Serabi Gold plc (AIM: SRB) (TSX: SBI) (LSE: 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 6 month periods ending 30 June 2013 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 17 January 2013 the Company completed the placement of 270
million new ordinary shares to raise in aggregate GBP£16.2 million
to finance the development of the Palito Mine project as outlined
in the PEA. The placement of new shares was underwritten by
Fratelli Investments Limited, one of the Company's major
shareholders.
- The Palito mine remains on schedule to commence gold production
at the end of 2013
- New mine management team and contract mining personnel in
place.
- All new mining fleet fabricated and either delivered or in
process of delivery to site. All other major items of surface or
underground equipment acquired.
- Refurbishment of primary crushing plant complete.
- Gravity concentrator ordered and gravity tower in construction
for completion end of September.
- Foundations for mill being laid and mill being overhauled.
- Flotation building and structures completed and flotation cells
being refurbished.
- Filtration plant expected to be complete by the end of
September.
- Gold room in construction with completion expected at the end
of October.
- Uncrushed run of mine ore stockpile of 5,900 tonnes as at the
end of July 2013. Target of 15,000 tonnes prior to plant
commissioning.
- Contract negotiations at an advanced stage for the refining and
purchase of the copper/gold concentrate that will be produced at
the Palito Mine.
- Completion of the acquisition of Kenai Resources Limited
("Kenai") on 18 July 2013 bringing under ownership the high grade
Sao Chico gold project ("Sao Chico"):
- Sao Chico, located approximately 25 kilometres from Serabi's
Palito Gold Mine, hosts a NI 43-101 compliant combined Measured and
Indicated Mineral Resource of 25,275 ounces of gold at 29.77
grammes per tonne ("g/t") and an Inferred Mineral Resource of
71,385 ounces gold at 26.03 g/t. Expected to be the first satellite
gold resource to supplement the Palito Mine production with high
grade material, taking advantage of the excess plant capacity
available to quickly expand Serabi's future gold production.
- An exploration programme is underway at Sao Chico:
- Drilling programme at Sao Chico commenced late May 2013. 19
holes completed to date over 3,025 metres. Initial assay results
expected early September.
- Geophysics programme at Sao Chico commenced 10 August 2013 for
50 line kilometres.
- Management considers that the drill programme will both
increase current resource confidence and size. On completion of the
drilling and geophysics programme the Company will submit a Final
Exploration Report ("FER") a significant step in the process for
conversion of the exploration licence to a mining licence in [late
2014].
- Mr Nicolas Banados, Managing Director, Equities for Megeve
Investments Limited, joined the Board as a non-executive director
on 13 May 2013 and is a representative of Fratelli Investments
Limited, the Company's largest shareholder,
- Mr Dan Kunz, the former Chairman of Kenai, was appointed to the
Board, as a non-executive director, on 26 July 2013.
- Appointment of Peel Hunt LLP as Broker.
Financial Highlights
3 months ended 3 months ended 6 months ended 6 months ended
30 June 2013 30 June 2012 30 June 2013 30 June 2012
(unaudited) (unaudited) (unaudited) (unaudited)
-------------- -------------- --------------- ---------------
Loss
attributable
to ordinary
shareholders
(US$) 957,515 854,100 2,316,741 2,169,226
-------------- -------------- --------------- ---------------
Basic and
diluted loss
per share (US
cents) 0.27 0.94 0.69 2.47
-------------- -------------- --------------- ---------------
6 months ended 12 months ended
30 June 2013 31 December
(unaudited) 2012 (audited)
US$ US$
--------------- ---------------
Property, plant, equipment additions during
the period 1,144,302 71,976
--------------- ---------------
Additions to Projects in construction during
the period 4,891,329 1,697,975
--------------- ---------------
Exploration and development expenditures
during the period 203,933 2,251,067
--------------- ---------------
Cash at end of period 13,993,628 2,582,046
--------------- ---------------
Equity Shareholders funds at end of period 58,929,002 39,261,001
--------------- ---------------
Michael Hodgson CEO said:
"We continue to make excellent progress on the mine and plant
remediation work at Palito. We have already established a good
stockpile of ore on surface and with the arrival of new mining
equipment this month, will be able to add to this over the coming
months and accelerate mine and ramp development. Having a good high
grade stockpile will put us in the best possible position when
commissioning of the process plant starts at the end of this
current year. The Sao Chico gold project is an excellent
acquisition for the Company and in time will allow Serabi to
enhance its gold production and utilise excess capacity at
Palito."
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.
Quality Assurance and Quality Control
Procedures Disclosure
The Company has implemented and maintains a Serabi quality
assurance/quality control (QA/QC) protocol at its JDO Project as
defined in its "NI 43-101 Technical Report for the Jardim Do Ouro
Project, Para State, Brazil" dated 22 December 2010. This ensures
best industry practice in sampling and analysis of exploration and
resource definition samples. The insertion of field duplicates,
certified standards and blank samples into the sample stream form
part of the Serabi procedure (these act as an independent check on
contamination, precision and accuracy in the analytical
laboratory).
