Serabi Gold plc (AIM: SRB) (TSX: SBI) (TSX: SBI.WT), the Brazilian
focused gold exploration and development company, advises that it
has today published its unaudited financial results for the 3 month
and 9 month periods ended 30 September 2012 and at the same time
has also published its Management Discussion and Analysis for the
same periods. Both documents, together with this announcement, have
been posted on the Company's website at www.serabigold.com and are
also available on SEDAR at www.sedar.com.
Corporate and Operational Highlights
- On 1 October 2012 the Company entered into a conditional
subscription agreement with Fratelli Investments Limited, one of
the Company's major shareholders, to subscribe for and underwrite a
conditional placement of new shares to raise in aggregate UK£ 16.2
million to finance the development and start-up of underground
mining operations at its Palito gold mine. In addition, Fratelli
Investments Limited provided an interim secured short term loan
facility of US$6 million (equivalent to approximately UK£ 3.8
million) to the Company to provide additional working capital to
the Company and to enable it to commence the initial works at
Palito.
- NCL completed the preliminary economic assessment on the Palito
project ("PEA") in June 2012. The results of the PEA were reported
on 13 June 2012 and the completed NI 43-101 compliant Technical
Report was filed on 29 June 2012.
- Highlights of the PEA were as follows:
- After-tax Internal Rate of Return ("IRR") of 68 per cent. at a
realised gold price of US$1,400 per ounce;
- Project payback within two years of first gold production;
- Net after-tax cash flow generated over project life of US$72.2
million at a realized gold price of US$1,400 per ounce;
- After-tax Net Present Value ("NPV") of US$38.2 million; based
on a 10% discount rate and a realised gold price of US$1,400 per
ounce;
- Average Life of Mine ("LOM") cash operating costs of US$739 per
ounce (gold equivalent) including royalties and refining
costs;
- Average annual free cash flow (after tax and sustaining capital
expenditure) of US$11.0 million;
- Average gold grade of 8.98 g/t gold producing a total gold
equivalent production of 201,300 ounces;
- Average annual production of 24,400 gold equivalent ounces over
the initial 8 year period with ranges between 19,000 to 30,000
ounces gold equivalent per annum;
- Initial capital expenditures of US$17.8 million prior to
production start-up;
- The Operational Environmental Licence for the Palito Mine was
renewed by Secretaria de Estado de Meio Ambiente ("SEMA"), the
state Environmental Agency for the State of Para on 27 April
2012.
- The Company completed a placing of 27,300,000 units on 24
January 2012 raising gross proceeds of UK£ 2.73 million. Each of
the 27,300,000 units were comprised of one ordinary share and
one-sixth of one ordinary share purchase warrant of the Company,
with each whole warrant being exercisable to acquire one Ordinary
Share at an exercise price of UK£ 0.15 until 23 January 2014.
Financial Highlights
3 months 3 months 9 months 9 months
ended 30 ended 30 ended 30 ended 30
September September September September
2012 2011 2012 2011
(unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
----------- ----------- ----------- -----------
Operating Loss for period 715,548 1,739,684 2,884,774 4,044,961
Loss per ordinary share
(basic and diluted) 0.78 cents 2.72 cents 3.24 cents 7.01 cents
9 months 12 months
ended 30 ended 31
September December
2012 2011
(unaudited) (audited)
US$ US$
----------- -----------
Exploration and development
expenditures during the
period 2,863,261 8,663,471
Cash at end of period 408,708 1,406,458
Equity Shareholders funds at
end of period 41,459,600 43,284,480
3 month period ended 30 September 2012 For the three month
period ended 30 September 2012 the Company recorded a net loss of
US$715,548 (0.78 US cents per share) compared to a net loss of
US$1,739,684 (2.72 US cents per share) for the comparative period
last year. The decrease in the loss for the period reflects lower
depreciation charges of US$223,150 for the quarter compared with
US$580,845 for the quarter ended 30 September 2011. This lower
level of depreciation arises as assets, particularly those in
Brazil, have been subject to depreciation on a straight line basis,
and whilst not necessarily in use recently and whilst still being
available for use, are reaching the point where the original
purchase price of these items has now been fully depreciated.
