For immediate release
14
June 2019
Serabi Gold plc(“Serabi”
or the “Company”)AGM Statement
Serabi Gold plc (AIM:SRB, TSX:SBI), the
Brazilian focused gold mining and development company, advises that
at 3:30 pm today (UK time), it will be holding its Annual General
Meeting.
The following is the text of the
statement that will be made by Mr. Mike Hodgson, the Chief
Executive of the Company. Highlights of the statement
are:
- Gold production is on budget and the Company remains on target
to achieving its full year guidance of approximately 40,000 to
44,000 ounces of gold.
- Exploration results generated during 2018 have been extremely
exciting with significant potential to grow the mineral resource
especially in the vicinity of the current Sao Chico ore body.
- Initial results from a new Preliminary Economic Assessment for
the Coringa project are expected to be issued during the early part
of the third quarter of 2019 and will reflect the 37% increase in
mineral resource.
“2018 was a very satisfying year for Serabi. Our
Palito/Sao Chico Tapajos operation continued to perform extremely
well, with excellent grades, and total annual gold production
exceeding that for 2017. At Coringa, we have made very
pleasing progress with the permitting of this project and the award
of a trial mining license and following the year end, we issued a
new geological resource report showing a 37 per cent increase in
the total gold resource. Across all of our tenements, the year also
saw the long overdue return of our exploration
activity.
“As I commented in the Company’s
operational update for the first quarter of 2019, we are continuing
to maintain very good levels of gold production from our current
Tapajos operations. Gold production for both the final quarter of
2018 and the first quarter of 2019 both exceeded 10,000 ounces, the
first time we have achieved two successive 10,000 ounce quarters
and, as of today, the second quarter of 2019 looks to be at similar
levels. So, as we approach the middle of the year, we
remain very much on course to achieving our full year guidance of
between 40,000 to 44,000 ounces of gold.
“Mining and development on both orebodies
is continuing as planned, and in the Sao Chico orebody, the lowest
level now being developed is the -33mRL level, which is 280
vertical metres from surface. With underground drilling
continuing at depth, the main vein has been intersected as deep as
the -100mRL level. In the Palito orebody, seven of the 25
veins that comprise the mineral resource and reserve are now being
worked across various levels, bringing flexibility as we mine upper
levels as well as lower ones. The development of veins on
upper levels such as the Mogno, Sena and Ipe veins, has meant that
we have been able to minimize the need for any significant mine
deepening during the past 18 months.
“2018 saw a substantial increase in exploration
activity. With respect to mine-site exploration, this focused
principally on step out surface drilling campaign mostly conducted
at Sao Chico. This drilling was to test the strike extension
of the Sao Chico orebody to the east and west and was very
successful. Mineralisation with mineable widths and grades of what
seems to be a continuation of the main Sao Chico orebody was traced
for approximately 300 metres to the west. Similarly drilling
to the east of the deposit intersected ore grades up to 100 metres
east of the current mine development. These two extensions
will now be followed up with closer spaced infill drilling, most
probably conducted from underground. Drilling success was,
however, not limited to Sao Chico, as surface step out drilling was
also undertaken on the G3 vein at Palito. G3 has been and
remains the most significant vein at Palito and the drilling
indicates it extends with mineable widths and grades for at least a
further 300 meters to the north and 200 metres to the south of the
current mine workings.
“The gold process plant continues to
perform very well, and as our operations are currently constrained
by the capacity of the plant, high plant availability is
critical. One of the main reasons we have been able to plan
for an increase in annual gold production for 2019 of approximately
15% is as a result of plant optimisation. Part of this
planned production improvement also results from a legacy of the
start-up of gold production from the Palito ore body in 2014, when
the CIP part of the process plant had not yet become operational.
This resulted in the accumulation of a stockpile of tailings from
the initial flotation process which still contained relatively high
gold grades (3g/t and higher). In late 2018 we took delivery
of a scrubbing plant which is now allowing these flotation tails to
be re-introduced directly into the cyanidation circuit of the
process plant. I am hopeful that this will contribute
production of between 3,000 - 4,000 ounces during 2019.
