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Press release from Marketwire

SEMAFO Reports Record 2010 Cash Flow From Operations of $147.5 Million

Record Production - Revenues - Net Income - Cash Margins

Wednesday, March 16, 2011

SEMAFO Reports Record 2010 Cash Flow From Operations of $147.5 Million17:15 EDT Wednesday, March 16, 2011MONTREAL, QUEBEC--(Marketwire - March 16, 2011) - SEMAFO (TSX:SMF) today announced its financial and operational results for the fourth quarter and year ended December 31, 2010. All amounts are in US dollars unless otherwise stated. 2010 HighlightsIn 2010 SEMAFO had its best year ever with production totaling 261,100 ounces of gold for sales of $323.3 million, compared to gold production of 242,400 ounces and sales of $240.8 million in 2009. Cash flow from operating activities increased to a record $147.5 million, compared to $92.1 million in 2009. Highlights for the year ended December 31, 2010 include:Record gold production of 261,100 ounces, a 8% increase over the same period last year Record gold sales of $323.3 million, an increase of 34% compared to last year Cash operating cost of $466 per ounce produced compared to $463 for the same period in 2009 Record operating income of $128.9 million, an increase of 112% compared to 2009 Record total cash margin of $723 per ounce Record net income of $103.2 million or $0.39 per share, an improvement of 137% over the same period last year Record cash flow from operating activities of $147.5 million or $0.56 per share, an increase of 60% over last year Increase of 180% in proven and probable reserves at Mana Continued exploration success at Mana Successful completion of Phases I, II and III of the Mana plant expansion Encouraging exploration results at Samira Hill Fourth Quarter Highlights Gold production of 61,500 ounces, a 6% increase over the same period last year Gold sales of $86.4 million, an increase of 18% compared to last year Cash operating cost of $533 per ounce produced compared to $506 for the fourth quarter 2009 Cash operating cost of $ $408 per ounce produced at Mana compared to $399 for the same period in 2009 Operating income of $33.2 million, an increase of 90% compared to 2009 Record total cash margin of $795 per ounce Net income of $27.0 million or $0.09 per share, an improvement of 157% over the same period last year Cash flow from operating activities of $38.7 million or $0.14 per share, an increase of 62% over last year Successful completion of Phase III of the Mana plant expansion A Word from the CEOSEMAFO has grown from a grassroots exploration company to a three-mine gold producer. Our operations have evolved, essentially owing to our unique savoir-faire, and today provide our Corporation with a solid platform for sustainable growth. In 2010, we achieved record production, revenues, net income, cash flow from operating activities and operating cash flow per share, while our cash operating cost remained comparable to the previous year.Over the past five years our cash margin rose from $45 to $723 per ounce, outpacing the average gold price increase. Our cash flow from operating activities totaled $147.5 million in 2010 compared to negative cash flow of $ 4 million in 2006, and our basic net income per share increased from a $0.11 basic net loss per share to a $0.39 basic net income per share for the same period.In 2010, we celebrated the production of our one-millionth ounce of gold, an accomplishment unmatched by the majority of companies in our industry.Energized by a 180% increase in reserves and 195% in inferred resources at Mana, our team continues to focus on this property as a flagship asset in our value creation model. Recognizing that the structures identified thus far represents less than 10% of the property, in 2010 we invested $18 million in accelerated exploration programs. We are motivated by the excellent 2010 exploration results and hence have established an initial $30-million exploration budget for the Mana property in 2011.We are pleased with the successful completion of our Mana plant expansion, which increased plant capacity from 4,000 tonnes per day to 6,000 tonnes per day in hard rock. The construction and commissioning of all three phases of the plant expansion were efficiently scheduled and executed on time and on budget with little or no impact on our operations.The next few years promise to be an exciting time for SEMAFO, as our expanded Mana property continues to strengthen our production profile. As part of this initiative, we will continue to maximize Mana's on-surface and at-depth exploration programs to ultimately increase shareholder value. In the past five years we have proven that our growth is sustainable and that our unique savoir-faire is present at all levels of our operations. We are now considered a significant player in our industry and remain committed to continue to grow responsibly to create value for our shareholders.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. 2010 Fourth Quarter and Year-End Conference CallSEMAFO will host a conference call to discuss the results, as well as to provide an update on operations.Date:Thursday, March 17, 2011Time:10:00 AM (ET)Tel. local & overseas:416 641-6699Tel. North America:1 888 223-4512The 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 7, 2011. To access the archived conference call, please dial 1 800 558-5253 and enter pass code 21512810.