Assay results are reported once rigorous QAQC procedures have
been approved
Neither the Toronto Stock Exchange, nor any other securities
regulatory authority, has approved or disapproved of the contents
of this news release.
The following information, comprising the Finance Review, the
Income Statement, the Group Balance Sheet, Group Statement of
Changes in Shareholders' Equity and Group Cash Flow, is extracted
from the Unaudited Condensed Interim Financial Statements and the
Management Discussion and Analysis.
The Company will, in compliance with Canadian regulatory
requirements, post its Management Discussion and Analysis for the
three months and six months ended 30 June 2013 together with the
Condensed Interim Financial Statements on SEDAR at www.sedar.com.
These documents will also available from the Company's website --
www.serabigold.com.
Outlook
Remediation and development works are progressing well and the
Company remains on schedule with the underground mine development
work benefitting from the earlier than planned completion of the
de-watering of the mine. Mine development is well underway, mine
services will continue to be overhauled and the rehabilitation of
the processing plant will continue with a view to having the
crushing, milling, gravity concentration, gold room and flotation
sections all completed and being commissioned by year end.
The plant remediation and design has taken into account the
processing requirements of future ore mined from Sao Chico.
The Company's exploration activities will remain limited whilst
the Company focuses its attention and personnel resources at Palito
towards the remediation and commencement of production. The
directors expect that future exploration activity at Palito 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. Exploration work
being undertaken at Sao Chico is a priority given the short period
prior to the expiry of the exploration licence and the desire to
secure a mining licence as quickly as possible to allow development
and gold production from this project to be started at the earliest
possible opportunity.
A number of refining and trading groups have been approached to
provide terms for the refining and purchase of the copper/gold
concentrate that will be produced at the Palito Mine and which is
expected to account for in excess of 70% of the revenues of the
operation. The Company has completed the evaluation of these
submissions and is in the process of agreeing contract terms.
The Company's strategy has been to develop additional satellite
high grade gold mining opportunities in relatively close proximity
to Palito, taking advantage of surplus capacity that exists in the
gold plant, the rationale being that ore mined could be treated
through the centralised processing facility located at the Palito
site. Kenai's high grade Sao Chico property is at a more advanced
stage than Serabi's own discoveries at Currutela, Palito South and
Piaui, and therefore obviously falls into this category of being a
satellite opportunity. The acquisition of Kenai on 18 July 2013
therefore presents the Company with the opportunity to reduce the
timeframe for the development of its first satellite deposit to
augment Palito mine production with additional high grade feed,
taking advantage of the excess plant capacity available.
The first stage of activity at Sao Chico is a minimum 3,500
metre diamond drilling programme to enhance the existing resource
in terms of both resource confidence and size. The drill programme
will be supplemented by ground geophysics, commencing early in
August 2013, which will establish other potential areas of interest
within the Sao Chico exploration licence. The current Sao Chico
gold resource comprises approximately 25,000 Measured and Indicated
ounces of gold and 71,000 Inferred ounces, both averaging over 26
g/t. and contained within just three veins with ten more veins
identified.
The Sao Chico exploration licence is in force until March 2014,
before which time the Company will apply to convert the concession
to a full mining licence. To acquire the full mining licence
status, the Company is following a two stage process. Following
completion of the on-going drilling and geophysics programmes, a
Final Exploration Report ("FER") will be compiled and submitted to
the Departamento Nacional de Produção Mineral ("DNPM") for
approval. On approval of the FER, the Company will then submit the
Plano de Approveimento Economico ("PAE"), which concludes the
permitting process to acquire the licence. The Company anticipates
the approval of both documents will take much of 2014, and
therefore expects that it will be in a position to commence
development of the project late in 2014 following the award of a
mining licence.
The DNPM have already issued a trial mining licence ("GUIA") for
the Sao Chico property, which will expire in April 2014 and
management consider that at the very least this illustrates the
DNPM's willingness to see the project developed. Discussions with
the DNPM suggest that as the FER and PAE will demonstrate that all
processing of Sao Chico ore will be undertaken at Palito, where a
fully permitted process facility will already be in place, the
application for a mining licence at Sao Chico can be rapidly
processed.
FINANCE REVIEW
Results of Operations
Three month period ended 30 June 2013 compared
to the three month period ended 30 June 2012
The loss from operations increased by US$146,187 from US$820,266
for the 3 months ended 30 June 2012 to US$966,453 for the 3 month
period ended 30 June 2013 an increase of 18% and primarily arising
from certain one off tax charges incurred during the period. This
has in part been offset by a change in the manner in which costs
associated with maintenance activities of the plant are treated for
accounting purposes and reduced depreciation costs.
In the 3 months to 30 June 2012 all costs relating to the
maintenance of the process plant were treated as an operating
expense as they were incurred, this cost for that 3 month period
being BrR$130,736 (US$64,250). Since the decision was taken by the
Board at the end of June 2012, to proceed with the development of
the Palito Mine, the plant has been considered to be in a state of
refurbishment and all costs related to the plant are being
capitalised as part of the overall mine development costs and
therefore there is no comparable expense reported in the income
statement for the 3 month period to 30 June 2013.
