SEMAFO Inc. (TSX:SMF)(OMX:SMF) today provided its 2012 outlook
including production guidance of between 235,000 and 260,000 ounces
of gold. SEMAFO's flagship Mana property in Burkina Faso is
expected to account for approximately 75% of the Corporation's gold
production, having just delivered its best quarterly production
result ever. Cash operating cost guidance has been established at
between $615 and $665 per ounce at Mana, and between $700 and $750
per ounce globally.
2012 Guidance
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Production Cash Operating Cost(i) (per
(ounces) ounce)
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Mana 178,000 - 195,000 $615 - $665
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Samira Hill 46,000 - 50,000 $930 - $980
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Kiniero(ii) 11,000 - 15,000 $1,050 - $1,150
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TOTAL 235,000 - 260,000 $ 700 - $750
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(i)Cash operating cost excludes government royalties and selling expenses.
(ii)Kiniero's guidance is based on an assumption of nine months of
operations in 2012.
SEMAFO remains extremely profitable and expects to continue to
benefit from considerable cash margins in 2012. Our cash reserves
and significant cash generation capabilities allow us to fund our
exploration, expansion and other value-creation activities
internally. At Mana, these activities are directed at growing
reserves and resources with a view to increasing SEMAFO's overall
gold production to an annualized capacity of up to 500,000 ounces.
Accordingly, our 2012 initial exploration budget has been
established at $45 million of which 80%, or $36 million, has been
allocated to Mana.
Reserves and Resources
In 2011, SEMAFO invested $38.5 million in exploration at Mana.
More than 300,000 meters of reverse-circulation, diamond and air
core drilling, and approximately 135,000 meters of auger drilling
were carried out during the year over priority targets including
the Fofina-Fobiri, Yaho, Kona, Wona, Massala and Saoura areas.
Exploration results have consistently expanded Mana's reserves
and resources and continue to emphasize the overall geological
potential of the property. Targets discovered within the past 18
months have been extended with drill results suggesting various
styles of gold mineralization throughout the area. The strike
length of the newly-discovered Yaho area has more than doubled to
over 1.5 kilometers and continues to display persistent lateral
continuity, while remaining open in all directions. The Mana
underground feasibility study, completed in March 2011, included a
37% increase in mineral reserves compared to the June 2010
pre-feasibility study results which added an additional 314,000
ounces. Results continue to demonstrate opportunities to further
augment underground reserves from those reported in the underground
feasibility study, which excludes all exploration results received
after December 31, 2010.
"Our exploration programs continue to expand Mana's exceptional
geological potential," said Michel Crevier, SEMAFO's
Vice-President, Exploration and Mine Geology. "We remain confident
that Mana has the potential to support our growth objective."
Approximately one-third of drill samples collected as part of
Mana's 2011 exploration program remain pending at the independent
assays laboratories in Ouagadougou, Burkina Faso. Outstanding assay
results include important infill, step-out and exploratory drilling
samples. Consequently, the updating of reserves and resources
calculations must be deferred until June 2012 in order to include
all results up to December 31, 2011.
In order to expedite future exploration assay processing, in
June 2011 SEMAFO announced a decision to invest $500,000 to build
an exploration laboratory to be located on the Mana property. The
laboratory, which will be operational the first quarter of 2012,
will have a significant impact on improving the turnaround time for
drilling assay results.
Mana Updates
SEMAFO continues to focus on evolving and expanding its core
asset, the Mana Mine. Three significant projects were initiated in
2011 as part of the Corporation's strategy to build long-term
sustainable value.
Plant Expansion - Phase IV
Announced at the beginning of 2011, Phase IV of the plant
expansion is scheduled for commissioning in the second quarter of
2012. Once completed, it is expected to increase Mana's current
plant capacity to attain up to 7,200 tonnes per day ("tpd") in
bedrock and up to 8,000 tpd in blended ore.
