sustainable Growths2.q4cdn.com/795832262/files/doc_financials/2010/AR/18en.pdf · letteR to...

sustainable Growth

2010 AnnuAl RePoRt

Pri

nte

d in

Can

ada

tAble of Contents

Vision, Corporate Mission, Humanitarian Mission and Values 1

2010 objectives and Achievements / Highlights 2011 objectives 2

Message from the Chairman 4

letter to shareholders 6

operations 9

exploration 12

Human Resources 16

Corporate social Responsibility 18

environment 20

energy 22

board of Directors and officers 23

forward-looking statements 23

Corporate Information 24

OUR PROFILE

seMAfo is a Canadian-based mining company with gold pro-

duction and exploration activities in West Africa. the Company

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.

sustainable Growth

Vision

Build an ethical, reputable, world-

class gold company through a

combination of exploration, devel-

opment and acquisitions.

Corporate Mission

Establish enduring relationships

with the countries in which we

operate and through our expe-

rience, expertise and financial

acumen, partner to responsibly

develop natural resources.

HuManitarian Mission

Make sustainable contributions to improve the quality of life and liveli-

hoods of the communities in which we operate through social, health,

education and environmental policies and programs.

Values

Respect and IntegRIty : It is the foundation of everything we do

— through accountability, responsibility, honesty, transparency, environ-

mental and employee safety and protection.

excellence : We relentlessly pursue excellence in everything we

do — through quality, effort, perseverance, continual improvement, hon-

our, entrepreneurship, and leadership.

Know-How : We support individual and collective achievement as it

directly impacts the organization — through leadership and employee

performance, integration, management, evaluation, promotion, training,

development and succession.

teamwoRK: We believe in the power of people working together to

attain common goals.

semafo 2010 AnnuAl REpoRt 1

maxImIze Value > pursue aggressive at-depth and on-surface exploration programs at the Mana Mine

> Complete Wona Deep feasibility study to commence development

> Initiate an aggressive two-year $6 millionexploration program at the Samira Hill Mine

dIscIplIned gRowtH > Achieve production of between 235,000 and 260,000 ounces of gold in 2010

> Increase plant capacity at the Mana Mine to up to 6,000 tonnes per day in bedrock

> Improve production efficiencies at the Samira Hill Mine

> Maintain stable production at the Kiniero Mine

> Attract and retain best mining talent

ResponsIble mInIng > Minimize our environmental footprint

> Continue corporate philanthropy program, donating up to 2% of net income to support Fondation SEMAFo

> Support government initiatives in host countries

> Increase employee training and develop-ment programs

maxImIze Value > Increased inferred mineral resources by 108%, representing 3.5 million ounces of gold

> Exploration budget doubled at Mana to $18.2 million > Discovered new zones at Mana: Wona Southwest, Kona, Fobiri, Fofina

> Discovered new priority targets at Mana: Y1, BC1

> Enhanced Wona Deep feasibility study to include Wona Southwest and parallel zones - results expected in Q1 2011

> At Mana, the first of two new airborne geophysical surveys scheduled revealed five new prospective trends over the property

> Discovered two new gold zones at Samira Hill

dIscIplIned gRowtH > Gold production of 261,100 ounces > Milestone production of SEMAFo’s 1 millionth ounce of gold

> Completed phases I, II and III of the Mana plant expansion on time and on budget

> Recognized as one of Canada’s top 50 companies, doing the best job of engaging employees, in an exclusive survey conducted by Aon Hewitt

> Gold production of 51,300 ounces at Samira Hill and 30,100 ounces at Kiniero

ResponsIble mInIng > Initiated Corporate Social Responsibility Report

> ongoing support including funding of approximately $1 million to Fondation SEMAFo

> launched “together for a Better Society” in Burkina Faso: a series of 30-minute weekly radio broadcasts aimed at raising awareness, facilitating discussion and promoting sustainable development in the surrounding communities and throughout the country

> Feasibility study of solar power facility underway in Burkina Faso

> Collaborated with Quebec-based school boards to establish tailor-made development programs for our African workforce

2010 objectIVes 2010 acHIeVements

objeCtiVes and aCHieVeMents

aVeRage sellIng pRIce (pER ounCE)

total casH cost (pER ounCE pRoDuCED)

casH maRgIn (In uS$)

858

703

508534481

436

988

510

1, 240

517

opeRatIng Income (loss) (In MIllIonS oF uS$)

150

100

50

0-5.0

33.1

60.9

128.9

gold sales ReVenues (In MIllIonS oF uS$)

300

225

150

75

0

323.3

240.8

169.9

74.144.5

-14.1

2008 2009 2010200720062008 2009 201020072006 2008 2009 201020072006

semafo 2010 AnnuAl REpoRt2

maxImIze Value

> pursue aggressive at-depth and on-surface exploration programs at Mana – initial budget of $30 million

> Commence development of Wona Deep underground mining operation

> Maintain robust exploration at Samira Hill — budget of $4.8 million

dIscIplIned gRowtH

> Achieve production of between 238,000 and 263,000 ounces of gold in 2011

> Increase Mana plant capacity to attain throughput of up to 8,000 tonnes per day in blended ore

> Attract and retain best mining talent

ResponsIble mInIng

> Manage effectively to minimize our environmental footprint

> Continue corporate philanthropy program, donating up to 2% of net income to Fondation SEMAFo

> Support government initiatives in host countries

> Increase employee training and development programs

> Maintain and improve our health and safety programs

2011 objectIVes

> Gold production of 261,100 ounces, an 8% increase compared to the previous year