Administration costs have shown an overall increase from
US$573,167 for the 3 month period ended 30 June 2012 to US$805,633
for the 3 month period to 30 June 2013. This increase is primarily
due to the settlement of certain one off historical tax adjustments
totalling BrR$304,500 (US$150,026). Excluding this item from the
analysis, administration costs for the 3 months to 30 June 2103
show a small increase of US$82,000 in comparison with the 3 months
to 30 June 2012. This variance is primarily attributable to the
timing of certain expenses in the UK which in 2012 had been
recognised and reported in a preceding period.
The reduction in depreciation charges between the two periods
reflects many of the Company's assets reaching the end of their
original forecast lives for amortisation purposes and have
therefore now been fully amortised. Depreciation charges for the 3
months to 30 June 2013 are US$112,974 compared with US$158,204 for
the 3 month period to 30 June 2012.
The Company recorded a foreign exchange gain of US$23,400 in the
3 month period to 30 June 2013 which compares with a foreign
exchange loss of US$19,103 recorded for the 3 months ended 30 June
2012. These foreign exchange gains and losses are primarily
incurred in respect of the cash holdings of the Company in
currencies other than US Dollars as at the period end and do not
necessarily reflect actual realised losses. The Company holds funds
in certain currencies in anticipation of future expenditures that
are anticipated to be settled in those currencies. The currency
gain in the 3 month period to 30 June 2013 in part reverses losses
on currency holdings reported in the 3 month period to 31 March
2013 and reflects the appreciation on certain currencies in
particular the UK Pound against the US Dollar as at 30 June 2013
compared with 31 March 2013.
Net interest charges for the 3 month period to 30 June 2013 were
US$14,462 compared with US$14,731 for the corresponding period 3
month period to 30 June 2012. An analysis of the composition of
these charges is set out in the table below:
2013 2012
US$ US$
Interest expense on convertible loan stock 15,653 13,394
Asset finance charges 4,195 -
Other interest and finance expenses 905 5,022
------------- -------------
20,753 18,416
Interest income (6,291) (3,685)
------------- -------------
14,462 14,731
------------- -------------
Asset finance charges relate to the acquisition of new mining
equipment under suppler credit terms. The first instalment was
settled in June 2013 when the first item was received in
Brazil.
Other interest and finance expenses are primarily related to the
Brazilian operation and the reduction in the 3 months to 30 June
2013 compared with the 3 months to 30 June 2012 reflects reduced
levels of settlements with long term creditors to which interest is
being applied and also reduced levels of penalties from tax
authorities for past adjustments of taxes due to be collected by
the Company on behalf of both the Federal and State tax
authorities.
Six month period ended 30 June 2013 compared to
the six month period ended 30 June 2012
The loss from operations was reduced by US$173,814 (7.9%) from a
loss of US$2,204,533 for the six months to 30 June 2012 to
US$2,030,719 for the six month period to 30 June 2013. This
variance has in part arisen from a change in the manner in which
costs associated with maintenance activities of the plant are
treated for accounting purposes and reduced depreciation costs.
Administration costs have increased by US$330.433 (24%) reflecting
the higher levels of activity during the six month period ended 30
June 2013 compared with the corresponding six month period ended 30
June 2012.
In the 6 months to 30 June 2012 all costs relating to the
maintenance of the process plant were treated as an operating
expense as they were incurred, this cost for that 6 month period
being BrR$338,690 (US$181,944). Since the decision was taken by the
Board at the end of June 2012, to proceed with the development of
the Palito Mine, the plant has been considered to be in a state of
refurbishment and all costs related to the plant are being
capitalised as part of the overall mine development costs and
therefore there is no comparable expense reported in the income
statement for the 6 month period to 30 June 2013.
Administration costs have shown an overall increase from
US$1,383,953 for the 6 month period ended 30 June 2012 to
US$1,714,386 for the 6 month period to 30 June 2013. The expense
for the 6 months to 30 June 2012 included a charge in respect of
labour claims amounting to US$201,667 whilst during the 6 month
period to 30 June 2013 this expense was only US$5,119. The Company
has incurred an expense in the 6 month period ended 30 June 2013 of
US$326,500 in respect of bonus payments made to senior management
personnel in respect of the preceding financial year's performance
and the recognised one-off tax liabilities amounting to US$150,026.
Excluding these items from the analysis, administration costs for
the 6 months to 30 June 2103 show an increase of US$50,000 by
comparison with the 6 months to 30 June 2012. This additional
expense has been incurred in Brazil and reflects the increased
level of administrative support required to manage the construction
and start-up of the Palito Gold Mine and includes the opening of a
support office in Belem, the Para state capital, to allow improved
communication with State and government departments.
