SEMAFO Reports Record Cash Flow from Operations of $92.1 Million for 2009

SEMAFO TSX-SMF

MONTREAL, March 17 /CNW Telbec/ - SEMAFO (TSX: SMF) today announced its financial and operational results for the year ended December 31, 2009. All amounts are in US dollars unless otherwise stated.

2009 Highlights

In 2009 SEMAFO produced a record 242,400 ounces of gold and achieved record gold sales of $240,788,000, compared to gold production of 195,400 ounces and sales of $169,911,000 in 2008. Cash flow from operating activities increased to a record $92,147,000, compared to $56,339,000 in 2008. Highlights for the year ended December 31, 2009 include:

    
    - Record gold production of 242,400 ounces, a 24% increase over 2008
    - Record gold sales of $240,788,000, an increase of 42% year over year
    - Cash operating cost of $463 per ounce compared to $461 in 2008
    - Record operating income of $60,905,000 compared to $33,108,000 in 2008
    - Record net income of $43,505,000 compared to $39,529,000 in 2008
    - Record cash flow from operating activities of $92,147,000 compared
      to $56,339,000 in 2008
    - Debt reduction of $27,000,000, including prepayment of $3,750,000
    - Positive at-depth and on-surface exploration results confirming the
      economic potential of the Wona deposit and resulting in a 55% increase
      in mineral resources at Mana
    - Identification of new prospective regional targets at Mana
    - Increased ownership in the Samira Hill Mine
    - SEMAFO added to S&P/TSX Composite Index
    - Entered into a partnership with the government of Burkina Faso to
      develop a solar power station

    Fourth Quarter Highlights

    - Gold production of 57,900 ounces
    - Record gold sales of $73,286,000
    - Record operating income of $17,494,000
    - Cash flow from operating activities of $23,902,000
    - Net income of $10,483,000
    

Outlook

In January and February 2010, SEMAFO's strong momentum continued, with a two-month gold production of 41,000 ounces. Accordingly, management remains confident that the Company will attain its 2010 production guidance of between 235,000 and 260,000 ounces of gold.

A Word from the CEO

SEMAFO's operations and management teams continued to excel in 2009, delivering another strong performance during the fourth quarter and culminating in the best year in our Company's history.

In 2009, we established new records. Our gold production totaled a record 242,400 ounces, surpassing the upper end of our annual guidance. Our revenues increased by 42%. Our operating income rose by 84% over 2008 and cash flow from operating activities reached $92,147,000, a 64% increase year over year.

Our ongoing exploration program at the Mana Mine continued to accentuate the robust potential of the Wona Deep Zone. In October 2009, we announced that a preliminary economic assessment confirmed the viability of an underground mining operation. We have since initiated pre-feasibility and feasibility studies with results expected in Q2 and Q3 2010 respectively. A recent airborne geophysical survey clearly identified the Wona structural corridor and suggested that it may extend to the south over more than 30 kilometers. Drill results in early 2010 confirmed both new gold zones and new surface targets at Mana.

Our balance sheet is stronger than ever as our debt to equity ratio decreased to 13% at year-end 2009, compared to 38% as at December 31, 2008.

In June, we successfully closed out the remaining gold ounces of our hedging program. As a result, we have been in a position to fully benefit from the market price of gold, which rose by 25% in 2009.

In 2009, SEMAFO's share price rose by 269% and the Company's market capitalization surpassed $1.2 billion. Our growth and value creation initiatives were significant all year long bringing the Company to be included in the S&P/TSX Composite Index.

We are proud of our accomplishments in 2009 and look forward to continued growth and value generation for our shareholders in the years to come.

SEMAFO's Consolidated Financial Statements and Management's Discussion and Analysis and other relevant financial materials are available in the Investor Relations section of the Company's website at www.semafo.com. These and other Company reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com.

SEMAFO will host a conference call to discuss the results, as well as to provide an update on operations.

    
    Conference Call:  Date:                   Thursday, March 18, 2010
                      Time:                   10:00 AM (ET)
                      Tel. local & overseas:  647 427-7450
                      Tel. North America:     1 888 231-8191
    

The conference call will feature Benoit La Salle, President and Chief Executive Officer, Benoit Desormeaux, Executive Vice-President and Chief Operating Officer, Martin Milette, Chief Financial Officer, Michel Crevier, SEMAFO's Geology Manager and Qualified Person, and Patrick Moryoussef, Mining Operations Manager.

