SEMAFO Reports Record Third Quarter Revenues, Operating Income and Margin Operating Income of $40.8 Million - Margin Up 32%
Operating Income of $40.8 Million - Margin Up 32%
MONTREAL, QUEBEC -- (Marketwire) -- 11/09/11 -- SEMAFO (TSX: SMF)(OMX: SMF) today reported its third quarter financial and operating results for the three-month period ended September 30, 2011. All amounts are in US dollars unless otherwise stated.
Third Quarter 2011 Highlights
-- Gold production of 61,500 ounces
-- Record gold sales of $102.3 million, a 19% increase year over year
-- Record operating income of $40.8 million, an increase of 7% year over
year
-- Net income of $31.3 million, a decrease of 3% year over year
-- Net income attributable to equity shareholders of the Corporation of
$29.7 million or $0.11 per share compared to $32.1 million or $0.12 per
share for the same period last year
-- Cash flow from operating activities of $43.1 million or $0.16 per share,
an increase of 3% year over year
-- Debt free after the full repayment of our long-term debt
-- Announced expansion project plan to increase Mana's processing capacity
to 14,000 tonnes per day
-- Agreement with Burkina Faso's National Electricity Company Sonabel to
build a power line connecting the Mana Mine to the National Power Grid
-- Listing of SEMAFO's common shares on NASDAQ OMX Stockholm on October 20,
2011
-- Declaration of inaugural dividend of CA $0.02 on November 8, 2011.
A Word from the CEO
The constant solid performance of our Mana Mine in Burkina Faso, bolstered by a strong gold price, has allowed SEMAFO to deliver all-time highs in gold revenues, operating income, and margins.
Our 2011 third quarter revenues increased by 19% over the same period last year, to attain $102.3 million. Operating income was $40.8 million for the quarter, an increase of 7% year over year and 15% for the first nine months of the year compared to the same period in 2010. Our net income of $31.3 million for the quarter brings our year-to-date total to $84.6 million, a 13% increase over the first nine-month period of 2010. During the quarter, cash flow from operating activities amounted to $43.1 million or $0.16 per share.
Part of our operations strategy is to maximize cash flow. This was evidenced by the fact that, despite rapidly rising energy costs industry wide; we realized a record average total cash margin of $984 per ounce sold for the quarter. Our cash operating cost per tonne increased by only 9% for the quarter compared to the same period last year, demonstrating effective cost management. The nine-month total cash margin was $864 per ounce sold compared to $700 for the same period in 2010, a 23% increase.
On the operations side, as our Mana Mine continues to demonstrate its growth potential, we announced another phase of plant expansion aimed at increasing capacity to 14,000 tonnes per day and representing as much as 120,000 additional gold ounces annually. This can potentially bring Mana's total production to more than 300,000 ounces of gold per annum by 2014. Our decision to further expand the plant is supported by the positive drill results from the Fofina, Fobiri and Yaho zones and currently foresees the construction of a satellite crushing and milling facility, which will prepare the ore for final processing at the main plant.
SEMAFO's geology team reported consistent values and widths confirming the high-grade mineralization in the Fofina area, with some similarities to the gold-producing Nyafe zone. Also during the quarter initial drill results from the Massala-Saoura zone, located at the northern tip of our property, provided encouraging results. The team expanded the Wona SW deep zone with drill results including 4.07 g/t Au over 43 meters, while parallel zones showed interesting values and thickness that suggest important swelling, which will be taken in consideration in the underground development. Very recently, Kona open pit area infill drilling confirmed the distribution of the mineralization and outlined higher-grade zones.
We continue to believe that our 115-kilometer long Mana property is one of the best gold projects in West Africa, with the potential to become a mining district. Our systematic approach has led us to discover the very important Fofina and Fobiri zones some 18 months ago and the new Yaho zone, which is located in the same general area, early this year. Our drilling campaign continues to provide noteworthy results, identifying potential reserves and resources development opportunities and project expansion possibilities. Taking into consideration our growth strategy and production objectives, during the third quarter we allocated an additional $8.5 million to Mana's exploration budget, bringing the 2011 total budget for the property to $38.5 million.
