SEMAFO: Cash Flow From Operations of $37.4 Million in Second Quarter 2016

MONTREAL, QUEBEC--(Marketwired - Aug. 10, 2016) - SEMAFO Inc. (TSX:SMF)(OMX:SMF) today reported its financial and operational results for the three-month period ended June 30, 2016. All amounts are in US dollars unless otherwise stated.

Second Quarter 2016 - in Review

• Gold production of 61,300 ounces compared to 66,000 ounces for the same period in 2015
• Gold sales of $76.6 million compared to $81.1 million for the same period in 2015
• Total cash cost¹ of $547 per ounce sold and all-in-sustaining cost¹ of $742 per ounce sold compared to $471 and $604, respectively, for the same period in 2015
• Adjusted operating income¹ of $19.6 million compared to $23.4 million for the same period in 2015
• Adjusted net income attributable to equity shareholders¹ of $15.0 million or $0.05 per share¹ compared to $16.1 million or $0.05 per share¹ for the same period in 2015
• Cash flows from operating activities² of $37.4 million or $0.12 per share¹ compared to $40.7 million or $0.14 per share¹ for the same period in 2015
• Completion of a bought deal offering of common shares for aggregate gross proceeds of $90.8 million (C$115.1 million)
• Recipient of grand prize for Corporate Social Responsibility of Mining Companies in Burkina Faso (RSE 2016)

Natougou Development:

• Permitting in line for receipt by year-end 2016
• Procurement of long-lead comminution equipment secured for site delivery in H2 2017
• Development on time and on budget
• Detailed design and engineering 17% complete

1	Total cash cost, all-in sustaining cost, adjusted operating income, adjusted net income attributable to equity shareholders, adjusted basic earnings per share and operating cash flows per share are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures" section of the Corporation's MD&A, note 16.
2	Cash flows from operating activities exclude changes in non-cash working capital items.

Mana, Burkina Faso

Mining Operations

	Three-month period				Six-month period
	ended June 30,				ended June 30,
	2016	2015	Variation		2016	2015	Variation
Operating Data
Ore mined (tonnes)	564,500	540,100	5	%	1,064,800	1,289,900	(17	%)
Ore processed (tonnes)	604,500	600,900	1	%	1,287,400	1,138,200	13	%
Waste mined (tonnes)	4,809,700	5,151,900	(7	%)	8,269,100	11,714,700	(29	%)
Operational stripping ratio	8.5	9.5	(11	%)	7.8	9.1	(14	%)
Head grade (g/t)	3.33	3.71	(10	%)	3.18	3.89	(18	%)
Recovery (%)	95	92	3	%	93	92	1	%
Gold ounces produced	61,300	66,000	(7	%)	122,600	131,200	(7	%)
Gold ounces sold	60,700	67,700	(10	%)	123,500	128,300	(4	%)
Statistics (in dollars)
Average realized selling price (per ounce)	1,262	1,198	5	%	1,224	1,209	1	%
Cash operating cost (per tonne processed)1	49	46	7	%	46	50	(8	%)
Total cash cost (per ounce sold)1	547	471	16	%	526	498	6	%
All-in sustaining cost (per ounce sold)1	742	604	23	%	719	624	15	%
Depreciation (per ounce sold)2	331	328	1	%	303	360	(16	%)

1	Cash operating cost, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures" section of the Corporation's MD&A, note 16.
2	Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold.

During the second quarter of 2016, the decrease in head grade compared to the same period in 2015, is due to the mine plan. The decrease in gold ounces produced is a direct result of the lower head grade. The year-over-year decrease in head grade in the first six months of 2016 is due to the mine plan and increased throughput from low-grade stockpiles. The increase in throughput in the first six months of 2016 compared to the same period in 2015 is due to the processing of ore through the secondary ball mill during the five-week shutdown of the SAG mill at the beginning of 2015.

In the second quarter in 2016, the 6% decrease in gold sales is caused by lower gold ounces sold, partially offset by an increase in the average realized selling price. The decrease in operating income compared to the same period in 2015 is mainly due to higher share-based compensation expense as a result of the increase in the fair value of our share price and lower revenue.

As expected, our cash operating cost per tonne reached $49 in the second quarter of 2016 compared to $46 in the second quarter of 2015. The cost difference mainly reflects higher transportation costs due to mining solely from the Siou and Fofina pits, higher fleet maintenance costs and the negative impact of exchange rates. The 23% increase in all-in sustaining cost in the quarter was anticipated and was mainly driven by an increase in the capitalized stripping expenditure, lower ounces sold and higher total cash cost.

