MONTREAL, Aug. 07, 2018 (GLOBE NEWSWIRE) -- SEMAFO Inc. (TSX:SMF) (OMX:SMF) today reported its financial and operational results for the three-month period ended June 30, 2018.  All amounts are in US dollars unless otherwise stated.

Second Quarter 2018 - in Review

• Gold production of 45,700 ounces compared to 47,600 ounces for the same period in 2017

• Gold sales of $58.5 million compared to $59.3 million for the same period in 2017

• All-in sustaining cost1 of $1,103 per ounce sold compared to $1,074 for the same period in 2017

• Cash flows from operating activities2 of $15.8 million or $0.05 per share1 compared to $23.6 million or $0.07 per share1 for the same period in 2017

• Adjusted net loss attributable to equity shareholders1 of $6.3 million or loss of $0.02 per share1 compared to adjusted net loss1 of $2.9 million or loss of $0.01 per share1 for the same period in 2017

• Underground mining services contract signed with AUMS for Siou Underground

• Osaanpalo Zone at Boungou Proximal returns up to 17.17 g/t Au over 3.0 meters

• Baali Zone at Boungou Regional returns up to 7.58 g/t Au over 9.4 meters
 

Boungou Mine

As at June 30, 2018:

• First gold poured on June 28, 2018

• Construction and commissioning of the mine 100% complete

• Construction capital expenditure on budget

• Pre-stripping of the projected 18 million tonnes complete

• Construction completed with 5.6 million man-hours (18 months) without lost-time injury

1All-in sustaining cost, adjusted net loss attributable to equity shareholders, adjusted basic loss 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 19.
2Cash 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,
         
  20182017Variation 20182017Variation
Operating Data        
Mining        
Waste mined (tonnes) 5,121,300 3,947,600 30% 10,327,100 8,586,000 20%
Ore mined (tonnes) 478,200 503,200 (5%) 1,070,500 982,600 9%
Operational stripping ratio 10.7 7.8 37% 9.6 8.7 10%
Capitalized Stripping Activity        
Waste material – Siou (tonnes)  4,547,200 (100%)  8,353,100 (100%)
Waste material – Wona (tonnes) 3,513,700 2,583,000 36% 6,717,900 3,714,300 81%
  3,513,700 7,130,200 (51%) 6,717,900 12,067,400 (44%)
Total strip ratio 18.1 22.0 (18%) 15.9 21.0 (24%)
         
Processing        
Ore processed (tonnes) 604,200 481,400 26% 1,216,200 1,117,700 9%
Low grade material (tonnes) 32,600 194,100 (83%) 72,300 289,600 (75%)
Tonnes processed (tonnes) 636,800 675,500 (6%) 1,288,500 1,407,300 (8%)
Head grade (g/t) 2.35 2.31 2% 2.30 2.43 (5%)
Recovery (%) 95 95   96 94 2%
Gold ounces produced 45,700 47,600 (4%) 91,200 103,000 (11%)
Gold ounces sold 45,100 46,900 (4%) 92,000 101,600 (9%)
         
Statistics (in dollars)        
Average realized selling price (per ounce) 1,298 1,265 3% 1,317 1,242 6%
Cash operating cost
(per tonne processed)¹
 56 43 30% 55 48 15%
Cash operating cost, including stripping (per tonne processed)1 70 64 9% 69 64 8%
Total cash cost (per ounce sold)¹ 858 703 22% 853 701 22%
All-in sustaining cost (per ounce sold) 1,103 1,074 3% 1,093 976 12%
Depreciation (per ounce sold)² 499 527 (5%) 520 491 6%


1Cash 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 19.
2Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold.


2018 Second Quarter Results

As expected, during the second quarter of 2018, the tonnes processed decreased by 6% due to the hardness of the ore. Consequently, the gold ounces produced and sold decreased compared to the same period in 2017.  The higher mining operation expenses are mainly due to the higher operational stripping ratio and the hardness of the ore. The increase in the operational stripping ratio and the decrease in capitalized stripping activity are due to more operational activities being carried out than stripping activities, in accordance with the mine plan.

As expected, in the second quarter of 2018, the all-in sustaining cost was $1,103 per ounce sold compared to $1,074 per ounce sold in the same period in 2017. This is attributable to a higher cash operating cost per tonne mainly caused by the higher operational stripping ratio and partially offset by lower sustaining capital expenditures.

