SEMAFO Reports Net Income of $33.6 Million for the Second Quarter 2010 - An Increase of 214% Year-Over-Year
MONTREAL, QUEBEC -- (Marketwire) -- 08/04/10 -- SEMAFO (TSX: SMF) today announced its second quarter financial and operational results for the three-month period ended June 30, 2010. All amounts are in US dollars unless otherwise stated.
Second Quarter 2010 Highlights
In the second quarter 2010, SEMAFO produced 68,300 ounces of gold and achieved gold sales of $87,085,000, compared to gold production of 64,100 ounces and sales of $58,646,000 for the corresponding period in 2009. Operating income increased to $37,526,000 for the three-month period ended June 30, 2010, compared to $17,043,000 in the second quarter 2009. Highlights for the second quarter ended June 30, 2010 include:
-- Gold production of 68,300 ounces, a 7% increase year over year
-- Gold sales of $87,085,000, an increase of 48% year over year
-- Cash operating cost of $426 per ounce compared to $419 in the same
period in 2009
-- Operating income of $37,526,000, a 120% increase year over year
-- Net income of $33,631,000 or $0.13 per share, a 214% improvement year
over year
-- Quarterly cash flow from operating activities of $42,210,000 or $0.16
per share, representing a 66% increase year over year
-- Continued exploration success at Mana
-- Increase of 125% of our mineral reserves, representing 961,000 ounces at
Mana
-- Completion of a $113,018,000 (C$119,887,500) equity financing
-- Purchase of a new mining fleet for the Samira Hill Mine
A Word from the CEO
SEMAFO set new records and posted significant year-over-year increases in revenue, operating income, net income, earnings per share and cash flow.
We produced 68,300 ounces of gold during the quarter, an increase of 7% over the second quarter 2009. We sold 72,000 ounces of gold during the quarter, representing an increase of 14% year over year. The variation in gold sales versus gold produced stems from a gold shipment that was delayed at the end of the first quarter to early in the second quarter. Gold sales totaled $87,085,000 for the quarter, 48% higher than the previous year. Our operating income increased by 120% to $37,526,000 and our net income increased by 214% to $33,631,000 year over year. These results are net of royalties paid and taxes accrued to the countries in which we operate amounting to $9,600,000. In addition, 2009 income taxes of $5,300,000 were paid during the quarter to a host country.
SEMAFO's average realized gold price for the quarter was $1,210 per ounce, $13 per ounce higher than the London Gold Fix (PM), and up $99 over the first quarter 2010. As a result of our successful gold selling strategy, our average realized gold price has surpassed the average London Gold Fix (PM) for a sixth consecutive quarter. We posted quarterly cash flow from operations of $42,210,000, up 66% year over year and 60% over the first quarter of 2010.
SEMAFO's liquidity and financial position remain strong. Through a bought-deal equity financing in June, we netted proceeds of $106,700,000, thereby increasing our cash position to $178,000,000.
Our flagship Mana Mine continued to excel with its best ever quarterly production of 45,700 ounces of gold, accounting for 67% of SEMAFO's total record production of 68,300 ounces of gold for the three-month period ended June 30, 2010. We continued to see progress in our organic growth strategy during the quarter. Our exploration programs delivered consistently impressive results. Ten drilling rigs were active on the property including core, reverse-circulation and auger (geochemical sampling) drilling, delivering exploration results that further attest to the property's excellent geological potential.
In June, we announced a 125% increase in reserves at Mana. The Wona Underground pre-feasibility results contributed to updated reserves as at April 30, 2010 for a total 1.7 million ounces. Our reserves at Mana have more than doubled, the underground potential is still open at depth and we have yet to include the results from the current Wona SW Zone. Metallurgical tests conducted on the Wona Underground revealed a 5% increase in hard rock recovery at Mana.
Given these outstanding exploration results and accelerated drilling program, we have allocated an additional $9,000,000 to Mana's exploration budget.
