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SEMAFO Reports 2012 Cash Flow from Operations of $155.4 Million

MONTRÉAL, QUÉBEC--(Marketwire - March 21, 2013) - SEMAFO (SMF.TO)(SMF.ST) today reported its financial and operational results for the fourth quarter and year ended December 31, 2012. All amounts are in US dollars unless otherwise stated.

2012 - The Year in Review

  • Gold production of 236,100 ounces

  • Gold sales of $388.5 million, a 2% decrease compared to 2011

  • Operating income of $34.6 million compared to $154.2 million in 2011

  • Net loss attributable to equity shareholders of $6.6 million or $(0.02) per share compared to net income attributable to equity shareholders of $111.8 million or $0.41 per share in 2011

  • Cash flow from operating activities(1) of $155.4 million or $0.57 per share

  • Discovery of the high-grade Siou Sector at Mana, with one-million ounces of initial in-pit inferred resources at an average grade of 4.62 g/t Au

  • Decision to move from an underground mining project to an improved overall economic super pit scenario resulted in a non-recurring loss of $17.0 million

  • Non-cash impairment charge of $60.0 million on the Samira Hill Mine

  • Sale of current investment resulted in a non-recurring loss of $24.3 million

  • Declaration of C$0.04 per share dividends to equity shareholders

  • Completed 60-kilometer water pipeline to accommodate Mana processing plant at a cost of $5.8 million less than the originally budgeted $30.2 million

  • Record throughput at Mana following the commissioning of Phase IV of the plant expansion

  • SEMAFO's Board of Directors appointed Benoit Desormeaux, formerly Executive Vice-President and Chief Operating Officer to the position of President and Chief Executive Officer of the Corporation

Fourth Quarter Review

  • Gold production of 62,400 ounces, a decrease of 4% compared to the same period in 2011

  • Gold sales of $110.3 million, a 3% decrease compared to the same period in 2011

  • Non-cash impairment charge of $60.0 million on the Samira Hill Mine

  • Net loss of $25.2 million compared to net income of $33.3 million for the same period in 2011

  • Cash flow from operating activities(1) of $48.6 million or $0.18 per share compared to $54.3 million or $0.20 per share for the same period in 2011

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(1) Cash flow from operating activities excludes changes in non-cash working capital items.

A Word from the CEO

For SEMAFO, 2012 was a year of transition on many levels. Although disappointing in terms of shareholder value, it nevertheless gave rise to numerous positive aspects with regard to our core business, from both strategic and operational perspectives. We achieved production and cost guidance for a fifth consecutive year. Our production totalled 236,100 gold ounces, just slightly below our 2011 results. Our annual revenues from gold sales posted only a 2% decrease from 2011 to stand at $388.5 million.

The highlight of the year from our standpoint was the discovery of the new high-grade Siou Sector at Mana. This vastly prospective area located approximately 15 kilometers east of our processing plant holds one million ounces of initial in-pit inferred resources at an average 4.62 g/t Au and a gold recovery rate of over 95%. Based on results to date, the Siou Sector where ongoing exploration work is being carried out has already become SEMAFO's most important find ever.

Another important event was the conversion of the Mana underground project to a super-pit. This decision, although it led to a $17 million write-off, was purely an economic decision based on the best return on investment as capital expenditures are spread out over the life of mine.

SEMAFO's reserves and resources decreased slightly to 6.6 million ounces in 2012. This is due to the removal of refractory sulphides from the south sector at Mana and the revision of Samira Hill's reserves and resources that became uneconomic following the review of technical and economic parameters. The revision at Samira Hill resulted in a non-cash impairment of $60 million in the fourth quarter of 2012. At Mana, the inferred category grade, however, almost doubled to 3.18 g/t Au as we included the high-grade Siou Sector in this category.

A comprehensive strategic review of the Corporation conducted during the latter part of the year facilitated the establishment of a realistic plan to move forward. We validated our top ensuing long-standing priority: to create value by generating future cash flow, while maintaining our solid operational performance. As the world economy continues to change shape, we will continue to focus on quality ounces as part of our strategy and ongoing efforts to reduce costs and optimize cash flow.

