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SEMAFO: Record Quarterly Production and Cash Flow from Operations

Development Pipeline Significantly Strengthened with Savary Acquisition

MONTREAL , May 7, 2019 /CNW Telbec/ - SEMAFO Inc. (SMF.ST) (SMF.ST) is pleased to announce record production of 102,400 ounces of gold and cash flow from operating activities1 of $79 million or $0.24 per share2 for the quarter ended March 31, 2019 . All amounts are in US dollars unless otherwise stated.

Highlight of Q1 2019

  • Consolidated gold production of 102,400 ounces
  • Cash flows from operating activities1 of $79 million or $0.24 per share2
  • Net income attributable to shareholders of $17.7 million or $0.05 per share
  • Acquisition of Savary Gold announced in Q1 and closed April 30, 2019
  • Three rigs drilling at Bantou with results expected early June
  • Balance sheet remains conservative with net cash and 100% exposure to upside in gold price

Benoit Desormeaux , President and Chief Executive Officer of SEMAFO, states: "My congratulations to the entire team for a record first quarter of 2019.  Both assets performed well and the strong quarterly contribution from Boungou helped to achieve record production and financial performance on a gross and per share basis. Our team has managed this accomplishment while minimizing dilution, maintaining a net cash position and retaining 100% upside to the price of gold. With the Savary acquisition closed, we have greatly strengthened our development asset base and growth profile. Combining Savary with our Bantou property produced a 1,250 km² district scale land package on the prolific Houndé greenstone belt in a country where we have a 20-year history. With our robust cash flow profile, clean balance sheet, and strong development pipeline we have solidified our position as a leading intermediate gold producer and are well positioned to deliver long term shareholder value."

 

_________________________

1

Cash flows from operating activities exclude changes in non-cash working capital items and is a non-IFRS performance measure

2

Operating cash flows per share is a non-IFRS financial performance measure with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of the MD&A, note 19.

 

Consolidated Results and Mining Operations











Three-month periods



ended March 31,



2019


2018


Variation

Gold ounces produced


102,400


45,500


125%

Gold ounces sold


106,100


46,900


126%






(in thousands of dollars, except amounts per ounce, per tonne and per share)



Revenues – Gold sales


138,541


62,698


121%

Operating income


40,359


(8,065)







Net income attributable to shareholders of the Corporation


17,666


(4,710)


Basic earnings per share


0.05


(0.01)


Diluted earnings per share


0.05


(0.01)












Cash flow from operating activities2


78,980


18,391


329%

Per share1


0.24


0.06


300%






Average realized selling price (per ounce)


1,306


1,336


(2%)

Total cash cost (per ounce sold)¹


484


848


(43%)

All-in sustaining cost (per ounce sold)¹


745


1,083


(31%)

 

2019 Guidance Reiterated

Our 2019 guidance provided on February 8 remains unchanged. Operations are tracking according to plan and in line with annual and longer-term targets. The one area that may require additional explanation is the all-in sustaining cost (AISC). The quarterly AISC for Boungou and Mana are slightly above the top end of the 2019 AISC guidance range. This was expected and over the course of the remainder of the year, the AISC for both operations will track back into the 2019 guidance range, albeit for different reasons.  At Boungou, the mine plan calls for the strip ratio to decrease over the year with a corresponding reduction in AISC.  At Mana, the mine plan calls for ore in the first half of the year to be sourced exclusively from Wona. Higher grade ore from the Siou North pit will only be available in the second half of 2019. As the average head grade increases at Mana, the AISC will correspondingly decrease.

Siou Underground Continues on Time, on Budget

Underground development at Siou continued to advance well with 2,750 meters completed at quarter-end. The pace of development continues in line with our goal of reaching full production in the first quarter of 2020. At quarter-end, the development continued on budget, with $19.8 million of the total $51.7 million budget incurred. Further, we started grade control drilling with results consistent with the block model. In April 2019 , Siou underground was approved by the National Mines Commission and the permit is expected shortly.

