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Message to Shareholders

Annual General and Special Meeting of Shareholders

Date: Thursday, May 15, 2014
Time: 10:00 AM (EDT)

Le Centre Sheraton Montréal
Salon Jarry & Joyce
1201 René-Lévesque Boulevard West
Montréal, Québec

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Message to Shareholders

2013 Year End and Fourth Quarter - A Word from the CEO

Significant volatility in the gold market during 2013, a trend that commenced in 2012, saw the price of the precious metal fluctuate from $1,694 per ounce at the start of the year to $1,204 per ounce as at December 31. Inter-day activity often posted variances of more than $40 per ounce, contributing to a turbulent market for gold within an already uncertain economy. In a weak gold price environment, SEMAFO's strategy remains unchanged: the Corporation continues to focus on achieving production objectives, maintaining stringent control of capital allocation, ongoing optimization programs and continuing value creation through exploration.

Since discovering the high-grade Siou deposit in August 2012, we added 769,300 ounces to mineral reserves and 795,300 ounces to inferred resources. As at December 31, 2013, Mana's reserves grew by 24% to 2.3 million ounces and the average grade increased 22% to 2.81 g/t Au year over year. In the coming years, mining these quality ounces will contribute to increased production and significantly lower all-in sustaining costs. We are proud that our fast-tracked development of Siou resulted in production from the high-grade deposit beginning on February 20, 2014, one full year ahead of schedule.

A Sixth Consecutive Year of Achieving Production and Cost Guidance

SEMAFO's operations team delivered another solid operating performance at Mana with record throughput at the processing plant of 2.8 million tonnes of ore at an average grade of 2.0 g/t Au. Accordingly, Mana achieved the guidance established early in 2013 with production of 158,600 ounces of gold. Mana's total cash cost was $777 per ounce sold, better than 2013 guidance, which had been set at between $805 and $855 per ounce. The Corporation has therefore met its production guidance for a sixth consecutive year.

In 2013, gold sales at Mana totalled 161,300 ounces and resulted in annual revenues of $226.6 million. Cash flow from operating activities amounted to $77.6 million or $0.28 per share2. Operating income totalled $18.9 million, with a net loss from continuing operations of $9.2 million or $0.03 per share. This is primarily due to a decrease in production and a lower average realized selling price per ounce of gold, which fell by $277 per ounce compared to 2012. SEMAFO has a strong financial position; the Corporation is debt-free and has cash and cash equivalents of $83 million as at December 31, 2013.

2014 Outlook – Increased Production and a Lower Cost per Ounce

SEMAFO's 2014 production guidance has been established at between 200,000 and 225,000 ounces of gold, representing a 34% increase over 2013 gold production. The total cash cost1 guidance is between $695 and $745 per ounce, a 7% decrease from 2013. Increased production and lower operating costs are expected as a result of mining the high-grade Siou and Fofina deposits. We anticipate achieving the full mining rate at Siou during the second quarter and advancing the Fofina deposit to production in the third quarter of 2014. In 2015, we anticipate a full year of production at Siou and Fofina, which will have a significant positive impact on Mana's overall production.

Focus on Quality Ounces

In terms of investments, SEMAFO's 2014 sustaining capital expenditures budget has been established at $31 million representing stripping costs for the mining of four pits, while a non-recurring amount of $18 million in growth capital expenditures has been allocated for the development of Siou and Fofina. The Corporation also plans to invest $18 million in a robust exploration program that will focus on the Siou intrusive area, located approximately 20 kilometers east of the Mana processing plant. The drilling program will focus on the North Apex, the newly acquired Pompoi Nord permit and the recently announced 15-kilometer geochemical anomaly trend, and will comprise more than 103,000 meters of reverse-circulation, 290,000 meters of auger, and 33,000 meters of diamond drilling. This area, which covers more than 200 km2, is considered highly promising in our search for quality ounces. Results of auger and reverse-circulation drilling are expected in the second and third quarters of 2014. As part of the program, during the second half of 2014, 24,000 meters of diamond drilling will be carried out with the objective to convert some of the at-depth mineral resources between 180 and 225 meters at Siou to reserves and ultimately extend the life of the mine. Some diamond drilling will be completed at a depth of over 400 meters to test the vertical continuity of the deposit. Results are expected in the fourth quarter of 2014.

Cost Containment at All Levels

We are proud of the great strides made through our ongoing optimization programs, which have resulted in millions of dollars of savings at all levels over the past two years. We expect to lower general and administrative expenses yet again in 2014 to $16 million. Our optimization programs, the sale of the Samira Hill mine in December and the winding down of activities at the Kiniero mine to care and maintenance this month with an objective to sell the property will allow us to focus solely on our Mana property.

For the future, we look to Mana, our quality asset with strong geological potential, as well as to the continued expansion of our pipeline of properties and projects in Burkina Faso, West Africa and beyond.

Benoit Desormeaux

Benoit Desormeaux, CPA, CA
President and Chief Executive Officer

November 12, 2013

1 Resources are exclusive of reserves.


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