Press release from Marketwire
SEMAFO Releases Third Quarter 2013 Results
- Receipt of Authorization to Begin Development at Siou for Anticipated Production in Second Quarter of 2014 - Net Income from Continuing Operations Attributable to Equity Shareholders of $1.7 million - Cash Flow from Operating Activities of $15.6 Million
Wednesday, November 13, 2013
SEMAFO Releases Third Quarter 2013 Results08:35 EST Wednesday, November 13, 2013
MONTREAL, QUEBEC--(Marketwired - Nov. 13, 2013) - SEMAFO (TSX:SMF)(OMX:SMF) today reported its financial and operating results for the three-month period ended September 30, 2013. All amounts are in US dollars unless otherwise stated.
Third Quarter 2013 in Review
- Siou adds 769,300 ounces at 4.94 g/t Au to Mana's gold reserves
- Mana's gold reserves increased 28% to 2.4 million ounces, net of depletion
- Mana's average mineral reserve grade increased by 20% to 2.77 g/t Au
- Siou inferred mineral resources of 795,300 ounces at 3.97 g/t Au
- Capital expenditures at Siou reduced to $12.5 million from $25.0 million
- The Samira Hill and Kiniero Mines classified as assets held for sale and discontinued operations
- Gold production at Mana of 38,700 ounces, compared to 36,600 ounces for the same period in 2012
- Gold sales at Mana of $49.5 million, a 9% decrease year over year
- Operating income from continuing operations of $0.4 million, compared to $7.5 million for the same period in 2012
- Net income from continuing operations attributable to equity shareholders of $1.7 million or $0.01 per share compared to $1.8 million or $0.01 per share for the same period in 2012
- Cash flow from operating activities1 from continuing operations of $15.6 million or $0.06 per share compared to $14.7 million or $0.05 per share for the same period in 2012
|(1)||Cash flow from operating activities excludes changes in non-cash working capital items.|
A Word from the CEO
We are pleased to announce today that the Corporation has received authorization for development of our high-grade Siou deposit as well as the Fofina deposit. Now that we have received the authorization ΓöÇ the penultimate step in the mining permit extension process ΓöÇ we can commence pre-stripping and road construction work at Siou in the coming months and start production in the second quarter of 2014. This places us at least six months ahead of our most recent schedule, a real accomplishment given Siou`s two-year timeline from discovery to production. In addition, the accelerated permitting process allows us to forecast production start-up at Fofina in 2015, instead of in 2016 as originally planned.
Since the Siou deposit is located a mere 15 kilometers from the Mana processing plant and ore from Siou will be trucked to the plant, capital expenditures required to bring Siou into production are minimal. There is no need to relocate villages, invest in new infrastructure or other significant ancillaries. We have therefore halved the capital expenditures needed in 2014 to bring Siou to production, to $12.5 million from the $25.0 million initial budget.
The Siou deposit remains open laterally and at depth. Significant inferred resources located approximately 180 meters below the surface require additional tighter-spaced drilling in order to bring them to mineral reserves. This is scheduled for 2015-2016.
For the fourth quarter, we have allocated the $3.5 million remaining in our 2013 exploration budget for activities in the Siou vicinity in order to find and define new drill targets for 2014. Exploration will consist mainly of 120,000 meters of auger drilling, geochemical surveys and field proofing as well as 8,500 additional soil samples.
During the quarter, we delivered on our promise and announced Mana's mineral reserves and resources estimation as at June 30, 2013. Mineral reserves and inferred resources2 at our high-grade Siou deposit totalled 769,300 and 795,300 ounces of gold, respectively. Proven and probable reserves of 4,842,900 tonnes at 4.94 g/t Au were calculated using a conservative gold price of $1,100 per ounce, demonstrating the robustness of the deposit. Siou has effectively increased the average reserve grade at Mana by 20%. Moreover, when Siou begins production, it will bring quality ounces to Mana's processing plant, ultimately leading to increased production and lower total cash cost per ounce. Once full production is attained, we estimate that Siou will account for approximately 30% of the ore mix at the processing plant. This is a perfect example of the implementation of our strategy to increase shareholder value.
In the third quarter of 2013, Mana produced 38,700 ounces of gold at a total cash cost of less than $800 per ounce. For the nine-month period ended September 30, 2013, production totalled 122,900 ounces at a total cash cost of $725 per ounce. Third-quarter net income from continuing operations attributable to equity shareholders totalled $1.7 million or $0.01 per share, and cash flow from operating activities from continuing operations amounted to $15.6 million or $0.06 per share.
Early in 2013, we made reference to the consideration of strategic alternatives for our two non-core assets due to their extreme sensitivity to downturns in the price of gold. In this regard, during the year we recorded impairments for the Samira Hill and Kiniero Mines. Consequently, during the third quarter, we placed the Samira Hill Mine on care and maintenance and will wind down operations at the Kiniero Mine to an eventual care and maintenance status in the coming months. Both properties are available for sale and in this third quarter 2013 MD&A, we consider these two assets as discontinued operations as at September 30, 2013 and present gold sales, costs, profits and cash flow from operations for the Mana property only.
