SEMAFO: Cash Flow from Operating Activities before Changes in non-Cash Working Capital of $50 Million

Bantou Continues to Deliver Strong Exploration Results

Montreal, Quebec, November 4, 2019 /CNW/ – SEMAFO Inc. (TSX, OMX: SMF) is pleased to announce results of operations, development and exploration activities for the three-month period ended September 30, 2019. All amounts are in US dollars unless otherwise stated.

Highlights

• Consolidated gold production of 68,800 ounces with Boungou contributing 55,600 ounces at $497 all-in sustaining cost(1)
• Cash flow from operating activities before changes in non-cash working capital(1) of $49.5 million or $0.15 per share(1)
• Net income attributable to shareholders of $8.9 million or $0.03 per share (after deferred income tax expenses of $11.3 million)
• Mana third quarter negatively affected by Wona pit wall failure, but processing plant has resumed normal operations and stockpiling of high grade Siou open pit ore has already begun
• Continued strong results from Bantou with five rigs drilling and resource goal of 2.5 - 3.0 million ounces by end of 2020
• Nabanga PEA shows an after-tax NPV of $100 million with upside potential
• Balance sheet remains conservative with net cash and 100% exposure to upside in gold price

Benoit Desormeaux, President and Chief Executive Officer of SEMAFO, states: "It's unfortunate that the temporary set-back at Wona potentially over-shadowed an otherwise strong quarter. The Mana processing plant is back up and running with high grade ore from Siou and we are looking forward to a solid finish to the year. Boungou continued its strong performance in the quarter and continued to demonstrate why it is our cornerstone operating asset. Bantou continued to deliver exciting drill results including some expansion potential and the Nabanga PEA provided a baseline economic case on which to improve."

(1)   All-in sustaining cost, cash flow from operating activities before changes in non-cash working capital and per share are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of the MD&A, note 18.

Consolidated Results and Mining Operations 

Consolidated Operational Overview and Update

Complete financial statements, including operational statements for Boungou and Mana, are provided at the end of this press release. Consolidated operational results for the quarter were negatively affected by the Wona pit wall failure. The Mana processing plant has resumed normal operations in early November and stockpiling of high grade ore from the Siou open pit has already begun.

As anticipated, Boungou continued its strong performance in the quarter producing 55,600 ounces at an all-in sustaining cost3 of $497 per ounce.

Underground development at Siou continued on-time and on-budget with 5,000 of the total 5,600 meters completed at quarter end. The pace of development continues in line with our goal of reaching full production in the first quarter of 2020. At quarter end, development continued on budget, with $44.7 million of the total $51.7 million budget incurred. Further grade control drilling in the quarter remained consistent with the block model.

(1) Gold ounces produced exclude pre-commercial production of 12,000 ounces from Boungou in 2018.
(2) Gold sales exclude those resulting from pre-production activities that were offset against capitalized construction costs and amounted to $14,994,000 from Boungou in 2018.
(3) Cash flow from operating activities before changes in non-cash working capital and per share, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of the MD&A, note 18.

Exploration & Development

Bantou

Drilling at Bantou-Karankasso resumed late in the quarter. A total of 8 holes (974 meters) were completed on Bantou, and 62 holes (7,387 meters) completed on Karankasso. Five drills were active on the combined project at the end of the quarter. At Bantou, drilling is focused on coincident geophysical and soil anomalies throughout the exploration permit. At Karankasso, drilling is concentrated on the geophysical/soil trends that host the known deposits but have remained undrilled to date.

New Drill Results from Bantou Nord

In the third quarter, results from north-south lines and depth extension drilling were completed at Bantou Nord. As shown in Table 1, the north-south lines continue to return wide intercepts at above-average grades similar to the southeast-oriented lines, confirming the disseminated nature of the mineralization at Bantou Nord. Figure 1 shows the location of the north-south lines at Bantou Nord.

In addition, hole extensions demonstrated a deeper extension, particularly hole KRC19-0297 which is believed to have crossed the down-plunge extension on line 200N. Previous near-surface holes on line 200N had only returned anomalous gold values. This hole entered mineralization at 211 meters, suggesting a north-east plunge of the disseminated zone.

Table 1 - Highlights of Bantou Nord Q3 2019 Results

* All assays are uncut

Figure 1 - Location of the Bantou Mineralization

New Drill Results from Bantou Proximal

During the quarter, results were received from Bantou Proximal. Table 2 shows closer spaced drilling has returned consistently higher grades over significant widths. The zone remains open along strike to the north and at depth. Further drilling to the north is planned later in the fourth quarter. In addition, core drilling is scheduled for preliminary metallurgy analysis and to better understand the mineralization for resource modeling.