> Gold sales of $323.3 million, an increase of 34% year over year

> Cash operating cost of $466 per ounce produced compared to $463 in 2009

> operating income of $128.9 million, an increase of 112% compared to 2009

> net income of $103.2 million or $0.39 per share, an improvement of 137% year over year

> Cash flow from operating activities of $147.5 million or $0.56 per share, an increase of 60% over last year

> Increase of 180% in proven and probable reserves at Mana

> Continued exploration success at Mana

> Successful completion of phases I, II and III of the Mana plant expansion

> Encouraging exploration results at Samira Hill

2010 HIgHlIgHts

basIc net Income (loss) peR sHaRe (In uS$)

40

30

20

10

0-0.12

0.19 0.18

0.39

net Income (loss) (In MIllIonS oF uS$)

100

75

50

25

0-23.1

39.543.5

103.2

opeRatIng casHflow (In MIllIonS oF uS$)

150

100

50

0

10.2

56.3

92.1

147.5

-16.1 -0.11 -4.4

2008 2009 201020072006 2008 2009 201020072006 2008 2009 201020072006


message fRom tHe cHaIRman

at semafo,

we are committed

to creating strong

and sustainable

value for our

shareholders and

other stakeholders.

jean lamaRReExECutIvE CHAIRMAn oF tHE BoARD

At SEMAFo, it is our belief that a successful corporation is more than strong financial performance and operational excellence.

We believe that the way we conduct ourselves is as important as the work we perform and that business suc-cess begins with a fervent commitment to sound ethical standards. By operating with integrity and transparency, we build and maintain credibility and trust with all of our valued stakeholders.

our Board of Directors’ primary responsibility is to monitor and assist management in creating long-term value for SEMAFo’s shareholders in an ethical and socially responsible manner. SEMAFo is built on a very sound and solid foundation that emphasizes the importance of good corporate governance practices. Accordingly, our Board of Directors continues to work together with senior management to build on our ethical track record and strong operating performance.

Fundamental to our commitment to create strong and sustainable value for our share-holders and other stakeholders in a constantly changing world, our determination to be a good corporate citizen is unfaltering.

our commitment to corporate social responsibility has deepened as we contin- uously strive to promote social, economic and environmental development in the communities in which we operate. In 2010, through our important corporate phi-lanthropy program, we pledged to donate up to 2% of our Corporation’s net income to support Fondation SEMAFo. these funds, representing approximately $1 million, will play an integral role in ongoing efforts to effect positive change in West Africa.

As part of our ongoing corporate responsibility program, just over a year ago, we announced the signature of an important partnership with the government of Burkina Faso to undertake a pre-feasibility study and create a consortium to construct a solar power station. I am pleased to report that in 2010 we progressed consider-ably. SEMAFo Energy engineers are on site compiling information and formula-ting recommendations in order to finalize the study. this important initiative is aimed at stimulating and sustaining the country’s socio-economic development by increasing the national electrical production capacity and thereby availing the population to a more adequate and ecological electricity supply.

last year, under the direction of SEMAFo’s Environment, Health and Safety, and Sustainable Development Committee of the Board, we saw the establishment of three important policies.

the implementation of the Environmental policy, the Health and Safety policy and the Social Responsibility policy further strengthens our commitment to the ethical management of our Corporation.

As part of SEMAFo’S unwavering com-mitment to ethical leadership and social responsibility, I am pleased that in 2011 we are publishing the first edition of our corporate social responsibility report. this comprehensive document is intended to provide readers with a clear indication of our performance across a broad range of environmental, social, and governance indicators.

While the future will no doubt bring about new hurdles, I remain confident that we will effectively make progress on our goal of building shareholder value and strengthen- ing the organization.

on behalf of the Board of Directors, I would like to express my gratitude to our shareholders for their continued confidence and trust in SEMAFo. I would also like to extend my sincere apprecia-tion to the directors, management team, employees and other stakeholders for their efforts and accomplishments.

jean lamaRRe Executive Chairman of the Board

March 15, 2011

tHE FIRSt EDItIon oF

ouR CoRpoRAtE SoCIAl

RESponSIBIlItY REpoRt

pRovIDES CoMpREHEnSIvE

InFoRMAtIon on

SEMAFo’S pERFoRMAnCE

ACRoSS A BRoAD RAnGE

oF EnvIRonMEntAl,

SoCIAl, AnD GovERnAnCE

InDICAtoRS.

In 2010, WE DonAtED SoME

$1 million t0

FonDAtIon SEMAFo, AS pARt

oF ouR onGoInG EFFoRtS

to EFFECt poSItIvE CHAnGE

In WESt AFRICA.


letteR to sHaReHoldeRs

last year’s record

results are a

testimony to

semafo’s unique

savoir-faire. our

dedicated people,

disciplined

methodology and

effective operations

together with a

deeply-rooted

conscientiousness

are the basis of

semafo’s success.

last year was a strong year for our Corporation. We ben-efited from an increased demand for gold and record prices, resulting in SEMAFo making history yet again with its best performance ever.

operationally, we produced a record 261,100 ounces of gold. We bettered our production and cost guidance for the third consecutive year. our success in discov-ery continues and the focus on value creation within our existing assets has brought our Corporation to a new level.

benoIt la salle, fcapRESIDEnt AnDCHIEF ExECutIvE oFFICER

benoIt desoRmeaux, caExECutIvE vICE-pRESIDEnt AnD CHIEF opERAtInG oFFICER

In the first quarter, we celebrated the production of our one millionth ounce of gold. this important milestone, an achievement unmatched by the majority of companies in our industry, is a testament to our successful record of discovery, development and opera-tions. our organization has successfully evolved from a small grassroots exploration company to a reputable West-African gold producer with a market capitalization that topped the $3 billion mark in 2010.

