SEMAFO Reports Cash Flow from Operations of $147.6 Million in 2015

Montreal, Quebec, March 9, 2016– SEMAFO Inc. (TSX, OMX: SMF) reported its financial and operational results for the fourth quarter and year ended December 31, 2015.  All amounts are in US dollars unless otherwise stated.

 

2015 - The Year in Review

Ø Gold production of 255,900 ounces, a 9% increase compared to 2014

Ø Total cash cost¹ of $493 per ounce sold and all-in-sustaining cost¹ of $645 per ounce sold, which represent year-over-year decreases of 24% and 19%, respectively

Ø Achieved production guidance for the eighth consecutive year

Ø Gold sales of $300.1 million, a 4% increase compared to 2014

Ø Operating income of $66.1 million, a 42% increase compared to the same period in 2014

Ø Net income attributable to equity shareholders of $24.9 million, compared to $15.8 million in 2014

Ø Cash flows from operating activities from continuing operations² of $147.6 million, a 22% increase compared to 2014

Ø Acquisition of Orbis Gold Limited, which includes the Natougou project

Ø Bought deal of common shares for $46.5 million

Ø Long-term debt of $90 million

 

Fourth Quarter 2015 - in Review

Ø Gold production of 57,500 ounces, a 7% decrease compared to the same period in 2014

Ø Gold sales of $72.5 million, an 8% decrease compared to the same period in 2014

Ø Operating income of $12.5 million compared to $14.9 million for the same period in 2014

Ø Net income from continuing operations attributable to equity shareholders of $0.5 million or nil per share compared to $4.6 million or $0.02 per share for the same period in 2014

Ø Cash flows from operating activities from continuing operations of $39.4 million or $0.13 per share compared to $40.4 million or $0.15 per share for the same period in 2014

1. Adjusted net income attributable to equity shareholders, adjusted basic earnings per share, operating cash flows per share, 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 from continuing operations” section of the Corporation’s MD&A, note 21.
2. Cash flows from operating activities from continuing operations exclude changes in non-cash working capital items.

Mana, Burkina Faso

Mining Operations

 

		Year
		ended December 31,
		2015		2014		Variation
Operating Data
Ore mined (tonnes)		2,390,600		2,190,400		9	%
Ore processed (tonnes)		2,399,100		2,754,400		(13	%)
Waste mined (tonnes)		18,924,700		19,201,500		(1	%)
Operational stripping ratio		7.9		8.8		(10	%)
Head grade (g/t)		3.63		2.90		25	%
Recovery (%)		91		91		—
Gold ounces produced		255,900		234,300		9	%
Gold ounces sold		258,600		230,200		12	%
Statistics (in dollars)
Average realized selling price (per ounce)		1,161		1,257		(8	%)
Cash operating cost (per tonne processed)¹		47		49		(4	%)
Total cash cost (per ounce sold)¹		493		649		(24	%)
All-in sustaining cost (per ounce sold)¹		645		801		(19	%)
Depreciation (per ounce sold)²		337		310		9	%

 

 

 

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 from continuing operations” section of the Corporation’s MD&A, note 21.

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.

 

 

The total cash cost of $493 per ounce sold and all-in sustaining cost of $645 per ounce sold at our Mana Mine, which represent year-over-year decrease of 24% and 19% respectively, are attributable to the higher head grade as well as the reduction in fuel pricing and the strength of the US dollar relative to the Euro. The increase in head grade in 2015 reflects the greater percentage of high-grade ore processed from the Siou and Fofina pits compared to 2014.

 

During 2015, more ore was mined compared to 2014 when the mine plan sequence was modified in order to reassign a portion of the Wona-Kona mining fleet to the development of the Siou and Fofina deposits in the first quarter of 2014. The decrease in throughput in the year is due to the processing of ore through the secondary ball mill during the five-week shutdown of the SAG mill and the mining sequence.

 

 

2015 Reserves and Resources

As at December 31, 2015, consolidated proven and probable mineral reserves stood at 3,265,000 ounces of gold. The reserve grade increased by 10% to 3.32 g/t Au. Consolidated measured and indicated mineral resources increased by 8% to 2,969,900 ounces.