In the quarter, we received two new drill results from an area approximately 700 meters east of the Bantou Zone (see Figure 1). The two holes (KRC19-0425 and KRC19-0515) are 150 meters apart and both returned high grade gold values over good widths. Mineralization consists of sheared and sericitized volcaniclastic rocks containing quartz veining and minor pyrite. To date, we have not yet established if the two intersections are interrelated, and their significance remains unknown. Follow-up drilling is ongoing.

Table 2 - Highlights of Bantou Proximal Q3 2019 Results

* All assays are uncut

Bantou Resource Estimate

Following completion of the drill programs in the fourth quarter, a revised mineral resource will be compiled for the Bantou Project, incorporating the Karankasso portion, for inclusion in the year-end 2019 resource statement. Our resource goal of 2.5-3.0 million ounces at Bantou by the end of 2020 remains unchanged.

Boungou

A three-rig exploration program was launched late in the third quarter north of the Boungou deposit to explore near-surface splays of the Boungou Shear Zone. A total of 31 holes (3,758 meters) were completed by quarter-end. Results remain pending. The three drills are expected to remain in the area until year-end.

Mana

During the third quarter, a total of 35 holes (3,631 meters) were drilled at Mana completing the Pompoï program and following up on significant results obtained on Fofina Sud. At Pompoi, results have been disappointing to date with only local anomalous gold values obtained. Although most auger anomalies are explained by the drill holes, the holes failed to return significant gold mineralization.

At Fofina Sud, a follow-up program of four lines at 50-meter spacing were completed to assess the extension of the mineralization. Drilling covers a strike length of 250 meters. As shown in Table 3, significant mineralization was obtained on each section and the zone remains open along strike and at depth. Saprolite is exceptionally thick in this area, reaching up to 80 meters vertically.

Additional drilling is planned in the fourth quarter to test the northern and southern extensions of the zone, in addition to deepening holes on previous sections to ensure complete coverage down dip and to test a parallel zone to the west that returned locally significant results.

Table 3 - Q3 2019 Select Drilling Results at Fofina Sud

Nabanga

On September 30, 2019, we announced positive results from a PEA on Nabanga with the following highlights:

• Pre-tax NPV of $147 million and after-tax NPV of $100 million, using a 5% discount rate
• Life of Mine (LoM) gold production of 571,000 ounces at all-in sustaining cost of $760/oz and a gold recovery of 92% during the 8 years of operations
  ◦       Over the LoM, combined open-pit and underground production is estimated at 2.98 million tonnes at an average grade of 6.47 g/t Au for 626,000 ounces of gold

• Pre-production capital expenditure of $84 million, including 20% contingency, and $56 million in LoM sustaining capital
• Project economics (base case at $1,300/oz gold price):
  ◦       After-tax 5% NPV: $100 million, After-tax IRR: 22.6%, Payback period: 4.4 years

• Preferred mining method - open-pit/ underground mining on the upper and at-depth portions of the ore zone, respectively
• Opportunities exist to improve returns through an increase in resources and additional cost saving measures in the mining operations and development

Mineral Resources

The PEA is based on mineral resources estimated on December 31, 2018 for the Nabanga deposit.

(1) Nabanga mineral resources are reported above a cut-off grade of 3.0 g/t Au.

Exploration Potential

On the exploration front, the Nabanga deposit remains open to the north and many of the ore shoots are open at depth. Hole NADD18 0005, drilled on the northernmost section, to date returned 5.17 g/t Au over 3.4 meters along the plunge direction, confirming the continuity of the mineralized shoot. In addition, the remainder of the 800-km2property is largely under-explored with many untested soil and auger anomalies within trucking distance of the deposit. More specifically, auger drilling carried out in 2019 within a 10- kilometer radius of the deposit identified gold geochemical anomalies that could offer proximal satellite zones of gold mineralization.

For more information on the basis, qualifications and assumptions of the PEA, refer to the press release dated September 30, 2019.

Qualified Persons & Technical Report

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no guarantee that inferred resources can be converted to indicated or measured resources and as such, there is no certainty that the PEA will be realized. The PEA was conducted by DRA Met-Chem. Patrick Moryoussef, Eng., Vice-President, Mining Operations, SEMAFO and Qualified Person, as defined by National Instrument 43-101 has reviewed this press release for accuracy and compliance with National Instrument 43-101. The PEA is based on the Nabanga resource estimate as of December 31, 2018 as announced on February 20, 2019. A technical report for the PEA prepared in accordance with National Instrument 43-101 will be filed on SEDAR within 45 days of the September 30th press release.