SEMAFo’s gold sales revenues have increased by 627% in the past five years. our average realized gold price has consistently surpassed the london Gold Fix (pM) for eight consecutive quarters. Since 2006, our cash margin rose from $45 to $723 per once, outpacing the average gold price increase.

In 2010, one of our objectives was to pursue aggressive at-depth and on-surface explo-ration at our flagship Mana property in Burkina Faso with a focus on increasing mineral reserves and resources, and we delivered. In July, we announced a 125% increase in reserves at Mana bringing updated reserves to a total 1.7 million ounces as at April 30, 2010. As at December 31, 2010, Mana’s proven and probable mineral reserves rose by 180%, bringing total reserves to 2.2 million ounces. Mana’s average reserves grade is 2.64 g/t Au, significantly higher than the worldwide average of 1 g/t Au. our 2010 exploration program continued to validate the uniqueness of this exceptional property, enhanced our understanding of the geology and further corroborated Mana’s undeni-able potential to become a mining district. Accordingly, an initial $30 million exploration budget has been established for Mana in 2011.

Results of our pre-feasibility study of Wona Deep at Mana further supported the economic viability of an underground mining operation. In the third quarter, ongoing positive drill results from the Wona SW and parallel zones motivated a decision to defer the feasibility study results until early 2011 in order to incorporate new findings.

last year we announced our objective to increase the plant capacity at the Mana Mine to up to 6,000 tonnes per day in bed-rock. We are pleased to report that our operations team successfully completed the plant expansion in a timely and effec-tive manner, with little or no impact on our ongoing operations.

At Samira Hill, we announced the discovery of two new gold zones, libdo-rado north and Boulon Jounga Exten-sion. Additionally, during the second phase of our exploration program, we received encouraging results for poten-tial new pits in the libdorado nW and libiri SE.

We were encouraged by the outstanding performance of our Mana project. We also remain optimistic that by maintaining our efforts, we will effectively improve pro-duction efficiencies and achieve stable satisfactory production at our niger and Guinea operations.

one of the important features that contrib-ute to SEMAFo’s uniqueness as an orga-nization is our savoir-faire. our dedicated people, our disciplined methodology and our effective operations together with a deeply-rooted conscientiousness are the basis of SEMAFo’s success. this sets us apart and last year’s record results are a testimony to this fact.

SEMAFo’S MARKEt

CApItAlIzAtIon toppED tHE

$3 billion MARK

In 2010.

*As at February 16, 2011

stocK peRfoRmance

Market Capitalization (in millions of CAD$)

share price (in CAD$)

330216 279

1,104

2,9243,085

1.701.01 1.20

4.43

10.75 11.33*

2006 2007 2008 2009 2010 2011


In 2010, in an exclusive survey conducted by Aon Hewitt, SEMAFo was designated as one of the top Canadian organizations doing the best job of engaging employ-ees. our employees voted SEMAFo among the top 50 Canadian employers of choice. this accolade speaks largely to our commitment to attract and retain the best mining talent.

In the third quarter, we launched our employee recognition program. this initiative is aimed at recognizing individual and team based contributions to the well-being of the organization and communities, that create value for SEMAFo and our stakeholders.

our deep-rooted values are also fundamental to our success. A diligent focus on the health and safety of our employees engender unprecedented loyalty and com-mitment. Sound response to our people’s needs and those of their communities are representative of genuine respect and integrity. our attention to detail, teamwork and an uncompromising determination to effect sustainable change are all part of our savoir-faire and one of the main reasons that we are often regarded as one of the most respected corporate citizens in each of our host countries.

We could not have positioned ourselves for success without the vigorous dedication and contribution of our employees and underlying support of their families. We are immensely grateful to all of these people. It is with that support that we turn our energy toward 2011 and the remarkable future that SEMAFo has in the years to come.

looking ahead, 2011 will no doubt hold its challenges for our Corporation as we come off a year of record highs. We face the coming year with enthusiasm, as we have built a solid foundation and believe that we have a bright future with a very competitive and hugely prospective project in Burkina Faso. our business environment is favorable and we have a solid balance sheet.

SEMAFo is uniquely positioned for the future. We are extremely proud of our focus, our ability to deliver on promises, our commitment and our talented employees, all of which have set our Corporation on the course to sustainable growth.

WItH oRGAnIC GRoWtH pRoJECtS WEll

unDERWAY At ExIStInG opERAtIonS AnD A SuItE

oF ExCEptIonAl ExploRAtIon RESultS to BuIlD

upon, tHE StAGE IS SEt FoR SEMAFo’S nExt

WAvE oF GRoWtH AnD vAluE CREAtIon FoR ouR

SHAREHolDERS.

With our organic growth projects well underway at our existing operations and a suite of exceptional exploration results to build upon, we have set the stage for our next wave of growth and value creation for our shareholders.