The reduction in depreciation charges between the two periods
reflects many of the Company's assets reaching the end of their
original forecast lives for amortisation purposes and have
therefore now been fully amortised. Depreciation charges for the 6
months to 30 June 2013 are US$220,641 compared with US$584,841 for
the 6 month period to 30 June 2012.
The Company recorded a foreign exchange loss of US$231,818 in
the 6 month period to 30 June 2013 which compares with a foreign
exchange gain of US$68,087 recorded for the 6 months ended 30 June
2012. The loss for the 6 months to 30 June 2013 primarily comprises
losses on cash holdings denominated in GB Pounds Sterling and
Euros. The Company holds funds in certain currencies in
anticipation of future expenditures that are anticipated to be
settled in those currencies. These currency holdings were acquired
early in the 6 month period, which saw a period of strengthening of
the US Dollar against most major currencies resulting in these book
exchange losses. Subsequent strengthening of Sterling during the
second quarter of 2013 has reversed some of the recorded losses
which were primarily incurred during the first quarter of 2013.
Net interest charges for the 6 month period to 30 June 2013 were
US$54,204 compared with US$32,780 for the corresponding 6 month
period to 30 June 2012. An analysis of the composition of these
charges is set out in the table below:
2013 2012
US$ US$
Interest on short term loan 26,630 -
Interest expense on convertible loan stock 31,292 27,321
Asset finance charges 4,195 -
Other interest and finance expenses 1,135 10,323
------------- -------------
63,252 37,644
Interest income (9,048) (4,864)
------------- -------------
54,204 32,780
------------- -------------
Interest charges on the short term loan relate to a US$6.0
million facility provided by Fratelli Investments Limited
("Fratelli") which was entered into on 1 October 2012. Under the
loan agreement a facility fee of 3% was payable to Fratelli and
interest accrued at the rate of 12% per annum. The facility was
repaid in January 2013 from the proceeds of a UK£16.2 million
placement of new ordinary shares that was completed on 17 January
2013.
Asset finance charges relate to the acquisition of new mining
equipment under suppler credit terms. The first instalment was
settled in June 2013 when the first item was received in
Brazil.
Other interest and finance expenses are primarily related to the
Brazilian operation and the reduction in the 6 months to 30 June
2013 compared with the 6 months to 30 June 2012 reflects reduced
levels of settlements with long term creditors to which interest is
being applied and also reduced levels of penalties from tax
authorities for past adjustments of taxes due to be collected by
the Company on behalf of both the Federal and State tax
authorities.
Liquidity and Capital Resources
The Company had a working capital position of US$14,305,840 at
30 June 2013 compared to US$(2,760,102) at 31 December 2012. The
working capital position at 31 December 2012 was inclusive of a
US$4.5 million short term loan received from a major shareholder
which was repaid in January 2013, following the successful
completion of a share placement on 17 January 2013 raising gross
proceeds of UK£16.2 million. This share placement and the repayment
of the loan comprise the principle reasons for the significant
improvement in the working capital position of the Company which
has resulted in an increase in cash resources available to the
company of US$11,411,582 million compared with 31 December
2012.
The levels of inventories have increased by US$62,000 compared
with 31 December 2012, reflecting the increasing levels of activity
and comprise consumables for the development mining activities that
are now underway. Equally the level of creditors has increased by
approximately US$822,188 as orders for equipment, contractor
services and consumables are placed.
The Company does not have any asset backed commercial paper
investments. As the Company has no revenue and has in recent years
primarily supported its activities by the issue of further equity,
the working capital position at any time reflects the timing of the
most recent share placement completed by the Company.
During the six month period ended 30 June 2013 the Company
issued 270,000,000 Ordinary Shares for gross cash proceeds of
UK£16.2 million. The placement had been underwritten by one of the
Company's major shareholders who received an underwriting fee of
8,135,035 Warrants in respect of the placement. Each Warrant
entitles the holder to subscribe for one Ordinary Share at a price
of UK£0.10 at any time until 16 January 2015.
The Company has, during the six month period ended 30 June 2013,
incurred costs of US$204,000 for development and exploration
expenditures on its mineral properties, US$1.2 million on asset
purchases, US$4.9 million related to the rehabilitation and
development of the Palito Mine and used cash of US$2,188,000 to
support its operating activities. Further details of the
exploration and development activities conducted during the period
are set out elsewhere in this MD&A.
On 30 June 2013 the Company's total assets amounted to
US$64,361,819 which compares to the US$48,203,224 reported at 31
December 2012. The current asset component has increased by some
US$13,765,000 million reflecting the higher cash balances following
the completion of the share placement with the non-current asset
component increasing by US$2,393,984. Whilst some US$6.2 million
has been expended on non-current assets the exchange rate movements
between the Brazilian Real and the United States Dollar has
resulted in exchange variations decreasing the carrying value of
exploration interests by US$1.2 million and of mining property,
plant and equipment by US$2.4 million. Depreciation charges of
US$0.2 million during the 6 months ended 30 June 2013 account for
the remaining change in value compared to 31 December 2012. Total
assets are mostly comprised of property, plant and equipment, which
as at 30 June 2013 totalled US$30,228,704 (December 2012:
US$26,848,991), of which US$6.01 million relates to recent project
development expenditures at the Palito Mine and deferred
exploration and development cost which as at 30 June 2013 totalled
US$16,375,076 (December 2012: US$17,360,805), of which US$15.38
million relates to capitalised exploration expenditures at, or in
close proximity to, the Palito Mine. The Company's total assets
also included cash holdings of US$13,993,628 (December 2012:
US$2,582,046).
