Serabi Gold Plc (LON: SRB)
Serabi Gold PLC (LON: SRB) is a United Kingdom domiciled gold exploration and mining company which is focused on production and exploration of gold in the country of Brazil. The company has two principal mining assets, the Palito Mining Complex and the Coringa Gold Project, both of which are fully owned by the company and are located in the Tapajos region of northern Brazil. The Palito Mining Complex which currently produces approximately 40,000 ounces of gold per annum is spread over 50,800 hectares of contiguous and highly prospective exploration ground. The Coringa Gold Project comprises an eight-kilometer continuous strike of historical artisanal mines, and the company expects Coringa will produce an additional 38,000 ounces of gold per annum when it is full production. Initial development of the Coringa Gold Project is expected to be started during 2020.
The Palito Mining Complex has two orebodies, Palito and San Chico with each of them being narrow vein underground mining operations, with ore grades of between 7.0 g/ton and 9.0 g/ton. The ore mined is fed to a central processing plant with processing capacity of 500 tpd (182,500 tonnes per annum) of ore. The company expects to increase production to over 45,000 ounces during 2020 by improving the grade of the processed ore using ore-sorting technology and expects its ore sorter to be fully operational for the start of the second quarter of 2020.
The Coringa project which is currently in the project permitting stage was acquired in December 2017. The company has published a preliminary economic assessment for the project in September 2019, anticipating an all-in sustaining cost of US$852 per ounce life of mine production of 288,000 ounces at an average grade of 8.3 g/ton.
The Palito Gold Mine
Source – Company Website
The shares of the company have a listing on the Toronto Stock Exchange where they are identified and traded under the ticker name SBI. The shares of the company are also listed for trading on the Alternative Investment Market (AIM) segment at the London Stock Exchange where they are identified and traded by the ticker name SRB. On the London Stock Exchange, the shares of the company also form part of the FTSE AIM All-Share Index.
Serabi Gold Plc (LON: SRB) News Update
The company announced an important outcome of its ongoing surface and underground exploration diamond drilling programme on January 6, 2020. The programme was conducted at company’s Palito Mining Complex, over the Sao Chico orebody.
Drilling programme result: (During Q4 2019)
- In the initial part of Q4 of 2019, to test the east and west continuity of the Sao Chico orebody, a 9,600-meter (step-out) drilling programme was started.
- Drilling on the west side, the company struck ore grades of 21.03 g/tonne and 15.39 g/tonne from holes 19-SCUD-219 and 248 respectively.
- Drilling on the east side, the company struck ore grades of 16.61 g/tonne and 27.35 g/tonne from holes 19-SC-143 and 142 respectively.
- Drilling further 100 metres deep into the current Sao Chico, ore-body, the company struck ore grades of 34.42 g/tonne and 114.49 g/tonne from holes 19-SCUD-284 and 19-SCUD-274 respectively.
Financial highlights for the quarter and nine-month period ending on 30 September 2019
The company on 11 November 2019 released its unaudited financial results for the quarter and nine-month ending on 30 September 2019.
- The EBITDA of the company for the third quarter stood at U$4.6 million compared with a small EBITDA loss for the same quarter in 2018.
- The Profit before tax of the company for the year to date period ending 30 September 2019 stood at US$3.8 million with earnings per share of 4.84 cents.
- The Operational cash inflow of the company for the third quarter of the year stood at US$5.1 million, as compared to the same period in 2018 of outflows of US$1.2 million.
Serabi Gold Stock Performance at The London Stock Exchange
Source – Thomson Reuters (one-year price chart)
At the time of writing this report at 8.01 AM GMT on 07 January 2020, the shares of the company were trading on the London Stock Exchange at GBX 79.90.
The shares of the company during the past 52 weeks of trading at the London Stock Exchange have registered a 52-week high of GBX 92.80, while registering a 52-week low of GBX 24.00. The company has a market capitalisation of £46.25 million on the London Stock Exchange at the time of writing this report on 07 January 2020.
The stock’s trading volume on the London Stock Exchange on an average for 5 days was up by +131.70% as compared to the 30 days’ average traded volume. In the last one month, the shares have generated a return of +8.22% and a return of +21.54% on year to date basis.
Business Outlook - Serabi Gold Plc (LON: SRB)
The latest discovered resource could significantly add to the bankable reserves and resources of the company. Moreover, the grade of some the ore identified by drilling is between two to three times higher in grade than what the company had been mining till now in this mine. This discovery thus makes for significant value upgrade for the company, not only does this discovery add more extractable ore from the Sao Chico orebody site but more importantly the higher grades ensure that the cost of extraction would be significantly lower than what the company is currently incurring for its existing production which adds to the profitability of the company.
The company currently has low levels of debt compared to many of its peers and the management has time and again reiterated their intention to fund any future expansion through internally generated cash-flow and the sensible use of additional debt. The production of gold for the third quarter of 2019 stood at 10,187 ounces, leading to the year to date production of 30,000 ounces of gold till 30 September 2019, a growth of eleven per cent over the corresponding period in 2018. The company expects to end the financial year with a total production in the range of 40,000 and 41,000 ounces of gold.
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