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
period ending 31 March 2012 and at the same time has also published
its Management's Discussion and Analysis for the same period. 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.
Operational Highlights for the last
quarter
- Assay results from ALS Minerals confirmed preliminary results
issued in December 2011 for drilling undertaken on the Palito South
extension and the Piaui prospect. Independent results reported an
average upgrade for gold assays of 8% and 14.9% respectively,
compared with the preliminary reported results.
- NCL personnel visited Palito during March 2012 to undertake
their field evaluation and gather the required data for the
PEA.
- 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.
Corporate Highlights
- The Company completed a placing of 27,300,000 units on January
24, 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 January 23,
2014.
- NCL Ingenieria y Construccion SA ("NCL") were appointed to
undertake an independent Preliminary Economic Assessment (the
"PEA") into the viability of re-establishing mining operations at
the Palito mine.
Financial Highlights
3 months ended 3 months ended
31 March 2012 31 March 2011
(unaudited) (unaudited)
US$ US$
-------------------- --------------------
Operating Loss for period (1,315,126) (742,642)
Loss per ordinary share (basic
and diluted) (1.56) cents (1.65) cents
3 months ended 12 months ended
31 March 2012 31 December 2011
(unaudited) (audited)
US$ US$
-------------------- --------------------
Exploration and development
expenditures during the period 931,607 8,663,471
Cash at end of period 3,382,198 1,406,458
Equity Shareholders funds at end
of period 47,388,560 43,284,480
For the three month period ended 31 March 2012 the Company
recorded a net loss of US$1,315,126 (1.56 US cents per share)
compared to a net loss of US$742,642 (1.65 US cents per share) for
the comparative period last year. The increase in the loss for the
period is significantly affected by a one-off item reported in the
financial statements for the quarter ended 31 March 2011. Excluding
this one-off item the loss for the quarter increased by only
US$32,000 from US$1,283,083 for the period ended 31 December 2011
to US$1,315,126 for the period ended 31 December 2012. The one-off
item in the first quarter of 2011 represented the write-back of a
provision equivalent to US$540,441 relating to a potential
liability to a supplier in Brazil that was no longer required.
Operating expenses of US$117,694 (three months to 31 March 2011:
US$183,822) reflect charges relating to the process plant at the
Palito Mine. During the first quarter of 2011 the Company was
crushing waste rock for use in road construction an activity which
ceased in the latter part of 2011. Costs for 2011 therefore include
consumable items related to this activity. The costs for 2012
primarily reflect the staffing costs of personnel involved in the
on-going maintenance and remedial works around the crushing and
process plant.
Administration costs as reported have increased by some
US$147,000 from US$665,387 for the three months ended 31 March 2011
to US$810,786 for the same three month period in 2012. However the
reported costs for 2011 quarter were net of income from waste rock
sales of US$183,000. On a like for like basis (excluding this
non-mineral related income) administration costs have reduced by
approximately US$37,000.
Costs for the UK corporate office have increased by US$15,000 as
a result of a small increase in professional fees with costs in
Brazil having been reduced. On a like for like basis costs in
Brazil have reduced from some $304,000 to around $200,000 for the
three month period ended 31 March 2012. However this saving has
been offset by an employment termination provision being recorded
of some US$182,000 of which US$130,000 relates to a long standing
claim from a former employee who had originally lodged a claim
amounting to the equivalent of US$726,000. The level of employment
termination provisions recorded in the corresponding quarter for
2011 was approximately US$128,000. With the current much reduced
staffing levels and all known material claims relating to the
original mine closure and the subsequent retrenchment of personnel
at the end of 2008 and early 2009, the Company anticipates that in
future the level of termination provisions required will be
significantly reduced.
Depreciation charges quarter on quarter have reduced reflecting
an increasing level of assets held by the company, the original
cost of which have now been fully depreciated.
The Company reported an exchange gain of US$93,400 in respect of
cash holdings, principally of UK sterling (3 months to 31 March
2011: US$192,397) which has been offset by exchange losses of
$6,200 (3 months to 31 March 2011: US$5,100).
Investment income has reduced from US$12,403 to US$1,179
reflecting the reduced levels of cash held by the Company during
the quarter ended 31 March 2012 compared with the corresponding
quarter of 2011.