We would like to thank our stakeholders for their ongoing commitment. Your support has brought SEMAFo to a new summit and will drive our Corporation’s future growth for the tomorrows.

our sincere gratitude goes out to our tal-ented and dedicated employees whose savoir-faire contributes everyday to SEMAFo’s ongoing success and has made us the mining company of reference in West Africa.

benoIt la salle, fca president and Chief Executive officer

benoIt desoRmeaux, caExecutive vice-president and Chief operating officer

March 15, 2011

tHE pRoDuCtIon oF ouR

1 millionth

ounCE oF GolD In tHE

FIRSt QuARtER oF 2010 IS A

tEStIMonY to ouR SuCCESSFul

RECoRD oF DISCovERY,

DEvElopMEnt AnD opERAtIonS.


operationally we delivered another solid performance, resulting

in a new annual gold production record of 261,100 ounces.

our operating team’s dedication and unique savoir-faire once

again brought our organization to new heights as we achieved

our best-ever production and cost guidance for a third consecu-

tive year.

opeRatIons

SEMAFo’S GolD pRoDuCtIon HAS InCREASED BY

175% ovER tHE pASt FIvE YEARS to REACH

A RECoRD 261,100 ounCES In 2010.

pRoductIon (In tHouSAnDS oF GolD ounCES)

300

200

100

0

94.8

195.4

242.4261.1

106.4

2008 2009 201020072006

Mana, burkina fasoSEMAFo’s Mana property is located approximately 200 kilometers west of ouagadou-gou, the capital city of Burkina Faso. Mana’s permitted properties cover in excess of 1,995 km2 over the resource-rich Houndé belt.

the Mana property is host to SEMAFo’s newest operation. the Mana Mine is an open-pit mining operation inaugurated in mid-2008.

In 2010, our flagship Mana Mine continued to deliver superior results producing 179,700 ounces of gold at an average cash operating cost of $370 per ounce. In the third quarter alone, Mana produced a record 46,400 ounces of gold. last year, Mana accounted for 69% of SEMAFo’s total gold production.

As part of a plant expansion program, in 2010 we increased the Mana Mine processing capacity from 4,000 tonnes per day to up to 6,000 tonnes per day in bedrock. the plant expansion project was made up of three distinct phases. the first phase, completed in the first quarter, increased plant capacity to up to 6,000 tonnes per day in saprolite ore, or soft rock. In July, the second phase was commissioned, which involved the addition of a semi-autogenous grinding mill. the last and final phase, aimed at optimizing gold recovery, was completed in December. through efficient scheduling and execution, con-struction and commissioning of all three phases of the plant expansion were carried out with little or no impact on ongoing operations.

During the second quarter, we announced receipt of a positive pre-feasibility study of the Wona underground. Results of the study confirmed our expectation of doubling pre-liminary economic assessment recoverable gold ounces, with underground potential remaining at depth. pre-feasibility results, in conjunction with Mana’s ongoing open pit operations and existing infrastructures further confirmed the economic viability of an underground mining operation. this project is particularly attractive owing to the 6,000 tonne-per-day processing plant and infrastructures already in place. Although fea-sibility study results were originally scheduled for receipt in late 2010, continued positive drill results motivated our decision to defer the feasibility study results until early 2011 in order to incorporate important new findings.

In the fourth quarter, and taking into con-sideration the property’s excellent explora-tion results and increased mine life, some equipment from a newly acquired mining fleet originally destined for Samira Hill was reas-signed to Mana. Accordingly, part of Mana’s existing fleet was transferred to Samira Hill.

In 2010, MAnA’S pRoCESSInG

CApACItY WAS InCREASED BY

50% to 6,000tonnES pER DAY.


saMira Hill, niger

kiniero, guinea

the Samira Hill Mine was inaugurated in 2004. It is located approximately 90 kilometers west of niamey, the capital of niger, on the 50-kilometer gold belt commonly referred to as the “Samira Horizon”. In 2010, gold production at the Samira Hill Mine totaled 51,300 ounces of gold at a cash operating cost of $708 per ounce.

production waned at Samira Hill in 2010. throughput declined as we processed harder ore. Additionally, the cash operating cost per ounce rose last year, mainly as a result of higher energy costs due to lower availability from the national power grid and increased transportation costs incurred owing to the extended pit-to-plant distance. our operations teams continue to work diligently to rectify these setbacks.

pre-stripping of the Samira Main pit, which will avail our operations team to higher-grade ore, is in progress and scheduled for completion in the second quarter of 2011.

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 endeavor, having commenced operations in 2002.

In 2010, the Kiniero Mine produced 30,100 ounces of gold at a cash operating cost of $624 per ounce.

the country’s socio-political situation was somewhat unsettled in 2010 and, as a result, we temporarily suspended additional cash investments for this prop-erty. In the fourth quarter, we determined that certain warranted expenditures would be made in order to maintain plant throughput.


As organic growth projects progress on our existing properties and

new development targets emerge, we are effectively setting the

stage for the next wave of growth and value creation.

Fundamental to our sustainable growth strategy is our commitment

to continued exploration. In 2010, we invested $18.2 million at Mana

as part of our accelerated and expanded exploration programs on

our more than 1,995 km2 of permitted land. We successfully increased

inferred resources by 108% over 2009.

exploRatIon

In 2010, SEMAFo’S totAl RESERvES InCREASED BY

90% ovER 2009.

ReseRVes and mIneRal ResouRces(In MIllIonS oF GolD ounCES)

10

8

6

4

2

02008 2009 201020072006

3.46

1.661.24

1.781.971.49

2.57

2.82

3.17

3.502.982.282.38

2.04

1.07

InFERRED RESouRCES

MEASuRED AnD InDICAtED RESouRCES

pRovEn AnD pRoBABlE RESERvES

Mana, burkina fasothis exceptional property has 2,159,700 ounces of proven and probable mineral reserves, 1,126,000 ounces of measured and indicated resources and 2,678,000 ounces of inferred resources.