The company has been incurring expenditures on the maintenance
of the current process plant. Up until the issue of the PEA on 28
June 2012, which demonstrated the economic viability of the Palito
project, the Company was deemed to be in an evaluation phase and it
was considered appropriate that such expenditures should be
expensed at the time of being incurred. With the project's economic
viability having been demonstrated and the Board having announced
the decision to proceed with the project development leading to a
start-up of production, costs relating to the refurbishment and
maintenance of the process plant will be capitalised as part of the
project development costs until such time as commercial production
is declared. This change of accounting treatment in accordance with
accepted accounting practise has the effect that no costs have been
classified in the 3 month period ended 30 September 2012 as being
operating costs.
Administration costs as reported have reduced by some US$295,943
from US$745,990 for the three months ended 30 September 2011 to
US$450,047 for the same three month period in 2012. There have been
two significant variances contributing to this reduction. As noted
previously, during the 3 month period ended 30 September 2011 the
Company was providing waste rock for road construction. The sales
of this material, not being sales of metals, did not fall within
the revenue definition adopted by the Company and were treated as
other income and classified as part of administrative expenses. For
the 3 months to September 2011 this amounted to BrR$122,825
(US$75,432). Also in the 3 months ended 31 September 2011, the
Company made a provision of BrR$299,250 (US$183,781) in respect of
settlement of employment claims made by former employees in Brazil.
The charge recorded in the 3 months ended 30 September 2012 was
approximately US$14,800. The net effect of these items accounts for
US$93,549.
Excluding the above items administration costs incurred in
Brazil were US$161,794 for the three months ended 30 September 2012
compared with US$249,272 for the 3 months ended 30 September
2011.
Administration cost incurred outside of Brazil were US$273,451
for the 3 months ended 30 September 2012 a reduction of US$115,000
compared with the 3 month period ended 30 September 2011.
Reductions have been achieved in the area of professional fees and
also reflect higher levels of investor relations activity in 2011
including branding and web-site development expenditures.
The Company reported an exchange gain of US$9,434 for the 3
months ended 30 September 2012 (3 months to 30 September 2011;
exchange loss of US$168,309). The significant exchange loss
incurred during 2011 was in part due to greater volatility in
exchange rates over this period but also reflects the exchange
element of US$70,500 relating to the adjustment of the
rehabilitation provision.
Investment income has reduced from US$18,330 to US$1,265
reflecting the reduced levels of cash held by the Company during
the quarter ended 30 September 2012 compared with the corresponding
quarter of 2011.
9 month period ended 30 September 2012 For the nine month period
ended 30 September 2012 the Company recorded a net loss of
US$2,884,774 (3.24 US cents per share) compared to a net loss of
US$4,044,961 (7.01 US cents per share) for the comparative period
last year.
The reduction in the loss of approximately US$1,160,000 is in
part explained by variations which have also influenced the results
for the three months to 30 September 2012 namely the reductions in
depreciation charges, the reduction in provisions for employment
claims and the effect of sales of waste rock. In addition with the
viability of the project to commence gold production at Palito
having been demonstrated by the PEA released in June 2012, costs
related to the maintenance of the plant are from 1 July 2012 being
capitalised as part of the plant development costs. Previously such
expenditure was being expensed as incurred.
