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Press release from Marketwire

SEMAFO Reports Record Second Quarter Net Income and Cash Flow

Net Income of $32.9 Million - Margins Up 16%

Wednesday, August 10, 2011

SEMAFO Reports Record Second Quarter Net Income and Cash Flow16:02 EDT Wednesday, August 10, 2011MONTREAL, QUEBEC--(Marketwire - Aug. 10, 2011) - SEMAFO (TSX:SMF) today reported its second quarter financial and operating results for the three-month period ended June 30, 2011. All amounts are in US dollars unless otherwise stated. Second Quarter 2011 HighlightsGold production of 63,800 ounces Record gold sales of $100.4 million, an increase of 15% year over year Record operating income of $40.6 million, an increase of 11% year over year Record net income of $32.9 million an increase of 7% year over year Net income attributable to equity shareholders of $30.6 million or $0.11 per share compared to $29.9 million or $0.12 per share for the same period last year Record cash flow from operating activities of $43.2 million or $0.16 per share Record throughput and production at Mana Follow-up drilling that more than doubled the strike length of the gold mineralization on our recently discovered Yaho zone at Mana Drilling at Mana's Fofina area continues to suggest a high-grade mineralization with some similarities to the gold-producing Nyafé deposit Encouraging initial drill results from Mana's Massala-Saoura area Mana's 2011 exploration budget gets $8.5 million increase Mana Underground receives green lightA Word from the CEO With continued strong performance at our Mana property in Burkina Faso and spurred on by a strong gold price, our second quarter revenues increased by 15% over the same period last year and by 26% compared to the first quarter of 2011. We achieved new milestones during the quarter with revenues reaching a record $100.4 million for the three-month period ended June 30, 2011. Our operating income attained an all-time high of $40.6 million for the quarter, an increase of 11% year over year and 60% compared to Q1 2011. We established a record $32.9 million in net income, representing a 7% increase over the same period last year. This quarter also saw record cash flow from operating activities of $43.2 million.Our operating cost per ounce produced for the three-month period ended June 30, 2011 increased by 2% quarter over quarter despite rapidly rising energy costs industry wide. Our total cash margin was $859 per ounce sold for the quarter, bringing our six-month total cash margin to $807 per ounce sold compared to $676 for the same period in 2010, a 19% increase. On the operations side, our Mana mine evidenced sustainable growth as a result of the completion of three phases of plant expansion. Mana's operations team delivered another strong performance with new records for ore processed, gold ounces produced, gold ounces sold and revenues. Phase IV of the plant expansion is progressing well and on schedule for commissioning by year-end. In the second quarter, we green-lighted the development of the Mana underground project following the results of the Underground feasibility study. Our human resources group is recruiting individuals specialized in underground mining and operations to complement and lend support to our team. Negotiations are underway with an experienced underground mining contractor who will bring the operation to start-up as well as train local staff. In light of the recent expansion of the Wona SW zone, which demonstrates opportunities to further increase underground reserves from those reported in the underground feasibility study, we are reviewing and optimizing mine engineering.SEMAFO's geology team successfully doubled the strike length of the newly-discovered Yaho zone to over 1.5 kilometers. This mineralization, which remains open in all directions, represents a new style of mineralization considerably different from Wona and Nyafé. These results also bring a better understanding of the zone which will assist our team in determining future work to ultimately increase resources. The new Yaho gold zone, which demonstrates outstanding mineralization widths, complements the Fofina – Fobiri discovery where assay results continue to suggest a high-grade mineralization with some similarities of the gold producing Nyafé deposit. The Fofina zone remains partially open and could provide additional flexibility to the Mana strategic plan in the near future. Air core drilling was carried out on the Massala-Saoura area during the first half of 2011 following the completion of magnetic and Helitem surveys, which identified regional scale anomalies associated with historical surface sample results ranging up to 13.8 g/t Au. With less than 15% of assayed samples received from the total 28,235 meters