Receivables of US$1,541,830 as at 30 June 2013 have increased
significantly compared to 31 December 2012 when the receivables
balance was US$85,509. The receivables as of 30 June 2013 includes
a down payment of approximately US$453,000 in respect of mining
equipment that is due to be delivered to the project site during
the second quarter of 2013. A further US$990,000 is represented by
advances made to Kenai Resources Limited ("Kenai") and its
Brazilian subsidiary under the terms of a loan agreement entered
into in May 2013 in conjunction with the proposed acquisition of
Kenai. The remaining balance represents other deposits paid by the
Company.
Prepayments as of 30 June 2013 were US$1,437,737 compared with
US$603,005 as at 31 December 2012, an increase of US$834,732. The
prepayments represent:
(i) prepaid taxes in Brazil amounting to US$522,000, of which
the majority is federal and state sales taxes which the Company
expects to recover either through off-set against other federal tax
liabilities or through recovery directly. The amount recoverable is
consistent with amounts due at 31 December 2012; (ii) costs
incurred or accrued relating to the proposed acquisition of Kenai
Resources Limited ("Kenai") which as at 30 June 2013 was still in
progress. Under the terms of the agreements with Kenai had the
transaction not completed these costs would have been recoverable
from Kenai. With the transaction having been completed on 18 July
2013, these costs, for which a provision of $500,000 has been made,
will either be expensed in a future period or set against the share
premium account as appropriate; (iii) Supplier down-payments.
Reflecting the level of development and construction activity
currently being undertaken for the opening of the Palito Gold Mine,
the Company has made advances to suppliers in respect of goods
purchased or items being fabricated of US$297,872 (31 December 2012
US$12,005).
The Company's total liabilities at 30 June 2013 were
US$5,432,817 (December 2012: US$8,942,223). The total liabilities
at 31 December 2012 included the short term loan payable to
Fratelli Investments Limited which, including interest, amounted to
US$4,580,745 as well as accounts payable to suppliers and other
accrued liabilities of US$2,384,724. At 30 June 2013 accounts
payable to suppliers and other accrued liabilities totalled
$3,571,508. The major items contributing to the overall increase of
$1,186,784 are:
(i) a liability in respect of finance agreements in place at 30
June 2013 relating to the acquisition of mining equipment totalling
US$251,000 (31 December 2012 : US$nil); (ii) a provision of
$500,000 in respect of anticipated costs relating to the
acquisition of Kenai; (iii) a general increase in liabilities
reflecting the higher levels of activity during the project
construction at Palito of US$357,000; and (iv) during the 3 month
period to 30 June 2013, the Company has recognised certain one- off
tax liabilities in Brazil to be settled in instalments. The
outstanding amount provided at 30 June 2013 was equivalent to
US$128,000.
The total liabilities include US$374,030 including accrued
interest (December 2012: US$364,656) attributable to the £300,000
loan from a related party, which has a repayment date of 31 October
2014 subject to the right of the holder at any time, on one or more
occasions, on or before the repayment date, to convert any of the
outstanding amounts owed by the Company to Ordinary Shares at a
price of 15 pence per Ordinary Share. It also includes the amount
of US$1,487,279 (December 2012: US$1,612,098) in respect of
provisions including US$1,241,434 (December 2012: US$1,223,392) for
the cost of remediation of the current Palito Mine site at the
conclusion of operational activity.
During the early part of 2012 the Company commissioned a
Preliminary Economic Assessment ("PEA") of the viability of
re-commencing mining operations at the Palito Mine. The report
which was completed and published in June 2012 was positive and the
Company entered into a conditional subscription agreement with
Fratelli Investments Limited ("Fratelli") on 2 October 2012 to
subscribe for and underwrite a placement of new shares to finance
the development and start-up of production at the Palito Gold Mine.
In addition, Fratelli agreed to provide an interim secured loan
facility of US$6.0 million to provide additional working capital to
the Company and to enable it to commence the initial works at
Palito. The placing of 270 million new Ordinary Shares with
Fratelli and other subscribers was completed on 17 January 2013,
raising gross proceeds of UK£16.2 million. The Company has repaid
out of the proceeds the amount of the loan facility that had been
drawn down, which at that time was US$4.5 million plus accrued
interest.
In July 2013 the Company completed the acquisition of Kenai
Resources Limited. Whilst this acquisition has necessitated
additional expenditures which were not foreseen, management
considers that the company holds and can access adequate capital to
be able to complete the necessary mine development and process
plant and infrastructure rehabilitation works that are required at
Palito in order to be able to commence gold production before the
end of 2013.