Administration costs have reduced slightly from US$2,113,195 for
the nine months to 30 September 2011 to US$1,834,000, but this has
been affected by the lack of waste rock sales in the nine month
period of the current year offset by the reduction in labour claim
charges. For the nine months to 30 September 2011 the charges
established for employment claims brought against the Company in
Brazil totalled BrR$999,451 (US$613,800) compared with BrR$414,677
(US$216,440) for the same nine month period in 2012 creating a
saving of US$397,360. Waste rock sales for the nine months to 30
September 2011 amounted to BrR$700,949 (US$430,479) whilst there
has been no similar sales income in 2012. The net impact of these
items is US$33,119 and thus excluding these effects administration
costs have reduced by US$312,314 for the period ended 30 September
2012 compared with the period ended 30 September 2011. Of this,
US$186,962 is attributable to costs incurred in Brazil and reflects
the reduced headcount and lower levels of activity during the nine
months ended 30 September 2012 compared with the corresponding
period in 2011 with the balance of US$125,352 being reductions in
administration cost incurred outside of Brazil, principally related
to lower professional fees and reductions in investor relations
activities.
During the nine month period ended 30 September 2011 the company
benefitted from a one-off income arising from the settlement of a
claim with a supplier which contributed a book income derived from
the release of a liability that had been established in respect of
the claim of U$540,441.
Depreciation charges for plant and equipment which have reduced
by US$933,986 from US$1,741,977 for the nine month period ended 30
September 2011 to US$807,991 for the nine month period to 30
September 2012.
The charges made in respect of the amortisation of share option
awards has reduced by approximately US$91,000 from US$186,710 in
the nine month period ended 30 September 2011 to US$95,638 in the
corresponding period in 2012. This reflects the completion of the
amortisation of older option awards during 2011 and the lower level
of awards made during the nine month period to 30 September 2011
compared with preceding years.
The Company has realised foreign exchange gains of US$73,940 in
the nine month period ended 30 September 2012 compared with a loss
for the same period in 2011 of US$26,000. The loss in 2011 included
a charge of US$70,500 relating to the foreign exchange element of
the increase in the rehabilitation reserve and excluding this
one-off exchange loss the exchange gain for the comparable nine
month period in 2011 was US$44,500.
Reduced levels of cash holdings explain the reduced level of
interest income derived in the nine months ended 30 September 2012
compared with the corresponding period of 2011 falling from
US$52,107 to US$6,129.
Exchange differences on the currency translation of foreign
operations reflect the revaluation of the assets and liabilities of
those foreign operations. The Brazilian Real has fallen in value
relative to the United States Dollar over the nine month period
ended 30 September 2012. The rate as at 30 September 2012 was
2.0306 Brazilian Real to one United States Dollar compared with a
rate as at 31 December 2011 of 1.8758. This decline has resulted in
a reduction in US Dollar terms of the book value of the assets of
the Company's Brazilian subsidiary in particular the values
attributable to the Palito Mine and the deferred exploration
interests. Any appreciation in the Brazilian Real will result in a
reversal of this exchange loss.
Outlook
Exploration and development activities will continue to be
limited. The proceeds of the funding announced on 1 October 2012
will be allocated to the development programme for the start-up of
gold production at Palito. The directors expect that future
exploration activity will be financed from the cash flow from gold
production at Palito and may therefore not be undertaken until such
time as sufficient and sustainable levels of cash flow are
achieved. With a positive PEA and the financing required for the
capital development of Palito now underwritten, the development
plan outlined in the PEA can be set in motion. Key elements of this
development plan are as follows:
- De-watering of the mine;
- Appointment of a mining contractor;
- Appointment of key project personnel;
- Placement of orders for mining equipment and mobile mining
fleet;
- Underground mine development, with stoping areas defined and
prepared and a stockpile of ore produced; and
- Refurbishment of the crushing and processing plant in
preparation for commencing ore processing in the fourth quarter of
2013.
