Kiniero

Located in central Guinea, the Kiniero Mine is approximately 650 kilometers east of the capital city of Conakry. The Kiniero Mine was SEMAFO's first West-African endeavour, having commenced operations in 2002.

Exploration

Kiniero’s exploration drilling program recently began and will be continued through 2012 with a budget totalling $4 million, including:

$3 million in mining project development over SGA (Secteur Gobelé A plus Gobelé D) with 16,000 meters of drilling including 4,000 meters of core drilling and 12,000 meters of RC drilling
$900,000 for 10,000 meters of RC drilling over the OBD, OBE sectors as well as a portion of Zone D and Sud JG
$100,000 of soil geochemical surveying and trenching over our Siguiri assets.

Production

Third Quarter 2011 v. Third Quarter 2010

During the second quarter 2011, the Kiniero Mine produced 5,200 ounces of gold at a cash operating cost of $760 per ounce produced.

During the third quarter of 2011, 110,100 tonnes of ore and 887,500 tonnes of waste material were extracted from the Gobelé A sector, for an average stripping ratio of 8.1:1. During the corresponding period in 2010, our mining activities were focused on the Gobelé A and West Balan BC pits where 105,200 tonnes of ore and 1,218,600 tonnes of waste material were extracted for a strip ratio of 11.6:1.

The 9% increase in ore processed in the third quarter of 2011 is explained by the processing of saprolite ore sourced from the Gobelé A sector during the third quarter of 2011, compared to harder ore sourced from West Balan BC pit at depth during the same period in 2010.

The 41% decrease in head grade in the third quarter of 2011, compared to the third quarter of 2010, is mainly due to lower grade ore sourced from the Gobelé A sector and from stockpiles, compared to the processing of higher grades from the West Balan BC pit at depth in 2010.

The 37% decrease in gold ounces produced in the third quarter of 2011, compared to the third quarter of 2010, is primarily due to the processing of lower grade ore.

The 11% improvement in cash operating cost per tonne processed in the third quarter of 2011, compared to the third quarter of 2010, is mainly due to a decreased stripping ratio. The increased cash operating cost per ounce produced is a result of the lower head grade.

The cash operating cost per ounce produced and per tonne processed for the third quarter of 2011 exclude fixed expenses incurred during the temporary shutdown period.

The corporate social responsibility expenses relate mainly to our support to the Government of Guinea's project to build a hydroelectric power plant on the Cogon River.

Update on Operations at the Kiniero Mine in Guinea

In September, we announced a temporary suspension of operations at our Kiniero mine in Guinea following an illegal protest by a group of local residents. Guinea's Secretary General and Minister of Mines & Geology issued a letter to the Corporation affirming the Government's outrage and disdain for the events. The stoppage is a precautionary measure. At the end of October, normal exploration activities resumed. However, at this time, we cannot ascertain when operations will resume. We are in discussion with the Government in order to establish a safe environment to return to normal operations.