As at December 31, 2010, Mana’s proven and probable mineral reserves increased by 180% to 25,468,000 tonnes at an average grade of 2.64 g/t Au for 2,159,700 ounces of gold. Inferred reserves were also updated to 2.7 million ounces of gold, representing a 195% increase year over year. the fact that these discoveries are situated over less than 10% of the structures identified on the property is a testament to Mana’s exceptional potential to become a mining district.

Exploration continues to impress at Mana with consistently positive results systemati-cally expanding the deposits mineable by open pit and the delineation of an eventual economically viable underground operation. Exploration has also generated important priority targets and resulted in the discovery of new gold mineralized zones.

Mana’s 2010 exploration budget was initially set at $9.2 million. Mid-year and owing to the exceptional drill results obtained, we allocated an additional $9 million to the program, thus bringing Mana’s 2010 exploration budget to a total $18.2 million for the year.

In the second quarter, as a direct result of accelerated exploration activities, we were able to combine the Wona underground pre-feasibility study results with revised open pit reserves for a 125% increase in reserves. this addition of 961,000 ounces brought Mana’s updated reserves to 1.7 million ounces of gold as at April 30, 2010.

SEMAFo’s savoir-faire and dynamic approach to exploration allow for immediate reaction to incoming results and the modification of plans moving forward in order to optimize activities.

In January 2010, we initiated pre-feasibility and feasibility studies of the Wona Deep mineralization. this came on the heels of a positive preliminary economic assessment confirming the potential to develop an economically viable underground

mining operation. the object of the stud-ies is the Wona Deep zone, a significant high-grade lode located just below the bottom of the Wona Main open pit. Ensuing exceptional exploration results during the year validated and even accentuated the robust nature of the deposit. Deep drill-ing confirmed the strong potential of the extension of the Wona Deep project with sig-nificant values ranging up to 7.14 g/t Au over 13.5 meters and 4.20 g/t Au over 32 meters. Accordingly, we made a decision to defer the feasibility study until the first quarter of 2011 in order to incorporate additional positive drill results from the Wona SW and parallel zones.

Early in the year, drilling confirmed the discovery of two new zones at Mana. Drill results from the Wona SW zone and the Kona zone, which are located to the south-west and north of the Wona Main zone, revealed that the Wona mineralization extends over five kilometers.

In the first quarter, auger drilling con-ducted in two areas identified new pri-ority surface targets and led to the discovery of the Fobiri and Fofina gold zones located approximately 14 kilome-ters southwest and 12.5 kilometers south respectively of the Mana mill. Reverse circulation (“RC”) drilling results were very encouraging with values of up to 4.12 g/t Au over 30 meters, including 9.12 g/t Au over 10 meters.

DISCovERIES to DAtE ARE

SItuAtED ovER lESS tHAn

10% oF tHE StRuCtuRES

IDEntIFIED on tHE pRopERtY,

WHICH AttEStS to MAnA’S

ExCEptIonAl potEntIAl to

BECoME A MInInG DIStRICt.

SEMAFo’S SAvoIR-FAIRE

AnD DYnAMIC AppRoACH

to ExploRAtIon AlloW

FoR IMMEDIAtE REACtIon

to InCoMInG RESultS

AnD tHE MoDIFICAtIon oF

plAnS MovInG FoRWARD

In oRDER to optIMIzE

ACtIvItIES.


Follow-up core drilling continued to return high grades with values up to 21.62 g/t Au (43.11 g/t Au uncut) across five meters. Additional RC and air core drilling over the Fobiri area are ongoing with the mineralization extending over 1.4 kilometers.

We brought the Fofina – Fobiri area from a conceptual greenfield target to a major discovery within one year. In 2011, systematic delineation drill programs are scheduled over both zones to increase measured and indicated resources and ultimately add new reserves at Mana.

the auger geochemical drilling program was also very successful last year gen-erating two new priority targets, Y1 and BC1. Both blocks are along strike with the Wona deformation corridor, host to the Wona and Kona deposits.

In the third quarter, we undertook two airborne geophysical surveys at Mana. A-985 km2 ultra high-resolution low-elevation helicopter borne magnetic survey was carried out across most peripheral permitted properties and virtually doubled our magnetic coverage in the area. Results revealed new prospective lineaments including: the Massala - Saoura trends (1 and 2), the oula trend, the Bombouela nord trend (1 and 2), the Wona – Kona trend and the Mana East trend. the second geophysical survey, a 302 km2 HElItEM lite electromagnetic survey over part of the central Mana group of properties is scheduled for the first quarter of 2011.

We can already foresee new targets devel-oping based on these survey outcomes and expect the HElItEM survey to further accentuate results.

In early 2011, we were granted the new Bombouela nord permit, which is continu-ous and to the north of the current group of permits. the Bombouela nord permit covers 115 km2 of land over the favorable Houndé greenstone rocks.

the 2011 exploration program at Mana has been established at $30 million. Based on the airborne geophysical surveys coupled with the extensive 2010 drill pro-gram information, our exploration crew is focused on refining the interpretation and establishing what should become an exciting 2011 program for SEMAFo at Mana.

tHE 2011 ExploRAtIon

pRoGRAM At MAnA HAS BEEn

EStABlISHED At

$30million.

longitudinal view of a potential underground mining development at Mana.


saMira Hill, nigerIn 2010 we established a $6 million exploration budget at Samira Hill, with activi-ties scheduled to take place over a two-year period. Auger and RC drilling programs focused primarily on the Samira Horizon with positive results. Additional activities carried out elsewhere on the property also revealed encouraging results suggestive of potential new targets.