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
------------------------ ------------------------
For the three months For the nine months
ended 30 September ended 30 September
2012 2011 2012 2011
(expressed in US$) (unaudited) (unaudited) (unaudited) (audited)
----------- ----------- ----------- -----------
CONTINUING OPERATIONS
Revenue -- 2,843 -- 3,906
Operating expenses -- (152,001) (178,119) (468,083)
----------- ----------- ----------- -----------
Gross (loss)/profit -- (149,158) (178,119) (464,177)
Administration expenses (450,047) (745,990) (1,834,000) (2,113,195)
Settlement of supplier
claim -- -- -- 540,441
Option costs (33,244) (92,399) (95,638) (186,710)
(Loss)/gain on asset
disposals -- (5,204) 8,355 (7,541)
Depreciation of plant
and equipment (223,150) (580,845) (807,991) (1,741,977)
----------- ----------- ----------- -----------
Operating loss (706,441) (1,573,596) (2,907,393) (3,973,159)
Foreign exchange
gain/(loss) 9,434 (168,309) 73,940 (26,000)
Finance costs (19,806) (16,109) (57,450) (97,909)
Investment income 1,265 18,330 6,129 52,107
----------- ----------- ----------- -----------
Loss before taxation (715,548) (1,739,684) (2,884,774) (4,044,961)
Income tax expense -- -- -- --
----------- ----------- ----------- -----------
Loss for the period from
continuing operations
(1) (2) (715,548) (1,739,684) (2,884,774) (4,044,961)
----------- ----------- ----------- -----------
Other comprehensive
income (net of tax)
Exchange differences on
translating foreign
operations (199,904) (7,489,207) (3,268,882) (4,699,101)
----------- ----------- ----------- -----------
Total comprehensive
(loss) for the period
(2) (915,452) (9,228,891) (6,153,656) (8,744,062)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Loss per ordinary share
(basic and diluted) (1) (0.78c) (2.72c) (3.24c) (7.01c)
----------- ----------- ----------- -----------
(1) All revenue and expenses arise from continuing operations.
(2) The Group has no non-controlling interests and all income /
(losses) are attributable to the equity holders of the Parent
Company
SERABI GOLD PLC
Condensed Consolidated Balance Sheets
As at As at As at
30 September 30 September 31 December
2012 2011 2011
(expressed in US$) (unaudited) (unaudited) (audited)
------------ ------------ ------------
Non-current assets
Development and deferred
exploration costs 18,249,489 15,122,184 16,648,884
Property, plant and equipment 25,514,742 29,132,327 28,266,092
------------ ------------ ------------
Total non-current assets 43,764,231 44,254,511 44,914,976
------------ ------------ ------------
Current assets
Inventories 980,832 1,242,439 1,114,255
Trade and other receivables 87,449 97,539 87,440
Prepayments and accrued income 577,310 1,003,371 701,669
Cash at bank and cash equivalents 408,708 4,033,410 1,406,458
------------ ------------ ------------
Total current assets 2,054,299 6,376,759 3,309,822
------------ ------------ ------------
Current liabilities
Trade and other payables 2,114,143 3,110,201 2,538,055
Accruals 114,659 300,732 146,165
------------ ------------ ------------
Total current liabilities 2,228,802 3,410,933 2,684,220
------------ ------------ ------------
Net current (liabilities)/ assets (174,503) 2,965,826 625,602
------------ ------------ ------------
Total assets less current
liabilities 43,589,728 47,220,337 45,540,578
------------ ------------ ------------
Non-current liabilities
Trade and other payables 233,825 163,167 508,680
Provisions 1,546,176 1,454,715 1,451,296
Interest bearing liabilities 350,127 273,766 296,122
------------ ------------ ------------
Total non-current liabilities 2,130,128 1,891,648 2,256,098
------------ ------------ ------------
Net assets 41,459,600 45,328,689 43,284,480
------------ ------------ ------------
Equity
Share capital 31,416,993 29,291,551 29,291,551
Share premium 50,306,920 48,278,626 48,292,057
Option reserve 1,979,610 1,864,893 1,956,349
Other reserves 780,028 702,095 702,095
Translation reserve (4,344,049) (816,933) (1,075,167)
Accumulated loss (38,679,902) (33,991,543) (35,882,405)
------------ ------------ ------------
Equity shareholders' funds 41,459,600 45,328,689 43,284,480
------------ ------------ ------------
The interim financial information has not been audited and does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. Whilst the financial information included in
this announcement has been compiled in accordance with
International Financial Reporting Standards ("IFRS") this
announcement itself does not contain sufficient financial
information to comply with IFRS. The Group statutory accounts for
the year ended 31 December 2011 prepared under IFRS as adopted in
the EU and with IFRS and their interpretations adopted by the
International Accounting Standards Board have been filed with the
Registrar of Companies following their adoption by shareholders at
the last Annual General Meeting. The auditor's report on these
accounts was unqualified but did contain an emphasis of matter with
respect to the Company and the Group regarding going concern and
the future availability of project finance. The auditor's report
did not contain a statement under Section 498 (2) or 498 (3) of the
Companies Act 2006.