From the time that production operations commence at planned
rates management anticipates that the Company will have sufficient
cash flow to be able to meet all its obligations as and when they
fall due and to, at least in part, finance the exploration and
development activities that it would like to undertake on its other
exploration projects.
There are, however, risks associated with the commencement of
any new mining and processing operation whereby unforeseen
technical and logistical events result in additional time being
required for commissioning or additional costs needing to be
incurred, giving rise to the possibility that additional working
capital may be required to fund these delays or additional capital
requirements. Should additional working capital be required the
Directors consider that further sources of finance could be secured
within the required timescale.
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
--------------------------------------------------
For the three months For the six months
ended 30 June ended 30 June
2013 2012 2013 2012
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
CONTINUING OPERATIONS
Revenue -- -- -- --
Operating expenses -- (64,250) -- (181,944)
----------- ----------- ----------- -----------
Gross loss -- (64,250) -- (181,944)
Administration expenses (805,633) (573,167) (1,714,386) (1,383,953)
Share based payments (47,846) (33,244) (95,692) (62,394)
Gain on asset disposals -- 8,599 -- 8,599
Depreciation of plant
and equipment (112,974) (158,204) (220,641) (584,841)
----------- ----------- ----------- -----------
Operating loss (966,453) (820,266) (2,030,719) (2,204,533)
Foreign exchange
gain/(loss) 23,400 (19,103) (231,818) 68,087
Finance expense (20,753) (18,416) (63,252) (37,644)
Investment income 6,291 3,685 9,048 4,864
----------- ----------- ----------- -----------
Loss before taxation (957,515) (854,100) (2,316,741) (2,169,226)
Income tax expense -- -- -- --
----------- ----------- ----------- -----------
Loss for the period from
continuing operations
(1) (2) (957,515) (854,100) (2,316,741) (2,169,226)
----------- ----------- ----------- -----------
Other comprehensive
income (net of tax)
Exchange differences on
translating foreign
operations (4,024,661) (4,235,830) (3,415,186) (3,068,978)
----------- ----------- ----------- -----------
Total comprehensive loss
for the period (2) (4,982,176) (5,089,930) (5,731,927) (5,238,204)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Loss per ordinary share
(basic and diluted) (1) (0.27c) (0.94c) (0.69c) (2.47c)
----------- ----------- ----------- -----------
(1) All revenue and expenses arise from continuing operations.
(2) The Group has no non-controlling interests and all 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 June 30 June 31 December
2013 2012 2012
(expressed in US$) (unaudited) (unaudited) (audited)
----------- ----------- -----------
Non-current assets
Development and deferred exploration
costs 16,375,076 17,405,081 17,360,805
Property, plant and equipment 30,228,704 25,845,466 26,848,991
----------- ----------- -----------
Total non-current assets 46,603,780 43,250,547 44,209,796
----------- ----------- -----------
Current assets
Inventories 784,844 985,865 722,868
Trade and other receivables 1,541,830 77,132 85,509
Prepayments and accrued income 1,437,737 545,441 603,005
Cash and cash equivalents 13,993,628 1,697,434 2,582,046
----------- ----------- -----------
Total current assets 17,758,039 3,305,872 3,993,428
----------- ----------- -----------
Current liabilities
Trade and other payables 2,823,871 1,990,299 2,001,683
Interest bearing liabilities -- -- 4,580,745
Accruals 628,328 113,191 171,102
----------- ----------- -----------
Total current liabilities 3,452,199 2,103,490 6,753,530
----------- ----------- -----------
Net current assets/(liabilities) 14,305,840 1,202,382 (2,760,102)
----------- ----------- -----------
Total assets less current liabilities 60,909,620 44,452,929 41,449,694
----------- ----------- -----------
Non-current liabilities
Trade and other payables 119,309 241,548 211,939
Provisions 1,487,279 1,547,976 1,612,098
Interest bearing liabilities 374,030 326,564 364,656
----------- ----------- -----------
Total non-current liabilities 1,980,618 2,116,088 2,188,693
----------- ----------- -----------
Net assets 58,929,002 42,336,841 39,261,001
----------- ----------- -----------
Equity
Share capital 52,773,993 31,416,993 31,416,993
Share premium 54,037,938 50,306,920 50,182,624
Option reserve 2,118,596 2,028,676 2,019,782
Other reserves 427,615 780,028 780,028
Translation reserve (8,021,497) (4,144,145) (4,606,311)
Accumulated loss (42,407,643)(38,051,631)(40,532,115)
----------- ----------- -----------
Equity shareholders' funds 58,929,002 42,336,841 39,261,001
----------- ----------- -----------
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 2012 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
(unaudited) capital premium reserve
------------ ----------- -----------
Equity shareholders'
