Semafo Inc. - 2006 Financial Results



    TSX-SMF

    MONTREAL, March 30 /CNW Telbec/ - SEMAFO (TSX - SMF) today reported its
operating results for the year ended December 31, 2006. All amounts referenced
are in US dollars except as otherwise stated.


    

    Financial Results

    -------------------------------------------------------------------------
    Years ended December 31                    2006        2005        2004
    -------------------------------------------------------------------------

    Operation
    Gold production (ounces)                 94,800     157,900      62,600
    Gold sales (ounces)                      95,000     157,000      59,700
    Cash operating cost  ($/ounce produced)  2  353         239         252
    Average selling price ($/ounce)             481         374         347

    Results (in thousands $)
    Gold sales                               45,699      58,760      20,766
    Net loss before loss on settlement
    of gold sales contracts(2)               (9,265)     (4,913)     (4,941)
    Net loss                                (10,423)    (13,482)     (4,941)
    Cash flow from operating
    activities(1,2)                           1,461      11,391          56
    -------------------------------------------------------------------------
    (1) Cash flow from operating activities excludes changes in non-cash
        working capital items and settlement of liabilities related to asset
        retirement obligations for property, plant and equipment and the
        effect of the settlement of gold sales contracts of $1,237,000
        (2005 - $13,290,000).
    (2) Non GAAP measures

    Highlights

    Financial
    ---------

    - Gold production of 94,800 ounces in 2006 at a cash operating cost of
      $353 per ounce
    - Operational cash flow of $9,000,000 from Kiniero
    - A temporary interruption at the Samira Hill plant operations leading to
      non-recoverable costs of $3,025,000

    Operations
    ----------

    - Finalization of the Mana project environmental impact study and
      obtention of the Environment Ministry's clearance
    - Commencement of Mana project construction and ordering of the plant's
      major equipment
    - Purchase and delivery of a mining equipment fleet for the Mana project
    - Purchase of a mining equipment fleet for the Kiniero mine and
      transition to owner miner

    Reserves and Resources (compliant with National Instrument 43-101)
    ------------------------------------------------------------------

    - A 10% increase in overall mineral reserves and resources to 4,420,300
      ounces
    - A 22% increase in Kiniero mineral reserves to 436,000 ounces

    Corporate
    ---------

    - Closing of a $20,000,000 bank loan
    - Public offerings were closed, generating gross proceeds of $91,148,000

    Results for the year-ended December 31, 2006
    --------------------------------------------

    For the year ended December 31, 2006, Semafo presents a net loss of
$10,423,000 or $0.07 per share, compared with net loss of $13,482,000 or $0.14
per share in 2005. The settlement of gold sales contracts generated a loss of
$1,158,000 in 2006, compared to a loss of $8,569,000 in 2005. In 2006, the
increase of the average selling price offset the increase in the operating
costs and the non-recoverable fixed expenses of $3,025,000 incurred during the
temporary shutdown of the Samira Hill operation.
    Gold sales for the year 2006 totalled $45,699,000 compared to $58,760,000
in 2005. We sold a total of 95,000 ounces of gold in 2006 at an average price
of $481 per ounce, compared to the sale of 157,000 ounces of gold at an
average price of $374 per ounce in 2005. The 29% increase in the average
selling price is due to the increase in the market price of gold and the
settlement of most of the Kiniero gold sales contracts in December 2005. The
decrease in the number of ounces sold resulted substantially from the
temporary shutdown at the Samira Hill mine, as well as the processing of lower
grade ore.

    Operations
    ----------

    Kiniero Mine
    ------------

    Gold production totalled 47,200 ounces at a cash operating cost of $368
per ounce, compared with 61,400 ounces at a cash operating cost of $276 per
ounce in 2005. The decrease in production and the change in the cash operating
cost experienced in 2006 are largely due to the processing of lower grade ore.
The cash operating cost per tonne of ore processed was $30 in 2006, compared
with $27 in 2005. Higher fuel and reagent prices reflected across the mining
industry also contributed to the increase in cash operating cost.

    Samira Hill Mine
    ----------------

    In May 2006, the ball mill's gearbox broke down, resulting in the
temporary shutdown of the Samira Hill plant. Major efforts were deployed to
resume operations on August 15. Unfortunately, after three weeks of
operations, a weakness in the raw material used to manufacture components of
the gearbox led to a second shutdown. Repairs were completed in late October
at which time normal operations resumed. These equipment problems resulted in
143 days of downtime during the year. The Company used this downtime to carry
out a full-scale plant review and to perform maintenance work aimed at
ensuring maximum plant availability after operations resumed. Subsequent to
year end, new gears was received and installed leaving the site with a back-up
on hand.
    Gold production totalled 47,600 ounces at a cash operating cost of $338
per ounce, compared with 96,500 ounces at a cash operating cost of $216 in
2005. As previously mentioned, the decrease in production was primarily due to
the shutdown of the plant and to the processing of lower grade ore. The cash
operating cost per tonne processed was $18, compared with $15 per tonne in
2005. This increase was due to additional drill and blast and higher fuel and
reagent costs.
    Audited consolidated financial statements and the Management's discussion
and analysis for the year-ended December 31, 2006 are available on the Semafo
website at www.semafo.com and on the SEDAR website at www.SEDAR.com.

    FORWARD-LOOKING STATEMENTS

    This press release contains "forward-looking statements", including, but
not limited to, the statements regarding the Company's expectations as to the
market price of gold, strategic plans, future commercial production,
production targets, timetables, mine operating costs, fixed assets expenses,
mineral reserve estimates and to the company's perspectives. Forward-looking
statements express, as at the date of this press release, our estimates,
forecasts, projections, expectations and beliefs as to future events or
results. Forward-looking statements are reasonable, but involve a number of
risks and uncertainties, and there can be no assurance that such statements
will prove to be accurate. Therefore, actual results and future events could
differ materially from those anticipated in such statements. Factors that
could cause results or events to differ materially from current expectations
expressed or implied by the forward-looking statements include, but are not
limited to, factors associated with fluctuations in the market price of
precious metals, mining industry risks, uncertainty as to calculation of
mineral reserves, risks related to the grade of reserves, risks related to
hedging strategies, risks of delays in construction and requirements of
additional financing.

    The common shares of Semafo are traded on The Toronto Stock Exchange
    under the symbol "SMF".

       Semafo is a mining company whose mission is to explore, develop
        and mine major gold deposits in West Africa. Semafo currently
     operates the Kiniero mine in Guinea, the Samira Hill mine in Niger
             and is developing the Mana project in Burkina Faso
    




For further information:

For further information: MONTREAL: Benoit La Salle, President and CEO,
(514) 744-4408, blasalle@semafo.com; Martin Milette, Chief Financial Officer,
(514) 744-4408, mmilette@semafo.com; RENMARK: Tina Cameron, (514) 939-3989,
tcameron@renmarkfinancial.com; More extensive information on Semafo can be
found on our home page at http://www.semafo.com

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SEMAFO INC.

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