The Corporation reiterates its 2018 consolidated production outlook of between 235,000 and 265,000 ounces of gold at an all-in sustaining cost of between $900 and $940 per ounce.

Boungou Mine

Construction and commissioning of the mine were both completed in the second quarter of 2018. The first gold was poured on June 28, slightly ahead of schedule, and we expect to achieve commercial production in August. In summary, the following achievements have been made:

As at June 30, 2018:

• Construction and commissioning of the mine 100% complete

• Development on budget with $229 million of the $231 million capital expenditure incurred

• Recruitment of mine operator employees and their training complete

• Pre-stripping of 18 million tonnes complete

  • 205,500 tonnes of ore stockpiled

• Construction completed with 5.6 million man-hours (18 months) without lost-time injury

Siou Underground Development

During the second quarter of 2018, we continued to advance development of Siou underground with the objective of achieving full production in the first quarter of 2020. Specifically, the following was achieved:

• Signing of underground mining services contract with AUMS

• Completion of detailed engineering required for development start-up

• Recruitment of key engineering personnel complete

• Construction of infrastructure pads

The Environmental and Social Impact Assessment (ESIA) study is expected to be filed in August.

Exploration

Boungou Mine

The Tapoa Permit Group consists of four contiguous permits - Boungou, Dangou, Pambourou and Bossoari- covering approximately 70 kilometers in strike length along the Diapaga belt in Burkina Faso. The 2018 exploration program at Tapoa is the first extensive drill program over the property following up on two years of detailed field work including mapping, trenching, geophysical surveys, soil and auger drilling. Initial exploration targeted two areas: Tawori and Dangou.

Boungou Proximal

A total of 22 RC holes (2,948 meters) was completed at Tawori, testing a shallow west-dipping structure dubbed the Osaanpalo Zone that outcrops four kilometers north of the Boungou Mine. The nature of mineralization of the Osaanpalo Zone including biotite alteration and shearing along with silicification, sericitization and pyrrhotite-arsenopyrite mineralization, shows similarities to the Boungou Shear Zone. To date, significant gold values have been obtained within the structure, showing a north-trending orientation of mineralization.

Table 1: Osaanpalo Zone Highlights1,2

Hole No.From (m)To (m)Length (m)Au (g/t)
TPA136768.0079.0011.001.01
TPA137034.0044.0010.002.17
TPA13715.0012.007.001.20
TPA137722.0024.002.003.12
TPA13780.004.004.001.15
TPA140246.0049.003.0017.17
TPA140476.0082.006.002.10
TPA140756.0057.001.0019.20

  1. All lengths are along the hole axis, and the true thickness has yet to be established.
  2. All assay results are capped at 45 g/t Au.

The Osaanpalo Zone provides an indication of the potential at Tapoa, particularly proximal to the Boungou Mine and infrastructure. The discovery shows that multiple near-surface gold-bearing structures like those at Boungou occur on the property that could rapidly add to the already extensive gold reserves at Tapoa. Further follow-up drilling is currently ongoing at Osaanpalo to establish the extent of the structure.

Boungou Regional

The Dangou permit is located approximately 30 kilometers east-northeast of the Boungou Mine. Previous work at Dangou has shown that the area is underlain by intermediate to mafic intrusive rocks and mafic volcanic flows. Soil and auger sampling in the area uncovered a series of west-northwest trending gold anomalies coincident with induced polarization chargeability highs. By the end of the second quarter of 2018, a total of 88 RC holes and two core holes (10,561 meters) had been completed across the most promising anomalies.

Assay results from this drilling show that the area is highly anomalous in gold throughout. In addition, significant gold mineralization was obtained from altered and locally sheared intervals of the intrusive rocks.

Table 2: Dangou Highlights1,2

Hole No.From (m)To (m)Length (m)Au (g/t)Zone
TPA141990.0096.006.002.62Baali
TPA142299.00105.006.001.92 
TPA144335.0040.005.006.15 
TPA144846.0053.007.002.44 
TPA144957.0062.005.001.79 
TPA145617.0024.007.001.59 
TPADD001146.00155.409.407.58Baali

1. All lengths are along the hole axis, and the true thickness has yet to be established.
2. All assay results are below the capping grade of 45 g/t Au.