SERABI GOLD PLC
Condensed Consolidated Statements of Changes in Shareholders' Equity
---------------------------------------------
Share
(expressed in US$) Share Share option Other
(unaudited) capital premium reserve reserves
---------- ---------- ---------- ----------
Equity shareholders' funds at
31 December 2010 27,752,834 40,754,032 1,648,484 260,882
---------- ---------- ---------- ----------
Foreign currency adjustments -- -- -- --
Loss for the period -- -- -- --
---------- ---------- ---------- ----------
Total comprehensive income for
the period -- -- -- --
Issue of new ordinary shares
for cash 731,412 4,229,767 -- 208,229
Issue of new ordinary shares
on exercise of special
warrants 807,305 4,004,807 -- 232,984
Costs associated with issue of
new ordinary shares for cash -- (709,980) -- --
Share option expense -- -- 216,409 --
---------- ---------- ---------- ----------
Equity shareholders' funds at
30 September 2011 29,291,551 48,278,626 1,864,893 702,095
---------- ---------- ---------- ----------
Foreign currency adjustments -- -- -- --
Loss for the period -- -- -- --
---------- ---------- ---------- ----------
Total comprehensive income for
the period -- -- -- --
Costs associated with issue of
new ordinary shares for cash -- 13,431 -- --
Share option expense -- -- 91,456 --
---------- ---------- ---------- ----------
Equity shareholders' funds at
31 December 2011 29,291,551 48,292,057 1,956,349 702,095
---------- ---------- ---------- ----------
Foreign currency adjustments -- -- -- --
Loss for the period -- -- -- --
---------- ---------- ---------- ----------
Total comprehensive income for
the period -- -- -- --
Issue of new ordinary shares
for cash 2,125,442 2,047,508 -- 77,933
Costs associated with issue of
new ordinary shares for cash -- (32,645) -- --
Share option expense -- -- 23,261 --
---------- ---------- ---------- ----------
Equity shareholders' funds at
30 September 2012 31,416,993 50,306,920 1,979,610 780,028
---------- ---------- ---------- ----------
----------------------------------------
(expressed in US$) Translation Accumulated
(unaudited) reserve loss Total equity
------------ ------------ ------------
Equity shareholders' funds at
31 December 2010 3,882,168 (29,946,582) 44,351,818
------------ ------------ ------------
Foreign currency adjustments (4,699,101) -- (4,688,101)
Loss for the period -- (4,044,961) (4,044,961)
------------ ------------ ------------
Total comprehensive income for
the period (4,699,101) (4,044,961) (8,744,062)
Issue of new ordinary shares
for cash -- -- 5,169,408
Issue of new ordinary shares
on exercise of special
warrants -- -- 5,045,096
Costs associated with issue of
new ordinary shares for cash -- -- (709,980)
Share option expense -- -- 216,409
------------ ------------ ------------
Equity shareholders' funds at
30 September 2011 (816,933) (33,991,543) 45,328,689
------------ ------------ ------------
Foreign currency adjustments (258,234) -- (258,234)
Loss for the period -- (1,890,862) (1.890,862)
------------ ------------ ------------
Total comprehensive income for
the period (258,234) (1,890,862) (2,149,096)
Costs associated with issue of
new ordinary shares for cash -- -- 13,431
Share option expense -- -- 198,159
------------ ------------ ------------
Equity shareholders' funds at
31 December 2011 (1,075,167) (35,882,405) 43,284,480
------------ ------------ ------------
Foreign currency adjustments (3,268,882) -- (3,268,882)
Loss for the period -- (2,884,774) (2,884,774)
------------ ------------ ------------
Total comprehensive income for
the period (3,268,882) (2,884,774) (6,153,656)
Issue of new ordinary shares
for cash -- -- 4,250,883