 

_____________________

1

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 MD&A, note 19.

2

Cash flows from operating activities exclude changes in non-cash working capital items and are a non-IFRS performance measure

 

Exploration and Development
Bantou

The focus of the exploration in the first quarter was at Bantou where a total of 58 RC (9,188 meters) and 5 core holes (821 meters) were drilled. The Bantou Zone hosts a maiden inferred resource estimate of 361,000 ounces at 5.35 g/t Au. Initially, one drill was active on the Bantou property testing a variety of prospective target areas. During the quarter, we encountered an interesting area approximately two kilometers north of the Bantou Zone. The area was sufficiently interesting to warrant further drilling, and a second drill was mobilized to continue testing the other target areas. Consequently, much of the drilling in the quarter was carried out on this new area. Assays are being compiled and we expect results, along with a geological interpretation, to be released in early June.

A third drill was added at Bantou in the quarter. The focus of the third drill is to test the extensions of the Bantou Zone along strike and at depth. With three active drills at Bantou, we will be increasing the exploration budget and will provide further details in early June.

Boungou

A total of 7,517 meters of reverse-circulation (RC) drilling was completed in the first quarter on the Dangou NE and Dangou Centre targets. The 7,517 meters represent approximately 30% of the total 25,000-meter program, which is designed to test and establish continuity. Although there have been some encouraging intercepts (1 meter at 22.9 g/t Au, 9 meters at 1.36 g/t Au, 4 meters at 3.67 g/t Au, 1 meter at 6.66 g/t Au, and 3 meters at 5.69 g/t Au), an interpretation can only be provided when the full program has been completed towards the end of the year.

Mana

An RC drill program commenced late March on the satellite targets located just north of Siou. Although some results have been returned so far (3 meters at 3.31g/t Au and 5 meters at 2.16 g/t Au), only 1,064 meters have been completed out of a total of 10,400 meters. The overall 2019 Mana exploration program includes 18,600 meters of RC drilling, including 7,600 meters at Pompoi.

Nabanga

A preliminary economic assessment (PEA) study has been initiated following the release of the updated inferred resource estimation at Nabanga (840,000 oz at 7.7 g/t Au). The study remains in progress and, as scheduled, will be released in the third quarter.

Summary

All areas of the business performed well in the first quarter. We look forward to carrying forward the momentum into the second quarter and beyond.

First Quarter Conference Call

A conference call will be held tomorrow, May 8, 2019 at 10:00 EDT , to discuss the first quarter results. Interested parties are invited to call the following telephone numbers to participate in the call. A live audio webcast of the conference call will be accessible for a period of 90 days through SEMAFO's website at www.semafo.com.

Tel. local & overseas: +1 (514) 225 7341
Tel. North America : 1 (888) 390 0605
Webcast: www.semafo.com
Replay overseas: +1 (416) 764 8677
Replay N. America: 1 (888) 390 0541
Replay pass code: 629024#
Expiration: May 15, 2019

Annual General Meeting of Shareholders

SEMAFO's Annual General Meeting of Shareholders will be held on Thursday, May 9, 2019 at 10:00 EDT at Club Saint-James, Salon Midway, 1145 avenue Union, in Montreal . 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 intermediate gold producer with over twenty years' experience building and operating mines in West Africa . The Corporation operates two mines, the Boungou and Mana Mines in Burkina Faso . SEMAFO is committed to building value through responsible mining of its quality assets and leveraging its development pipeline.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. All statements other than statements of present or historical facts are forward-looking. 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 "expected", "upside", " growth", "development pipeline", "deliver", "long term", "guidance", "targets", "will", "continues", "on-time, on-budget", "in line with", "goal", "shortly", "prospective", "focus", "increasing", "initiated", "in progress", "scheduled", "committed", "building", "leveraging" 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 (i) obtain exploration results from Bantou in early June, (ii) deliver long term shareholder value, (iii) meet our 2019 guidance, (iv) deliver the Siou Underground on-time and on-budget, (v) achieve full production from Siou Underground in the first quarter of 2020, (vi) obtain the permit for the Siou Underground shortly, (vii) complete the Nabanga PEA by the third quarter,  (viii) 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 2018 Annual MD&A, as updated in SEMAFO's 2019 First 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.