Exploration

Mana Project, Burkina Faso

Year to date, 24,400 meters of RC drilling have been carried out on the Mana Project, of which 16,000 meters on Yama, 5,400 meters on BN2 and 3,000 meters on Kona Blé. More than half of the budgeted 60,000-meter auger program has now been effected, primarily on the BN2, Bissa, Wona Southwest, Yama and Mouni areas.

Yama Mineral Reserves Estimate

As at June 30, 2016, the open pit probable mineral reserves estimate for the Yama deposit totals 662,300 tonnes averaging 1.81 g/t Au for 38,500 ounces of contained gold. The mineral reserves were estimated based on a gold price of $1,100 per ounce. The Yama deposit will have a total strip ratio of 11:1 and an average mill recovery rate of 93%. The Corporation will begin the process for an extension of the Mana mining permit in the second half of 2016.

The mineral reserves statement has been completed by Michel Crevier, P.Geo MScA, Vice-President Exploration and Mine Geology, who is SEMAFO's Qualified Person and has reviewed this press release for accuracy and compliance with National Instrument 43-101.

Natougou Project

Geological mapping of the Tapoa permit is progressing well, and our understanding of the property will be further enhanced by a recently conducted Phase II airborne magnetic survey that completed coverage of the property.

The 2016 auger program planned for the Natougou (Tapoa) Project is now complete, with a total of 62,000 meters drilled to date. Results from the program, coupled with those from the geophysical survey, will allow us to identify follow-up RC drill targets for the second half of the year.

About half of the auger drill campaign was realised on Trend 045, a regional structure that crosses the property to the south of the Natougou deposit along a northeast direction. Mapping, trenching, soil sampling, and auger drilling have been ongoing throughout the year, and results to date confirm the presence of key favourable features such as wide hydrothermal alterations along a strong deformation corridor associated with significant results such as 1.40 g/t Au over 7 meters in trenching. Soil sampling anomalies have also been noted locally along the corridor over a distance of more than 40 kilometers.

To maximise our understanding of the geological structure of Trend 045, the geological mapping campaign was prioritised over a follow-up RC program in the second quarter. The 5-000 meter RC program will now be conducted on the trend after the rainy season with results expected in the fourth quarter of 2016.

West Sector

An RC drill program is ongoing on the footwall zone of the Boungou Shear Zone and on the sector west of the deposit. Significant results are included below and in Figure 1: http://media3.marketwire.com/docs/PDRA.pdf.

Highlights West Zone

Drill hole*	From (meters)	To (meters)	Length (meters)	Au g/t
TPA0670	152.00	158.30	6.30	1.80
TPA0674	163.50	167.00	3.50	2.62
TPA0675	154.60	159.00	4.40	18.90
TPA0676	172.10	175.70	3.60	7.49
TPA0680	162.30	168.00	5.70	3.56

*Drilling was realised at an almost vertical dip.

Holes TPA0670, TPA0674 and TPA0675 represent in-fill results from the known portion of the zone, whereas TPA0676 extends a little to the west and the TPA0680 offers a northern extension. The latter two merit additional drilling.

Highlights Boungou Footwall Zone

In the quarter, RC drilling was carried out on the Boungou Footwall Zone as shown in Figure 1: http://media3.marketwire.com/docs/PDRA.pdf.

Drill hole*	From (meters)	To (meters)	Length (meters)	Au g/t
TPA0480	31.00	31.50	0.50	14.60
BODD438	32.50	33.90	1.40	4.20
TPA0550	36.00	37.70	1.70	2.78
BODD078	84.50	85.00	0.50	8.69

*Drilling was realised at an almost vertical dip.

The RC program was designed to investigate potential footwall-type mineralization outside the one known area. While drilling on the eastern portion of the future open pit was unsuccessful, some good results such as BODD438, TPA0550 and BODD078 will be further investigated.

Natougou Development

In the second quarter, the Corporation continued to advance the Natougou Project towards construction start-up by year-end 2016. The Natougou Project has progressed as follows:

• Development on time and budget, with $4.3 million spent as at June 30, 2016
  
  
• Detailed design and engineering 17% complete
  
  
• Procurement of long-lead comminution equipment secured for site delivery in H2 2017
  
  
  • Package comprises SAG mill, tower mill, jaw crusher, cone crusher, vibrating screen and apron feeders
    
    
  • Tower mill is already in stock
    
    
• Issue of requests for quotation for the power plant, fuel depot, mining contractor and 14 other packages
  
  
• Hiring of key personnel for the construction phase is ongoing
  
  

Natougou Permitting

• Permitting is in line for receipt by year-end 2016
  
  
• Two out of the three steps completed: public hearings and meetings with the Technical Committee on Environmental Evaluations "COTEVE"
  
  
• Final milestone involves review of the application by the National Mining Commission, followed by grant of a permit
  
  

SEMAFO's Management's Discussion and Analysis, Consolidated Financial Statements and related 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 www.sedar.com.