Among these results, the Baali Zone discovery appears promising with wide biotite alteration and gold mineralization. Although the geometry of the zone remains to be established, core follow up drilling suggests a subvertical zone of altered gabbro and basalt. The Dangou area has also returned significant values from mineralized quartz veins in a sheared gabbro (TPA1456) in addition to disseminated and stringer sulfides in gabbro (TPA1443). These, and other significant cuts from the drilling, will be followed up on in the coming months.

These results clearly demonstrate the potential for different styles of gold mineralization at Tapoa. Upcoming efforts will continue to focus on identifying and understanding new gold-bearing zones that could potentially add to the reserves base of the property.

Mana Project

Mana - Siou
In the quarter, a total of 5 core holes (3,114 meters) was drilled at the Siou North target area. To date, barring a few isolated gold values, no significant mineralization was obtained along the trend. Three holes remain pending, after which the potential of this target will be evaluated for further work.

Mana Regional

A series of satellite targets was tested within trucking distance of the Mana mill. In all, 68 RC holes totaling 9,243 meters and 3 core holes (709 meters) were completed. Significant assay results were obtained at a zone dubbed Doumakélé, which has hematized and pyritized intrusive and volcanic enclaves and is located 25 kilometers southeast of the mill. Highlights include 2.02 g/t Au over 5 meters (MRC18-5107), 8.69 g/t Au across 3.7 meters and 4.19 g/t Au over 4.5 meters (WDC-976), and 6.38 g/t Au over 10.7 meters (WDC-980). Most of the holes were drilled at different directions in order to establish the geometry of the mineralization, so the true thickness remains to be established. The objective is to identify near-surface satellite zones that can be readily transported to the existing mill. The economic potential of Doumakélé will be assessed once additional drilling to better define the zone is complete.

Yactibo (Nabanga Project)

The Yactibo Property hosts the Nabanga deposit, which has inferred mineral resources of 590,000 ounces at a grade of 10.0 g/t Au (1.84 million tonnes at a 5 g/t Au cut-off grade). The 2018 program is designed to test a new interpretation suggesting a shallower northern plunge of the high-grade shoots that could extend beyond 200 meters and along strike.

To date, a total of 25 holes (7,148 meters) core holes has been drilled along the Nabanga structure. Assay results have been received for 20 of the 25 holes drilled to date, and an additional seven holes will be completed when the rainy season ceases early in the fourth quarter.

Results appear to confirm the shallow plunge of the mineralization although the grades seem to gradually decrease at depth. Further drilling is scheduled in the fourth quarter this year following completion of the rainy season. On completion of the program, we will update our resource estimation.

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 tomorrow, August 8, 2018, at 8:00 EDT to discuss this press release. Interested parties are invited to call the following telephone numbers to participate in the call:

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: 7370499
Replay expiration: September 08, 2018

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 deposit of Siou, and is targeting commercial production at the Boungou Mine in the third quarter of 2018.  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 include words or expressions such as “outlook”, “continues to advance”, “development”, " with the objective of", “start-up”, “expected”, “indication”, “potential”, “could”, “rapidly”, “add”, “ongoing”, "promising", "suggests", “will”, "in order to", "designed to", “additional”, "appear", "seem", "scheduled", “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 attain our 2018 consolidated production outlook of between 235,000 and 265,000 ounces of gold at an all-in sustaining cost of between $900 and $940 per ounce, the ability to achieve commercial production at the Boungou Mine in August, the ability to achieve full production at Siou Underground in the first quarter of 2020, the ability to file Siou’s ESIA study in August 2018, the ability of the Osaanpalo Zone to rapidly add to the gold reserves at Tapoa, the ability of the follow-up drilling at Osaanpalo to establish the extent of the structure, the ability of upcoming exploration efforts at Tapoa to identify and understand new gold-bearing zones that could add to the reserves base of the property, the ability of the Mana Regional exploration program to identify near-surface satellite zones that can be readily transported to the existing mill, the ability of the 2018 exploration program at Yactibo to confirm our new interpretation at the Nabanga deposit, the ability to execute on our strategic focus, fluctuation in the price of currencies, gold prices and 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 2017 Annual MD&A, as updated in SEMAFO’s 2018 First Quarter MD&A, 2018 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.

