SEMAFO Reports Record Operating Income of $19.5 Million for the First Quarter
2010
Operating Income Increases by 75% - Margins up by 45%
Net Income Increases by 55% and Cash Flow up 43%
SEMAFO TSX-SMF
MONTREAL, May 11 /CNW Telbec/ - SEMAFO (TSX: SMF) today announced its first quarter financial and operational results for the three-month period ended March 31, 2010. All amounts are in US dollars unless otherwise stated.
First Quarter 2010 Highlights
In the first quarter 2010, SEMAFO produced 65,800 ounces of gold and achieved gold sales of $63,575,000, compared to gold production of 58,100 ounces and sales of $49,495,000 for the corresponding period in 2009. Operating income increased to a record $19,523,000 for the three-month period ended March 31, 2010, compared to $11,173,000 in the first quarter 2009. Highlights for the first quarter ended March 31, 2010 include:
- Record gold production of 65,800 ounces, a 13% increase year over year
- Gold sales of $63,575,000, an increase of 28% year over year
- Cash operating cost of $455 per ounce compared to $460 in the first
quarter 2009
- Record operating income of $19,523,000, a 75% increase year over year
- Record net income of $13,805,000 or $0.06 per share, a 55% improvement
year over year
- Record cash flow from operating activities increased 43% to $26,457,000
or $0.11 per share, compared to $18,500,000 or $0.08 for the first
quarter 2009
- Continued exploration success at Mana
- Discovery of two new gold zones at the Samira Hill Mine in Niger
- Metallurgical tests revealed 81% recovery in bedrock at Wona Zone, a 5%
improvement from previous study results
- Successful completion of the Mana phase I plant expansion, with
throughput exceeding design capacity to attain up to 7,300 tonnes per
day
A Word from the CEO
A production increase of 42% at the Samira Hill Mine along with a strong performance at our Mana Mine drove our first quarter production up by 13% over the same period in 2009. Total cash costs and cash operating costs declined by 6% and 10% respectively, compared to the fourth quarter 2009. We focused on cost containment and reported a steady rise in our total cash margin.
First quarter gold sales increased 28% compared to the first quarter of 2009, which is a result of increased production and a higher average realized gold price. The variation between total gold production and sales stems from customs scheduling in Burkina Faso, which delayed the last gold shipment of the quarter. The shipment took place on April 1, and will therefore be accounted for only in the second quarter 2010. Had the shipment transpired in the first quarter, both our earnings and cash flow per share would have increased by $0.01 respectively.
We finished the quarter with a strong balance sheet. Our debt to equity ratio stands at 10% compared to 13% as at December 31, 2009. Cash balances remained at $61 million after investing $17 million in strategic capital expenditures, including $9 million for the expansion of the Mana Mine, which has a payback period of less than 12 months.
As part of our organic growth strategy, an active exploration program continued to bolster our confidence in the ongoing drilling programs and their potential impact on reserves and resources. At the Mana Mine in Burkina Faso, exploration results continue to attest to the property's potential to become a mining district. Regional exploration programs had identified priority targets and recent drill results confirmed two new gold bearing zones, the Fobiri and Fofina NW. Core drilling also confirmed two new gold bearing zones, the Wona SW and Kona. Recently announced drill results on Kona further validated the zone's open pit potential.
Through our expanded exploration activities at the Samira Hill Mine in Niger, we discovered two new gold zones, the Libdorado North located immediately north of the Libiri open pit, and the Boulon Jounga Extension.
Prefeasibility and feasibility studies of the Wona mineralization at depth are progressing according to schedule, with results expected in the second and third quarter of the year respectively.
Phase I of the Mana plant expansion aimed at increasing plant capacity to up to 6,000 tonnes per day in saprolite ore (soft rock) was completed on schedule and on budget. This first phase is fully operational, with the processing plant having surpassed design capacity to attain up to 7,300 tpd. Phase II, aimed at increasing plant capacity to 6,000 tpd for the processing of the hard rock portion of the deposit is scheduled for completion at the end of the second quarter 2010. Phase III, which will extend the leach time to accommodate increased throughput and optimize gold recovery is scheduled for commissioning at year-end.