Second Quarter Conference Call

A conference call will be held today, Wednesday, August 10, 2016 at 10:00 EDT to discuss this press release. Interested parties 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

Webcast: http://www.semafo.com/

Replay number: 1 (800) 585 8367 or +1 (416) 621 4642

Replay pass code: 56308431

Replay expiration: August 31, 2016

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation operates the Mana Mine in Burkina Faso, which includes the high-grade satellite deposits of Siou and Fofina, and is developing the advanced gold deposit of Natougou. 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 "in line", "will", "further", "expected", "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 receive the Natougou permit by year-end 2016, the ability to obtain site delivery of long-lead comminution equipment in H2 2017, the ability to achieve Yama's total strip ratio of 11:1 and average mill recovery rate of 93%, the ability of the Phase II airborne magnetic survey to further enhance our understanding of the Tapoa permit, the ability to release Trend 045 exploration results in the fourth quarter of 2016, 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 2015 Annual MD&A, as updated in SEMAFO's 2016 First Quarter MD&A and 2016 Second 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 information in this release is subject to the disclosure requirements of SEMAFO under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on August 10, 2016 at 7:00 a.m., Eastern Daylight Time.

Consolidated Results and Mining Operations

Financial and Operating Highlights

	Three-month period						Six-month period
	ended June 30,						ended June 30,
	2016		2015		Variation		2016		2015		Variation
Gold ounces produced	61,300		66,000		(7	%)	122,600		131,200		(7	%)
Gold ounces sold	60,700		67,700		(10	%)	123,500		128,300		(4	%)
(in thousands of dollars, except amounts per share)
Revenues - Gold sales	76,590		81,115		(6	%)	151,146		155,131		(3	%)
Mining operation expenses	30,071		28,638		5	%	58,793		57,701		2	%
Government royalties	3,139		3,259		(4	%)	6,157		6,192		(1	%)
Depreciation of property, plant and equipment	20,164		22,288		(10	%)	37,504		46,398		(19	%)
Share-based compensation	5,127		535		858	%	8,805		3,297		167	%
Other	3,661		3,571		3	%	7,623		7,512		1	%
Operating income	14,428		22,824		(37	%)	32,264		34,031		(5	%)
Finance costs	1,062		171		521	%	1,364		3,210		(58	%)
Foreign exchange loss (gain)	2,714		(1,686	)	-		(2,195	)	4,595		-
Income tax expense	4,147		2,382		74	%	8,272		12,249		(32	%)
Other	(573	)	(158	)	(263	%)	(946	)	(289	)	(227	%)
Net income	7,078		22,115		(68	%)	25,769		14,266		81	%
Attributable to equity shareholders
Net income	5,304		19,719		(73	%)	21,488		11,605		85	%
Basic earnings per share	0.02		0.07		(71	%)	0.07		0.04		75	%
Diluted earnings per share	0.02		0.07		(71	%)	0.07		0.04		75	%
Adjusted amounts
Adjusted operating income1	19,555		23,359		(16	%)	41,069		37,328		10	%
Adjusted net income attributable to equity shareholders1	15,038		16,114		(7	%)	27,440		27,086		1	%
Per share1	0.05		0.05		-		0.09		0.09		-
Cash flows
Cash flows from operating activities2	37,390		40,748		(8	%)	72,594		73,301		(1	%)
Per share1	0.12		0.14		(14	%)	0.24		0.26		(8	%)

1	Adjusted operating income, adjusted net income attributable to equity shareholders, adjusted basic earnings per share and operating cash flows per share are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial measures" section of the Corporation's MD&A, note 16.
2	Cash flows from operating activities exclude changes in non-cash working capital items.

Interim Consolidated Statement of Financial Position

(Expressed in thousands of US dollars - unaudited)

