SEMAFO to Proceed with Pre-Feasibility Study Following Positive Preliminary
Economic Assessment on Wona Underground

    
    SEMAFO TSX-SMF
    

MONTREAL, Oct. 29 /CNW Telbec/ - SEMAFO (TSX: SMF) is pleased to announce the positive results of a Preliminary Economic Assessment (PEA) confirming the economic potential of the Wona underground deposit. The PEA is based on December 2008 resources estimates with the inclusion of 2009 drill results up to WDC 99. The remainder of reported 2009 drilling results (WDC 100 to WDC 146) were not included in the PEA, nor does it include any inferred resources. Based on the positive PEA and the successful drilling program results, SEMAFO has decided to proceed with a pre-feasibility study including all 2009 drilling results.

    
    Highlights of the PEA (using an $800/oz gold price) include:

    - Indicated resources attributable to the underground mine of
      approximately 4.5 million tonnes at 3.2 g/t Au diluted for over
      460,000 ounces
    - Mine life of more than 6 years at 2,000 tpd
    - Cash operating cost of $43 per tonne
    - Annual production from underground of 57,000 ounces at a cash operating
      cost of $556 per ounce
    - Initial capital expenditure of $52.4 million
    

The positive PEA results, in conjunction with Mana's ongoing open pit operations and existing infrastructures, is demonstrative of the potential to develop an economically viable underground mining operation. Gold production from the underground is estimated at 4.5 million tonnes at 3.2 g/t of indicated resources at a cash operating cost of $556 per ounce. This represents a 6.2-year mine life at a rate of 2,000 tpd for the underground operation and considering that open pits will maintain a rate of 4,000 tpd. The PEA supports the economically and technically viable development of the Wona underground using a 2.8 g/t cut-off grade with 20% dilution, a process plant recovery rate of 76% and energy costs of $0.13 per kWh from the national power grid. Initial capital cost expenditures are estimated at $52.4 million with ongoing capital expenditures of $5.5 million.

The Wona underground project is particularly attractive owing to the $140 million processing plant and infrastructures currently in place. Subject to the results of the pre-feasibility study, the underground operation will provide additional tonnage to the mill in order to increase Mana's overall mine life by more than two years at a throughput of 6,000 tpd.

    
    Financial Analysis

                                              Price of Gold
                                        $800      $900      $1,000

          IRR (Pre-tax)                   12%       25%         36%
          Operating Cash Flow ($M)        83       118         152
    

"Results to date exceed our expectations," said Benoit La Salle, SEMAFO's President and CEO. "The PEA provides confirmation of the incredible economic potential of the Mana underground project and affirms our belief that Mana has the makings of a first-class gold deposit. The internal rate of return on this project is excellent and we have yet to incorporate the remaining results from the 2009 drilling program, which will undoubtedly increase the prospective ounces and reduce cash operating costs."

    
    Forthcoming milestones in the development of the Mana underground project
    include:

          - 2009 drilling program - remaining results      Q4-2009
          - Results of pre-feasibility study               Q2-2010
          - Results of feasibility study                   Q3-2010
    

The financial analysis is estimated using a core of diluted indicated resources and production rates, development quantities and cost estimates calculated using Met-Chem Canada Inc (Met-Chem) projections, and evaluated based on current Mana operations costs as well as those from other similar projects in Africa. The potential "mineable" tonnes were estimated by Met-Chem at 97% of the total indicated resources (above 2.8 g/t cut-off) diluted. The cost estimates assume contract mining during the initial project development, while ongoing development and production are to be carried out by SEMAFO personnel. Processing will take place at the existing Mana plant located less than two kilometres from the underground access.

The Wona underground deposit PEA is preliminary in nature and includes mineral resources that are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the preliminary economic assessment will be realised as presented since certain engineering parameters will only be validated during the pre-feasibility study.

The PEA was conducted by the firm Met-Chem Canada Inc. and revised by Patrick Moryoussef, Eng., Mining Operations Manager, SEMAFO and Qualified Person, as defined by National Instrument 43-101. Patrick Moryoussef has reviewed this press release for accuracy and compliance with National Instrument 43-101. The PEA is based on SEMAFO's Technical Report on the Resources and Reserves of the Mana gold deposits as at December 31, 2009, available on SEDAR at www.sedar.com.

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 in Burkina Faso, Niger and Guinea. SEMAFO is committed to evolve in a conscientious manner to become a major player in its geographical area of interest, while maintaining principles and strengthening relationships to increase shareholder value.

Caution Concerning Forward-looking Statement

This press release may contain 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. Forward-looking statements include words or expressions such as "proceed with", "potential", "develop", "viable", "estimated", "ongoing", "increase", "forthcoming", "continue", "committed", "evolve", "become", maintaining", "strengthening", "increase" and other similar expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include our the variation in the price of gold and the US dollar, the ability to continue or complete our 2009 exploration program at Mana, the ability to complete the pre-feasibility study of the Wona underground, the possibility that the pre-feasibility study does not demonstrate the potential to develop an economically viable underground mining operation at Wona, the ability of the Wona underground operation to increase overall mine life by over two years at Mana, mining industry risks, uncertainty as to calculation of mineral reserves and resources, delays and other risks described in the Company's documents filed with Canadian securities regulatory authorities. Although the Company is of the opinion that these forward-looking statements are based on reasonable assumptions, such assumptions may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements. Readers can find further information with respect to risks in the Company's 2008 Annual MD&A, as updated in the 2009 First Quarter MD&A and 2009 Second Quarter MD&A, and other filings with Canadian securities regulatory authorities available at www.sedar.com. The Company disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.

SOURCE SEMAFO INC.

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

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