Message from CEO


The 2016 third quarter was another solid quarter for the Corporation. We generated revenues of $80 million, an 11% increase relative to the same quarter in 2015. The strong revenue performance was caused by a $218 increase in the average realized selling price to $1,337 per ounce, partially offset by lower gold ounces sold. The higher revenue drove up our adjusted operating income to $21 million, compared with $18 million in Q3 2015. And, we generated $39 million of cash flow from operating activities in the quarter, a 13% increase that is attributable to the higher sales.

Despite the rainy season in the third quarter, we produced 62,500 ounces, a slight reduction compared to the prior-year quarter that directly results from the lower head grade. Following this year’s increase in gold prices, we decided to process low-grade material in the quarter to take advantage of available milling capacity and generate additional cash flow. We added 127,400 tonnes of low grade material to the mix, which increased the ore processed and decreased the head grade to 2.71 g/t.  Absent the impact of this decision, the head grade from the pits would have been 3.1 g/t in the third quarter of 2016. Consequently, our total cash1 and all-in sustaining cost2 reached $574 and $751 per ounce, respectively.

In the quarter, we announced that we had commenced pre-stripping activities at the Wona North pit. The annual mining capacity at Mana will increase to 40 million tonnes for the next three years in order to produce over 200,000 ounces of gold per year. To ensure that we reach the guided production capacity in 2017, we have established development capital expenditures at Mana of $13 million, $10 million of which will be allocated to the purchase of mining equipment and $3 million to development of Wona. On-site delivery of the mining fleet is expected in early 2017.

Our performance year to date leaves us well-placed relative to our 2016 production and cost guidance. We produced 185,100 ounces in the first nine months of 2016, in line with our full-year guidance of 225,000 to 245,000 ounces. For the nine-month period ended September 30, 2016, SEMAFO's all-in sustaining cost2 of $730 per ounce and total cash cost1 of $542 per ounce were within our 2016 cost guidance ranges.

In the quarter, we announced our production targets for the coming three years in order to provide visibility on our growth story. While next year’s production is expected to be similar to that of 2016, 2018 and 2019 production should benefit from the addition of Natougou quality ounces.  The 2018 and 2019 consolidated costs per ounce should also be positively impacted by the onset of production at Natougou.

As cash flow remains a priority for us, I am pleased to say that year-to-date we have generated $112 million of cash flow from operating activities. Coupled with our cash and cash equivalents of $282 million at the end of the quarter, we are in an excellent position to finance construction of Natougou and our exploration program.


Natougou continues to progress on time and on budget, with $7.7 million spent to date. This is an exciting time for us – we are fully funded and almost all permitted to make the transition to a mid-cap producer of over 400,000 ounces per year in just over two years. Detailed design and engineering advanced in the quarter to 37% completion and is expected to be finalized in the first quarter of 2017. In addition, we continue to expect receipt of the final mining permit in the fourth quarter.


Drilling in the third quarter was impacted by the rainy season. Our greatest focus continues to lie on the Natougou Project and Wona proximal areas. In the third quarter, we compiled data from the completed airborne geophysical survey on the Tapoa Permit Group where the Natougou deposit is located. Results from the survey showed a series of lineaments across the entire property within a two- to four-kilometer wide corridor. A number of targets were identified, and an RC drill program commenced in the fourth quarter of 2016.

A portion of the RC drilling focused on defining the limits of the footwall zone below the Boungou Shear Zone within the pit area and extending the west flank mineralized zone of the shear zone. We have already commenced a drill program at 80-meter spacing in order to bring the west flank mineralized zone into the inferred resources category by year-end.

In the Mana Project area, the RC drill program was mainly carried out within trucking distance of the Mana Mill such as to the northeast of Wona-Kona. One RC rig is still in operation on the Mana Ouest permit.

Community Outreach

With respect to our community relations efforts, in the quarter, the SEMAFO Foundation helped families living close to the Mana Mine prepare for the new school year by distributing over 12,000 school kits and evaluating a site for a new primary school.

In the Natougou region, the Foundation completed construction of its first primary school in the quarter, in addition to distributing school kits and solar lamps to school children. Community services were reinforced by the launch of new sanitary facilities and cereal banks, and by the commencement of construction of a women’s activity centre.

In Conclusion

In closing, I would like to highlight that the third quarter was another good quarter where we again demonstrated our ability to execute, operationally and financially.  Our balance sheet is in excellent shape.  Looking forward to the fourth quarter, we expect it to be a busy one on the Natougou front. We expect to receive our Natougou mining permit and begin construction, and drill up the west flank mineralised zone into the inferred resources category. This should allow us to finish the year in strength and provide the foundation for a strong start to 2017.

Benoit Desormeaux
President and Chief Executive Officer
November 9, 2016

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.