“Other modifications in the plant have included
the construction of a new detoxification plant, improvements to the
crushing circuit and the purchase of an ore sorting unit. The
ore-sorter will separate out crushed waste rock from crushed ore,
and is equipped to sort both optically and using X-Ray
scanning. By eliminating waste material and therefore
increasing average plant throughput grade it has the effect of
lowering unit production costs, but also liberates essential plant
capacity. We will be installing, commissioning and
optimising the ore-sorter during 2019 and therefore do not expect
much impact on production this year, but look forward to the
benefits in 2020.
“The successful raising of new equity in
April 2018, as well as allowing the Company to ‘progress a number
of capital projects and advance the Coringa project, provided the
financial base to restart exploration which had been on hold since
2012. The highlight of the exploration programme was the Airborne
Magnetic and Electromagnetic geophysical survey that the Company
conducted over approximately 20,000 hectares of our
tenements. This has resulted in us now having the entire
Jardin do Ouro property covered by airborne surveys which,
collectively, have identified multiple anomalies with some very
significant ones being identified from the most recent survey.
“The most stand out feature is an extremely
pronounced magnetic high that runs east west across the
tenements. This is a regional feature and we see many of the
electromagnetic anomalies lying on the flanks of this magnetic
high. In addition, the survey identified the smaller but
nonetheless very exciting anomaly named the ‘Cinderella shear’
which is located traversing the Sao Chico mining license area in a
south west to north east trend. In the airborne survey this
was highlighted as an eight kilometre long magnetic and
electromagnetic high.
“Our exploration team have now also conducted a
terrestrial Induced Polarisation (“IP”) ground geophysics survey
over the Cinderella shear, and identified a very coincidental,
seven kilometre long chargeability ‘high’ anomaly. As a
result, the Cinderella shear has become an area of significant
interest to us.
“We also undertook IP surveys to the west of the
Sao Chico deposit, covering the strike projection of the
mineralisation which is also an area overlaid with significant
artisanal surface workings. The results were excellent, with
the three key anomalous areas were identified. We are now
undertaking soil geochemistry sampling over these anomalies, to
hopefully provide better targeting for a surface drilling programme
which we will hope to undertake later in the
year.
“The other main highlight of 2018 and the early
part of this year was the continued advancement and permitting of
our Coringa project. After a successful drilling campaign
during 2018, a new NI 43-101 compliant geological resource was
published in March 2019. This work has resulted in a 37%
increase in the total geological resources which now total
approximately 500,000 ounces of gold, with an average grade of over
7 g/t. We are following this up with a new Preliminary
Economic Assessment (“PEA”), the results of which I expect to be
issued during the early part of the third quarter of 2019.
During 2018 we were awarded a Trial Mining License, and this has
allowed us to prepare the portal area in readiness to commence the
decline to access the Serra ore zone at Coringa. The
Environmental Impact Study (“EIA”) was also approved by the State
environmental authority, SEMAS, in the latter part of 2018, and is
a key step to the award of the Preliminary License (“LP”).
However, the Brumadinho tailings dam collapse in early 2019 has led
to concerns amongst the general public regarding conventional
tailings dams and resulted in us re-considering our plans for
tailings management at Coringa. During 2018, we had already
undertaken significant studies into the cost and benefits of
introducing filtering and dry stacking of tailings at Palito.
Whilst we determined that this change in the management of tailings
was not necessary at Palito, we did accumulate significant
knowledge and understanding of the technology. As a result,
we have been able to prepare a plan to replace the planned
conventional tailings facility at Coringa with the use of
filtration and dry stacking of tails thereby eradicating the need
for a tailings dam and are in the process of submitting an
amendment to the Coringa EIA, reflecting this change. We
believe that this approach should alleviate any safety concerns and
expedite permitting, and I hope that we can be in receipt of the LP
before the end of 2019.
“Before leaving the subject of tailings, another
use of funds from the April 2018 capital raise included substantial
remediation of our tailings management facility (TMF) at
Palito. We spent much of the year buttressing the two main
tailings ponds, under the guidance and supervision of our certified
Brazilian tailings consultant, and by September this work was
completed and approved by the authorities. We also
successfully submitted a new tailings management plan to the state
environmental agency which was accepted, which now means we have
long term tailings storage capacity until 2027.
“The gold price has clearly been
favourable over recent months and particularly when looked at in
Brazilian Reals where it is at its highest levels for many
years. With the Company’s cost base mostly denominated in
Reals, this is a good time to be a gold producer in
Brazil.