Our short-term priorities are to bring the Siou Sector to reserves by the third quarter of 2013, initiate the permitting process and begin mining by the end of 2014 or early 2015. We also intend to focus exploration activities within the 20-kilometer radius of the Mana processing plant and carry out exploration on the 30-kilometer Kokoi Trend, host to the high-grade Siou Sector.

Today, with ore sourced almost exclusively from the super pit, we can sustain operations at the plant at full capacity for the next eight to ten years. Owing to the Siou's high-grade mineralization, however, development of the sector could represent an opportunity to reduce our operating cost, boost production and ultimately increase cash flow within the next 18 to 24 months. Moreover, the south sector has yet to be added to the scenario. We believe that the Corporation's fundamentals and potential for creating shareholder value are as strong as ever.

We believe that SEMAFO represents an undeniable investment opportunity. Today, our Corporation's share price is significantly undervalued and far from indicative of the numerous opportunities on the horizon. We are cognizant that our Mana property will serve as the cornerstone of our Corporation's evolution and approach to intelligently grow our business.

SEMAFO is financially sound, has a solid cash position, is debt-free and completely unhedged. Since November 2011, our Corporation has paid out three dividends. We continue to strive for excellence in health and safety and lead the way in corporate responsibility. Our dedicated team continues to pull together in the pursuit of excellence and an overall commitment to simply doing more. We are determined to optimize operations at all levels, improve efficiencies and contain costs.

We are optimistic for 2013. We have established a clear strategy to identify new quality ounces, expand reserves and resources, and build future cash flow. The task at hand is to create value and, moving forward, we are confident that we have the assets, the talent and the ability to do just that.

2012 Mineral Reserves and Resources

SEMAFO's 2012 year-end mineral reserves totalled 36.7 million tonnes at an average grade of 2.08 g/t Au for 2.5 million ounces compared to 37.9 million tonnes at 2.18 g/t Au for 2.7 million ounces in 2011. The decrease in reserves is mainly due to 2012 production and the reduction in Samira Hill's reserves.

The 2012 measured and indicated resources average grade increased by 15% to 1.89 g/t Au for a total 4.2 million ounces as compared to 4.7 million ounces in 2011. The decrease in resources is due to the Samira Hill revision as well as the removal of most of the refractory sulphide material from the south sector deposits (Yaho, Fofina and Fobiri), which was uneconomical according to various metallurgical tests conducted during the year. The 2012 measured, indicated and inferred resources in Mana's south sector are mainly composed of oxide and transitional mineralization and are not refractory.

Total inferred resources amounted to 36.3 million tonnes at an average grade of 2.57 g/t Au for 3.0 million ounces as compared to 61.4 million tonnes at 1.51 g/t Au for 3.0 million ounces in 2011. A slight gain in inferred resource ounces and the 89% increase in grade, despite the removal of the majority of the refractory sulphide material from the 2012 inferred resources are due to the inclusion of the initial in-pit inferred resources from the high-grade Siou Zone. Discovered in August 2012, Siou hosts 6.7 million tonnes at 4.62 g/t Au for close to one million ounces.

Our Flagship Mana Mine, Burkina Faso

Highlights:

  • Mana's reserves totalled 1.9 million ounces

  • Mana's measured and indicated resources increased by 8% to 3.0 million ounces and the average grade increased by 14% to 1.93 g/t Au

  • The Wona-Kona super pit reserves stand at 1.6 million ounces at an average grade of 2.21 g/t Au

  • Mana's inferred resources' average grade increased by 89% to 3.18 g/t Au resulting from the addition of the Siou Zone initial in-pit inferred resources of 999,200 ounces, bringing total inferred resources to 18.3 million tonnes at an average grade of 3.18 g/t Au for 1.9 million ounces.

Mana's mineral reserves total 25.1 million tonnes at an average grade of 2.31 g/t Au at year-end 2012 compared to 25.7 million tonnes at an average grade of 2.40 g/t Au in 2011.