funds at 31 December
2011 29,291,551 48,292,057 1,956,349
------------ ----------- -----------
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 --
Costs associated with
issue of new ordinary
shares for cash -- (32,645) --
Share option expense -- -- 72,327
------------ ----------- -----------
Equity shareholders'
funds at 30 June 2012 31,416,993 50,306,920 2,028,676
------------ ----------- -----------
Foreign currency
adjustments -- -- --
Loss for the period -- -- --
------------ ----------- -----------
Total comprehensive
income for the period -- -- --
Costs associated with
issue of new ordinary
shares for cash -- (124,296) --
Share options lapsed -- -- (87,276)
Share option expense -- -- 78,382
------------ ----------- -----------
Equity shareholders'
funds at 31 December
2012 31,416,993 50,182,624 2,019,782
------------ ----------- -----------
Foreign currency
adjustments -- -- --
Loss for the period -- -- --
------------ ----------- -----------
Total comprehensive
income for the period -- -- --
Issue of new ordinary
shares for cash 21,357,000 4,182,600 --
Costs associated with
issue of new ordinary
shares for cash -- (327,286) --
Warrants lapsed in period -- -- --
Share option expense -- -- 98,814
------------ ----------- -----------
Equity shareholders'
funds at 30 June 2013 52,773,993 54,037,938 2,118,596
------------ ----------- -----------
(expressed in US$) Other Translation Accumulated Total
(unaudited) reserves reserve loss equity
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 December
2011 702,095 (1,075,167) (35,882,405) 43,284,480
----------- ----------- ----------- -----------
Foreign currency
adjustments -- (3,068,978) -- (3,068,978)
Loss for the period -- -- (2,169,226) (2,169,226)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- (3,068,978) (2,169,226) (5,238,204)
Issue of new ordinary
shares for cash 77,933 -- -- 4,250,883
Costs associated with
issue of new ordinary
shares for cash -- -- -- (32,645)
Share option expense -- -- -- 72,327
----------- ----------- ----------- -----------
Equity shareholders'
funds at 30 June 2012 780,028 (4,144,145) (38,051,631) 42,336,841
----------- ----------- ----------- -----------
Foreign currency
adjustments -- (462,166) -- (462,166)
Loss for the period -- -- (2,567,760) (2,567,760)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- (462,166) (2,567,760) (3,029,926)
Costs associated with
issue of new ordinary
shares for cash -- -- -- (124,296)
Share options lapsed -- -- 87,276 --
Share option expense -- -- -- 78,382
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 December
2012 780,028 (4,606,311) (40,532,115) 39,261,001
----------- ----------- ----------- -----------
Foreign currency
adjustments -- (3,415,186) -- (3,415,186)
Loss for the period -- -- (2,316,741) (2,316,741)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- (3,415,186) (2,316,741) (5,731,927)
Issue of new ordinary
shares for cash 88,800 -- -- 25,628,400
Costs associated with
issue of new ordinary
shares for cash -- -- -- (327,286)
Warrants lapsed in period (441,213) -- 441,213 --
Share option expense -- -- -- 98,814
----------- ----------- ----------- -----------
Equity shareholders'
funds at 30 June 2013 427,615 (8,021,497) (42,407,643) 58,929,002
----------- ----------- ----------- -----------
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
-----------------------------------------------
For the three months For the six months
ended ended
30 June 30 June
2013 2012 2013 2012
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
Operating activities
Operating loss (966,453) (820,266) (2,030,719) (2,204,533)
Depreciation - plant,
equipment and mining
properties 112,974 158,204 220,641 584,841
Gain on asset disposals -- (8,599) -- (8,599)
Option costs 47,846 33,244 95,692 62,394
Interest paid (5,100) (5,022) (112,705) (10,323)
Foreign exchange loss (60,528) (145,975) (365,844) (90.359)
Changes in working capital
(Increase)/ decrease in
inventories (66,201) 45,941 (127,788) 52,320
(Increase) /decrease in
receivables, prepayments
and accrued income (2,216,686) 86,214 (2,383,622) 128,422
Increase/(decrease) in
payables, accruals and
provisions 710,652 21,857 1,133,999 (458,461)
----------- ----------- ----------- -----------
Net cash flow from
operations (2,443,496) (634,402) (3,570,346) (1,944,298)
----------- ----------- ----------- -----------
Investing activities
Proceeds from sale of fixed
assets -- 9,928 -- 9,928
Purchase of property, plant
and equipment and projects
in construction (3,705,076) (42) (5,784,467) (51,952)
Exploration and development
expenditure (92,796) (1,017,349) (203,933) (1,948,956)
Interest received 6,291 3,685 9,048 4,864
----------- ----------- ----------- -----------
Net cash outflow on
investing activities (3,791,581) (1,003,778) (5,979,352) (1,986,116)
----------- ----------- ----------- -----------
Financing activities
Issue of ordinary share
capital -- -- 25,628,400 4,250,883
Repayment of short term loan -- -- (4,500,000) --
Payment of share issue costs (45,627) -- (327,286) (32,645)