For more information, contact

John Jentz
Vice-President, Corporate Development & Investor Relations
Email: John.Jentz@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

 
Consolidated Results and Mining Operations
Financial and Operating Highlights
 
  Three-month period
 Six-month period
  ended June 30,
 ended June 30,
  2018 2017 Variation 2018 2017 Variation
         
Gold ounces produced 45,700 47,600 (4%) 91,200 103,000 (11%)
Gold ounces sold 45,100 46,900 (4%) 92,000 101,600 (9%)
          
(in thousands of dollars, except amounts per share)         
Revenues – Gold sales 58,517 59,315 (1%) 121,215 126,201 (4%)
         
Mining operation expenses 36,139 30,573 18% 72,773 66,138 10%
Government royalties 2,540 2,389 6% 5,684 5,081 12%
Depreciation of property, plant and equipment 22,583 24,795 (9%) 48,011 50,063 (4%)
Share-based compensation 613 (1,095)  2,031 124 1,538%
Other 4,200 3,408 23% 8,339 7,335 14%
         
Operating loss (7,558)(755)(901%) (15,623)(2,540)(515%)
         
Finance income (612)(800)(24%) (1,253)(1,536)(18%)
Finance costs 287 321 (11%) 600 645 (7%)
Foreign exchange (gain) loss 1,292 (6,103)  864 (6,932) 
Income tax expense (recovery) 2,588 (3,521)  179 (1,681) 
           
Net (loss) income for the period (11,113)9,348   (16,013)6,964  
           
Net (loss) income attributable to equity shareholders (10,431)8,854   (15,141)6,163  
Basic earnings (loss) per share (0.03)0.03   (0.05)0.02  
Diluted earnings (loss) per share (0.03)0.03   (0.05)0.02  
         
Adjusted amounts        
Adjusted operating loss¹ (7,696)(2,754)(179%) (15,664)(4,643)(237%)
Adjusted net loss attributable to equity shareholders¹ (6,317)(2,893)(118%) (12,865)(7,267)(77%)
Per share¹ (0.02)(0.01)(100%) (0.04)(0.02)(100%)
         
Cash flows        
Cash flows from operating activities² 15,839 23,614(33%) 34,230 46,761 (27%)
Per share¹ 0.05 0.07(29%) 0.11 0.14 (21%)


1Adjusted operating loss, adjusted net loss attributable to equity shareholders, adjusted basic loss 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 19.
2Cash flows from operating activities exclude changes in non-cash working capital items.


Interim Consolidated Statements of Financial Position
(Expressed in thousands of US dollars - unaudited)


  As at As at 
  June 30, December 31, 
  2018 2017 
  $ $ 
     
Assets    
     
Current assets    
Cash and cash equivalents 108,871 198,950 
Trade and other receivables 25,427 22,649 
Income tax receivable 6,332 3,186 
Inventories 59,553 66,409 
Other current assets 4,777 4,094 
  204,960 295,288 
Non-current assets    
Advance receivable 2,485 2,867 
Restricted cash 23,015 23,237 
Property, plant and equipment 783,127 703,341 
Intangible asset 1,289 1,374 
Other non-current financial assets 2,733 2,256 
  812,649 733,075 
Total assets 1,017,609 1,028,363 
     
Liabilities    
     
Current liabilities    
Trade payables and accrued liabilities 70,042 72,720 
Current portion of long-term debt 30,310 310 
Current portion of finance lease 5,396 4,703 
Share unit plan liabilities 4,205 6,404 
Provisions 3,059 3,069 
  113,012 87,206 
Non-current liabilities    
Long-term debt 86,253 115,247 
Finance Lease 19,038 19,008 
Share unit plan liabilities 2,098 3,138 
Provisions 22,604 12,258 
Deferred income tax liabilities 30,225 30,944 
  160,218 180,595 
Total liabilities 273,230 267,801 
     
Equity    
     
Equity Shareholders    
Share capital 623,604 622,294 
Contributed surplus 6,771 7,220 
Accumulated other comprehensive (loss) income (18,473)2,256 
Retained earnings 102,267 97,710 
  714,169 729,480 
Non-controlling interests 30,210 31,082 
     
Total equity 744,379 760,562 
Total liabilities and equity 1,017,609 1,028,363 


Interim Consolidated Statements of (Loss) Income
(Expressed in thousands of US dollars, except per share amounts - unaudited)


  Three-month period  Six-month period 
  ended June 30,  ended June 30, 
  2018 2017  2018 2017 
  $ $  $ $ 
           