drilled, preliminary results already indicate the potential for significant mineralization. Hole MAC11-1613 returned 6.77 g/t Au across 8 meters along what appears to be a regional scale geological contact identified from the airborne magnetic-Helitem survey. Given SEMAFO's successful year-to-date exploration results at Mana and taking into consideration our growth strategy and increased production objectives at our current facility, we have allocated an additional $8.5 million to Mana's 2011 exploration budget. Exploration is to include more infill drilling and additional exploration and delineation which will be carried out this year on the different areas such as Fofina, Fobiri, Yaho, Wona SW and Massala-Saoura.In late June, we announced the decision to build an exploration laboratory which will be located on the Mana property. This facility will significantly reduce the turnaround time for drilling assay results.Our savoir-faire is fundamental to our commitment to maximize shareholder value, and was recognized by His Excellency Burkina Faso Prime Minister Luc Adolphe TIAO last month when he led a delegation which included the Minister of Mines, Quarries, and Energy, Salif Lamoussa KABORE on a visit to the Mana mine. On many occasions during the visit, His Excellency praised SEMAFO's exemplary performance and commitment to community service.Consolidated Results and Mining OperationsThree-month period ended June 30Six-month period ended June 3020112010Variation20112010VariationOperating HighlightsGold ounces produced63,80068,300(7%)123,800134,100(8%)Gold ounces sold66,10072,000(8%)122,800129,200(5%)(In thousands of dollars, except amounts per ounce and per tonne)Revenues – Gold sales100,39887,08515%179,765150,66019%Mining operating costs (excluding Government royalties)38,50030,41127%72,07957,52625%Government royalties5,1503,26058%8,6505,79449%Operating income40,59036,56511%65,96054,63621%Income tax expense6,2365,51413%10,35210,620(3%)Net income32,85130,7047%53,24342,66725%Attributable to: Equity shareholders of the Corporation30,63129,9162%48,80041,71017% Non-controlling interest2,220788182%4,443957364%Cash flow from operating activities 143,19141,3145%74,50866,58012%Basic net income per share0.110.12(8%)0.180.1613%Diluted net income per share0.110.11–0.170.166%Operating cash flow per share 20.160.16–0.270.264%Average realized price (per ounce)1,5191,21026%1,4641,16626%Cash operating cost (per ounce produced) 359042638%58444132%Cash operating cost (per tonne processed) 3363116%35329%Total cash cost (per ounce sold) 466046841%65749034%Total cash margin (per ounce sold) 585974216%80767619%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 costs 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 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 to $645 per ounce. SEMAFO will host a conference call to discuss the results, as well as to provide an update on operations. Date:Thursday, August 11, 2011Time:10:00 AM (ET)Tel. local & overseas:416 981-9011Tel. North America:1 800 379-4140The 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 September 1, 2011. To access the archived conference call, please dial 1 (800) 558 5253 and enter pass code 21531860 followed by the number sign (#).A live audio webcast of the conference can be accessed through SEMAFO's website at 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 These and other corporate reports are also available on the website maintained by the Canadian Securities Administrators at 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 "prospective", "continues", "suggest", "encouraging", "opportunities", "increase", "ultimately", "could", "additional", "potential", "remains confident", "will", "attain", "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 of the Wona SW zone to further increase underground reserves from those reported in the underground feasibility study, the ability of the extension of the Yaho zone to ultimately increase resources, the ability of the Fofina – Fobiri discovery to be a high-grade mineralization, the ability of the Fofina zone to provide additional flexibility to the Mana strategic plan in the near future, the ability of the Massala-Saoura area to attain significant mineralization, the ability to meet our 2011 production guidance of between 238,000 and 263,000 ounces of gold at a cash operating cost to between $595 to $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 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 and 2011 Second Quarter MD&A, and other filings made with Canadian securities regulatory authorities and available at These documents are also available on our website at 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, FCASEMAFOPresident & CEO514-744-4408Toll-Free:1-888-744-4408blasalle@semafo.comORCommunicationsSofia St