Message from CEO


Our Q4 results capped off what was a good year for SEMAFO and our shareholders. We entered with two primary goals:  to achieve our ninth consecutive year of meeting production guidance and to move the Natougou project on time and on budget through the feasibility study and permitting process. I am happy to highlight that we succeeded on both counts. In fact, the year finished with Mana achieving not only its production, but also its cost guidance for the year.  And, also by year-end 2016, our dedicated teams had successfully advanced Natougou through a robust feasibility study, an environmental and social impact assessment study, procurement of all long-lead items, near-completion of the detailed engineering process, receipt of the mining permit and construction start-up, all on time and on budget. 

In 2016, Mana delivered one of its highest production levels – more than 240,000 ounces – at a total cash cost1 of $548 per ounce. As a result, our all-in sustaining cost2 came in at $720 per ounce, at the lower end of our guidance of between $720 and $760 per ounce.  We recorded gold sales of $300 million, similar to 2015. Adjusted net income attributable to shareholders was $48 million or $0.15 per share compared with $41 million and $0.14 per share in 2015.

We enter 2017 in a very strong financial position, having closed 2016 with $274 million in cash and cash equivalents after generating $142 million in cash flow from operating activities and reducing debt by $30 million.

In 2017, we expect stable production of between 215,000 and 235,000 ounces of gold at an all-in sustaining cost2 of between $795 and $835 per ounce, both of which are expected to improve once Natougou is in production.

At the end of 2016, construction of the high-grade Natougou project commenced. Our focus this year will be on ensuring that we meet our different Natougou milestones including completion of detailed engineering, start of construction of the process plant and start of pre-stripping activities in Q2. We also expect construction of houses for the resettled communities to begin in the second quarter. 

In spite of our strong commitment to exploration in 2016, reserves did not increase in the year. At year-end 2016, gold reserves net of production totalled approximately 3.0 million ounces of gold compared to 3.3 million ounces at year-end 2015. Consolidated measured and indicated resources were relatively unchanged at 3 million ounces. However, inferred resources increased mainly due to completion of a drill program at the West Flank Sector at Natougou. Inferred resources increased by 119% to 754,000 ounces.

Both the exploration activities planned in our budget this year and its expansion to $23 million speak to our determination to add quality new reserves and resources.  Given the positive drill results in 2016, more than 60% of the total budget - $15 million – has been assigned to the Natougou project. A provision of $8.5 million has been allocated for an infill drill program on the Natougou deposit with the object of converting the inferred resources on the West Flank Sector into indicated resources. In the second half of the year, we will commence a pre-feasibility study into a potential underground operation on the West Flank with expected completion in the first quarter of 2018. In addition, an amount of $5 million has been allocated to regional exploration on the Tapoa Permit Group.

At Mana, a program of auger, RC and core drilling totalling $5 million will be carried out in the year with a focus on the Siou Sector. Of the $5 million, $1 million will be used for an infill drill program on the underground potential at Siou that could increase the mine life of the deposit.

The remaining $3 million in the total exploration budget is split between drill programs at the Nabanga, Kongolokoro and Korhogo projects. At the Nabanga deposit, the drill focus has shifted from exploring the extension to finding parallel structures in the same intrusive.  Since we have no plans to further explore the Banfora Zone, we recorded a non-cash impairment loss of $8.9 million in the year.

On the community front, the year 2016 was a busy one for SEMAFO Foundation, which took on extra personnel to work full time with communities in the Natougou area. At Mana, more than half of its budget was devoted to upgrading and developing the educational sector through construction of new schools, distribution of 12,000 school kits and adding sanitary facilities. Through the Foundation’s support, communities had improved access to water and increased their usage of energy generators. In the year, the Foundation’s livelihood projects continued to thrive. Sesame production increased 35% year over year to 733 tonnes, and participants generated $500,000, representing a 4% year-over-year increase. The year also saw the launch of a new livelihood project for women.

In its first full year of activities in the Natougou region, SEMAFO Foundation completed construction of a primary school, in addition to distributing school kits and solar lamps to school children. Community facilities were strengthened by the launch of new sanitary facilities and cereal banks, and by the commencement of construction of a women’s activity centre. First meetings have been held with sesame producers with the goal of offering production support.

In Conclusion

SEMAFO demonstrated solid financial, operational and exploration results in 2016. In 2017, we expect to set the table for achieving higher production and lower costs over the coming years by progressing construction of the Natougou project on time and on budget. Through our expanded exploration budget, we maintain our focus on delivering mine life extensions at both Mana and Natougou and ultimately creating greater shareholder returns.


Benoit Desormeaux, CPA, CA
President and Chief Executive Officer
March 8, 2017

All amounts in US$, unless otherwise indicated

1 Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and government royalties per ounce sold.

2 All-in sustaining cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the total cash cost, plus sustainable capital expenditures and stripping costs per ounce.