The conference call will be archived for replay until April 2, 2010. To access the archived conference call, please dial 1 800 642-1687 and enter pass code 62468767.

A live audio webcast of the conference can be accessed through SEMAFO's website at www.semafo.com. The webcast will be available for replay for a period of 90 days.

SEMAFO's Annual Meeting of Shareholders will be held on Tuesday, June 16, 2010 at 4:00 p.m. at the Centre Sheraton Hotel Montréal, Salon 4-5, 1201 René-Lévesque Boulevard West, in Montreal. Attendees will have the opportunity to ask questions and meet the management team and Board of Directors.

    
    Consolidated Results and Mining Operations

                                       --------------------------------------
                                               2009        2008   Variation
                                       --------------------------------------
    Operating Highlights

    Gold ounces produced                    242,400     195,400          24%
    Gold ounces sold                        243,800     198,000          23%

    (In thousands of dollars, except
     amounts per ounce and per tonne)
    Revenues - Gold sales                   240,788     169,911          42%
    Mining operating costs                  124,265     100,676          24%
    Operating income                         60,905      33,108          84%
    Net income                               43,505      39,529          12%
    Adjusted net income(1)                   39,968      21,680          84%
    Cash flow from operating
     activities(2)                           92,147      56,339          64%
    Average selling price (per ounce)           988         858          15%
    Cash operating cost (per ounce
     produced)(3)                               463         461           -
    Cash operating cost (per tonne
     processed)(3)                               33          33           -
    Total cash cost (per ounce sold)(4)         510         508           -

    Cash and cash equivalents - as at
     December 31                             62,481      23,442         166%

    (1) Adjusted net income is a non-GAAP measure. For 2009, the net adjusted
        net income represents the net income excluding a gain on settlement
        of advances payable totaling $3,537,000 while the adjusted net income
        for 2008 excluded a gain on disposal of investment in subsidiaries in
        the amount of $17,849,000.
    (2) Cash flow from operating activities excludes changes in non-cash
        working capital items and settlement of liabilities related to asset
        retirement obligations.
    (3) Cash operating cost is calculated using ounces produced and tonnes
        processed. See the section "Non-GAAP measures" section of SEMAFO's
        MD&A.
    (4) Total cash cost is a non-GAAP measure and it represents the mining
        operating costs per ounce sold.


    Consolidated Balance Sheets
    As at December 31, 2009 and 2008
    -------------------------------------------------------------------------
    (Expressed in thousands of US dollars)

                                                           2009        2008
                                                              $           $
    Assets

    Current assets
    Cash and cash equivalents                            62,481      23,442
    Restricted cash                                           -       1,250
    Accounts receivable                                   9,894       5,067
    Inventories                                          60,300      49,152
    Other short-term assets                               4,556       3,546
                                                      ----------  -----------
                                                        137,231      82,457
    Restricted cash                                       4,407       4,050
    Property, plant and equipment                       200,375     202,980
    Investment and other assets                          19,743      25,186
                                                      ----------  -----------
                                                        361,756     314,673
                                                      ----------  -----------
                                                      ----------  -----------
    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities             33,658      28,843
    Income tax payable                                    5,019           -
    Current portion of long-term debt                    18,808      22,390
    Fair value of derivative financial instruments            -      15,020
                                                      ----------  -----------
                                                         57,485      66,253
    Long-term debt                                       15,612      38,076
    Advances payable                                      3,007       8,890
    Asset retirement obligations                          5,879       4,846
    Future income taxes                                   7,110       2,288
                                                      ----------  -----------
                                                         89,093     120,353
                                                      ----------  -----------
    Shareholders' Equity

    Share capital                                       329,759     293,910
    Contributed surplus                                   5,998       4,797
    Deficit                                             (63,094)   (104,387)
                                                      ----------  -----------
                                                        272,663     194,320
                                                      ----------  -----------
                                                        361,756     314,673
                                                      ----------  -----------
                                                      ----------  -----------


    Consolidated Statement of Operations
    For the Years Ended December 31, 2009 and 2008
    -------------------------------------------------------------------------
    (Expressed in thousands of US dollars)

                                                           2009        2008
                                                              $           $

    Revenue - Gold sales                                240,788     169,911
                                                   --------------------------

