SEMAFO’s Net Income Increases to $22.1 Million in Second Quarter 2015

Montreal, Quebec, August 5, 2015 – SEMAFO Inc. (TSX, OMX: SMF) today reported its financial and operational results for the three-month period ended June 30, 2015.  All amounts are in US dollars unless otherwise stated.

Second Quarter 2015 in Review

  Production for the second quarter of 2015 totalled 66,000 ounces at a total cash cost¹ of $471 per ounce sold and all-in sustaining cost¹ of $604 per ounce sold at our Mana Mine. These costs per ounce represent year-over-year decreases of 22% and 16%, respectively. In light of favourable fuel prices and exchange rates, SEMAFO is lowering its 2015 total cash cost¹ guidance from between $575 and $605 per ounce to between $515 and $540 per ounce, representing an 11% decrease at midpoint.

• Gold production of 66,000 ounces, a 9% decrease compared to the same period in 2014
• Gold sales of $81.1 million, an 8% decrease compared to the same period in 2014
• Operating income of $22.8 million compared to $20.7 million for the same period in 2014
• Net income of $22.1 million compared to $14.9 million for the same period in 2014
• Net income from continuing operations attributable to equity shareholders of $19.7 million or $0.07 per share compared to $13.0 million or $0.05 per share for the same period in 2014
• Adjusted net income from continuing operations attributable to equity shareholders¹ of $15.6 million or $0.05 per share¹ compared to $13.3 million or $0.05 per share¹ for the same period in 2014
• Cash flows from operating activities from continuing operations² of $40.7 million or $0.14 per share¹ compared to $37.6 million or $0.14 per share¹ for the same period in 2014
• Feasibility study at Natougou over 40% complete and on track for completion in Q2 2016
• Proximal exploration on Natougou returns promising results
• Delineation drill results at Natougou match expectations
• Inferred resources of 1.84 million tonnes at 10.0 g/t Au for 590,000 oz of gold at Nabanga deposit
• Recipient of grand prize for Corporate Social Responsibility of Mining Companies in Burkina Faso (RSE 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 16.
2. Cash flows from operating activities from continuing operations exclude changes in non-cash working capital items.

Mana, Burkina Faso

Mining Operations

¹        Cash operating cost, total cash cost and all-in sustaining cost are a non-IFRS financial performance measure with no standard definition under IFRS. See the “Non-IFRS financial performance measures from continuing operations” 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.

For the second quarter in 2015, lower ore mined and throughput compared to the same period in 2014 are a direct result of the mine plan sequence. The increase in head grade in the second quarter of 2015 reflects a greater percentage of high-grade ore processed from the Fofina and Siou pits compared to the same period in 2014.

During the second quarter of 2015, gold sales amounted to $81.1 million compared to $87.8 million for the same period in 2014. The 8% decrease is attributable to a decrease in the average realized selling price. The decrease in mining operation expenses reflects lower fuel pricing, coupled with the strength of the US dollar relative to the Euro and lower throughput. Cash flows from operating activities from continuing operations reached $40.7 million in the second quarter of 2015 due to the increase in operating income.

Reduction in 2015 Cost Guidance

In light of favourable fuel prices and exchange rates, SEMAFO has reduced its cost guidance for 2015. The 2015 total cash cost guidance has been lowered from between $575 and $605 per ounce to between $515 and $540 per ounce, representing an 11% decrease at midpoint. Our all-in sustaining cost guidance for the year has consequently decreased from between $715 and $750 per ounce to between $655 and $685 per ounce. In addition, the corporate general and administrative expense estimate for 2015 has been lowered from $15 million to $14 million.