 

Consolidated Statements of Financial Position

(Expressed in thousands of US dollars - unaudited) 









As at



As at



March 31,



December 31,



2019



2018



$



$






Assets










Current assets





Cash and cash equivalents


98,985



96,519

Trade and other receivables


38,163



29,434

Income tax receivable


6,681



6,390

Inventories


84,602



83,211

Other current assets


5,245



5,378



233,676



220,932

Non-current assets





Advance receivable


1,916



2,117

Restricted cash


25,163



25,340

Property, plant and equipment


796,554



782,060

Intangible asset


1,167



1,204

Other non-current financial assets


5,137



2,622



829,937



813,343

Total assets


1,063,613



1,034,275






Liabilities










Current liabilities





Trade payables and accrued liabilities


61,172



63,905

Current portion of long-term debt


60,104



60,181

Current portion of finance leases


11,793



7,820

Current portion of share unit plan liabilities


4,172



3,311

Provisions


2,928



3,051



140,169



138,268

Non-current liabilities





Long-term debt


42,968



57,388

Finance Leases


23,653



20,144

Share unit plan liabilities


2,092



2,263

Provisions


24,022



23,561

Deferred income tax liabilities


53,705



39,548



146,440



142,904

Total liabilities


286,609



281,172






Equity










Shareholders of the Corporation





Share capital


624,308



623,604

Contributed surplus


6,497



6,771

Accumulated other comprehensive (loss) income


(16,560)



(18,909)

Retained earnings


126,882



109,216



741,127



720,682

Non-controlling interests


35,877



32,421






Total equity


777,004



753,103

Total liabilities and equity


1,063,613



1,034,275

 

Consolidated Statements of Income (loss)

For the three-month period ended March 31, 2019 and 2018

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






Three-month period



ended March 31,



2019


2018



$


$





Revenue – Gold sales


138,541


62,698





Costs of operations




Mining operation expenses


51,405


39,778

Depreciation of property, plant and equipment


39,628


25,428

General and administrative


3,960


3,917

Corporate social responsibility expenses


357


222

Share-based compensation


2,832


1,418





Operating income (loss)


40,359


(8,065)





Other expenses (income)




Finance income


(548)


(641)

Finance costs


3,556


313

Foreign exchange loss (gain)


496


(428)





Income (loss) before income taxes


36,855


(7,309)





Income tax expense (recovery)




Current


734


527

Deferred


14,999


(2,936)



15,733


(2,409)





Net income (loss) for the period


21,122


(4,900)





Attributable to:




Shareholders of the Corporation


17,666


(4,710)

Non-controlling interests


3,456


(190)



21,122


(4,900)





Earnings (loss) per share




Basic


0.05


(0.01)

Diluted


0.05


(0.01)

 


Consolidated Statements of Cash Flows

For the three-month period ended March 31, 2019 and 2018

(Expressed in thousands of US dollars - unaudited)






Three-month period



ended March 31,



2019


2018



$


$





Cash flows from (used in):








Operating activities




Net income (loss) for the period


21,122


(4,900)

Adjustments for:




Depreciation of property, plant and equipment


39,628


25,428

Share-based compensation


2,832


1,418

Unrealized foreign exchange loss (gain)


116


(552)

Deferred income tax expense (recovery)


14,999


(2,936)

Other


283


(67)



78,980


18,391

Changes in non-cash working capital items


(15,736)


(15,636)

Net cash provided by operating activities


63,244


2,755





Financing activities




Drawdown of long-term debt


(15,000)