Korhogo

In the quarter, 567 holes of auger drilling (10,224 meters) and 700 meters of trenching were completed on the Korhogo property in Côte d’Ivoire. The program is complete for the year, and we are currently compiling the results and assessing our plans for 2020.

Third Quarter Conference Call

A conference call will be held tomorrow, November 5, 2019 at 10:00 AM EST, to discuss the third quarter results. Interested parties are invited to call the following telephone numbers to participate in the call. A live audio webcast of the conference call will be accessible for a period of 90 days through SEMAFO’s website at www.semafo.com.

Tel. local & overseas: +1 (514) 225 7341
Tel. North America: 1 (888) 390 0605
Webcast: www.semafo.com
Replay overseas: +1 (416) 764 8677
Replay N. America: 1 (888) 390 0541
Replay pass code: 921499#
Expiration: December 5, 2019

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. All statements other than statements of present or historical facts are forward-looking. Forward-looking statements involve known and unknown risks, uncertainties and assumptions and accordingly, actual results and future events could differ materially from those expressed or implied in such statements. You are hence cautioned not to place undue reliance on forward-looking statements. Forward-looking statements include words or expressions such as "goal", "upside”, "potential", “improve”, "anticipated", "planned", "ongoing", "committed", "building", "leveraging", “development”, “pipeline” and other similar words or expressions. Factors that could cause future results or events to differ materially from current expectations expressed or implied by the forward-looking statements include the ability to (i) achieve the resource goal of 2.5 - 3.0M ounces at Bantou by end of 2020, (ii) deliver the Siou Underground on time and on budget, (iii) meet our goal of reaching full production at the Siou Underground in the first quarter of 2020,(iv) better understand the mineralization of Bantou Proximal, (v) deliver long term shareholder value, (vi) meet our 2019 revised guidance, (vii) resume the processing of ore at Mana at the end of October, (viii) execute on our strategic focus, fluctuation in the price of currencies, gold or operating costs, mining industry risks, uncertainty as to calculation of mineral reserves and resources, delays, political and social stability in Africa (including our ability to maintain or renew licenses and permits) and other risks described in SEMAFO’s documents filed with Canadian securities regulatory authorities. You can find further information with respect to these and other risks in SEMAFO’s 2018 Annual MD&A, as updated in SEMAFO's 2019 First, Second and Third Quarter MD&As, and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These documents are also available on our website at www.semafo.com. SEMAFO disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.

Interim Consolidated Statements of Financial Position 
(Expressed in thousands of US dollars - unaudited) 

Interim Consolidated Statements of Income (Loss) 
For the three-month and nine-month periods ended September 30, 2019 and 2018, respectively
(Expressed in thousands of US dollars, except per share amounts - unaudited)

Interim Consolidated Statements of Cash Flows 
For the three-month and nine-month periods ended September 30, 2019 and 2018, respectively
(Expressed in thousands of US dollars - unaudited)

Boungou, Burkina Faso 
Mining Operations
Commercial production at Boungou was declared on September 1, 2018.

(1)    Gold ounces produced exclude pre-commercial production of 12,000 ounces.
(2)    Gold sales exclude those resulting from pre-production activities that were offset against capitalized construction costs and amounted to $14,994,000.
(3)    Cash operating cost, cash operating cost including stripping, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of this MD&A, note 18.
(4)    Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold.

Mana, Burkina Faso 
Mining Operations

(1)    Cash operating cost, cash operating cost including stripping, total cash cost and all-in sustaining cost are non-IFRS financial performance measures with no standard definition under IFRS. See the "Non-IFRS Financial Performance Measures" section of the MD&A, note 18.
(2)    Depreciation per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the depreciation expense per ounce sold.

SEMAFO - 11/04/19 News Release PDF

For more information, contact

SEMAFO
John Jentz
Vice-President, Corporate Affairs & Investor Relations
Email: John.Jentz@semafo.com
 
Ruth Hanna                                                                            
Analyst, Investor Relations                                  
Email: Ruth.Hanna@semafo.com                                         

Tel. local & overseas: +1 (514) 744 4408
North America Toll-Free: 1 (888) 744 4408
Website: www.semafo.com 

About SEMAFO

SEMAFO is a Canadian-based intermediate gold producer with over twenty years’ experience building and operating mines in West Africa. The Corporation operates two mines, the Boungou and Mana Mines in Burkina Faso. SEMAFO is committed to building value through responsible mining of its quality assets and leveraging its development pipeline.