SEMAFO Reports Record 2010 Cash Flow From Operations of $147.5 Million

MONTREAL, QUEBEC--(Marketwire - March 16, 2011) - SEMAFO (TSX:SMF) today announced its financial and operational results for the fourth quarter and year ended December 31, 2010. All amounts are in US dollars unless otherwise stated.

2010 Highlights

In 2010 SEMAFO had its best year ever with production totaling 261,100 ounces of gold for sales of $323.3 million, compared to gold production of 242,400 ounces and sales of $240.8 million in 2009. Cash flow from operating activities increased to a record $147.5 million, compared to $92.1 million in 2009. Highlights for the year ended December 31, 2010 include:

• Record gold production of 261,100 ounces, a 8% increase over the same period last year

• Record gold sales of $323.3 million, an increase of 34% compared to last year

• Cash operating cost of $466 per ounce produced compared to $463 for the same period in 2009

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

• Record total cash margin of $723 per ounce

• Record net income of $103.2 million or $0.39 per share, an improvement of 137% over the same period last year

• Record 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

Fourth Quarter Highlights

•  Gold production of 61,500 ounces, a 6% increase over the same period last year

•  Gold sales of $86.4 million, an increase of 18% compared to last year

•  Cash operating cost of $533 per ounce produced compared to $506 for the fourth quarter 2009

• Cash operating cost of $ $408 per ounce produced at Mana compared to $399 for the same period in 2009

•  Operating income of $33.2 million, an increase of 90% compared to 2009

• Record total cash margin of $795 per ounce

•  Net income of $27.0 million or $0.09 per share, an improvement of 157% over the same period last year

•  Cash flow from operating activities of $38.7 million or $0.14 per share, an increase of 62% over last year

•  Successful completion of Phase III of the Mana plant expansion

A Word from the CEO

SEMAFO has grown from a grassroots exploration company to a three-mine gold producer. Our operations have evolved, essentially owing to our unique savoir-faire, and today provide our Corporation with a solid platform for sustainable growth. In 2010, we achieved record production, revenues, net income, cash flow from operating activities and operating cash flow per share, while our cash operating cost remained comparable to the previous year.

Over the past five years our cash margin rose from $45 to $723 per ounce, outpacing the average gold price increase. Our cash flow from operating activities totaled $147.5 million in 2010 compared to negative cash flow of $ 4 million in 2006, and our basic net income per share increased from a $0.11 basic net loss per share to a $0.39 basic net income per share for the same period.

In 2010, we celebrated the production of our one-millionth ounce of gold, an accomplishment unmatched by the majority of companies in our industry.

Energized by a 180% increase in reserves and 195% in inferred resources at Mana, our team continues to focus on this property as a flagship asset in our value creation model. Recognizing that the structures identified thus far represents less than 10% of the property, in 2010 we invested $18 million in accelerated exploration programs. We are motivated by the excellent 2010 exploration results and hence have established an initial $30-million exploration budget for the Mana property in 2011.

We are pleased with the successful completion of our Mana plant expansion, which increased plant capacity from 4,000 tonnes per day to 6,000 tonnes per day in hard rock. The construction and commissioning of all three phases of the plant expansion were efficiently scheduled and executed on time and on budget with little or no impact on our operations.

The next few years promise to be an exciting time for SEMAFO, as our expanded Mana property continues to strengthen our production profile. As part of this initiative, we will continue to maximize Mana's on-surface and at-depth exploration programs to ultimately increase shareholder value.

In the past five years we have proven that our growth is sustainable and that our unique savoir-faire is present at all levels of our operations. We are now considered a significant player in our industry and remain committed to continue to grow responsibly to create value for our shareholders.

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 Company's website at www.semafo.com. These and other Company reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com.

2010 Fourth Quarter and Year-End Conference Call

SEMAFO will host a conference call to discuss the results, as well as to provide an update on operations.

Date:	Thursday, March 17, 2011
Time:	10:00 AM (ET)
Tel. local & overseas:	416 641-6699
Tel. North America:	1 888 223-4512

The conference call will feature Benoit La Salle, President and Chief Executive Officer, Benoit Desormeaux, Executive Vice-President and Chief Operating Officer, Martin Milette, Chief Financial Officer, Michel Crevier, SEMAFO's Geology Manager and Qualified Person, and Patrick Moryoussef, Mining Operations Manager.

The conference call will be archived for replay until April 7, 2011. To access the archived conference call, please dial 1 800 558-5253 and enter pass code 21512810.

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 and Special Shareholders Meeting

SEMAFO's Annual Meeting of Shareholders will be held on Tuesday, May 10, 2011 at 4:00 p.m. at Hotel Reine-Élizabeth, Salle Duluth, 900 René-Lévesque Boulevard West, in Montreal, Quebec. Attendees will have the opportunity to ask questions and meet the management team and Board of Directors.