The Corporation’s 2015 production guidance remains unchanged at between 245,000 and 275,000 ounces. The assumptions used to forecast the downward revision of costs for the second half of 2015 include:

Price of fuel:                        $1.14 US dollars per litre

Exchange rate:                                           $0.80 US dollars to the Canadian dollar

Exchange rate:                                           $1.11 US dollars to the Euro

Update on Natougou Feasibility Study

During the quarter, we made strong progress in advancing the feasibility study, which has now passed the 40% completion stage. We continue to target completion of the feasibility study by early second quarter of 2016 with a base case scenario of a 4,000-tonne-per-day processing plant.  As at June 30, 2015, a total of $5.7 million of the estimated budget of $12.5 million has been disbursed towards completion of the study including:

•           Process: 30% completed. This includes conclusion of the trade-off studies and design criteria, in addition to 30%  completion of the plant and general layout. 

•           Geotechnics: 100% completed. Both the ground water exploration program and geotechnical assessment of the open pit wall stability have been conducted.

•           Hydrology: 15% completed. This includes 50% completion of the water balance analysis.

•           Environmental study: 25% completed

•           6,000 meters of condemnation drilling: 100% completed

•           21,630 meters of delineation drilling: 100% completed

The additional 17,000-meter delineation drill program is already underway in the southwest part of the deposit with the aim of converting a portion of the indicated resources to the measured category in the third quarter.

Exploration

An initial exploration budget for 2015 was set at $18 million, $12 million of which was allocated to the Mana project and $6 million to the Banfora project. Following evaluation of our exploration strategy and in light of the weak gold environment, we have decided to cease exploration activities at Banfora in the third quarter, focus on areas within trucking distance of the Mana Mine and Natougou deposit while initiating exploration in Côte d’Ivoire. Accordingly, we maintain the initial budget of $18 million with $11 million allocated to the Mana project, $1.3 million to the Natougou deposit, $5.4 million to Banfora and $0.3 million to the Korhogo permits in Côte d’Ivoire.

Exploration - Natougou

Proximal Exploration on Natougou Returns Promising Results

In July, we announced results from an ongoing 10,000-meter proximal drilling program at Natougou designed to explore the lateral extensions of the flat-lying Boungou Shear Zone (BSZ) proximal to the current in-pit resources. A new mineralized area, dubbed the Southwest Extension,  has returned values of up to 10.29 g/t Au over 10 meters at depths varying from 8 to 131 meters. The target area measures approximately 200 meters wide and remains open towards the west and northwest. The 14-hole program was designed to provide a better understanding of the geometry of the shear zone while establishing the potential for proximal mineralization that could eventually be included in the resources base.

Regional Exploration - Natougou

The budget of $1.3 million is dedicated to carry out regional airborne geophysical surveying, RC drilling and some soil geochemical programs in the second half of 2015 on the Boungou, Dangou and Pambourou permits, within trucking distance of the Natougou deposit.

Second Quarter 2015 Conference Call

SEMAFO’s second quarter 2015 Management’s Discussion and Analysis and 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.

A conference call will be held today, Wednesday, August 5, 2015 at 10:00 EDT to discuss the second-quarter results. The webcast will also be accessible on our website at www.semafo.com  for a period of 30 days.

Details

Tel. local & overseas:    +1 (647) 788 4922
Tel. North America:                1 (877) 223 4471
Replay number:                      1 (800) 585 8367
Replay pass code:                   95206955

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 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”, “promising”, “estimate”, “target”, “aim of”, “designed to”, “potential”, “could”, “dedicated to”,  “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 2015 production guidance of between 245,000 and 275,000 ounces at a total cash cost of between $515 and $540 per ounce and an all-in sustaining cost of between $655 and $685 per ounce, the ability to meet the corporate general and administrative estimate of $14 million, the ability to complete the DFS early in the second quarter of 2016,  the ability to complete the definitive feasibility study within the budget estimate of $12.5 million, the ability to convert a portion of the indicated resources to the measured category in the third quarter, the ability of our 14-hole RC program to include proximal mineralization of the shear zone in the resources base, 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 2014 Annual MD&A, as updated in SEMAFO’s 2015 First Quarter MD&A and 2015 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 5, 2015 at 8:00 a.m., Eastern Daylight Time.

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Consolidated Results and Mining Operations from Continuing Operations

Operating Highlights from Continuing Operations

¹        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 the Corporation’s MD&A, note 16.

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