New Production Facility
This new facility was put forward in consideration of the
positive drill results received from the Fofina, Fobiri and Yaho
zones. Detailed evaluations of the new facility are pending the
receipt of outstanding 2011 drill results in that they will impact
the facility's optimal location and size, both elements of which
are key to maximizing efficiencies. Completion of the new facility
is projected for the second half of 2014. Once operational, the
facility will play an important role in substantially expediting
the overall processing of ore from the southern region in the most
economical manner while increasing overall processing capacity to
14,000 tpd. This run rate represents the potential for an
additional 120,000 ounces of annual gold production. As part of
this project, the Corporation has commenced procurement of
additional mining equipment and construction of a pipeline to
ensure adequate water supply at all times. The pipeline is
scheduled to be commissioned in June, 2012.
Wona Deep Development
SEMAFO's continued collaboration with Dumas Contracting Ltd.'s
("Dumas") highly experienced underground development team has been
fundamental to ensuring that the Mana underground project continues
to progress according to the Corporation's expectations.
Construction of all surface infrastructures and services to support
underground operations is on track for completion by the end of the
first quarter of 2012. Dumas' expertise and innovation in the area
of underground mining continue to contribute considerably to the
effective development of this project.
Dumas, whose client list includes some of the world's largest
and most respected mining companies, is a leading full-service
underground mining contractor with over 1,200 employees providing
services worldwide. Dumas offers a full range of underground hard
rock mining contracting services including mine construction, mine
development, production mining, mine services and engineering, and
maintains the highest quality equipment fleet to meet their
clients' needs while maintaining an unwavering commitment to an
industry-leading health and safety program and to the ultimate goal
of "Zero Harm."
Capital Expenditures
Focusing on building sustainable value, the Corporation expects
total capital expenditures for 2012 to amount to $195 million,
which is consistent with previously disclosed information,
including the following major investments:
-- Mana plant expansion - Phase IV: $10 million
-- Mana new production facility: $52 million
-- Mana - Wona Deep development: $58 million
-- Stripping costs: $37 million
"Our professional teams, those responsible for efficient and
effective day-to-day operating activities and those in development,
who design, procure, build and expand facilities represent our core
strength," said Benoit Desormeaux, SEMAFO's Executive
Vice-President and Chief Operating Officer. "These skills, which
have been instrumental in delivering three mines and multiple plant
expansions on time and on budget, will be used to support Mana's
production growth to an annualized run rate of approximately
300,000 ounces in 2014. Company-wide, our dedicated and focused
teams are aligned with SEMAFO's objective of achieving an overall
annualized production capacity of up to 500,000 ounces of
gold."
A number of assumptions were made in preparing the 2012
guidance, including:
-- Price of gold of $1,650 per ounce
-- $1.30 per liter or $100 per barrel of oil
-- Foreign exchange rates of:
-- $0.98 US dollars to the Canadian dollar
-- $1.30 US dollars to the Euro
All amounts are in US dollars unless otherwise indicated. Cash
operating cost is a measure that is not defined under International
Financial Reporting Standards (IFRS). This data may not be
comparable to data presented by other gold producers.
About SEMAFO
SEMAFO is a Canadian-based mining company with gold production
and exploration activities in West Africa. The Corporation
currently operates three gold mines: the Mana Mine in Burkina Faso,
the Samira Hill Mine in Niger and the Kiniero Mine in Guinea.
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 "outlook",
"guidance", "expected", "increasing", "augment", "potential",
"objective", "will", "projected", "scheduled", "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 guidance of between 235,000 to 260,000 ounces
of gold at a cash operating cost between $615 and $665 per ounce at
Mana, and between $700 and $750 per ounce globally, Mana's ability
to account for 75% of our gold production, the ability to increase
reserves and resources at Mana, the ability to increase overall
Mana plant capacity to 14,000 tpd, the ability to commission the
water pipeline in the second quarter of 2012, the ability to reach
our overall annualized production capacity objective of up to
500,000 ounces of gold, 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 2010 Annual MD&A and 2010 Annual Information
Form, as updated in SEMAFO's 2011 First Quarter MD&A, 2011
Second Quarter MD&A and 2011 Third 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 above information has been made public in accordance with
the Swedish Securities Market Act and/or the Financial Instruments
Trading Act.
Contacts: SEMAFO Sofia St Laurent, Communications Tel. local
& overseas: +1 (514) 744 4408 North America Toll-Free: 1 (888)
744 4408sstlaurent@semafo.com www.semafo.com Maria Bang Brunswick
Group Stockholm +46 (8) 410 32 189mbang@brunswickgroup.com