Costs associated with issue of
new ordinary shares for cash -- -- (32,645)
Share option expense -- 87,277 110,538
------------ ------------ ------------
Equity shareholders' funds at
30 September 2012 (4,344,049) (38,679,902) 41,459,600
------------ ------------ ------------
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
For the three months For the nine months
ended 30 September ended 30 September
2012 2011 2012 2011
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
Operating activities
Operating loss (706,441) (1,573,596) (2,907,393) (3,973,159)
Depreciation - plant,
equipment and mining
properties 223,150 580,845 807,991 1,741,977
Gain/(loss) on asset
disposals -- 5,204 (8,355) 7,541
Option costs 33,244 92,399 95,638 186,710
Interest paid (4,954) (5,255) (15,277) (33,941)
Foreign exchange (loss)
/ gain (17,210) 78,789 (111,113) (159,159)
Changes in working
capital
(Increase) / decrease
in inventories (937) 100,315 51,383 35,862
(Increase) / decrease
/ in receivables,
prepayments and
accrued income (50,205) 166,121 78,217 (54,013)
Increase/(decrease) in
payables, accruals
and provisions 136,710 (119,697) (321,751) 152,475
----------- ----------- ----------- -----------
Net cash flow from
operations (386,643) (674,875) (2,330,660) (2,095,707)
----------- ----------- ----------- -----------
Investing activities
Proceeds from sale of
fixed assets -- 14,302 9,647 129,457
Purchase of property,
plant and equipment (5,425) (92,761) (57,377) (138,397)
Exploration and
development expenditure (914,305) (2,854,925) (2,863,261) (6,969,901)
Interest received 1,265 18,330 6,129 52,107
----------- ----------- ----------- -----------
Net cash outflow on
investing activities (918,465) (2,915,054) (2,904,862) (6,926,734)
----------- ----------- ----------- -----------
Financing activities
Issue of ordinary share
capital -- -- 4,250,883 4,961,180
Issue of warrants -- -- -- 208,229
Capital element of
finance lease payments -- -- -- --
Payment of share issue
costs -- -- (32,645) (709,980)
Payment of special
warrant issue costs -- -- -- (14,900)
----------- ----------- ----------- -----------
Net cash inflow from
financing activities -- -- 4,218,238 4,444,529
----------- ----------- ----------- -----------
Net (decrease) in cash
and cash equivalents (1,305,108) (3,589,929) (1,017,284) (4,577,912)
Cash and cash
equivalents at
beginning of period 1,697,434 7,859,831 1,406,458 8,598,754
Exchange difference on
cash 16,382 (236,492) 19,534 12,568
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period 408,708 4,033,410 408,708 4,033,410
----------- ----------- ----------- -----------
1. Basis of preparation These interim
accounts are for the three and nine month periods ended 30
September 2012. Comparative information has been provided for the
unaudited three and nine month periods ended 30 September 2011 and,
where applicable, the audited twelve month period from 1 January
2011 to 31 December 2011.
The interim accounts for the periods have been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" and the accounting policies are consistent
with those of the annual financial statements for the year ended 31
December 2011 and those envisaged for the financial statements for
the year ending 31 December 2012. The Group has not adopted any
standards or interpretation in advance of the required
implementation dates. It is not anticipated that the adoption in
the future of the new or revised standards or interpretations that
have been issued by the International Accounting Standards Board
will have a material impact on the Group's earnings or
shareholders' funds. The Group comprises Serabi Gold plc and its
wholly owned subsidiary entities.