    Expenses
    Mining operations                                   124,265     100,676
    Amortization of property, plant and equipment        40,863      25,445
    Administration                                       14,367      10,250
    Accretion expense of asset retirement
     obligations                                            388         432
                                                   --------------------------

                                                        179,883     136,803
                                                   --------------------------

    Operating income                                     60,905      33,108

    Charitable donations - Fondation SEMAFO                 722           -
    Interest, banking fees and other income                 355        (638)
    Interest on long-term debt                            4,947       4,621
    Stock-based compensation                              1,337       1,186
    Change to the fair value of derivative
     financial instruments                                2,383       5,077
    Gain on disposal of investment in subsidiaries            -     (17,849)
    Loss on disposal of portfolio investments                 -         317
    Write-down of exploration property                      827           -
    Gain on settlement of advances payable               (3,537)          -
    Foreign exchange loss (gain)                            525      (1,423)
                                                   --------------------------

    Net income before taxes                              53,346      41,817

    Income tax expense
    Current                                               5,019           -
    Future                                                4,822       2,288
                                                   --------------------------
                                                          9,841       2,288

    Net income for the year                              43,505      39,529
                                                   --------------------------

    Basic net income per share                             0.18        0.19
    Diluted net income per share                           0.18        0.19
                                                   --------------------------
                                                   --------------------------


    Consolidated Statement of Cash Flows
    For the Years Ended December 31, 2009 and 2008
    -------------------------------------------------------------------------
    (Expressed in thousands of US dollars)

                                                           2009        2008
                                                              $           $
    Cash flows from

    Operating activities
    Net income for the year                              43,505      39,529
    Adjustment for :
      Change to fair value of derivative
       financial instruments                              2,383       5,077
      Loss on disposal of investment in
       portfolio investments                                  -         317
      Amortization of property, plant
       and equipment                                     39,673      25,445
      Amortization of stripping costs                     1,190         452
      Stock-based compensation                            1,337       1,186
      Accretion expense of asset retirement
       obligations                                          388         432
      Amortization of deferred transaction costs            871         767
      Gain on disposal of investment in
       subsidiaries                                           -     (17,849)
      Gain on settlement of advances payable             (3,537)          -
      Write-down of exploration property                    827           -
      Unrealized foreign exchange loss (gain)               688      (1,305)
      Future income taxes                                 4,822       2,288
                                                   --------------------------
                                                         92,147      56,339
                                                   --------------------------
      Changes in non-cash working capital items
       and settlement of liabilities related to
       asset retirement obligations                      (6,984)     (9,939)
                                                   --------------------------
                                                         85,163      46,400
                                                   --------------------------
    Financing activities

    Reimbursement of long-term debt                     (26,951)     (7,768)
    Term facility, net of transaction costs                   -       4,250
    Settlement of advances payable                       (3,000)          -
    Issuance of share capital                            35,713      18,817
    Share issue expenses                                 (2,212)     (1,316)
                                                   --------------------------
                                                          3,550      13,983
                                                   --------------------------
    Investing activities

    Additions to property, plant and equipment          (35,084)    (41,093)
    Disposal of portfolio investments                         -         702
    Financial instruments settled                       (15,483)    (29,844)
    Decrease in restricted cash                             893       3,250
                                                   -------------------------
                                                        (49,674)    (66,985)
                                                   --------------------------

    Change in cash and cash equivalents
     during the year                                     39,039      (6,602)

    Cash and cash equivalents - beginning of year        23,442      30,044
                                                   --------------------------

    Cash and cash equivalents - end of year              62,481      23,442
                                                   --------------------------
                                                   --------------------------
    

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Company 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 in West Africa.

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 "potential", "prospective", "targets", "continued", "ongoing", "accentuate", "expected", "suggested", "may" 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 complete the pre-feasibility and feasibility studies of the Mana underground, 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 2009 Annual MD&A and 2009 Annual Information Form 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.

SEMAFO Inc.'s Board of Directors has approved this press release.

SOURCE SEMAFO INC.

For further information: For further information: Benoit La Salle, President & CEO, SEMAFO, (514) 744-4408, Toll-Free: 1-888-744-4408, blasalle@semafo.com; Sofia St Laurent, Communications, SEMAFO, (514) 744-4408, Toll-Free: 1-888-744-4408, sstlaurent@semafo.com

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