Message from CEO


Operationally, the first quarter of 2017 was a difficult one. We processed 732,000 tonnes of ore in the quarter at an average grade of 2.55 g/t for quarterly production of 55,400 ounces of gold at a total cash cost of $699 per ounce1 and all-in sustaining cost of $8922 per ounce. As detailed in our April 24, 2017 press release, the mined grade was adversely affected by the geological interpretation of the upper portion of Zone 9 in the Siou pit. The upper portion of Zone 9 presents a complex geometry as the area comprises the junction of three different zones. Once out of the upper part of Zone 9, the geometry becomes simpler and more rectilinear at depth.

In light of our first-quarter challenges, we revised our 2017 guidance to between 190,000 and 205,000 ounces of gold at an all-in sustaining cost of between $920 and $960 per ounce2.

From a financial perspective, a three-percent appreciation in the gold price improved our average realized gold price on a year-over-year basis to $1,223 per ounce. Gold sales in the quarter reached $67 million. Mining operating expenses increased in the quarter, mainly as a result of higher operational stripping ratio and higher throughput. In addition, depreciation of property, plant and equipment increased by $7.9 million due to an increase in capitalised stripping activities at Siou at depth. As a result, we incurred an adjusted net loss attributable to shareholders of $4.4 million or $0.01 per share.

Notwithstanding the above, we generated $23 million in cash flow from operating activities and closed the quarter with $255 million in cash and cash equivalents. Our long-term debt stands at $60 million, and we have access to an additional $60 million.

At the end of the quarter, we formalised the commencement of construction of the Boungou Mine through a ground-breaking ceremony, which was attended by Burkina Faso’s Minister of Mines. During the event, the mine was officially named Boungou Mine after the closest village.  To date, development of the Boungou Mine or Natougou Project is progressing according to plan. Note that you can now follow construction of the Boungou Mine on our website, which we will be updating on a monthly basis with photos and videos.

On the exploration front, drilling is ongoing at Natougou on the West Flank Sector with the aim of upgrading the inferred resources on the West Flank to the indicated category. During the quarter, an infill program to drill the West Flank Sector up to 40-meter by 40-meter spacing was three-quarters completed and some 65% of assay results received. Overall, results were in line with the 80-meter by 80-meter model.

Exploration on the West Flank in the second quarter will involve further geotechnical holes as well as drilling the East Flank at 40-meter by 40-meter spacing. Results from a 24,000-meter drill program carried out on Trend 045 south of Natougou in the first quarter of 2017 will also be followed up in the second half of the year.

Exploration at Mana in the first quarter focused on testing the Siou deposit at depth. Some results from the 16-hole program have already returned significant values, such as 11 g/t Au over 11 meters, 7 g/t Au over 4.7 meters, and 6 g/t Au over 4.7 meters.

On the community relations side, the first quarter saw SEMAFO Foundation inaugurate 18 new projects, 15 of which benefited the communities close to the Mana Mine and three the Boungou communities.  At Mana, two new high schools were opened, and a primary school was expanded and its sanitary facilities improved. To upgrade community resources and help with the sale of agricultural produce, the Foundation sunk freshwater boreholes, launched a simple water supply network and opened a number of new grain storehouses. In the region close to the future Boungou Mine, SEMAFO Foundation’s activities in the quarter helped local communities ensure the food self-security of their families in addition to improving their chances of employment at the mine.

In Conclusion

In closing, I’d like to reiterate our disappointment with our first quarter production and overall results. While we are currently experiencing challenges, we have the right team to face them. We remain financially sound, with a healthy cash position with which to build the Boungou Mine, the next step in our growth platform.


Benoit Desormeaux, CPA, CA
President and Chief Executive Officer
May 3, 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.