(i) Going concern and availability of project
finance In common with many companies in the exploration and
development stages, the Group raises its finance for exploration
and development programmes in discrete tranches. The Group has
completed, during the first half of 2012, the preparation of a
Preliminary Economic Assessment ("PEA") into the viability of
re-commencing mining operations at the Palito Mine. The results of
the PEA were announced on 13 June 2012 and indicated a project
after tax internal rate of return of 68% based on employing a
selective underground mining operation and exploiting only the
previously declared mineral resource estimates. The directors
believe that the PEA results support a small scale, high grade
operation using selective mining techniques and the Board intends,
subject to financing, to undertake the necessary mine development
and remedial works as soon as possible.
On 2 October 2012, the Company announced that it had entered
into a conditional subscription agreement with Fratelli Investments
Limited ("Fratelli"), one of its major shareholders, to subscribe
for and underwrite a placement of new shares to raise in aggregate
UK£ 16.2 million to finance the development and start-up of
underground mining operations at its Palito gold mine. In addition,
Fratelli has provided an interim secured short term loan facility
of US$6 million to the Company ("Loan Agreement") to provide
additional working capital to the Company and to enable it to
commence the initial works at Palito. In the opinion of the Board
this conditional subscription, if completed, will provide
sufficient funds to undertake the mine development and plant and
infrastructure improvements and rehabilitation required to commence
gold production operations at Palito and will provide working
capital for the Company during this period. The Directors consider
that thereafter the Group will have sufficient funds to finance the
Group and its commitments for the foreseeable future. The Directors
have therefore concluded that it is appropriate to prepare the
financial statements on a going concern basis.
Whilst the Directors are confident that the share subscription
will be completed there can be no certainty that this will be the
case. Whilst Fratelli have provided an interim loan facility were
the additional funding not to become available in an appropriate
timescale, the Directors would need to consider alternative
strategies and an impairment review would be required in respect of
the carrying value of the assets relating to the Palito Mine and
other deferred exploration costs. These conditions indicate the
existence of a material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern. No
adjustments to asset carrying values that may be necessary should
the Group be unsuccessful in raising the required finance have been
recognised in these financial statements.
(ii) Impairment The Directors have
undertaken a review of the carrying value of the mining and
exploration assets of the Group, and considered the implications of
the operational difficulties experienced and the current
operational status of Palito. Following this review they have
assessed the value of the existing assets on the basis of value in
use involving a future recommencement of underground mining
operations which is dependent on the ability of the Group to raise
future finance and to operate the mine in line with the mine plan
that forms the basis of the value in use calculation. The carrying
values of assets have not been adjusted to reflect a failure to
raise sufficient funds, not achieving the projected levels of
operation or that, if a sale transaction were undertaken, the
proceeds may not realise the value as stated in the accounts.
(iii) Inventories Inventories - are valued
at the lower of cost and net realisable value.
(iv) Property, plant and equipment
Property, plant and equipment are depreciated over their useful
lives.
(v) Mining property The Group commenced
commercial production at the Palito mine effective 1 October 2006.
Prior to this date all revenues and operating costs were
capitalised as part of the development costs of the mine. Effective
from 1 October 2006 the accumulated development costs of the mine
were re-classified as Mining Property costs and such cost will be
amortised over the anticipated life of the mine on a unit of
production basis. As the underground mine is currently on care and
maintenance and there is no depletion of the reserves and resources
attributable to the mine, no amortisation charge has been recorded
in the period. The Company announced on 2 October 2012 that it had
conditionally secured the funding that the Board considers
necessary to undertake the mine development and plant and
infrastructure improvements and rehabilitation required to commence
gold production operations at Palito. Costs associated with the
redevelopment works at the Palito mine will be capitalised until
such time as the Group achieves commercial production levels of
gold after which time the Group will amortise Mine Property costs
on a unit of production basis.
