MONTREAL, QUEBEC--(Marketwired - March 8, 2017) - SEMAFO Inc. (TSX:SMF)(OMX:SMF) today reported its financial and operational results for the fourth quarter and year ended December 31, 2016. All amounts are in US dollars unless otherwise stated.
2016 - The Year in Review
- Achieved production and cost guidance for a ninth consecutive year
- Gold production of 240,200 ounces, a 6% decrease compared to 2015
- Total cash cost1of $548 per ounce sold and all-in-sustaining cost1of $720 per ounce sold, which represent year-over-year increases of 11% and 12%, respectively - Gold sales of $300.5 million compared to $300.1 million in 2015
- Adjusted operating income1of $71.0 million compared to $66.0 million in 2015
- Adjusted net income attributable to equity shareholders1 of $48.1 million or $0.15 per share1 compared to $40.9 million or 0.14 per share1 for the same period in 2015
- Cash flows from operating activities2of $142.2 million or $0.45 per share1compared to $147.6 million or $0.51 per share for the same period in 2015
- Amendment to long-term debt consisting of an incremental $60.0 million to be drawn by June 30, 2017
- Completion of a bought deal offering of common shares for aggregate gross proceeds of $90.8 million (C$115.1 million)
- Resumption of development of Wona North pit
- Recipient of four prizes for community-based development in Burkina Faso
- Inferred resources at Natougou increased to 754,000 ounces
Fourth Quarter 2016 - in Review
- Gold production of 55,100 ounces compared to 57,500 ounces in 2015
- Gold sales of $69.1 million compared to $72.5 million in 2015
- Total cash cost1of $571 per ounce sold and all-in-sustaining cost1of $694 per ounce sold compared to $493 and $719, respectively, in 2015
- Adjusted operating income1 of $10.6 million compared to $13.5 million in 2015
- Adjusted net income attributable to equity shareholders1 of 7.9 million or $0.02 per share1 compared to $4.2 million or $0.02 per share1 in 2015
- Cash flows from operating activities2 of $30.4 million or $0.09 per share1 compared to $39.4 million or $0.13 per share1 in 2015
| 1 | Total cash cost, all-in sustaining cost, adjusted operating income, adjusted net income attributable to equity shareholders, adjusted basic earnings per share and operating cash flows per share are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures defined at the end of this press release. |
| 2 | Cash flows from operating activities exclude changes in non-cash working capital items. |
Mana, Burkina Faso
Mining Operations
| Year | ||||
| ended December 31, | ||||
| 2016 | 2015 | Variation | ||
| Operating Data | ||||
| Ore mined (tonnes | 2,175,700 | 2,390,600 | (9 | %) |
| Ore processed (tonnes) | 2,753,300 | 2,399,100 | 15 | % |
| Waste mined (tonnes) | 16,686,800 | 18,924,700 | (12 | %) |
| Operational stripping ratio | 7.7 | 7.9 | (3 | %) |
| Head grade (g/t) | 2.88 | 3.63 | (21 | %) |
| Recovery (%) | 94 | 91 | 3 | % |
| Gold ounces produced | 240,200 | 255,900 | (6 | %) |
| Gold ounces sold | 240,600 | 258,600 | (7 | %) |
| Statistics (in dollars) | ||||
| Average realized selling price (per ounce) | 1,249 | 1,161 | 8 | % |
| Cash operating cost (per tonne processed)1 | 43 | 47 | (9 | %) |
| Total cash cost (per ounce sold)1 | 548 | 493 | 11 | % |
| All-in sustaining cost (per ounce sold)1 | 720 | 645 | 12 | % |
| Depreciation (per ounce sold)² | 324 | 337 | (4 | %) |
| 1 | Cash operating cost, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS financial performance measures defined at the end of this press release. |
| 2 | Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold. |
The total cash cost of $548 per ounce sold is due to a lower head grade, partially offset by a lower cash operating cost per tonne1. The increase in all-in sustaining cost to $720 was anticipated and is mainly due to an increase in the stripping capitalized expenditure and to a higher total cash cost.