The changes in reserves are net of 2015 depletion due to production and mainly result from the addition of a maiden reserves statement for Natougou. All mineral resources reported are exclusive of mineral reserves. Reserves and resources were estimated using a gold price of $1,100 and $1,400 per ounce, respectively.

 

Positive Feasibility Study for Natougou

Highlight of the first quarter of 2016 is our announcement of a positive feasibility study and funding for the Natougou project.

With mineral reserves of 9.6 million tonnes at 4.15 g/t Au for 1.3 million ounces, Natougou represents one of the highest grade open-pit projects in West Africa. Results from the feasibility study, which include an after-tax IRR of 48%, 5% NPV of $262 million and a payback period of 1.5 years, demonstrate strong economic support for proceeding with the project and a solid foundation from which to expand its potential.

In the first quarter of 2016, we entered into a commitment letter with Macquarie Bank Limited to amend our credit facility ("Facility") to $120 million. Closing of the amended Facility is anticipated on or about March 31, 2016 and drawdown of the incremental $60 million is subject to conditions precedent customary in a transaction of this nature. Coupled with our $167 million cash position at year-end 2015 and anticipated cash flow from Mana operations, we estimate we have sufficient funds to bring Natougou into production.

Natougou Milestones

• Complete permitting by year-end 2016

• Complete detailed engineering in fourth quarter of 2016

• Construction start-up by year-end 2016

• Ongoing exploration with the aim of increasing reserves and resources and enhancing economics as of the fourth year of the mine life

 

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.

 

Fourth Quarter and Year-End Conference Call

A conference call will be held today, Wednesday, March 9, 2016 at 10:00 EST 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: www.semafo.com
Replay number: 1 (800) 585 8367 or +1 (416) 621 4642
Replay pass code: 23405759
Replay expiration: March 30, 2016

Annual General Meeting of Shareholders

SEMAFO's Annual General Meeting of Shareholders will be held on Thursday, May 12, 2016 at 10:00 EDT at Club Saint-James, Salon Midway, 1145 avenue Union, 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 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 “expand”, “potential”, “anticipated”, “estimate”, “aim”, “target”, “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 an after-tax IRR of 48% with a payback period of 1.5 years and an after-tax NPV of $262 million, the ability to bring Natougou into production with the combination of our cash position at year-end 2015, anticipated cash flow from production and the amended Macquarie Facility, the ability to close the Macquarie amended Facility and to meet the various conditions precedent to drawdown, the ability to complete permitting by year-end 2016,  the ability to complete detailed engineering in fourth quarter of 2016, the ability to start construction by year-end 2016, the ability to increase reserves and resources, the ability to enhance economics as of fourth year of the mine life, 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, 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 March 9, 2016 at 7:00 a.m., Eastern Standard Time.

 

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 Analyst, 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

 

 

 

Financial and Operating Highlights

 

		2015		2014		2013
Gold ounces produced		255,900		234,300		158,600
Gold ounces sold		258,600		230,200		161,300
(in thousands of dollars, except amounts per ounce, per tonne and per share)
From Continuing Operations
Revenues – Gold sales		300,129		289,349		226,618
Operating income		66,066		46,359		18,942
Net income (loss) attributable to equity shareholders		24,910		15,812		(9,227	)
Basic earnings (loss) per share		0.09		0.06		(0.03	)
Diluted earnings (loss) per share		0.09		0.06		(0.03	)
Adjusted net income (loss) attributable to equity shareholders¹		40,956		29,603		(13,468	)
Per share¹		0.14		0.11		(0.05	)
Cash flows from operating activities2		147,561		120,730		77,562
Per share1		0.51		0.44		0.28
Average realized selling price (per ounce)		1,161		1,257		1,405
Cash operating cost (per tonne processed)¹		47		49		40
Total cash cost (per ounce sold)¹		493		649		777
All-in sustaining cost (per ounce sold)¹		645		801		1,242
From Discontinued Operations
Net loss attributable to equity shareholders3		—		(11,339	)	(75,995	)
Total
Net income (loss) attributable to equity shareholders		24,910		4,473		(85,222	)
Basic earnings (loss) per share		0.09		0.02		(0.31	)
Diluted earnings (loss) per share		0.09		0.02		(0.31	)
Total assets		781,513		618,302		567,546
Cash dividends declared per share		—		—		0.02

 

 

 

1. Cash operating cost, total cash cost, all-in sustaining cost, 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 from continuing operations” section of this MD&A, note 22.
2. Cash flows from operating activities from continuing operations exclude changes in non-cash working capital items.
3. The year ended December 31, 2014 includes a non-cash amount of $9,691,000 regarding the reversal of the non-controlling interest as a result of the sale of the Kiniero Mine.