Total measured and indicated mineral resources at Mana increased by 8% in 2012 to 48.6 million tonnes at an average grade of 1.93 g/t Au, representing 3.0 million ounces. This compares to 51.4 million tonnes at an average grade of 1.69 g/t Au for 2.8 million ounces at the end of 2011. The slight increase in ounces, despite the removal of the majority of the refractory sulphide material in the south sector is due to the higher grade material at Kona at depth and the inclusion of the high-grade mineralization from the Fofina Zone.

Mana's 2012 inferred resources totalled 18.3 million tonnes at a grade of 3.18 g/t Au, representing 1.9 million ounces as at December 31, 2012. The higher grade is due to the inclusion of the initial in-pit resources of our high-grade Siou Sector discovered in August 2012, representing 6.7 million tonnes at a grade of 4.62 g/t Au. The decrease of the overall inferred tonnage, despite of a higher resource grade is due to the removal of most of the inferred refractory sulphide resources from the south sector deposits (Yaho, Fofina and Fobiri).

Metallurgical Tests

In 2012, metallurgical tests showed that the sulphide portions for the Fofina, Fobiri and Yaho deposits had low recoveries (20% to 48%) with CIL treatment. Consequently, SEMAFO decided to investigate other process routes such as sulphide flotation, sulphide concentrate regrinding and ultimately oxidation to seek better gold recoveries. Although a combination of ultrafine grinding followed by oxidation at Fofina significantly improved recoveries to 88%, the tests also indicate that the capital expenditures and consumable costs required to achieve optimal results are not justified at current gold prices.

The Corporation, however, is currently conducting heap leaching tests on the oxide portion of the Yaho deposit to seek better economics for the south sector. The results should be available during the third quarter of 2013.

SEMAFO's Consolidated Financial Statements and Management's Discussion and Analysis and other relevant financial materials are available in the Investor Relations section of the Corporation's website at www.semafo.com. These and other corporate reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com.

2012 Fourth Quarter and Year-End Conference Call

SEMAFO will host a conference call today, Thursday March 21, 2013 at 10:00 EDT to discuss this press release. Investors are invited to call the following telephone numbers to participate in the conference:

Tel. local & overseas: +1 (416) 641-6715

Tel. North America: 1 (800) 616-7436

The conference call will be archived for replay until April 10, 2013. To access the archived conference call, please dial 1 (800) 558-5253 and enter pass code 216461101 followed by the number sign (#).

A live audio webcast of the conference can be accessed through SEMAFO's website at www.semafo.com. The webcast will be available for replay for a period of 90 days.

Annual Shareholders Meeting

SEMAFO's Annual General Shareholders Meeting will be held on Monday, May 13, 2013 at 4:00 p.m. (EDT) at Le Centre Sheraton Montréal, Salle Drummond, 1201 René-Lévesque Boulevard West, in Montreal, Quebec. Attendees will have the opportunity to ask questions and meet the management team and members of the Board of Directors.

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production and exploration activities in West Africa. The Corporation currently operates three gold mines: the Mana Mine in Burkina Faso, the Samira Hill Mine in Niger and the Kiniero Mine in Guinea. SEMAFO is committed to evolve in a conscientious manner to become a major player in its geographical area of interest. SEMAFO's strategic focus is to maximize shareholder value by effectively managing its existing assets as well as pursuing organic and strategic growth opportunities.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. 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 "ongoing", "being carried out", "move forward", "priority", "create", "generating", "future", "will", "strategy", "increase", "added", "potential", "optimistic", "expand", "committed", "evolve", "become", "pursuing", "growth", "opportunities" 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 generate future cash flow, the ability to deliver on our strategy, the ability to bring the Siou Sector to reserves by the third quarter of 2013, initiate the permitting process and begin mining by the end of 2014 or early 2015, the ability to sustain operations at the Mana plant at full capacity for the next eight to ten years, the ability of the Siou Sector to reduce our operating cost, boost production and ultimately increase cash flow within the next 18 to 24 months, the ability to expand reserves and resources and build future cash flow, the ability to 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 2012 Annual MD&A 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.

The above information has been made public in accordance with the Swedish Securities Market Act and/or the Financial Instruments Trading Act.