	As at	As at
	June 30,	December 31,
	2016	2015
	$	$
Assets
Current assets
Cash and cash equivalents	254,070	167,166
Trade and other receivables	18,066	17,028
Income tax receivable	-	1,634
Inventories	48,816	53,200
Other current assets	3,736	2,622
	324,688	241,650
Non-current assets
Advance receivable	3,439	4,532
Restricted cash	4,499	4,388
Property, plant and equipment	533,731	529,087
Intangible asset	1,723	1,856
Other non-current assets	5,959	-
	549,351	539,863
Total assets	874,039	781,513
Liabilities
Current liabilities
Trade payables and accrued liabilities	39,398	35,869
Current portion of long-term debt	284	29,052
Share unit plan liabilities	8,979	1,360
Provisions	2,728	6,346
Income tax payable	4,980	-
	56,369	72,627
Non-current liabilities
Long-term debt	59,466	59,379
Share unit plan liabilities	5,066	4,485
Provisions	7,690	7,313
Deferred income tax liabilities	29,832	31,846
	102,054	103,023
Total liabilities	158,423	175,650
Equity
Equity Shareholders
Share capital	616,533	516,070
Contributed surplus	9,352	10,685
Retained earnings	64,943	48,242
	690,828	574,997
Non-controlling interest	24,788	30,866
Total equity	715,616	605,863
Total liabilities and equity	874,039	781,513

Interim Consolidated Statement of Comprehensive Income

(Expressed in thousands of US dollars, except per share amounts - unaudited)

	Three-month period				Six-month period
	ended June 30,				ended June 30,
	2016		2015		2016		2015
	$		$		$		$
Revenue - Gold sales	76,590		81,115		151,146		155,131
Costs of operations
Mining operation expenses	33,210		31,897		64,950		63,893
Depreciation of property, plant and equipment	20,164		22,288		37,504		46,398
General and administrative	3,481		3,437		7,308		7,052
Corporate social responsibility expenses	180		134		315		460
Share-based compensation	5,127		535		8,805		3,297
Operating income	14,428		22,824		32,264		34,031
Other expenses (income)
Finance income	(573	)	(158	)	(946	)	(289	)
Finance costs	1,062		171		1,364		3,210
Foreign exchange loss (gain)	2,714		(1,686	)	(2,195	)	4,595
Income before income taxes	11,225		24,497		34,041		26,515
Income tax expense
Current	6,611		5,268		10,565		8,872
Deferred	(2,464	)	(2,886	)	(2,293	)	3,377
	4,147		2,382		8,272		12,249
Net income and comprehensive income for the period	7,078		22,115		25,769		14,266
Attributable to:
Equity shareholders	5,304		19,719		21,488		11,605
Non-controlling interests	1,774		2,396		4,281		2,661
	7,078		22,115		25,769		14,266
Earnings per share
Basic	0.02		0.07		0.07		0.04
Diluted	0.02		0.07		0.07		0.04

Interim Consolidated Statement of Cash Flows

(Expressed in thousands of US dollars - unaudited)

		Three-month period				Six-month period
		ended June 30,				ended June 30,
		2016		2015		2016		2015
		$		$		$		$
Cash flows from (used in):
Operating activities
Net income for the period		7,078		22,115		25,769		14,266
Adjustments for:
	Depreciation of property, plant and equipment	20,164		22,288		37,504		46,398
	Share-based compensation	5,127		535		8,805		3,297
	Write-off of other non-current assets related to financing fees	-		-		-		2,520
	Unrealized foreign exchange loss (gain)	1,862		(1,268	)	(2,928	)	3,413
	Deferred income taxes expense	(2,464	)	(2,886	)	(2,293	)	3,377
	Adjustment for withholding taxes	5,827		-		5,827		-
	Other	(204	)	(36	)	(90	)	30
		37,390		40,748		72,594		73,301
Changes in non-cash working capital items		(3,578	)	(8,672	)	3,187		(8,476	)
Net cash provided by operating activities		33,812		32,076		75,781		64,825
Financing activities
Drawdown (repayment) of long-term debt		-		-		(30,000	)	90,000
Long-term debt transaction costs		(259	)	-		(259	)	(1,200	)
Proceeds on issuance of share capital, net of expenses		87,238		-		88,643		43,925
Dividends paid to non-controlling interest		(10,359	)	-		(10,359	)	-
Net cash provided by financing activities		76,620		-		48,025		132,725
Investing activities
Acquisition of Orbis Gold Limited		-		-		-		(154,550	)
Acquisitions of property, plant and equipment		(20,397	)	(17,484	)	(39,940	)	(35,371	)
Advance made to Sonabel		-		(566	)	-		(566	)
Net cash used in investing activities		(20,397	)	(18,050	)	(39,940	)	(190,487	)
Effect of exchange rate changes on cash and cash equivalents		(2,632	)	1,992		3,038		(4,120	)
Change in cash and cash equivalents during the period		87,403		16,018		86,904		2,943
Cash and cash equivalents - beginning of period		166,667		114,853		167,166		127,928
Cash and cash equivalents - end of period		254,070		130,871		254,070		130,871
Interest paid		910		1,517		2,492		1,517
Interest received		493		158		854		289
Income tax paid		6,088		-		6,173		-