 

 

Fourth Quarter Financial and Operating Highlights

 

		Three-month period
		ended December 31,
		2015		2014		Variation
Gold ounces produced		57,500		61,800		(7	%)
Gold ounces sold		65,500		65,500		—
(in thousands of dollars, except amounts per ounce, per tonne and per share)
Revenues – Gold sales		72,475		78,591		(8	%)
Operating income		12,549		14,873		(16	%)
Net income attributable to equity shareholders		476		4,609		(90	%)
Basic earnings per share		—		0.02		(100	%)
Diluted earnings per share		—		0.02		(100	%)
Adjusted net income attributable to equity shareholders¹		3,270		9,898		(67	%)
Per share¹		0.01		0.04		(75	%)
Cash flow from operating activities2		39,430		40,416		(2	%)
Operating cash flow per share¹		0.13		0.15		(13	%)
Average realized selling price (per ounce)		1,106		1,200		(8	%)
Cash operating cost (per tonne processed)¹		42		51		(18	%)
Total cash cost (per ounce sold)¹		493		596		(17	%)
All-in sustaining cost (per ounce sold)¹		719		700		3	%

 

¹     Adjusted net income attributable to equity shareholders, adjusted basic earnings per share, operating cash flows per share, 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 measures from continuing operations” section of the Corporation’s MD&A, note 21.

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

 

 

 

 

Consolidated Statement of Financial Position

(Expressed in thousands of US dollars)

 

 

 

		As at			As at
		December 31,			December 31,
		2015			2014
		$			$
Assets
Current assets
Cash and cash equivalents		167,166			127,928
Trade and other receivables		17,028			21,470
Income tax receivable		1,634			12,086
Inventories		53,200			59,729
Other current assets		2,622			2,311
		241,650			223,524
Non-current assets
Advance receivable		4,532			4,229
Restricted cash		4,388			3,726
Property, plant and equipment		529,087			382,388
Intangible asset		1,856			1,915
Other non-current assets		—			2,520
		539,863			394,778
Total assets		781,513			618,302
Liabilities
Current liabilities
Trade payables and accrued liabilities		35,869			49,530
Current portion of long-term debt		29,052			—
Restricted and deferred share unit liabilities		1,360			1,938
Provisions		6,346			6,579
		72,627			58,047
Non-current liabilities
Long-term debt		59,379			—
Restricted share unit liabilities		4,485			3,967
Provisions		7,313			6,917
Deferred income tax liabilities		31,846			18,766
		103,023			29,650
Total liabilities		175,650			87,697
Equity
Equity Shareholders
Share capital		516,070			466,861
Contributed surplus		10,685			10,889
Retained earnings		48,242			25,932
		574,997			503,682
Non-controlling interests		30,866			26,923
Total equity		605,863			530,605
Total liabilities and equity		781,513			618,302

 

 

 

 

Consolidated Statement of Income For the years ended December 31, 2015 and 2014
(Expressed in thousands of US dollars, except per share amounts)
		Year
		ended December 31,
		2015		2014
		$		$
Revenue – Gold sales		300,129		289,349
Costs of operations
Mining operation expenses		127,618		149,305
Depreciation of property, plant and equipment		87,689		72,195
General and administrative		13,559		17,432
Corporate social responsibility expenses		857		826
Share-based compensation		4,340		3,232
Operating income		66,066		46,359
Other expenses (income)
Finance income		(748	)	(343	)
Finance costs		3,846		1,646
Foreign exchange loss		8,161		5,251
Income before income taxes		54,807		39,805
Income tax expense
Current		10,510		1,382
Deferred income tax liabilities		13,744		19,028
		24,254		20,410
Net income from continuing operations		30,553		19,395
Net loss from discontinued operations		—		(1,648	)
Net income for the year		30,553		17,747
Net income from continuing operations attributable to:
Equity shareholders		24,910		15,812
Non-controlling interests		5,643		3,583
		30,553		19,395
Net income (loss) from discontinued operations attributable to:
Equity shareholders		—		(11,339	)
Non-controlling interests		—		9,691
		—		(1,648	)
Net income for the year attributable to:
Equity shareholders		24,910		4,473
Non-controlling interests		5,643		13,274
		30,553		17,747
Basic earnings per share from continuing operations		0.09		0.06
Basic loss per share from discontinued operations		—		(0.04	)
Basic earnings per share		0.09		0.02
Diluted earnings per share from continuing operations		0.09		0.06
Diluted loss per share from discontinued operations		—		(0.04	)
Diluted earnings per share		0.09		0.02