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.Annual and Special Shareholders MeetingSEMAFO's Annual Meeting of Shareholders will be held on Tuesday, May 10, 2011 at 4:00 p.m. at Hotel Reine-Élizabeth, Salle Duluth, 900 René-Lévesque Boulevard West, in Montreal, Quebec. Attendees will have the opportunity to ask questions and meet the management team and Board of Directors.Consolidated Results and Mining Operations20102009VariationOperating HighlightsGold ounces produced 261,100242,4008%Gold ounces sold260,800243,8007%(In thousands of dollars, except amounts per ounce and per tonne)Revenues – Gold sales 323,275240,78834%Mining operating costs 122,144114,7956%Government royalties 12,7129,47034%Operating income 128,87360,905112%Income tax expense 20,20410,87586%Non-controlling interest 1,752--Net income 103,24643,505137%Adjusted net income 1103,24639,968158%Cash flow from operating activities 2147,45192,14760%Basic net income per share 0.390.18117%Diluted net income per share 0.380.18111%Operating cash flow per share 30.560.3847%Average realized price (per ounce) 1,24098826%Cash operating cost (per ounce produced) 44664631%Cash operating cost (per tonne processed) 43333-Total cash cost (per ounce sold) 55175101%Total cash margin (per ounce sold) 672347851%1Adjusted net income is a non-GAAP measure. For 2009, the adjusted net income represents the net income excluding a gain on settlement of advances payable totaling $3,537,000.2Cash flow from operating activities excludes changes in non-cash working capital items and settlement of liabilities related to asset retirement obligations.3Operating cash flow per share is a non-GAAP measure. See the "Non-GAAP Measures" section of the Corporation's MD&A. 4Cash operating cost is a non-GAAP measure and is calculated using ounces produced and tonnes processed. See the "Non-GAAP Measures" section of the Corporation's MD&A.5Total cash cost is a non-GAAP measure and represents the mining operating costs and government royalties per ounce sold. 6Total cash margin is a non-GAAP measure and is calculated using the average realized price and the total cash cost.Consolidated Balance SheetsAs at December 31, 2010 and 2009 (Expressed in thousands of US dollars) 2010 $2009 $AssetsCurrent assetsCash on hand220,43962,481Restricted cash (note 8)3,750-Accounts receivable6,0219,894Inventories (note 4)68,95260,300Other short-term assets (note 5)5,2384,556304,400137,231Restricted cash6574,407Property, plant and equipment (note 6)257,413200,375Investment and other assets (note 7)19,60019,743582,070361,756LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities36,78933,658Income tax payable21,2315,019Current portion of long-term debt (note 8)14,82418,80872,84457,485Long-term debt (note 8)-15,612Advance payable (note 9)3,0073,007Asset retirement obligations (note 10)7,0085,879Future income taxes (note 14)3,0237,11085,88289,093Non-controlling interest1,752-Shareholders' EquityShare capital (note 11)452,542329,759Contributed surplus (note 12)8,0535,998Retained earnings (Deficit)33,841(63,094)494,436272,663582,070361,756Consolidated Statement of OperationsFor the Years Ended December 31, 2010 and 2009 (Expressed in thousands of US dollars) 2010 $2009 $Revenue – Gold sales323,275240,788ExpensesMining operations122,144114,795Government royalties12,7129,470Amortization of property, plant and equipment41,93140,863Administration17,14514,367Accretion expense of asset retirement obligations470388194,402179,883Operating income128,87360,905Charitable donations – Fondation SEMAFO1,068722Interest, banking fees and other income128355Interest on long-term debt2,7284,947Stock-based compensation3,5251,337Change to the fair value of derivative financial instruments (note 13)1452,383Write-down of exploration property – Datambi project (note 6 b)-827Gain on settlement of advances payable (note 9)-(3,537)Foreign exchange gain(3,923)(509)Net income before income taxes and non-controlling interest125,20254,380Income tax expense (recovery) (note 14)Current23,7765,019Future(3,572)5,85620,20410,875Non-controlling interest1,752-Net income for the year103,24643,505Basic net income per share (note 15)0.390.18Diluted net income per share (note 15)0.380.18Consolidated Statements of Cash FlowsAs at December 31, 2010 and 2009 (Expressed in thousands of US dollars) 2010 $2009 $Cash flows from :Operating activitiesNet income for the year103,24643,505Adjustment for :Change to fair value of derivative financial instruments1452,383Amortization of property, plant and equipment41,93140,863Stock-based compensation3,5251,337Accretion expense of asset retirement obligations470388Amortization of deferred transaction costs503871Gain on settlement of advances payable-(3,537)Write-down of exploration property-827Unrealized foreign exchange gain(549)(346)Non-controlling interest1,752-Future income taxes (recovery) expense(3,572)5,856147,45192,147Changes in non-cash working capital items and settlement of liabilities related to asset retirement obligations (note 17 a)12,311(6,984)159,76285,163Financing activitiesReimbursement of long-term debt(20,065)(26,951)Settlement of advances payable-(3,000)Issuance of share capital121,31335,713Share issue expenses(6,311)(2,212)94,9373,550Investing activitiesAdditions to property, plant and equipment(96,741)(35,084)Financial instruments settled-(15,483)Decrease in restricted cash-893(96,741)(49,674) Change in cash on hand during the year157,95839,039Cash on hand – beginning of year62,48123,442Cash on hand – end of year220,43962,481About 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 StatementsThis 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 "continues", "will", "growth", "create", "evolve", "become", "focus", "maximize", "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 complete our $30 million exploration program for the Mana property in 2011, the ability to continue to maximize Mana's on-surface and at-depth exploration programs to ultimately increase shareholder value, the ability to continue to grow responsibly to create value for our shareholders, the ability to execute on our strategic focus, 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 2010 Annual 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.FOR FURTHER INFORMATION PLEASE CONTACT: Benoit La Salle, CASEMAFOPresident & CEO514-744-4408Toll-Free:1-888-744-4408blasalle@semafo.comORCommunicationsSofia St Laurent514-744-4408Toll-Free:1-888-744-4408sstlaurent@semafo.com