(vi) Revenue Revenue represents amounts
receivable in respect of sales of gold and by-products. Revenue
represents only sales for which contracts have been agreed and for
which the product has been delivered to the purchaser in the manner
set out in the contract. Revenue is stated net of any applicable
sales taxes. Any unsold production and in particular concentrate
are held as inventory and valued at production cost until sold.
(vii) Currencies The condensed financial
statements are presented in United States dollars ("US$" or "$").
Other currencies referred to in these condensed financial
statements are UK pounds ("UK£ "), Canadian dollars ("C$") and
Brazilian Reais ("BrR$").
Transactions in currencies other than the functional currency of
a company are recorded at a rate of exchange approximating to that
prevailing at the date of the transaction. At each balance sheet
date, monetary assets and liabilities that are denominated in
currencies other than the functional currency are translated at the
amounts prevailing at the balance sheet date and any gains or
losses arising are recognised in profit or loss.
On consolidation, the assets and liabilities of the Group's
overseas operations that do not have a US Dollar functional
currency are translated at exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average
exchange rate for the period. Exchange differences arising on the
net investment in subsidiaries are recognised in other
comprehensive income.
Copies of this release are available from the Company's website
at www.serabigold.com
Forward-looking statements
This press release contains forward-looking statements. All
statements, other than of historical fact, that address activities,
events or developments that the Company believes, expects or
anticipates will or may occur in the future (including, without
limitation, statements regarding the estimation of mineral
resources, exploration results, potential mineralization, potential
mineral resources and mineral reserves) are forward-looking
statements. Forward-looking statements are often identifiable by
the use of words such as "anticipate", "believe", "plan", may",
"could", "would", "might" or "will", "estimates", "expect",
"intend", "budget", "scheduled", "forecasts" and similar
expressions or variations (including negative variations) of such
words and phrases. Forward-looking statements are subject to a
number of risks and uncertainties, many of differ materially from
those discussed in the forward-looking statements. Factors that
could cause actual results or events to differ materially from
current expectations include, among other things, without
limitation, failure to establish estimated mineral resources, the
possibility that future exploration results will not be consistent
with the Company's expectations, the price of gold and other risks
identified in the Company's most recent annual information form
filed with the Canadian securities regulatory authorities on
SEDAR.com. Any forward-looking statement speaks only as of the date
on which it is made and, except as may be required by applicable
securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement.
Qualified Persons Statement
The information contained within this announcement has been
reviewed and verified by Michael Hodgson, CEO of the Company. Mr
Hodgson is an Economic Geologist by training with over 25 years'
experience in the mining industry. He holds a BSc (Hons) Geology,
University of London, a MSc Mining Geology, University of Leicester
and is a Fellow of the Institute of Materials, Minerals and Mining
and a Chartered Engineer of the Engineering Council of UK,
recognizing him as both a Qualified Person for the purposes of
Canadian National Instrument 43-101 and by the AIM Guidance Note on
Mining and Oil & Gas Companies dated June 2009.
Neither the Toronto Stock Exchange, nor any other securities
regulatory authority, has approved or disapproved of the contents
of this news release.
Enquiries: Serabi Gold plc Michael Hodgson Chief
Executive Tel: +44 (0)20 7246 6830 Mobile: +44 (0)7799 473621
Clive Line Finance Director Tel: +44 (0)20 7246 6830 Mobile:
+44 (0)7710 151692 Email: contact@serabigold.com Website:
www.serabigold.com Beaumont Cornish Limited Nominated
Adviser Roland Cornish Tel: +44 (0)20 7628 3396 Michael Cornish
Tel: +44 (0)20 7628 3396 Fox Davies Capital Ltd UK Broker
Simon Leathers Tel: +44 (0)20 3463 5010 Jonathan Evans Tel: +44
(0)20 3463 5010
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