In the first quarter, we announced the discovery two new gold zones at Samira Hill, the libdorado northwest zone and the Boulon Jounga north. the libdorado northwest zone is located immediately north of the libiri open pit and returned values of up to 5.59 g/t Au over 10 meters and 5.11 g/t Au over 11 meters. the Boulon Jounga potential area trends northeast over more than 8 kilometers with RC drill-ing highlights including up to 10.74 g/t Au over 3 meters.

We began the third quarter with more posi-tive exploration results. With just over half of the planned 41,000 meters of RC drill-ing completed and receipt of partial assay results from only three of ten targeted areas, exploration results for potential new pits were very encouraging. testing to define new gold zones, which may become part of the near-term mine plan returned intersects including 27.77 g/t Au over 4 meters.

Moving forward, and in order to achieve greater mine planning flexibility, our Samira Hill exploration team will focus on providing our operations team with more readily available sources of ore.

the 2011 exploration budget at Samira Hill is $4.8 million. Scheduled activities will include 30,000 meters of air core drilling and 40,000 of RC drilling over high prior-ity targets and three early-stage targets.

this map is also available on SEMAFo’s website (www.semafo.com), where it is regularly updated to reflect ongoing exploration.

mana: aeRomagnetIc map and InteRpRetatIon

tHE 2011 ExploRAtIon

pRoGRAM At MAnA HAS BEEn

EStABlISHED At

$30million.


semafo’s dedicated

and talented

workforce motivates

our success.

more than 2,000

strong, our people

are the pillars of our

corporation’s most

valuable asset: its

unique savoir-faire.

our saVoir-faire

We have long believed that our employees are our greatest

resource and essential to the long-term success of our organiza-

tion. We put a great deal of effort into attracting, supporting and

retaining the best people. We encourage continuous improvement

and strive to create an environment in which all employees may

develop and contribute to their full potential.

Human ResouRces

Since 2006, our workforce has grown from 1,575 to more than 2,000 individuals. We have continually endeavored to minimize the number of expatriates and accordingly, nationals account for almost 95% of our workforce.

our recruitment efforts focus on training and hiring local workers as part of our commitment to promote sound sustainable economies and positive change within our host communities. We believe in the importance of training national staff so they can eventually benefit from positions of responsibility.

Fostering knowledge and individual skills is key to charting the path to a dynamic community for sustainable development. In 2010 and in collaboration with Quebec-based school boards, we fashioned tailor-made development programs for our African workforce. these programs are part of our operational competencies improve-ment approach aimed at growing local talent.

We consider the health and safety of our employees to be of the utmost importance. We strive to maximize productivity without compromising employee safety. this commitment is supported by our conscientious engagement to sustain and raise the level of safety throughout our operations.

We have always striven to maintain a work environment that promotes mutual respect and the well-being and personal growth of our employees. Appropriately, and directly in line with our corporate values, in 2010 we initiated the SEMAFo Employee Recognition program. In the first edition, 159 employees were nomi-nated by their peers in various categories including the ability to establish and sustain a positive work environment, community involvement and individual initiatives that facilitate value creation for SEMAFo and its stakeholders.

In 2010, a national survey conducted by Aon Hewitt Associates and Queen’s university School of Business Research to measure Canadian employees’ engage-ment determined SEMAFo as one of the top 50 employers in Canada. We received a score of 75% from our employees, while the average score for the survey’s natu-ral Resources Category was 56%. this was our first participation to the survey, which included all Canadian and expatriate employees.

At SEMAFo, our dedicated and talented workforce motivates our success. More than 2,000 strong, our people are the pillars of our Corporation’s most valuable asset: our unique savoir-faire.

At SEMAFo, WE StRIvE

to MAIntAIn A WoRK

EnvIRonMEnt tHAt

pRoMotES MutuAl

RESpECt AnD tHE WEll-

BEInG AnD pERSonAl

GRoWtH oF ouR

EMploYEES.

In 2010, A nAtIonAl

SuRvEY RECoGnIzED

SEMAFo AS onE oF tHE

top 50EMploYERS In CAnADA.


as part of our

ongoing corporate

philanthropy program,

in 2010 we pledged

up to 2% of our

corporation’s net

earnings, representing

approximately

$1 million, to support

the vital works of

fondation semafo

in our host countries.

Since our beginnings, we have always endeavored to be a socially

responsible corporate citizen and carry out our operations in a

conscientious manner. our savoir-faire, cultivated from years

of practical application and experience is at the heart of our

humanitarian mission. At SEMAFo, we are committed to make a

sustainable contribution to improve the quality of life and liveli-

hoods of the communities in which we operate through ethical

educational, social and environmental policies and programs.

coRpoRate socIal ResponsIbIlIty

SEMAFo is a strong proponent of corporate social responsibility and as part of its corporate philanthropy program is a proud supporter of Fondation SEMAFo, a non-profit organization established in 2008. As part of our ongoing corporate philanthropy program, in 2010 we pledged up to 2% of our Corporation’s net earnings, represent-ing approximately $1 million, to support the vital works of this organization in our host countries.