Repayment of equipment financing


(77)


(77)

Payments of finance lease


(2,125)


(1,145)

Proceeds on issuance of share capital, net of expenses


430


741





Net cash used in financing activities


(16,772)


(481)





Investing activities




Acquisition of property, plant and equipment


(43,179)


(61,156)

Net acquisitions of equity investments



(1,606)





Net cash used in investing activities


(43,179)


(62,762)





Effect of exchange rate changes on cash and cash equivalents


(827)


958

Change in cash and cash equivalents during the period


2,466


(59,530)

Cash and cash equivalents – Beginning of period


96,519


198,950

Cash and cash equivalents – End of period


98,985


139,420

Interest paid


2,775


2,330

Interest received


548


710

Income tax paid


851


1,356

 

Boungou, Burkina Faso

Mining Operations






Three-month period



ended March 31,



2019

Operating Data






Mining



Waste mined (tonnes)


2,106,000

Ore mined (tonnes)


280,000

Operational stripping ratio


7.5




Capitalized Stripping Activity



Waste material – Boungou (tonnes)


5,044,600




Total strip ratio


25.5




Processing



Tonnes processed (tonnes)


308,700

Head grade (g/t)


6.50

Recovery (%)


96

Gold ounces produced


61,900

Gold ounces sold


64,700




Financial Data (in thousands of dollars)



Revenues – Gold sales


84,492

Mining operation expenses


17,070

Government royalties and development taxes


4,724

Depreciation of property, plant and equipment


24,948

General and administrative


217

Corporate social responsibility expenses


82

Segment operating income


37,451




Statistics (in dollars)



Average realized selling price (per ounce)


1,306

Cash operating cost (per tonne processed)1


53

Cash operating cost, including stripping (per tonne processed)1


88

Total cash cost (per ounce sold)1


337

All-in sustaining cost (per ounce sold)1


534

Depreciation (per ounce sold)2


386

 

____________________________

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 MD&A, note 19.

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.

 

Mana, Burkina Faso

Mining Operations




Three-month period


ended March 31,


2019


2018


Variation

Operating Data










Mining




Waste mined (tonnes)

2,766,300


5,205,800


(47%)

Ore mined (tonnes)

408,100


592,300


(31%)

Operational stripping ratio

6.8


8.8


(23%)

Capitalized Stripping Activity




Waste material – Siou (tonnes)

2,405,900



Waste material – Wona (tonnes)

1,825,000


3,204,200


(43%)


4,230,900


3,204,200


32%

Total strip ratio

17.1


14.2


20%





Processing




Ore processed (tonnes)

427,900


612,000


(30%)

Low grade material (tonnes)

212,300


39,700


435%

Tonnes processed (tonnes)

640,200


651,700


(2%)

Head grade (g/t)

2.27


2.24


1%

Recovery (%)

87


97


(10%)

Gold ounces produced

40,500


45,500


(11%)

Gold ounces sold

41,400


46,900


(12%)





Financial Data (in thousands of dollars)




Revenues – Gold sales

54,049


62,698


(14%)

Mining operations expenses

27,182


36,634


(26%)

Government royalties

2,429


3,144


(23%)

Depreciation of property, plant and equipment

14,531


25,332


(43%)

General and administrative

543


635


(14%)

Corporate social responsibility expenses

275


185


49%

Segment operating income

9,089


(3,232)


Statistics (in dollars)




Average realized selling price (per ounce)

1,306


1,336


(2%)

Cash operating cost (per tonne processed)¹

41


54


(24%)

Cash operating cost, including stripping (per tonne processed)1

61


67


(9%)

Total cash cost (per ounce sold)¹

715


848


(16%)

All-in sustaining cost (per ounce sold)¹

1,075


1,083


(1%)

Depreciation (per ounce sold)²

351


540


(35%)

 

________________________________

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 MD&A, note 19.

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.

 

SOURCE SEMAFO


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