Table 1

MINERAL RESERVES AND RESOURCES (As at December 31, 2012)

MINERAL RESERVES

Mines


Mana(1)(2) Burkina Faso


Samira Hill(2)(3) Niger


Kiniero(2)(4) Guinea

Total

Proven Mineral Reserves

Tonnes

12,561,600

5,237,600

1,082,300

18,881,500

Grade (g/t Au)

2.41

1.33

2.37

2.11

Ounces(5)

974,400

223,700

82,500

1,280,600

Probable Mineral Reserves

Tonnes

12,510,800

2,661,400

2,628,100

17,800,300

Grade (g/t Au)

2.20

1.10

2.23

2.04

Ounces(5)

886,300

94,200

188,800

1,169,300

TOTAL MINERAL RESERVES

Tonnes

25,072,400

7,899,000

3,710,400

36,681,800

Grade (g/t Au)

2.31

1.25

2.27

2.08

Ounces(5)

1,860,700

317,900

271,300

2,449,900

MINERAL RESOURCES

Mines

Mana
Burkina Faso

Samira Hill
Niger

Kiniero
Guinea

Total

Measured

Tonnes

10,022,300

6,772,100

1,660,100

18,454,500

Grade (g/t Au)

1.54

1.58

2.38

1.63

Ounces(5)

496,100

344,000

126,800

966,900

Indicated

Tonnes

38,579,900

4,937,400

6,834,800

50,352,100

Grade (g/t Au)

2.03

1.23

2.31

1.99

Ounces(5)

2,521,300

195,400

507,100

3,223,800

TOTAL MINERAL RESOURCES

Tonnes

48,602,200

11,709,500

8,494,900

68,806,600

Grade (g/t Au)

1.93

1.43

2.32

1.89

Ounces(5)

3,017,400

539,400

633,900

4,190,700

TOTAL MINERAL RESERVES AND RESOURCES

Tonnes

73,674,600

19,608,500

12,205,300

105,488,400

Grade (g/t Au)

2.06

1.36

2.31

1.96

Ounces(5)

4,878,100

857,300

905,200

6,640,600

INFERRED MINERAL RESOURCES

Tonnes

18,252,800

10,161,600

7,929,400

36,343,800

Grade (g/t Au)

3.18

1.49

2.55

2.57

Ounces(5)

1,867,400

487,600

649,400

3,004,400

(1)

The Corporation indirectly owns 90% of SEMAFO Burkina, which directly holds the interest in the Mana Mine reserves and resources.

(2)

Mineral reserves and resources were estimated using a gold price of US$1,300 and US$1,600 per ounce respectively.

(3)

Mineral reserves and resources at the Samira Hill Mine represent the combined reserves and resources of SML and AGMDC. The Corporation indirectly owns 80% of SML.

(4)

The Corporation indirectly owns 85% of SEMAFO Guinée, which directly holds the interest in the Kiniero Mine reserves and resources.

(5)

Rounding of numbers to the nearest hundreds of tonnes may present slight differences in the figures representing the ounces contained.

Table 2

MANA PROPERTY - MINERAL RESERVES AND RESOURCES (As at December 31, 2012)

DEPOSITS

DECEMBER 31, 2012

PROVEN RESERVES

PROBABLE RESERVES

TOTAL RESERVES


Tonnes

Grade
(g/t Au)


Ounces


Tonnes

Grade
(g/t Au)


Ounces


Tonnes

Grade
(g/t Au)


Ounces

WONA-KONA

10,525,800

2.29

774,800

11,552,500

2.13

790,700

22,078,300

2.21

1,565,500

NYAFÉ

270,300

5.71

49,600

4,600

4.67

700

274,900

5.69

50,300

FOFINA

1,684,500

2.64

143,100

953,700

3.10

94,900

2,638,200

2.81

238,000

ROMPAD

81,000

2.64

6,900

0

0.00

0

81,000

2.64

6,900

TOTAL MANA

12,561,600

2.41

974,400

12,510,800

2.20

886,300

25,072,400

2.31

1,860,700

DEPOSITS

DECEMBER 31, 2012

MEASURED RESOURCES

INDICATED RESOURCES

TOTAL RESOURCES


Tonnes

Grade (g/t Au)


Ounces


Tonnes

Grade (g/t Au)


Ounces


Tonnes

Grade (g/t Au)


