Serabi Gold – Round-Up Of Financial & Operational Performance Of 2019

2019 was a year when Serabi Gold achieved new milestones on the operational front, and we would expect this to translate into excellent financial results for the year.  In the year, it produced 40,101 ounces of gold from its Palito Mining Complex, which is a record production for the Company. For the nine months period ending on 30 September 2019, the Company reported revenue of $43,939,510 compared to revenue of $33,223,837 for the comparable nine months period ending on 30 September 2018, registering a growth of 32.25 per cent. We would expect that with the continued strong gold price and over 10,000 ounces produced in the fourth quarter that this would result in continued revenue growth for the year as a whole. In the fourth quarter of 2109, the Company increased its cash by almost US$1.0 million to US$14.3 million, indicating another quarter of good financial performance.

Data Source – Thomson Reuters

Below are the major financial and operational highlights of Serabi Gold during the year 2019.

Financial Highlights

The latest financial performance of the Company till the third quarter period ending on 30 September 2019:

• The EBITDA of the Company for the year to date (30 September 2019) stood at US$12.1 million, which is up by 120 per cent against the corresponding period in 2018.
• The Profit before tax of the Company stood at US$3.8 million for the year to date with earnings per share of 4.84 cents.
• The cash in the books of the Company on 30 September 2019 stood at US$13.4 million an increase of US$4.2 million against the corresponding period ending on 30 September 2018.
• The Operational cash flow of the Company for the year to date period stood at US$14.5 million (US$11.7 million after mine development costs), in comparison to US$3.2 million (US$0.3 million after mine development costs) for the corresponding period in 2018.
• During January 2020, the Company announced the raising of US$12 million, by issuing Convertible Loan Notes to Greenstone Resources II LP. The proceeds will be used partly to progress the development of the Coringa project, partly for the settlement of the final acquisition payment for the Coringa project, repayment of a loan from Sprott Resource Lending Partnership and the rest for Company's working capital needs.

Operational Highlights

• During the fourth quarter of 2019, the total gold production achieved by the Company stood at 10,223 ounces. The total production figures for the year 2019 thus stands at 40,101 ounces which is a record in gold production achieved by the Company. This figure is within the guidance given for the year and is a seven per cent improvement over the production figures of 2018.
• Commissioning of the ore sorter on the Palito Complex site will be completed during the first quarter of 2020.
• The Company expects that the Ore Sorting machine will increase its production potential by 20% to 25%.
• Regarding the Coringa Project, the public hearing for this project took place on 06 February 2020 at Novo Progresso, Para state, Brazil.
• The meeting was attended by nearly 600 people from various government departments and the general public. The Company’s management believes that having visited the site, the officials and the general public have formed a positive view of the Company and the prospects of the Coringa Project.
• The Company believes that SEMAS, the state environmental authority for the state of Para would now be making a positive recommendation to COEMA, the State Environmental Council for the state of Para, the legislative body that will give final approval for the award of the Licençia Previa. The Company expects COEMA will take approximately two months to arrive at a decision before granting Licençia Previa.
• Post the Licençia Previa; the Company will apply for an Installation Licence which will be granted after approval of the final plant and site design approval. Subject to financings it will then be able to start full devilment and construction.
• The development of the Project, which is currently estimated to have the potential to produce 38,000 ounces of gold per year, would nearly double the production capacity of the Company when fully commissioned.
• The Company expects the initial commencement of gold production from the Coringa gold project to happen during the fourth quarter of 2021.

Data Source – Company’s fourth quarter operating results news release

Strengths And Opportunities Underpinning The Progress Into 2020

The beneficiation of low-grade ore to high grade ore performed by the ore sorter machine will improve the production performance of the Company for the year 2020 and beyond. The newly commissioned ore sorter will not only help the Company bring down its operating costs, but it will also help it ramp up its production. The company in its 10 February 2020 regulatory statement has stated that it expects to be able to increase its production from 40,000 ounces per year to an annualized level of 50,000 ounces per year with the help of the ore sorter.

The Company has raised $12 million in January 2020, and it will use it to make the final acquisition payment of the Coringa gold project. The Company expects to start construction of the gold process plant and other sie infrastructure the Project towards the fourth quarter of 2020 with initial gold production to start by the fourth quarter of 2021. The Company will be financing the construction of the plant through cash flow from its current operations and further debt, which it hopes to secure during the second half of 2020.

Serabi Gold Plc Stock Trading Performance At The London Stock Exchange

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One-year price chart (Source – Thomson Reuters)

The shares of the Company were trading at GBX 87.30 on the LSE on 18 February 2020. The market capitalisation of the stock based on the current price was around £50.52 million.

In the past 52 weeks of trading on the exchange, the shares of the Company have traded as high as GBX 92.800 and with a low of GBX 24.00.

Performance of Serabi Gold shares against FTSE AIM All Share Index and FTSE Gold Mine Index for the past one year (Source – Thomson Reuters)

Serabi Gold’s Value Creation Strategy

To bring about short-term capital appreciation through cash infusion in accretive growth and contribute to long term cash generation to sustained shareholder distribution.

Contribute towards the improvement of infrastructure, education and healthcare to improve the standards of living and provide new opportunities for local populations. Contribute towards tax and royalty receipts to sustain a high-quality oversight & regulatory regime. To create a stable and secure work environment where employees learn, are mentored, can progress and develop their careers.