Moving forward, we are well-positioned to fully benefit from the expected positive gold price environment and continue our successful record of discovery, development and operations in our quest to unlock further value for our shareholders.
Consolidated Results and Mining Operations
Three-month Period Ended March 31
-----------------------------------
2010 2009 Variation
-----------------------------------
Operating Highlights
Gold ounces produced .................... 65,800 58,100 13%
Gold ounces sold ........................ 57,200 53,600 7%
(In thousands of dollars, except
amounts per ounce, per tonne and
per share)
Revenues - Gold sales ................... 63,575 49,495 28%
Mining operating costs .................. 27,115 25,525 6%
Royalties ............................... 2,534 1,190 113%
Operating income ........................ 19,523 11,173 75%
Net income .............................. 13,805 8,902 55%
Cash flow from operating activities(1) .. 26,457 18,500 43%
Basic net income per share .............. 0.06 0.04 50%
Operating cash flow per share(2) ........ 0.11 0.08 38%
Average realized price (per ounce) ...... 1,111 923 20%
Cash operating cost (per ounce
produced)(3) ........................... 455 460 (1%)
Cash operating cost (per tonne
processed)(3) .......................... 32 31 3%
Total cash cost (per ounce sold)(4) ..... 518 513 1%
Total cash margin (per ounce sold)(5) ... 593 410 45%
(1) Cash flow from operating activities excludes changes in non-cash
working capital items and settlement of liabilities related to asset
retirement obligations.
(2) Operating cash flow per share is a non-GAAP measure. See the "Non-
GAAP" measures" section of the Company's MD&A.
(3) Cash operating cost is calculated using ounces produced and tonnes
processed. See the "Non-GAAP measures" section of the Company's MD&A.
(4) Total cash cost is a non-GAAP measure and represents the mining
operating costs per ounce sold. See the "Non-GAAP measures" section
of the Company's MD&A.
(5) Total cash margin is a non-GAAP measure and is calculated using the
average realized price and the total cash cost.
Outlook
SEMAFO's gold production for the month of April 2010 totaled 22,500 ounces, 15,300 ounces from the Mana Mine and 7,200 ounces from the Samira Hill and Kiniero Mines. Accordingly, management remains confident that the Company will attain its 2010 production guidance of between 235,000 and 260,000 ounces of gold.
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.
Date: Wednesday, May 12, 2010
Time: 10:00 AM (ET)
Tel. local & overseas: 416 644-3426
Tel. North America: 1 800 731-5319
The conference call will feature Benoit La Salle, CA, President and Chief Executive Officer, Benoit Desormeaux, CA, Executive Vice-President and Chief Operating Officer, Martin Milette, CA, Chief Financial Officer, Michel Crevier, PGeo MScA, SEMAFO's Geology Manager and Qualified Person, and Patrick Moryoussef, Eng, Mining Operations Manager.
The conference call will be archived for replay until May 26, 2010. To access the archived conference call, please dial 1 877 289-8525 and enter pass code 4291480 followed by the number sign #.
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 General and Special Meeting of Shareholders will be held on Wednesday, June 16, 2010 at 4:00 pm 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.
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 "continued", "ongoing", "potential", "expected", "further", "scheduled", "will", "guidance", "committed", "evolve", "become", "pursuing" 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 obtain a payback of less than 12 months on our $9M capital expenditure for the expansion of the Mana Mine, the ability of the Mana Mine to become a mining district, the ability to realize the Kona zone open pit potential, the ability to complete the pre-feasibility and feasibility studies of the Mana mineralization at depth and Phase II and Phase III of the Mana Mine plant expansion on schedule, the ability to meet our 2010 production guidance of between 235,000 and 260,000 ounces of gold, the ability to find growth opportunities in West Africa, 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, as updated in SEMAFO's 2010 First 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.
SEMAFO Inc.'s Board of Directors has approved this press release.
For further information: Benoit La Salle, President & CEO, SEMAFO, (514) 744-4408, Toll-Free: 1-888-744-4408, [email protected]; Sofia St Laurent, Communications, SEMAFO, (514) 744-4408, Toll-Free: 1-888-744-4408, [email protected]
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