Revenue – Gold sales 58,517 59,315  121,215 126,201 
       
Costs of operations      
Mining operation expenses 38,679 32,962  78,457 71,219 
Depreciation of property, plant and equipment 22,583 24,795  48,011 50,063 
General and administrative 3,859 3,329  7,776 6,871 
Corporate social responsibility expenses 341 79  563 464 
Share-based compensation 613 (1,095) 2,031 124 
       
Operating loss (7,558)(755) (15,623)(2,540)
       
Other expenses (income)      
Finance income (612)(800) (1,253)(1,536)
Finance costs 287 321  600 645 
Foreign exchange loss (gain) 1,292 (6,103) 864 (6,932)
       
Income (loss) before income taxes (8,525)5,827  (15,834)5,283 
       
Income tax expense (recovery)      
Current (238)514  289 2,235 
Deferred 2,826 (4,035) (110)(3,916)
  2,588 (3,521) 179 (1,681)
       
Net (loss) income for the period (11,113)9,348  (16,013)6,964 
       
Attributable to:      
Equity shareholders (10,431)8,854  (15,141)6,163 
Non-controlling interests (682)494  (872)801 
  (11,113)9,348  (16,013)6,964 
       
Earnings (loss) per share      
Basic (0.03)0.03  (0.05)0.02 
Diluted (0.03)0.03  (0.05)0.02 


Interim Consolidated Statements of Comprehensive (Loss) Income
(Expressed in thousands of US dollars - unaudited)


  Three-month period  Six-month period 
  ended June 30,  ended June 30, 
  2018 2017  2018 2017 
  $ $  $ $ 
       
Net (loss) income for the period (11,113)9,348  (16,013)6,964 
       
Other comprehensive (loss) income      
Item that will be reclassified to profit or loss      
Changes in fair value of available-for-sale assets (net tax of nil) n/a (479) n/a 339 
Item that will not be reclassified to profit or loss      
Changes in fair value of equity investments at FVOCI (net of tax of nil) (478)n/a  (1,031)n/a 
Total comprehensive (loss) income for the period, net of tax (11,591)8,869  (17,044)7,303 
Attributable to:      
Equity shareholders (10,909)8,375  (16,172)6,502 
Non-controlling interests (682)494  (872)801 
  (11,591)8,869  (17,044)7,303 


Interim Consolidated Statements of Cash Flows
(Expressed in thousands of US dollars - unaudited)


  Three-month period
  Six-month period
 
  ended June 30,
  ended June 30,
 
  2018 2017  2018 2017 
  $ $  $ $ 
       
Cash flows from (used in):      
       
Operating activities      
Net (loss) income for the period (11,113)9,348  (16,013)6,964 
Adjustments for:      
Depreciation of property, plant and equipment 22,583 24,795  48,011 50,063 
Share-based compensation 613 (1,095) 2,031 124 
Unrealized foreign exchange loss (gain) 991 (5,331) 439 (6,339)
Deferred income tax expense (recovery) 2,826 (4,035) (110)(3,916)
Other (61)(68) (128)(135)
  15,839 23,614  34,230 46,761 
Changes in non-cash working capital items 5,039 (2,842) (10,597)(8,594)
Net cash provided by operating activities 20,878 20,772  23,633 38,167 
   .   
Financing activities      
Drawdown of long-term debt  60,000   60,000 
Repayment of equipment financing (78)(79) (155)(155)
Payments of finance lease (1,165)  (2,310) 
Proceeds on issuance of share capital, net of expenses 120 12  861 61 
       
Net cash (used in) provided by financing activities (1,123)59,933  (1,604)59,906 
       
Investing activities      
Net proceed on disposition (acquisition) of equity investment 98   (1,508) 
Acquisition of property, plant and equipment (48,700)(43,864) (109,856)(81,096)
Increase in restricted cash  (15,077)  (15,077)
       
Net cash used in investing activities (48,602)(58,941) (111,364)(96,173)
       
Effect of exchange rate changes on cash and cash equivalent (1,702)6,372  (744)7,625 
Change in cash and cash equivalents during the period (30,549)28,136  (90,079)9,525 
Cash and cash equivalents – beginning of period 139,420 255,161  198,950 273,772 
Cash and cash equivalents – end of period 108,871 283,297  108,871 283,297 
Interest paid 2,406 892  4,736 1,780 
Interest received 739 693  1,449 1,132 
Income tax paid 2,010 3,506  3,366 5,667