We are pleased with our second quarter performance as we continue to deliver on our objectives and post strong financial and operational results. Moving forward, we believe that SEMAFO is well-positioned to further benefit from the positive gold price environment and continue our successful record of discovery, development and operations in order to deliver significant long-term value to our shareholders.
Consolidated Results and Mining Operations
Three-month period ended Six-month period ended
June 30 June 30
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2010 2009 Variation 2010 2009 Variation
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Operating Highlights
Gold ounces produced 68,300 64,100 7% 134,100 122,200 10%
Gold ounces sold 72,000 63,000 14% 129,200 116,600 11%
(In thousands of
dollars, except
amounts per ounce
and per tonne)
Revenues - Gold
sales 87,085 58,646 48% 150,660 108,141 39%
Mining operating
costs 30,411 26,945 13% 57,526 52,470 10%
Government royalties 3,260 2,375 37% 5,794 4,365 33%
Operating income 37,526 17,043 120% 57,049 28,216 102%
Net income 33,631 10,721 214% 47,436 19,623 142%
Cash flow from
operating
activities(1) 42,210 25,444 66% 68,667 43,944 56%
Basic net income per
share 0.13 0.05 160% 0.19 0.08 138%
Diluted net income
per share 0.13 0.05 160% 0.18 0.08 125%
Operating cash flow
per share(2) 0.16 0.11 45% 0.27 0.19 42%
Average realized
price (per ounce) 1,210 931 30% 1,166 927 26%
Cash operating cost
(per ounce
produced)(3) 426 419 2% 441 439 -
Cash operating cost
(per tonne
processed)(3) 31 31 - 32 31 3%
Total cash cost (per
ounce sold)(4) 468 465 1% 490 487 1%
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(1)Cash flow from operating activities excludes changes in non-cash
working capital items and settlement of liabilities related to asset
retirement obligations.
(2)Operating cash flow per share is a non-GAAP measure. See the 'Non-GAAP
Measures' section of the Company's MD&A.
(3)Cash operating cost is calculated using ounces produced and tonnes
processed. See the 'Non-GAAP Measures' section of the Company's MD&A.
(4)Total cash cost is a non-GAAP measure and represents the mining
operating costs and government royalties per ounce sold.
Outlook
SEMAFO's gold production for the month of July 2010 totaled 21,000 ounces, 15,000 ounces from the Mana Mine and 6,000 ounces from the Samira Hill and Kiniero Mines. Accordingly, management remains confident that the Company will attain its 2010 production guidance of between 235,000 and 260,000 ounces of gold.
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.
SEMAFO will host a conference call to discuss the results, as well as to provide an update on operations.
Date: Thursday, August 5, 2010
Time: 10:00 AM (ET)
Tel. local & overseas: 416 981-9000
Tel. North America: 1 800 750-5857
The conference call will feature Benoit La Salle, CA, President and Chief Executive Officer, Benoit Desormeaux, CA, Executive Vice-President and Chief Operating Officer, Martin Milette, CA, Chief Financial Officer, Michel Crevier, PGeo MScA, SEMAFO's Geology Manager and Qualified Person, and Patrick Moryoussef, Eng, Mining Operations Manager.
The conference call will be archived for replay until August 25, 2010. To access the archived conference call, please dial 1 800 558-5253 and enter pass code 21475876 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 90 days.
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 in West Africa.
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 'growth', 'strategy', 'potential', 'further', 'continue', 'long-term', '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 to meet our 2010 production guidance of between 235,000 and 260,000 ounces of gold, 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 2009 Annual MD&A and 2009 Annual Information Form, as updated in SEMAFO's 2010 First Quarter MD&A and Second 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.
Contacts:
SEMAFO
Benoit La Salle
President & CEO
514-744-4408
Toll-Free: 1-888-744-4408
blasalle@semafo.com
SEMAFO
Sofia St Laurent
Communications
514-744-4408
Toll-Free: 1-888-744-4408
sstlaurent@semafo.com