Ounces

WONA-KONA

1,903,600

1.86

113,700

23,925,200

2.45

1,884,300

25,828,800

2.41

1,998,000

NYAFÉ

589,800

4.36

82,700

586,900

4.30

81,100

1,176,700

4.33

163,800

FOFINA

958,400

2.00

61,500

1,346,500

3.32

143,900

2,304,900

2.77

205,400

YAHO

5,832,500

0.98

183,500

12,544,800

0.99

399,700

18,377,300

0.99

583,200

FILON 67

58,100

3.61

6,700

23,900

3.79

2,900

82,000

3.66

9,600

FOBIRI

679,900

2.20

48,000

152,600

1.91

9,400

832,500

2.14

57,400

TOTAL MANA

10,022,300

1.54

496,100

38,579,900

2.03

2,521,300

48,602,200

1.93

3,017,400

DEPOSITS

DECEMBER 31, 2012

INFERRED


Tonnes

Grade
(g/t Au)


Ounces

WONA-KONA

6,714,000

2.44

526,900

NYAFÉ

365,600

4.26

50,000

FOFINA

713,200

3.60

82,600

YAHO

1,430,100

1.64

75,500

FILON 67

27,400

3.79

3,300

FOBIRI

1,182,400

2.16

81,900

MAOULA

1,089,400

1.37

48,000

SIOU

6,730,700

4.62

999,200

TOTAL MANA

18,252,800

3.18

1,867,400

We are presenting 100% of the reserves and resources of the mines in the above table. Regarding open pit reserves, cut-off grades are established with the Ultimate Pit software in consideration of the rock type and haulage distance.

The mineral reserves and resources were estimated as at December 31, 2012 in accordance with the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum and incorporated into National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). Mineral reserves and resources estimates for the Mana Mine were carried out internally under the guidance of Michel Crevier P.Geo MScA, Vice-President Exploration and Mine Geology and SEMAFO's Qualified Person who has reviewed this press release for accuracy and compliance.

Consolidated Results and Mining Operations

2012

2011

Variation

Operating Highlights

Gold ounces produced

236,100

250,100

(6

%)

Gold ounces sold

231,500

249,600

(7

%)

(in thousands of dollars, except amounts per ounce, per tonne and per share)

Revenues - Gold sales

388,501

395,916

(2

%)

Mining operating expenses (excluding government royalties)

164,393

150,535

9

%

Government royalties

19,979

19,857

1

%

Write-off of property, plant and equipment

16,998

-

-

Impairment of property, plant and equipment

60,000

-

-

Operating income

34,626

154,164

(78

%)

Loss on sale of current investment

24,297

-

-

Income tax expense

18,392

29,869

(38

%)

Net income (loss) attributable to equity shareholders

(6,604

)

111,759

(94

%)

Cash flow from operating activities(1)

155,406

171,875

(10

%)

Basic earnings (loss) per share

(0.02

)

0.41

(105

%)

Diluted earnings (loss) per share

(0.02

)

0.40

(105

%)

Operating cash flow per share(2)

0.57

0.63

(10

%)

Adjusted operating income(3)

111,624

154,164

(28

%)

Adjusted net income attributable to equity shareholders(3)

75,314

111,759

(33

%)

Adjusted basic earnings per share(3)

0.28

0.41

(32

%)

Average realized selling price (per ounce)

1,678

1,586

6

%

Cash operating cost (per ounce produced)(4)

704

591

19

%

Cash operating cost (per tonne processed)(4)

35

35

-

Total cash cost (per ounce sold)(5)

793

677

17

%

Total cash margin (per ounce sold)(6)

885

909

(3

%)

(1)

Cash flow from operating activities excludes changes in non-cash working capital items.

(2)

Operating cash flow per share is a non-IFRS financial performance measure with no standard definition under IFRS. See the "Non-IFRS financial performance measures" section of the Corporation's MD&A.