“With the operation in very much in
regime, we are maintaining gold grades of over7 g/t gold, and
with the production form the flotation tailings ‘topping up’ our
monthly run of mine production, we are hoping to build up our cash
position further ahead of making the final acquisition payment for
the Coringa project due at the end of this year.
“Our near-term ambition remains to grow the
business to become a 100,000 ounce per annum producer within two
years. We have tremendous organic growth potential especially
around Sao Chico and if exploration success can be turned into
production ounces, this will of course greatly help in bringing
about that expansion in the quickest and most cost-effective
manner. With a 37% improvement in the recently published
updated geological resource at Coringa, we anticipate the
forthcoming PEA will report improved project economics, on the back
of which we will be actively seeking to put in place an attractive
financing package for the project. I firmly believe that with our
organic growth accompanied by permitting success at Coringa and the
development of that project, Serabi will benefit from having
greater critical mass and being able to attract wider investor
support.
“Before closing I would like to acknowledge,
again, the support, long term loyalty and commitment of our major
shareholders, Fratelli Investments and Greenstone Resources.
Finally, I would like to thank our other new and existing
shareholders, along with our management team and our workforce in
Brazil.”
Enquiries:
Serabi Gold plc Michael
Hodgson
Tel: +44 (0)20 7246 6830Chief Executive
Mobile: +44 (0)7799 473621Clive
Line
Tel: +44 (0)20 7246 6830Finance
Director
Mobile: +44 (0)7710 151692 Email: contact@serabigold.com
Website: www.serabigold.com
Beaumont Cornish
LimitedNominated Adviser and Financial
Adviser
Roland Cornish
Tel: +44 (0)20 7628 3396Michael
Cornish
Tel: +44 (0)20 7628 3396
Peel Hunt LLPUK
Broker
Ross Allister
Tel: +44 (0)20 7418 9000James Bavister
Tel: +44 (0)20 7418 9000
GLOSSARY OF TERMSThe following is a glossary of
technical terms:
Note: Mineral resources and reserves were
estimated in conformity with the widely accepted CIM Estimation of
Mineral Resource and Mineral Reserves Best Practices Guidelines
(the “Guidelines”) and are reported in accordance with the Canadian
Securities Administrators’ National Instrument 43-101” and the
definitions applicable to individual categories of reserves and
resources are set out in the Guidelines. The Glossary below
includes only a summary of these definitions and readers can access
the full definitions at
http://web.cim.org/standards/menupage.cfm?sections=177&menu=178.
“Au” means gold. “CIM” means Canadian
Institute of Mining, Metallurgy and Petroleum.“development” -
excavations used to establish access to the mineralised rock and
other workings.“grade” is the concentration of mineral within the
host rock typically quoted as grams per tonne (g/t), parts per
million (ppm) or parts per billion (ppb).“g/t” means grams per
tonne.“Indicated Mineral Resource‟ is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be
reasonably assumed.“Inferred Mineral Resource‟ is that part of a
Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling
and reasonably assumed, but not verified, geological and grade
continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill
holes.“Measured Mineral Resource‟ is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape,
and physical characteristics are so well established that they can
be estimated with confidence sufficient to allow the appropriate
application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable
exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough to
confirm both geological and grade continuity.“Mineral Resource” is
a concentration or occurrence of diamonds, natural solid inorganic
material, or natural solid fossilized organic material including
base and precious metals, coal, and industrial minerals in or on
the Earth’s crust in such form and quantity and of such a grade or
quality that it has reasonable prospects for economic extraction.
The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or
interpreted from specific geological evidence and knowledge.
“Mineral Reserve” is the economically mineable part of a Measured
or Indicated Mineral Resource demonstrated by at least a
Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. A Mineral Reserve
includes diluting materials and allowances for losses that may
occur when the material is mined.“Probable Mineral Reserve” is the
economically mineable part of an Indicated and, in some
circumstances, a Measured Mineral Resource demonstrated by at least
a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and
other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified.“Proven Mineral Reserve”
is the economically mineable part of a Measured Mineral Resource. A
Proven Mineral Reserve implies a high degree of confidence in the
Modifying Factors. “t” means tonnes“Vein” is a generic term to
describe an occurrence of mineralised rock within an area of
non-mineralised rock.
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