 

 

 

Consolidated Statement of Cash Flows For the years ended December 31, 2015 and 2014

(Expressed in thousands of US dollars)

 

 

		Year
		ended December 31,
		2015		2014
		$		$
Cash flows from (used in):
Operating activities
Net income for the year from continuing operations		30,553		19,395
Adjustments for :
Depreciation of property, plant and equipment		87,689		72,195
Share-based compensation		4,340		3,232
Write-off of other non-current assets related to financing fees		2,520		—
Unrealized foreign exchange loss		7,612		6,799
Deferred income taxes expense		13,744		19,028
Other		1,103		81
		147,561		120,730
Changes in non-cash working capital items		4,756		1,140
Net cash provided by operating activities    from continuing operations		152,317		121,870
Net cash used in operating activities    from discontinued operations		—		(2,088	)
Net cash provided by operating activities		152,317		119,782
Financing activities
Financing fees		—		(1,020	)
Long-term debt		90,000
Long-term debt transaction costs		(1,200	)	—
Proceeds on issuance of share capital, net of expenses		44,305		5,700
Dividends paid to non-controlling interest and withholding taxes		(2,656	)	—
Net cash provided by financing activities		130,449		4,680
Investing activities
Acquisition of Orbis Gold Limited		(154,550	)	—
Acquisitions of property, plant and equipment		(79,449	)	(68,591	)
Advance made to Sonabel		(566	)	(2,068	)
Increase in restricted cash		(1,017	)	(641	)
Net cash used in investing activities		(235,582	)	(71,300	)
Effect of exchange rate changes on cash and cash equivalents		(7,946	)	(7,833	)
Change in cash and cash equivalents during the year		39,238		45,329
Cash and cash equivalents – beginning of year		127,928		82,599
Cash and cash equivalents of continuing operations – end of year		167,166		127,928
Interest paid		4,578		—
Interest received		450		343
Income tax paid		1,131		5,276

 

 

 

2015 Reserves and Resources

 

Table 1 - Consolidated Reserves and Resources

 

PROPERTY	Mana1,2,4,5,6	Tapoa1,2,4,5,6 (Natougou Project)	Yactibo1,3,4,5,7 (Nabanga Project)	Total
MINERAL RESERVES
Proven
Tonnes	12,655,000	1,583,000		14,238,000
Grade (g/t Au)	3.15	6.46		3.52
Ounces	1,281,400	329,000		1,610,400
Probable
Tonnes	8,325,000	7,984,000		16,309,000
Grade (g/t Au)	2.64	3.69		3.16
Ounces	707,600	947,000		1,654,600
TOTAL MINERAL RESERVES
Tonnes	20,980,000	9,567,000		30,547,000
Grade (g/t Au)	2.95	4.15		3.32
Ounces	1,989,000	1,276,000		3,265,000
MINERAL RESOURCES (exclusive of reserves)
Measured
Tonnes	8,751,000	77,000		8,828,000
Grade (g/t Au)	1.67	1.84		1.67
Ounces	470,800	5,000		475,800
Indicated
Tonnes	33,526,000	2,564,000		36,090,000
Grade (g/t Au)	2.13	2.44		2.15
Ounces	2,293,100	201,000		2,494,100
TOTAL M&I
Tonnes	42,277,000	2,641,000		44,918,000
Grade (g/t Au)	2.03	2.42		2.06
Ounces	2,763,900	206,000		2,969,900
Inferred
Tonnes	13,041,000	2,683,000	1,840,000	17,564,000
Grade (g/t Au)	2.82	3.99	10.00	3.75
Ounces	1,184,200	345,000	590,000	2,119,200

 

 

 

 

¹     The Corporation indirectly owns a 100% interest in all of its permits, except for the permits held by SEMAFO Burkina Faso S.A. in which the Government of Burkina Faso holds a 10% interest.