(3)

Adjusted operating income, adjusted net income attributable to equity shareholders and adjusted basic earnings per share are non-IFRS financial performance measures with no standard definition under IFRS. In 2012, the adjusted operating income excludes the write-off of property, plant and equipment of $16,998,000 related to the underground project and $60,000,000 related to the impairment of non-financial assets of the Samira Hill Mine, while the adjusted net income attributable to equity shareholders and the adjusted basic earnings per share also exclude the loss on the sale of a current investment totalling $24,297,000, as well as the income tax expense and the non-controlling interest impact totalling $7,377,000 related to these non-recurring transactions.

(4)

Cash operating cost is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using ounces produced and tonnes processed. See the "Non-IFRS financial performance measures" section of the Corporation's MD&A.

(5)

Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and the government royalties per ounce sold.

(6)

Total cash margin is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using the average realized selling price and the total cash cost.

Fourth Quarter Financial and Operating Highlights

Three-month period

ended December 31,

2012

2011

Variation

Gold ounces produced

62,400

64,800

(4

%)

Gold ounces sold

64,200

67,200

(4

%)

(in thousands of dollars, except amounts per ounce, per tonne and per share)

Revenues - Gold sales

110,305

113,854

(3

%)

Operating income (loss)

(28,055

)

47,448

(159

%)

Net income (loss) attributable to equity shareholders

(25,156

)

33,277

(176

%)

Basic earnings (loss) per share

(0.09

)

0.12

(175

%)

Diluted earnings (loss) per share

(0.09

)

0.12

(175

%)

Adjusted operating income(1)

31,945

47,448

(33

%)

Adjusted net income attributable to equity shareholders(1)

22,339

33,277

(33

%)

Adjusted basic earnings per share(1)

0.08

0.12

(33

%)

Cash flow from operating activities(2)

48,564

54,325

(11

%)

Operating cash flow per share(3)

0.18

0.20

(10

%)

Average realized selling price (per ounce)

1,718

1,694

1

%

Cash operating cost (per ounce produced)(4)

695

559

24

%

Cash operating cost (per tonne processed)(4)

34

35

(3

%)

Total cash cost (per ounce sold)(5)

788

665

18

%

Total cash margin (per ounce sold)(6)

930

1,029

(10

%)

(1)

Adjusted operating income, adjusted net income attributable to equity shareholders and adjusted basic earnings per share are non-IFRS financial performance measures with no standard definition under IFRS. In 2012, the adjusted operating income excludes the write-off of property, plant and equipment of $60,000,000 related to the impairment of non-financial assets of the Samira Hill Mine, while the adjusted net income attributable to equity shareholders and the adjusted basic earnings per share also exclude the income tax recovery expense and the non-controlling interest impact totalling $12,505,000 related to this non-recurring transaction.

(2)

Cash flow from operating activities excludes changes in non-cash working capital items

(3)

Operating cash flow per share is a non-IFRS financial performance measure with no standard definition under IFRS. See the "Non-IFRS financial performance measures" section of this MD&A.

(4)

Cash operating cost is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using ounces produced and tonnes processed. See the "Non-IFRS financial performance measures" section of this MD&A.

(5)

Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and the government royalties per ounce sold.

(6)

Total cash margin is a non-IFRS financial performance measure with no standard definition under IFRS and is calculated using the average realized selling price and the total cash cost.

Consolidated Statement of Financial Position

(Expressed in thousands of US dollars)

As at

As at

December 31,

December 31,

2012

2011

$

$

Assets

Current assets

Cash and cash equivalents

139,451

178,713

Trade and other receivables

30,395

43,022

Investment

-

22,307

Inventories

96,829

81,639

Other current assets

6,432

5,517

273,107

331,198

Non-current assets

Restricted cash

923

1,226

Property, plant and equipment

406,030

362,187

Investment

19,600

29,400

Deferred income tax asset

3,000

-

429,553

392,813

Total assets

702,660

724,011

Liabilities

Current liabilities

Trade payables and accrued liabilities

67,020

58,010

Provisions

2,588

-

Advance payable

915

-

Income tax payable

8,276

15,509

Dividends payable

5,492

5,348

84,291

78,867

Non-current liabilities

Restricted share unit liabilities

2,001

1,090

Advance payable

-

2,102

Provisions

12,487

8,505

Deferred income tax liabilities

2,040

6,954

Total liabilities

100,819

97,518

Equity

Equity Shareholders

Share capital

455,179

454,746

Contributed surplus

12,232

10,935

Accumulated other comprehensive income

-

5,686

Retained earnings

120,152

138,467

587,563

609,834

Non-controlling interests

14,278

16,659

Total equity

601,841

626,493

Total liabilities and equity

702,660

724,011

Consolidated Statement of Income (Loss)