During 2016, less ore was mined compared to 2015 due to the mine plan sequence. The increase in throughput in 2016 compared to 2015 is mainly due to the processing of ore through the secondary ball mill during the five-week shutdown of the SAG mill at the beginning of 2015 and to the low grade material processed in 2016. The latter results from a decision to take advantage of higher gold prices and available milling capacity in order to generate additional cash flow. We achieved this by adding 423,800 tonnes of low-grade material to the mix in 2016. Absent the impact of this decision, the head grade would have been 3.26 g/t.
The year-over-year decrease in head grade in 2016 is attributable to the mine plan sequence and to increased throughput from low-grade material.
2016 Reserves and Resources
As at December 31, 2016, total proven and probable mineral reserves stood at 28.2 million tonnes averaging 3.31 g/t Au for 3.0 million ounces as compared to 30.5 million tonnes at 3.32 g/t Au for 3.3 million ounces at the end of 2015. The slight decrease in reserves is due to depletion as SEMAFO produced 240,200 ounces of gold in 2016.
Inferred resources at Natougou amounted to 6.3 million tonnes averaging 3.72 g/t Au for 754,000 ounces of gold, an increase of 119% compared to year-end 2015. The increase in inferred resources is mainly attributable to the expansion of the West Flank Sector adjacent to the open-pit deposit.
All mineral resources reported are exclusive of mineral reserves. Gold price assumptions for reserves and resources are unchanged from 2015 at $1,100 and $1,400 per ounce, respectively. For further details, refer to our press release of February 27, 2017.
2017 Exploration
As previously disclosed, the 2017 initial exploration program has been set at $23 million, $15 million of which will be spent at Natougou, $5 million at Mana and the balance at other properties. At Mana, $1 million of the initial budget will be used to test the underground potential at Siou.
The 2017 budget for Natougou includes a provision of $8.5 million for an infill drill program (40-meter by 40-meter hole spacing) designed to bring current inferred resources on the West Flank Sector into the indicated category. In addition, an amount of $1.3 million has been earmarked for completing studies into a potential underground operation accessible by a decline collared at the bottom of the Natougou open pit. The remainder of the Natougou program involves exploration drilling on permits both proximal and contiguous to the Natougou deposit.
Since we have no plan to further explore the Banfora Zone, we recorded a non-cash impairment loss of $8.9 million in the year.
Natougou Development
In the fourth quarter, two key milestones for the Natougou Project were achieved: award of the mining permit and commencement of construction. Achievement of these goals means that the project continues in line with our expected time schedule. In addition, the following progress has been made:
- Development on time and on budget, with $17 million spent as at December 31, 2016
- Detailed design and engineering 80% complete at end of February 2017
- Earthworks have commenced including
- Clearing, grubbing and removal of top soil
- Building the water storage facility - Procurement
- 100% of long-lead items have been ordered
- Suppliers selected for 70% of total contract value - Hiring of key personnel for the construction team is well underway
- Compensation to inhabitants has been initiated in line with the resettlement action plan
SEMAFO's Management's Discussion and Analysis, Consolidated Financial Statements and related financial materials are available in the "Investor Relations" section of the Corporation's website at www.semafo.com. These and other corporate reports are also available on www.sedar.com.
Fourth Quarter and Year-End 2016 Conference Call
A conference call will be held today, Wednesday, March 8, 2017 at 10:00 EST to discuss this press release. Interested parties are invited to call the following telephone numbers to participate in the conference:
| Tel. local & overseas: +1 (647) 788 4922 |
| Tel. North America: 1 (877) 223 4471 |
| Webcast: http://www.semafo.com/ |
| Replay number: 1 (800) 585 8367 or +1 (416) 621 4642 |
| Replay pass code: 60539531 |
| Replay expiration: March 29, 2017 |
Annual General Meeting of Shareholders
SEMAFO's Annual General Meeting of Shareholders will be held on Thursday, May 4, 2017 at 10:00 EDT at Club Saint-James, Salon Midway, 1145 avenue Union, in Montreal Quebec. Attendees will have the opportunity to ask questions and meet the management team and members of the board of directors.
About SEMAFO
SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation operates the Mana Mine in Burkina Faso, which includes the high-grade satellite deposits of Siou and Fofina, and is advancing construction of the Natougou Project. SEMAFO's strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities.