----------- ----------- ----------- -----------
Net cash (outflow)/ inflow
from financing activities (45,627) -- 20,801,114 4,218,238
----------- ----------- ----------- -----------
Net (decrease)/ increase in
cash and cash equivalents (6,280,704) (1,638,180) 11,251,416 287,824
Cash and cash equivalents at
beginning of period 20,222,386 3,382,198 2,582,046 1,406,458
Exchange difference on cash 51,946 (46,584) 160,166 3,152
----------- ----------- ----------- -----------
Cash and cash equivalents at
end of period 13,993,628 1,697,434 13,993,628 1,697,434
----------- ----------- ----------- -----------
1. Basis of preparation These interim
accounts are for the three and six month periods ended 30 June
2013. Comparative information has been provided for the unaudited
three and six month periods ended 30 June 2012 and, where
applicable, the audited twelve month period from 1 January 2012 to
31 December 2012.
The 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 2012
and those envisaged for the financial statements for the year
ending 31 December 2013. 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.
(i) Going concern and availability of project
finance In common with many companies in the exploration and
development stages, the Company raises its finance for exploration
and development programmes in discrete tranches. During the early
part of 2012 the Company commissioned a Preliminary Economic
Assessment ("PEA") of the viability of re-commencing mining
operations at the Palito Mine. The report which was completed and
published in June 2012 was positive and the Company entered into a
conditional subscription agreement with Fratelli Investments
Limited ("Fratelli") on 2 October 2012 to subscribe for and
underwrite a placement of new shares to finance the development and
start-up of underground mining activities at the Palito Gold Mine.
In addition Fratelli agreed to provide an interim secured loan
facility of US$6 million to provide additional working capital to
the Company and to enable it to commence the initial works at
Palito. The placing of 270 million new Ordinary Shares with
Fratelli and other subscribers was completed on 17 January 2013,
raising gross proceeds of UK£16.2 million. The Company has repaid
out of the proceeds the amount of the loan facility that had been
drawn down, which at that time was US$4.5 million plus accrued
interest.
In July 2013 the Company completed the acquisition of Kenai
Resources Limited. Whilst this acquisition has necessitated
additional expenditures which were not foreseen, management
considers that the company holds and can access adequate capital to
be able to complete the necessary mine development and process
plant and infrastructure rehabilitation works that are required at
Palito in order to be able to commence gold production before the
end of 2013. From the time that production operations commence at
planned rates management anticipate the Company will have
sufficient cash flow to be able to meet all its obligations as and
when they fall due and to, at least in part, finance the
exploration and development activities that it would like to
undertake on its other exploration projects.
There are, however, risks associated with the commencement of
any new mining and processing operation whereby unforeseen
technical and logistical events result in additional time being
required for commissioning or additional costs needing to be
incurred, giving rise to the possibility that additional working
capital may be required to fund these delays or additional capital
requirements. Should additional working capital be required the
Directors consider that further sources of finance could be secured
within the required timescale. On this basis the Directors have
therefore concluded that it is appropriate to prepare the financial
statements on a going concern basis. However there is no certainty
that such additional funds will be forthcoming. These conditions
indicate the existence of a material uncertainty which may cast
doubt over the Group's and the Company's ability to continue as a
going concern and therefore that it may be unable to realise its
assets and discharge its liabilities in the normal course of
business.
These financial statements do not reflect the adjustments to
carrying values of assets and liabilities and the reported expenses
and balance sheet classifications that would be necessary should
the going concern assumption be inappropriate. These adjustments
could be material.
(ii) Impairment The Directors have
undertaken a review of the carrying value of the mining and
exploration assets of the Group and given particular consideration
to the results of the PEA, the current operational status of Palito
and the potential risks and implications of starting up a past
producing gold mine. As part of this review they have assessed the
value of the existing Palito Mine asset on the basis of the
projected value in use that could be expected should the Company
follow the re-development, start-up and future mining plans
proposed in the PEA. 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 and assets in
construction 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.
Costs related to work on the remediation, rehabilitation and
development of the Palito Mine, the process plant and other site
infrastructure are being capitalised together with a portion of
general administration costs incurred in Brazil as Assets in
Construction. Upon the successful commencement of commercial
production, these costs will be transferred to Mining Assets and
amortised 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 is
held as inventory and valued at production cost until sold.
(vii) Currencies The condensed financial
statements are presented in United States dollars (US$ or "$").
Other currencies referred to in these condensed financial
statements are GB pounds ("GB£"), Canadian dollars ("C$") 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.
(viii) Cash and cash equivalents Cash and
cash equivalents include cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts. Bank
overdrafts are shown within interest bearing liabilities in current
liabilities on the balance sheet.
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 Peel Hunt LLP UK Broker Matthew
Armitt Tel: +44 (0)20 7418 9000 Andy Crossley Tel: +44 (0)20 7418
9000 Blythe Weigh Communications Limited Public Relations
Tim Blythe Tel: +44 (0)20 7138 3204 Mobile: +44 7816 924626 Halimah
Hussain Tel: +44 (0)20 7138 3203 Mobile: +44 7725 978141
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