²     Mineral reserves and resources at Mana and at Tapoa (Natougou project) were estimated using a gold price of $1,100 and $1,400 per ounce, respectively.

³     Mineral resources at Yactibo Permit Group (Nabanga poject) were reported above a 5.0 g/t Au cut-off grade.

⁴     Rounding of numbers of tonnes and ounces may present slight differences in the figures.

⁵     All mineral resources reported are exclusive of mineral reserves.

⁶     As of December 31, 2015.

⁷     As of June 30, 2015.

2015 Reserves and Resources (continued)

Table 2 - Mana, Burkina Faso^1,2,3

 

 

DEPOSITS	DECEMBER 31, 2015
PROVEN RESERVES				PROBABLE RESERVES			TOTAL RESERVES
Tonnage		Grade (g/t Au)	Ounces4	Tonnage	Grade (g/t Au)	Ounces4	Tonnage		Grade (g/t Au)	Ounces4
WONA-KONA	6,107,000		2.35	460,700	6,558,000	2.25	474,400	12,665,000		2.30	935,100
NYAFÉ	263,000		5.85	49,400	4,000	5.02	700	267,000		5.84	50,100
FOFINA	1,146,000		2.74	100,800	39,000	2.30	2,900	1,185,000		2.72	103,700
SIOU	4,800,000		4.17	644,000	1,724,000	4.14	229,600	6,524,000		4.16	873,600
ROMPAD	339,000		2.43	26,500	-	-	-	339,000		2.43	26,500
TOTAL MANA	12,655,000		3.15	1,281,400	8,325,000	2.64	707,600	20,980,000		2.95	1,989,000

 

 

 

 

DEPOSITS	DECEMBER 31, 2015
MEASURED						INDICATED						TOTAL RESOURCES
Tonnage		Grade (g/t Au)		Ounces4		Tonnage		Grade (g/t Au)		Ounces4		Tonnage		Grade (g/t Au)		Ounces4
WONA-KONA	1,427,000		1.95		89,500		20,962,000		2.55		1,715,300		22,389,000		2.51		1,804,800
NYAFÉ	300,000		5.60		54,100		230,000		5.84		43,100		530,000		5.70		97,200
FOFINA	1,061,000		2.99		102,000		425,000		3.87		52,800		1,486,000		3.24		154,800
YAHO	4,654,000		1.05		157,200		9,895,000		0.99		316,200		14,549,000		1.01		473,400
FILON 67	26,000		2.72		2,300		9,000		3.59		1,000		35,000		2.93		3,300
FOBIRI	469,000		1.80		27,100		114,000		1.52		5,600		583,000		1.74		32,700
SIOU	814,000		1.47		38,600		1,891,000		2.62		159,100		2,705,000		2.27		197,700
TOTAL MANA	8,751,000		1.67		470,800		33,526,000		2.13		2,293,100		42,277,000		2.03		2,763,900

 

 

 

 

DEPOSITS			DECEMBER 31, 2015
INFERRED
Tonnage	Grade (g/t Au)		Ounces4
WONA-KONA			3,010,000	2.91		281,600
NYAFÉ			151,000	5.86		28,400
FOFINA			162,000	4.33		22,600
YAHO			471,000	1.45		22,000
FILON 67			6,000	6.32		1,100
FOBIRI			578,000	1.39		25,800
MAOULA			2,628,000	1.62		137,100
SIOU			6,035,000	3.43		665,600
TOTAL MANA			13,041,000	2.82		1,184,200

 

 

¹     The Corporation indirectly owns a 100%interest in all of its permits, except for the permits held by SEMAFO Burkina Faso S.A., in which the Government of Burkina Faso holds a 10% interest.

²     Mineral reserves and resources were estimated using a gold price of $1,100 and $1,400 per ounce, respectively.

³     All mineral resources reported are exclusive of mineral reserves.

⁴                       Rounding of numbers of tonnes and ounces may present slight differences in the figures