In 2010, as part of our commitment to promote sustainable development, through Fondation SEMAFo and in collaboration with various governments and commu-nity groups, we instigated the following activities: a sesame produce and processing project in Burkina Faso, a paprika produce project in niger and a fish and millet program in Guinea.

During the year, more than 2,600 boxes containing vital medical supplies, educational material, clothing, housewares and miscellaneous items were shipped and distributed throughout our West-African host countries. Aid was delivered to 25 drought-stricken villages in the Samira region in the form of more than 60 tons of grain.

In 2010, we continued our support of academic initiatives in our host countries. We helped to build multiple educational locales and latrines. We donated hundreds of teaching and schools supplies and continued to support the canteen program, which for many young students represents their sole source of nourishment. Adult training at our facilities was also ongoing with the objective to provide national employ-ees with increased knowledge and skills to avail them to better employment opportuni-ties in the future.

“together for a Better Society” is a new weekly radio program that we initiated in Burkina Faso. these 30-minute radio broadcasts will address a wide range of topics including: the issue of newborn abandonment and child trafficking as well as fiscal man-agement and administration of small and medium enterprises. the weekly programs will be broadcast over more than 16 community radio stations throughout the country.

By way of this important communication tool, we aim to raise awareness, facilitate discussion, and promote sustainable devel-opment, business opportunities and good social practices.

In 2011, our objective is to further augment our sustainable development activities to affect positive long-term change in the communities in which we operate.

2,600 BoxES oF MEDICAl

SupplIES, EDuCAtIonAl MAtERIAl, ClotHInG

AnD otHER ItEMS WERE DIStRIButED

tHRouGHout ouR HoSt CountRIES.

ouR In-SCHool CAntEEn

InItIAtIvE AvAIlED SoME

660 StuDEntS to MoRE

tHAn 119,000MEAlS In 2010.


In 2011, we are

publishing the

premiere issue of

our corporate social

Responsibility Report.

this document

illustrates our

corporation’s

performance across

a broad range of

environmental, social

and governance

indicators.

We have always placed great emphasis on ethical and responsi-

ble environmental practices and policies. We strongly encourage

all initiatives and projects that might contribute to limiting and

reducing our environmental footprint.

Engaging with the communities in which we operate is an essen-

tial part of our environmental impact assessment process. local

communities, governments and non-governmental organizations

all play a key role in identifying, addressing and whenever pos-

sible preventing local issues, as well as influencing environmental

management.

enVIRonment

By routinely engaging with local communities, governments and non-governmental organizations, we not only benefit from shared knowledge and constructive dialogue, but foster long-term relationships. We believe that this is fundamental to robust and effective environmental management.

We recognize that mineral extraction by its very nature has the potential to impact the environment unless carefully managed, and that fair and responsible environmental management is essential to carry out our mining operations.

In 2011, we are publishing the premiere issue of our Corporate Social Responsibility Report. this document illustrates our Corporation’s performance across a broad range of environmental, social and governance indicators.

As an important part of our quest to minimize our environmental footprint, our envi-ronmental professionals are responsible for water and waste management, incident and environmental risks management, as well as the implementation of employee training and awareness programs. At each of our three mines, monitoring of these different environmental components is documented in monthly reports. In addition, our rigorous system includes audits conducted by independent expert firms whose recommenda-tions drive our continuous improvement process.

Water is an important factor in the gold mining process and is in scarce supply in many parts of Africa, including the coun-tries in which we operate. this makes it even more important that the mining process does not pollute natural water sources and that it uses as little as pos-sible. to this end, we have established recovery and recycling programs as well as strict targets for water usage, which are carefully monitored and enforced.

As a testimony to our rigor in promoting environmental safety, no incidents were reported in 2010.

We strongly believe in restoring any area affected by our mining operations, to the extent possible, to its original state and to assure the long-term security and sta-bility of land following termination of our activities. our mining site rehabilitation activities began in 2002 at our Kiniero Mine and today, activities including refor-estation, restoration and mine planning are ongoing at all of our sites.

In 2011, we plan to develop and imple-ment a system to monitor and limit our greenhouse gas emissions. In future, we also plan to implement and analyze our business life cycle in order to maximize operations while minimizing various envi-ronmental impacts such as resource use, emissions and ecotoxicity.

At EACH oF ouR

tHREE MInES, AuDItS

ARE ConDuCtED

BY InDEpEnDEnt

ExpERt FIRMS WHoSE

RECoMMEnDAtIonS

DRIvE ouR ContInuouS

IMpRovEMEnt pRoCESS.

REFoREStAtIon, REStoRAtIon AnD MInE

plAnnInG ACtIvItIES ARE onGoInG At All

ouR SItES.


semafo is putting

forth its expertise

and savoir-faire to

facilitate the creation

of consortiums that

will collaborate with

host countries to

increase their energy

resources.

SEMAFo Energy was born out of our corporate social

responsibility program and our desire to assist West-African

countries in identifying and generating new sources of energy

and electricity.

Most West-African countries have inadequate energy resources. With elec-trification rates below 30%, the negative repercussions on industrial and agricultural growth as well as education are considerable. In order to assist our host countries to progress on this front, SEMAFo is putting forth its expertise and savoir-faire to facilitate the creation of consortiums that will collaborate with local governments to become leading players in the energy sector in each of Burkina Faso, niger and Guinea.