In light of the uncertainty and ongoing volatility in the price of gold and considering that bringing Siou into production and continuing exploration are the key to value creation and constitute a priority, we decided not to declare a semi- annual dividend at this time. In addition, we took additional steps to further reduce capital expenditures and administrative costs. We should begin to reap the results of the latter in the fourth quarter, with a more significant impact in 2014.
The Corporation is maintaining its 2013 annual production guidance for Mana of between 153,000 and 168,000 ounces with the total cash cost expected to be at the lower end of our established guidance of between $805 and $855 per ounce.
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 regulators at www.sedar.com.
|(2)||Resources are exclusive of reserves.|
Consolidated Results and Mining Operations from Continuing Operations
|Three-month period||Nine-month period|
|ended September 30,||ended September 30,|
|2013||2012 3,4||Variation||2013||2012 3,4||Variation|
|Operating Highlights from Continuing|
|Gold ounces produced||38,700||36,600||6||%||122,900||127,100||(3||%)|
|Gold ounces sold||36,900||32,800||13||%||121,200||121,800||-|
|(in thousands of dollars, except amounts per ounce, per tonne and per share)|
|Revenues - Gold sales||49,488||54,406||(9||%)||175,847||202,690||(13||%)|
|Mining operating expenses (excluding government royalties)||27,130||27,220||-||79,134||81,536||(3||%)|
|Write-off of property, plant and equipment||-||-||-||-||16,998||-|
|Impairment of investment in GoviEx||-||-||-||19,600||-||-|
|Loss on sale of current investment||-||-||-||-||24,297||-|
|Income tax expense (recovery)||(1,152||)||4,849||-||8,517||14,097||(40||%)|
|Net income from continuing operations attributable to equity shareholders||1,660||1,766||(6||%)||7,798||3,772||107||%|
|Basic earnings per share from continuing operations||0.01||0.01||-||0.03||0.02||50||%|
|Diluted earnings per share from continuing operations||0.01||0.01||-||0.03||0.02||50||%|
|Cash flow from operating activities from continuing operations1||15,575||14,695||6||%||61,365||75,643||(19||%)|
|Operating cash flow per share from continuing operations2||0.06||0.05||20||%||0.22||0.28||(21||%)|
|(1)||Cash flow from operating activities from continuing operations excludes changes in non-cash working capital items.|
|(2)||Operating cash flow per share from continuing operations is a non-IFRS financial performance measure with no standard definition under IFRS. See the "Non-IFRS financial performance measures" section of the Corporation`s MD&A, note 19.|
|(3)||Amounts have been restated for the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. Please refer to note 6 of the financial statements.|
|(4)||Amounts have been restated to reflect the discontinued operations.|
SEMAFO's senior management will host a conference call today at 10:00 AM to discuss the third quarter financial and operational results, as well as to provide an update on the Corporation's activities.
|Conference Call:||Tel. local & overseas:||+1 (416) 981 9000|
|Tel. North America:||1 (800) 763 1505|
The conference call will be archived for replay until December 3, 2013. To access the archived conference call, please dial 1 (800) 558-5253 and enter pass code 21685822 followed by the number sign (#).
A live audio webcast of the conference will be accessible through SEMAFO's website at www.semafo.com. The webcast will be available for replay for a period for 30 days.
SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation currently operates two gold mines: the Mana Mine in Burkina Faso and the Kiniero Mine in Guinea. SEMAFO is committed to evolve in a conscientious manner through the responsible development of its high potential Mana property. 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 "guidance", "scheduled", "will", "ultimately", "leading", "increased", "strategy", "expected", "begin", "anticipated", "commence", "estimated", "committed", "evolve", "become", "pursuing", "growth", "opportunities" 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 meet our annual production guidance for Mana of between 153,000 and 168,000 ounces with a total cash cost at the lower end of our established guidance of $805 and $855 per ounce, the ability to begin production at Siou in the second quarter of 2014, Siou's ability to bring quality ounces to Mana's processing plant, ultimately leading to increased production and lower total cash cost per ounce, the ability of our strategy to increase shareholder value, the ability to commence pre-stripping and road construction work at Siou in the coming months, the ability to commence production from the Fofina deposit in 2015, 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 2012 Annual MD&A, as updated in SEMAFO's 2013 First Quarter MD&A, 2013 Second Quarter MD&A and 2013 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Vice-President, Investor Relations
Cell: +1 (514) 240 2780
Sofia St Laurent
Communications & Investor Relations
Tel. local & overseas: +1 (514) 744 4408
North America Toll-Free: 1 (888) 744 4408