For the Years Ended December 31, 2012 and 2011

(Expressed in thousands of US dollars, except per share amounts)

2012

2011

$

$

Revenue - Gold sales

388,501

395,916

Costs of operations

Mining operation expenses

184,372

170,392

Depreciation of property, plant and equipment

59,248

41,210

General and administrative

24,834

22,224

Corporate social responsibility expenses

5,377

3,393

Share-based compensation

3,046

4,533

Write-off of property, plant and equipment

16,998

-

Impairment of property, plant and equipment

60,000

-

Operating income

34,626

154,164

Other expenses (income)

Finance income

(295

)

(439

)

Finance costs

2,023

1,728

Foreign exchange loss (gain)

(735

)

247

Loss on the sale of current investment

24,297

-

Income before income taxes

9,336

152,628

Income tax expense (recovery)

Current

24,883

25,858

Deferred

(6,491

)

4,011

18,392

29,869

Net income (loss) for the year

(9,056

)

122,759

Attributable to:

Equity shareholders

(6,604

)

111,759

Non-controlling interests

(2,452

)

11,000

(9,056

)

122,759

Earnings (loss) per share

Basic

(0.02

)

0.41

Diluted

(0.02

)

0.40

Consolidated Statement of Income (Loss)

For the Years Ended December 31, 2012 and 2011

(Expressed in thousands of US dollars, except per share amounts)

2012

2011

$

$

Net income (loss) for the year

(9,056

)

122,759

Other comprehensive loss

Changes in fair value of investment in GoviEx (net of tax impact of $1,320)

(8,480

)

-

Changes in fair value of current investment (net tax impact of nil)

(21,503

)

(2,794

)

Reclassification of accumulated other comprehensive loss to net loss related to current investment sold (net of tax impact of nil)

24,297

-

Other comprehensive loss for the year, net of tax

(5,686

)

(2,794

)

Total comprehensive income (loss) for the year

(14,742

)

119,965

Attribuable to:

Equity shareholders

(12,290

)

108,965

Non-controlling interests

(2,452

)

11,000

(14,742

)

119,965

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2012 and 2011

(Expressed in thousands of US dollars)

2012

2011

$

$

Cash flows from (used in):

Operating activities

Net income (loss) for the year

(9,056

)

122,759

Adjustments for:

Depreciation of property, plant and equipment

59,248

41,210

Share-based compensation

3,046

4,533

Non-cash finance costs

1,409

874

Unrealized foreign exchange loss (gain)

1,975

(1,512

)

Write-off of property, plant and equipment

16,998

-

Loss on the sale of current investment

24,297

-

Impairment of property, plant and equipment

60,000

-

Deferred income taxes expense (recovery)

(6,491

)

4,011

Provisions

3,980

-

155,406

171,875

Changes in non-cash working capital items

(750

)

(33,828

)

154,656

138,047

Financing activities

Reimbursement of long-term debt

-

(15,000

)

Proceeds on issuance of share capital

315

1,643

Reimbursement of advance payable

(2,000

)

-

Payment of dividends to non-controlling interest

(787

)

-

Payment of dividends to equity shareholders

(10,709

)

-

(13,181

)

(13,357

)

Investing activities

Current investment

(4,813

)

(25,101

)

Proceeds from the sale of current investment

5,617

-

Acquisitions of property, plant and equipment

(180,766

)

(145,634

)

Decrease in restricted cash

303

3,181

(179,659

)

(167,554

)

Effect of exchange rate changes on cash and cash equivalents

(1,078

)

1,138

Change in cash and cash equivalents during the year

(39,262

)

(41,726

)

Cash and cash equivalents - beginning of year

178,713

220,439

Cash and cash equivalents - end of year

139,451

178,713

Interest paid

-

724

Interest received

295

439

Income tax paid

29,377

29,694