Consolidated Results and Mining Operations

	2010	2009	Variation
Operating Highlights
Gold ounces produced	261,100	242,400	8	%
Gold ounces sold	260,800	243,800	7	%
(In thousands of dollars, except amounts per ounce and per tonne)
Revenues – Gold sales	323,275	240,788	34	%
Mining operating costs	122,144	114,795	6	%
Government royalties	12,712	9,470	34	%
Operating income	128,873	60,905	112	%
Income tax expense	20,204	10,875	86	%
Non-controlling interest	1,752	-	-
Net income	103,246	43,505	137	%
Adjusted net income 1	103,246	39,968	158	%
Cash flow from operating activities 2	147,451	92,147	60	%
Basic net income per share	0.39	0.18	117	%
Diluted net income per share	0.38	0.18	111	%
Operating cash flow per share 3	0.56	0.38	47	%
Average realized price (per ounce)	1,240	988	26	%
Cash operating cost (per ounce produced) 4	466	463	1	%
Cash operating cost (per tonne processed) 4	33	33	-
Total cash cost (per ounce sold) 5	517	510	1	%
Total cash margin (per ounce sold) 6	723	478	51	%

1	Adjusted net income is a non-GAAP measure. For 2009, the adjusted net income represents the net income excluding a gain on settlement of advances payable totaling $3,537,000.
2	Cash flow from operating activities excludes changes in non-cash working capital items and settlement of liabilities related to asset retirement obligations.
3	Operating cash flow per share is a non-GAAP measure. See the "Non-GAAP Measures" section of the Corporation's MD&A.
4	Cash operating cost is a non-GAAP measure and is calculated using ounces produced and tonnes processed. See the "Non-GAAP Measures" section of the Corporation's MD&A.
5	Total cash cost is a non-GAAP measure and represents the mining operating costs and government royalties per ounce sold.
6	Total cash margin is a non-GAAP measure and is calculated using the average realized price and the total cash cost.

Consolidated Balance Sheets
As at December 31, 2010 and 2009
(Expressed in thousands of US dollars)
	2010 $	2009 $
Assets
Current assets
Cash on hand	220,439	62,481
Restricted cash (note 8)	3,750	-
Accounts receivable	6,021	9,894
Inventories (note 4)	68,952	60,300
Other short-term assets (note 5)	5,238	4,556
	304,400	137,231
Restricted cash	657	4,407
Property, plant and equipment (note 6)	257,413	200,375
Investment and other assets (note 7)	19,600	19,743
	582,070	361,756
Liabilities
Current liabilities
Accounts payable and accrued liabilities	36,789	33,658
Income tax payable	21,231	5,019
Current portion of long-term debt (note 8)	14,824	18,808
	72,844	57,485
Long-term debt (note 8)	-	15,612
Advance payable (note 9)	3,007	3,007
Asset retirement obligations (note 10)	7,008	5,879
Future income taxes (note 14)	3,023	7,110
	85,882	89,093
Non-controlling interest	1,752	-
Shareholders' Equity
Share capital (note 11)	452,542	329,759
Contributed surplus (note 12)	8,053	5,998
Retained earnings (Deficit)	33,841	(63,094	)
	494,436	272,663
	582,070	361,756

Consolidated Statement of Operations
For the Years Ended December 31, 2010 and 2009
(Expressed in thousands of US dollars)
	2010 $		2009 $
Revenue – Gold sales	323,275		240,788
Expenses
Mining operations	122,144		114,795
Government royalties	12,712		9,470
Amortization of property, plant and equipment	41,931		40,863
Administration	17,145		14,367
Accretion expense of asset retirement obligations	470		388
	194,402		179,883
Operating income	128,873		60,905
Charitable donations – Fondation SEMAFO	1,068		722
Interest, banking fees and other income	128		355
Interest on long-term debt	2,728		4,947
Stock-based compensation	3,525		1,337
Change to the fair value of derivative financial instruments (note 13)	145		2,383
Write-down of exploration property – Datambi project (note 6 b)	-		827
Gain on settlement of advances payable (note 9)	-		(3,537	)
Foreign exchange gain	(3,923	)	(509	)
Net income before income taxes and non-controlling interest	125,202		54,380
Income tax expense (recovery) (note 14)
Current	23,776		5,019
Future	(3,572	)	5,856
	20,204		10,875
Non-controlling interest	1,752		-
Net income for the year	103,246		43,505
Basic net income per share (note 15)	0.39		0.18
Diluted net income per share (note 15)	0.38		0.18

Consolidated Statements of Cash Flows
As at December 31, 2010 and 2009
(Expressed in thousands of US dollars)
			2010 $		2009 $
Cash flows from :
Operating activities
Net income for the year			103,246		43,505
Adjustment for :
		Change to fair value of derivative financial instruments	145		2,383
		Amortization of property, plant and equipment	41,931		40,863
		Stock-based compensation	3,525		1,337
		Accretion expense of asset retirement obligations	470		388
		Amortization of deferred transaction costs	503		871
		Gain on settlement of advances payable	-		(3,537	)
		Write-down of exploration property	-		827
		Unrealized foreign exchange gain	(549	)	(346	)
		Non-controlling interest	1,752		-
		Future income taxes (recovery) expense	(3,572	)	5,856
			147,451		92,147
	Changes in non-cash working capital items and settlement of liabilities related to asset retirement obligations (note 17 a)		12,311		(6,984	)
			159,762		85,163
Financing activities
Reimbursement of long-term debt			(20,065	)	(26,951	)
Settlement of advances payable			-		(3,000	)
Issuance of share capital			121,313		35,713
Share issue expenses			(6,311	)	(2,212	)
			94,937		3,550
Investing activities
Additions to property, plant and equipment			(96,741	)	(35,084	)
Financial instruments settled			-		(15,483	)
Decrease in restricted cash			-		893
			(96,741	)	(49,674	)
Change in cash on hand during the year			157,958		39,039
Cash on hand – beginning of year			62,481		23,442
Cash on hand – end of year			220,439		62,481

About SEMAFO

SEMAFO is a Canadian-based mining company with gold production 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.

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 "continues", "will", "growth", "create", "evolve", "become", "focus", "maximize", "pursuing" 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 complete our $30 million exploration program for the Mana property in 2011, the ability to continue to maximize Mana's on-surface and at-depth exploration programs to ultimately increase shareholder value, the ability to continue to grow responsibly to create value for our shareholders, 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 2010 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.