SEMAFo Energy’s inaugural project is a 20-megawatt solar photovoltaic plant des-tined for Burkina Faso. this first endeavor will be carried out in close collaboration with the government of Burkina Faso, creating an important partnership aimed at stimulating and sustaining the country’s socio-economic development by increas-ing the national electrical production capacity and thereby providing the popula-tion with access to a more adequate electricity supply. Construction is scheduled to begin in the first quarter of 2012.

SEMAFo Energy is also examining the possibility of other potential endeavors such as the development of solar, coal and uranium projects in niger and hydro-electricity in Guinea.

eneRgy

FoRWARD-looKInG StAtEMEntS

this document 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 “committed”, “evolve”, “become”,

“pursuing”, “growth”, “vision”, “goals”, “objectives”, “believe”, “build”, “maintain”, “continues”, “create”, “ongoing”,

“will”, “progress”, “optimistic”, “improve”, “future”, “tomorrows”, “promotes”, “reforestation”, “restoration”,

“possibility” 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)

commence development of Wona Deep underground mining operation, (ii) achieve production of between 238,000

and 263,000 ounces of gold in 2011, (iii) increase Mana plant capacity to attain throughput of up to 8,000 tonnes per

day in blended ore, (iv) attract and retain best mining talent, (v) execute on our strategic focus, including achieving

the potential of the Mana property to become a mining district. other risks and uncertainties relate to fluctuations in

currency exchange rates, the price of gold and our operating costs, as well as mining industry risks and uncertainties

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 annual documents for the financial

year ended December 31, 2010 filed 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.

board of direCtors and offiCersBOARD OF DIRECTORS

jean lamaRRe(Executive Chairman)presidentlamarre Consultants

bRyan a. coates, cavice-president Finance and CFoosisko Mining Corporation

pIeRRe claVeR damIbaInternational Consultant

benoIt la salle, fcapresident and Chief Executive officerSEMAFo Inc.

joHn leboutIllIeR, cm (lead Director)Chairman of the BoardIndustrial AllianceInsurance and Financial Services Inc.

gIlles masson, caCorporate Director

lawRence mcbReaRtylabour Relations Consultant

BOARD COMMITTEES

audIt commItteeGIllES MASSon, CA (Chairman)BRYAn A. CoAtES, CAlAWREnCE McBREARtY

Human ResouRces and coRpoRate goVeRnance commItteeJoHn leBoutIlllER, CM (Chairman)pIERRE ClAvER DAMIBAlAWREnCE McBREARtY

enVIRonment, HealtH and safety, and sustaInable deVelopment commItteelAWREnCE McBREARtY (Chairman)pIERRE ClAvER DAMIBAJEAn lAMARRE

OFFICERS

jean lamaRReExecutive Chairman

benoIt la salle, fcapresident and Chief Executive officer

benoIt desoRmeaux, caExecutive vice-president and Chief operating officer

maRtIn mIlette, ca, cpaChief Financial officer

eRIc paul-Hus, ll.lvice-president, law and Corporate Secretary

mIcHel cReVIeR, pgeo, mscaGeology Manager and Qualified person


Corporate inforMationCORPORATE OFFICE CANADA

semafo Inc. semafo eneRgy (2010) Inc.750 Marcel-laurin BoulevardSuite 375Saint-laurent, Quebec H4M 2M4telephone: 514 744-4408toll-Free: 1 888 744-4408Fax: 514 744-2291Email: [email protected] site: www.semafo.com

BARBADOS

semafo (baRbados) lImItedafRIcan geomIn mInIngdeVelopment coRpoRatIon ltd.the GablesHaggatt HallSt-Michael, BarbadosWest Indies

BURKINA FASO

semafo buRKIna faso s.a.semafo ÉneRgIe buRKIna s.a.mana mInÉRal s.a.wIndIga s.a.Sector 13, Babanguida AvenueBenda Street, Door #21101 po Box 390ouagadougou 01, Burkina Fasotelephone: (011) 226.50.36.95.92Fax: (011) 226.50.36.95.87Email: [email protected]

NIGER

socIÉtÉ des mInes du lIptaKo (sml) s.a.Mali Béro Boulevard169 IB 73 Streetpo Box 12470niamey, nigertelephone: (011) 227.20.75.30.32Fax: (011) 227.20.75.30.40Email: [email protected]

GUINEA

semafo guInÉe s.a.les mInÉRaux sgV s.a.KossaKen mIneRal s.a.po Box 2073Boulevard du CommerceImmeuble EtI face Ambassade de FranceConakry, République de Guinéetelephone: (011) 224.30.43.52.41Email: [email protected]

AUDITORS

pRIcewateRHousecoopeRs llp1250 René-lévesque Boulevard WestSuite 2800Montreal, Quebec H3B 2G4

TRANSFER AGENT AND REGISTRAR

computeRsHaRe tRust company of canada1500 university StreetSuite 700Montreal, Quebec H3A 3S8

ANNUAL REPORT

For investor inquiries, including additional copies of this report in French or English, please contact investor relations at SEMAFo Inc.telephone: 514 744-4408tolI-Free: 1 888 744-4408Fax: 514 744-2291Email: [email protected]: www.semafo.com

ANNUAL SHAREHOLDERS MEETING

the Annual and Special Shareholders Meeting will be held at 4:00 p.m. on tuesday, May 10, 2011Hotel Reine-ElizabethSalle Duluth900, René-lévesque Boulevard WestMontreal, QuebecH3B 4A5

STOCK EXCHANGE LISTING

tHe toRonto stocK excHangeSymbol: SMFCuSIp: 816922

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