Outlook
Exploration and development activities will continue to be
limited until the results of the PEA are available and thereafter
future activity will be subject to the levels of funding available
to the Company. On the assumption that the PEA is positive and that
the company is able to secure the required level of finance within
a reasonable time frame thereafter, it could be anticipated that
following the closing of such financings:
- Work would be undertaken to commence de-watering of the
mine;
- A mining contractor would be appointed;
- The company would seek to secure appointments of key
personnel;
- Mining equipment and mobile mining fleet orders would be
placed;
- Orders would be placed for any items required for the crushing
and processing plant; and
- Exploration activity at Piaui, Palito South and Currutela would
be restarted with a view to implementing drill programmes to
establish Canadian National Instrument 43-101 compliant mineral
resources on one or more of these prospects.
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
--------------- ---------------
For the three months ended
31 March
2012 2011
(expressed in US$) Notes (unaudited) (unaudited)
------ --------------- ---------------
CONTINUING OPERATIONS
Revenue -- --
Operating expenses (117,694) (183,822)
--------------- ---------------
Gross loss (117,694) (183,822)
Administration expenses (810,786) (665,387)
Settlement of supplier claim -- 540,441
Share based payments (29,150) (30,571)
Loss on asset disposals -- (13,515)
Depreciation of plant and equipment (426,637) (567,336)
--------------- ---------------
Operating loss (1,384,267) (920,190)
Foreign exchange gain 87,190 187,297
Finance costs (19,228) (22,152)
Investment income 1,179 12,403
--------------- ---------------
Loss before taxation (1,315,126) (742,642)
Income tax expense -- --
--------------- ---------------
Loss for the period from continuing
operations (1) (2) (1,315,126) (742,642)
--------------- ---------------
Other comprehensive income (net of
tax)
Exchange differences on translating
foreign operations 1,166,852 943,210
--------------- ---------------
Total comprehensive (loss)/income
for the period (2) (148,274) 200,568
--------------- ---------------
--------------- ---------------
Loss per ordinary share (basic and
diluted) (1) 3 (1.56c) (1.65c)
--------------- ---------------
(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
31 March 31 December
2012 2011
(expressed in US$) Notes (unaudited) (audited)
------ --------------- ---------------
Non-current assets
Development and deferred exploration
costs 5 17,998,296 16,648,884
Property, plant and equipment 6 28,690,108 26,266,092
--------------- ---------------
Total non-current assets 46,688,404 44,914,976
--------------- ---------------
Current assets
Inventories 1,140,908 1,114,255
Trade and other receivables 107,047 87,440
Prepayments and accrued income 661,105 701,669
Cash at bank and cash equivalents 3,382,198 1,406,458
--------------- ---------------
Total current assets 5,291,258 3,309,822
--------------- ---------------
Current liabilities
Trade and other payables 2,186,333 2,538,055
Accruals 115,214 146,165
--------------- ---------------
Total current liabilities 2,301,547 2,684,220
--------------- ---------------
Net current assets 2,989,711 625,602
--------------- ---------------
Total assets less current
liabilities 49,678,115 45,540,578
--------------- ---------------
Non-current liabilities
Trade and other payables 510,506 508,680
Provisions 1,460,029 1,451,296
Interest bearing liabilities 319,020 296,122
--------------- ---------------
Total non-current liabilities 2,289,555 2,256,098
--------------- ---------------
Net assets 47,388,560 43,284,480
--------------- ---------------
Equity
Share capital 8 31,416,993 29,291,551
Share premium 50,306,920 48,292,057
Option reserve 1,990,465 1,956,349
Other reserves 780,028 702,095
Translation reserve 91,685 (1,075,167)
Accumulated loss (37,197,531) (35,882,405)
--------------- ---------------
Equity shareholders' funds 47,388,560 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 will be filed with the
Registrar of Companies following their adoption by shareholders at
the next 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
----------------------------------------------------------------------------
(expressed in US$) Share 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 -- (706,564) -- --
Share option expense -- -- 37,548 --
------------ ------------ ------------ ----------
Equity shareholders' funds
at 31 March 2011 29,291,551 48,282,042 1,686,032 702,095
