of $22.0 million
  • Continued focus on optimizing and improving efficiencies throughout the Corporation's operations

2013 Guidance

Production
(ounces
) Cash
Operating Cost1
(per ounce
) Total
Cash Cost
2
(per ounce
)
Mana 153,000 - 168,000 $ 715 - $765 $ 805 - $855
Samira Hill 46,000 - 52,000 $ 885 - $935 $ 985 - $1,035
Kiniero 16,000 - 20,000 $ 870 - $950 $ 975 - $1,055
TOTAL 215,000 - 240,000 $ 760 - $810 $ 855 - $905
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.
2 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.

The 2013 production guidance has been established at between 215,000 and 240,000 ounces of gold. At Mana, ore grade is expected to be slightly lower than the average grade of the deposit during the year due to scheduled pre-stripping activities at the Wona-Kona super pit. The ore grade for Mana in 2013 is estimated at 2.13 g/t with a daily processing rate of approximately 8,500 tonnes. However, the ore grade should improve in 2014 and 2015 as a result of accessing higher grade zones in the super pit. In 2014 and 2015, the head grade should be in line with the average grade of the deposit, which is 2.31 g/t. Furthermore the Corporation anticipates adding the newly discovered high-grade Siou zone to reserves in 2013 and being in a position to begin processing ore from this zone at the Mana mill at the end of 2014 or beginning of 2015.

The increase in the 2013 cash cost guidance is due to lower grade ore expected to be processed at Mana during the year and to industry-wide inflationary pressures on costs including labour and consumables.

2013 Capital Expenditures

Capital expenditures for 2013 are estimated at $114.6 million and are itemized in the following table.

Capital Expenditures (in Millions of Dollars)

Mana Samira
Hill
Kiniero Total
Stripping Costs $ 49.5 $ 17.4 $ 1.0 $ 67.9
Sustaining Capital - 2013 $ 13.4 $ 10.1 $ 2.9 $ 26.4
Sustaining Capital - 2012 Deferred $ 7.0 -- -- $ 7.0
Growth Capital - 2013 $ 3.5 -- -- $ 3.5
Growth Capital - 2012 Deferred $ 9.8 -- -- $ 9.8
Total $ 83.2 $ 27.5 $ 3.9 $ 114.6

The consolidated corporate general and administrative expense is estimated at $23.0 million, comparable to our 2012 expenses.

Mana

Capitalized stripping costs of $49.5 million represent the stripping of 23 million tonnes in the Wona-Kona super pit. With the 13.5 million tonnes of waste accounted for in the production cost, the total strip ratio is expected to be 12:1 in 2013, in line with the average stripping ratio of the super pit. In 2014, the total strip ratio is anticipated to remain at 12:1.

Sustaining capital expenditures are estimated at $20.4 million, primarily for mining equipment and overhauls ($8.5 million) as well as to raise the tailings dam ($2.5 million).

Growth capital expenditures are expected to be $13.3 million, which includes various infrastructures to accommodate the augmented throughput at the plant following the last three expansions as well as increased activities at the super pit.

Samira Hill

Capitalized stripping costs of $17.4 million represent the stripping of 5.3 million tonnes of ore in the Boulon Jounga II pit and 1.3 million tonnes in Libiri North West A.

Sustaining capital expenditures are forecasted at $10.1 million, mainly to raise the tailings dam ($2.5 million) and for mining equipments and overhauls ($2.5 million).

Kiniero

Capitalized stripping costs of $1.0 million represent the stripping of 480,000 tonnes of ore from the Gobele A pit. Sustaining capital expenditures are forecasted at $2.9 million.

A number of assumptions were made in preparing the 2013 guidance, including:

  • Price of gold of $1,700 per ounce
  • Price of fuel:
    • Mana: $1.40 per litre
    • Samira Hill: $0.92 per litre
    • Kiniero: $1.21 per litre
  • Exchange rate of $1.00 US dollars to the Canadian dollar
  • Exchange rate of $1.32 US dollars to the Euro

2013 Exploration

Successful drilling resulted in the discovery of the high-grade Siou zone in 2012, located approximately 15 kilometers east of the Mana processing plant. The Corporation continues to focus exploration on organic growth at Mana in the vicinity of the mill as well as on strategic investment opportunities.

The 2013 initial exploration budget has been established at $22.0 million, of which $20.0 million has been allocated to Mana. More than 107,000 meters of combined air core, reverse circulation and diamond drilling, metallurgical tests, and geochemistry and geophysics works will be carried out in 2013. The Corporation's 2013 priorities are to expand the geological potential at Yaho and to convert the high-grade Siou zone to reserves during the year.

Results of preliminary metallurgical tests conducted on the sulfides at Yaho and Fofina in the south sector should be available at the same time as the Corporation's reserves and resources estimate update scheduled for mid-March 2013. Preliminary results from the heap-leach metallurgical tests initiated on the oxides at Yaho and Fofina are expected at the beginning of the third quarter 2013. Metallurgical test results from the Siou zone are expected by the end of January 2013.

Production numbers are preliminary and are subject to final adjustment. All amounts are in US dollars unless otherwise indicated. Cash operating cost is a measure that is not defined under International Financial Reporting Standards (IFRS). This data may not be comparable to data presented by other gold producers.

SEMAFO anticipates releasing its 2012 fourth quarter and year-end financial results on or about March 13, 2013. The Corporation will also host a conference call to discuss the fourth quarter and year-end results, the details of which will be announced at a later date.

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 "guidance", "outlook", "expected", "scheduled", "estimated", "should", "improve", "anticipates", "forecasted", "initial", "will", "expand", "potential", "preliminary", "adjustment", "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 meet our guidance of between 215,000 and 240,000 ounces of gold at a cash operating cost of between $760 and $810 per ounce and total cash cost of between $855 and $905 per ounce, the ability to incur $114.6 million of capex, $22 million of exploration and $23 million of general and administrative expenditures in 2013, the ability to improve the ore grade in 2014 and 2015, the ability to add the Siou zone to reserves in 2013 and be in a position to begin processing ore from this zone at the end of 2014 or beginning of 2015, the ability of the strip ratio at Mana to be 12:1 in 2013 and 2014, the accuracy of our assumptions, the ability to expand the geological potential at Yaho, the ability to meet our guidance at each mine and to respect our capex breakdown, the ability to carry-out our 2013 exploration program, the ability to update our reserves and resources estimate in mid-March and to obtain the results of our tests on schedule, 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 2011 Annual MD&A and 2011 Annual Information Form, as updated in SEMAFO's 2012 First Quarter MD&A, 2012 Second Quarter MD&A and 2012 Third Quarter 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.

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