Consolidated Results and Mining Operations
Three-month period Nine-month period
ended September 30 ended September 30
----------------------------
----------------------------
2011 2010 Variation 2011 2010 Variation
--------------------------------------------------------
--------------------------------------------------------
Operating Highlights
Gold ounces produced 61,500 65,500 (6%) 185,300 199,600 (7%)
Gold ounces sold 59,600 69,500 (14%) 182,400 198,700 (8%)
(In thousands of
dollars, except
amounts per ounce,
per tonne and per
share)
Revenues - Gold
sales 102,297 86,223 19 % 282,062 236,883 19 %
Mining operating
expenses (excluding
Government
royalties) 38,555 31,267 23 % 110,634 88,793 25 %
Government royalties 5,270 3,236 63 % 13,920 9,030 54 %
Operating income 40,756 37,949 7 % 106,716 92,585 15 %
Income tax expense 9,006 6,767 33 % 19,358 17,387 11 %
Net income 31,320 32,392 (3%) 84,563 75,059 13 %
Attributable to:
Equity shareholders
of the Corporation 29,682 32,102 (8%) 78,482 73,812 6 %
Non-controlling
interests 1,638 290 465 % 6,081 1,247 388 %
Cash flow from
operating
activities 1 43,139 41,776 3 % 117,383 108,480 8 %
Basic net income per
share 0.11 0.12 (8%) 0.29 0.28 4 %
Diluted net income
per share 0.11 0.12 (8%) 0.28 0.28 -
Operating cash flow
per share 2 0.16 0.15 7 % 0.43 0.42 2 %
Average realized
selling price (per
ounce) 1,717 1,241 38 % 1,546 1,192 30 %
Cash operating cost
(per ounce
produced) 3 637 454 40 % 602 445 35 %
Cash operating cost
(per tonne
processed) 3 37 34 9 % 36 32 13 %
Total cash cost (per
ounce sold) 4 733 496 48 % 682 492 39 %
Total cash margin
(per ounce sold) 5 984 745 32 % 864 700 23 %
1 Cash flow from operating activities excludes changes in non-cash working
capital items.
2 Operating cash flow per share is a non-GAAP financial performance measure
with no standard definition under IFRS. See the 'Non-GAAP financial
performance measures' section of the Corporation's MD&A.
3 Cash operating cost is a non-GAAP financial performance measure with no
standard definition under IFRS and is calculated using ounces produced and
tonnes processed. See the 'Non-GAAP financial performance measures' section
of the Corporation's MD&A.
4 Total cash cost is a non-GAAP financial performance measure with no
standard definition under IFRS and represents the mining operating expenses
and Government royalties per ounce sold.
5 Total cash margin is a non-GAAP financial performance measure with no
standard definition under IFRS and is calculated using the average realized
selling price and the total cash cost.
Management remains confident that the Corporation will attain its 2011 production guidance of between 238,000 and 263,000 ounces of gold at a cash operating cost of between $595 and $645 per ounce.
SEMAFO will host a conference call to discuss the results, as well as to provide an update on operations.
Date: Thursday, November 10, 2011
Time: 10:00 AM (EST)
Tel. local & overseas: 1 416 981-9000
Tel. North America: 1 800 917-9975
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 Vice-President Exploration and Mine Geology and Qualified Person, and Patrick Moryoussef, Vice-President Mining Operations.
The conference call will be archived for replay until November 30, 2011. To access the archived conference call, please dial 1 800 558-5253 and enter pass code 21541486 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 60 days.
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 Corporation's website at www.semafo.com. These and other corporate reports are also available on the website maintained by the Canadian Securities Administrators 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: 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.
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 'strategy', 'maximize', 'continues', 'potential', 'expansion', 'aimed at', 'increasing', 'by 2014', 'will', 'objective', 'believe', 'remains', 'confident', 'attain', 'committed', 'evolve', 'become', 'focus', 'pursuing', 'growth' 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 of our operations strategy to maximize cash flow, the ability of our Mana Mine to grow, the ability of another phase of plant expansion to increase capacity to 14,000 tonnes per day representing as much as 120,000 additional ounces annually, the ability to bring Mana's total production to more than 300,000 ounces of gold per annum by 2014, the ability of the Mana property to become a mining district, the ability to attain our 2011 production guidance of between 238,000 and 263,000 ounces of gold at a cash operating cost of between $595 and $645 per ounce, the ability to execute on our strategic focus, fluctuation in the price of currencies, gold or operating costs, mining industry risks, uncertainty as to the 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 2010 Annual MD&A and 2010 Annual Information Form, as updated in SEMAFO's 2011 First Quarter MD&A, 2011 Second Quarter MD&A and 2011 Third 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.
The above information has been made public in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act.
The MD&A and Financial Statements are available at the following links:
http://media3.marketwire.com/docs/FS_ENGLISH_Q3_2011.pdf
http://media3.marketwire.com/docs/MD_A_ENGLISH_Q3_2011_FINAL.pdf.
Contacts:
SEMAFO
Sofia St Laurent
Communications
514-744-4408
Toll-Free:1-888-744-4408
sstlaurent@semafo.com
Maria Bang
Brunswick Group Stockholm
46 (8) 410 32 189
mbang@brunswickgroup.com
