Construction of SEMAFO’s 90%-owned Boungou mine in Burkina Faso is progressing well and is on schedule for commissioning of the open-pit mine in the second half of 2018. As at June 30, 2017, the following key components had been advanced:

• Development on schedule with $69 million spent
• Construction of the mine 35% complete
• Concrete works are progressing on the SAG, Vertimill, crusher and surge bin foundations
• Erection of the leach and water tanks has commenced
• On-site delivery of the vertimill, the first long-lead item
• Work has commenced on the power plant and fuel depot
• Water storage facility has been excavated and is ready to collect 2017 rainwater
• Pre-strip mining at the Boungou deposit has commenced
• Construction of the resettlement village 65% complete
• 1,540 personnel including contractors were employed on site, 93% of whom are Burkinabe
• 1.1 million man-hours have been worked without lost-time injury.

The table below presents the construction milestones for the Boungou Mine and their level of completion:

The picture shows the first concrete pour.

The Boungou permit, which contains the Natougou deposit, lies within the Diapaga Greenstone Belt, a northeast-southwest orientated belt that extends over 250 km in length and over 50 km in width. SEMAFO holds four contiguous permits, collectively known as the Tapoa Permit Group, covering approximately 70 km in strike length along the Diapaga belt. Laterite and alluvium cover extensive (lateral) portions of the permit however both are generally less than 10 m in thickness. Highlights:

• Processing: 4,000 t/d in a CIP plant
• Mine life: +7 years
• Capital expenditures: $231 million
• After-tax 5% NPV: $262 million at base case of $1,100/oz Au
• After-tax project IRR: 48% at $1,250/oz Au
• During the first three years; average production of + 226,000 oz, average total cash cost of $283/oz, average all-in sustaining cost of $374/oz
• Average head grade of 5.72 g/t Au.

During the second quarter of 2017, a total of 23,700 m was drilled in 156 holes, completing the infill programs (40-m by 40-m hole spacing) on the West and East Flank Sectors, with 49,400 m in 326 holes, of the Boungou reserves pit. Results continue to be in line with the 80-m x 80-m model. The East Flank, although much smaller, has a similar structure to that of the West Flank.

The geotechnical drilling program on the East and West Flanks has also been completed. Samples have been sent to Rocklab in South Africa to establish engineering parameters.