------------ ------------ ------------ ----------
Foreign currency
adjustments -- -- -- --
Loss for the period -- -- -- --
------------ ------------ ------------ ----------
Total comprehensive income
for the period -- -- -- --
Costs associated with issue
of new ordinary shares for
cash -- 10,015 -- --
Share option expense -- -- 270,317 --
------------ ------------ ------------ ----------
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 -- -- 34,116 --
------------ ------------ ------------ ----------
Equity shareholders' funds
at 31 March 2012 31,416,993 50,306,920 1,990,465 780,028
------------ ------------ ------------ ----------
SERABI GOLD PLC
Condensed Consolidated Statements of Changes in Shareholders' Equity
----------------------------------------------------------------------
(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 943,210 -- 943,210
Loss for the period -- (742,642) (742,642)
------------ -------------- --------------
Total comprehensive income
for the period 943,210 (742,642) 200,568
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 -- -- (706,564)
Share option expense -- -- 37,548
------------ -------------- --------------
Equity shareholders' funds
at 31 March 2011 4,825,378 (30,689,224) 54,097,874
------------ -------------- --------------
Foreign currency
adjustments (5,900,545) -- (5,900,545)
Loss for the period -- (5,193,181) (5,193,181)
------------ -------------- --------------
Total comprehensive income
for the period (5,900,545) (5,193,181) (11,093,726)
Costs associated with issue
of new ordinary shares for
cash -- -- 10,015
Share option expense -- -- 270,317
------------ -------------- --------------
Equity shareholders' funds
at 31 December 2011 (1,075,167) (35,882,405) 43,284,480
------------ -------------- --------------
Foreign currency
adjustments 1,166,852 -- 1,166,852
Loss for the period -- (1,315,126) (1,315,126)
------------ -------------- --------------
Total comprehensive income
for the period 1,166,852 (1,315,126) (148,274)
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 -- -- 34,116
------------ -------------- --------------
Equity shareholders' funds
at 31 March 2012 91,685 (37,197,531) 47,388,560
------------ -------------- --------------
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
For the three months ended
31 March
2012 2011
(expressed in US$) (unaudited) (unaudited)
------------ ------------
Operating activities
Operating loss (1,384,267) (920,190)
Depreciation - plant, equipment and mining
properties 426,637 567,336
Loss on sale of assets -- 13,515
Option costs 29,150 30,571
Interest paid (5,301) (10,326)
Foreign exchange 55,616 (48,930)
Changes in working capital
Decrease / (increase) in inventories 6,379 (37,481)
Decrease / (increase) in receivables,
prepayments and accrued income 42,208 (158,356)
(Decrease) in payables, accruals and provisions (480,318) (11,749)
-- ------------ ------------
Net cash outflow from operations (1,309,896) (575,610)
------------ ------------
Investing activities
Proceeds from sale of fixed assets --- 40,642
Purchase of property, plant and equipment (51,910) (27,383)
Exploration and development expenditure (931,607) (1,639,267)
Interest received 1,179 12,403
------------ ------------
Net cash outflow on investing activities (982,338) (1,613,605)
------------ ------------
Financing activities
Issue of ordinary share capital 4,250,883 4,961,179
Issue of warrants -- 208,229
Capital element of finance lease payments -- --
Payment of share issue costs (32,645) (706,564)
Payment of special warrant issue costs -- (14,900)
------------ ------------
Net cash inflow from financing activities 4,218,238 4,447,944
------------ ------------
Net increase in cash and cash equivalents 1,926,004 2,258,729
Cash and cash equivalents at beginning of period 1,406,458 8,598,754
Exchange difference on cash 49,736 243,345
------------ ------------
Cash and cash equivalents at end of period 3,382,198 11,100,828
------------ ------------
1. Basis of preparation These interim
accounts are for the three month period ended 31 March 2012.
Comparative information has been provided for the unaudited three
month period ended 31 March 2011 and, where applicable, the audited
twelve month period from 1 January 2011 to 31 December 2011.
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 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.
(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 is planning
to complete, during the first half of 2012, the preparation of a
Preliminary Economic Assessment ("PEA") of the viability of
re-commencing mining operations at the Palito Mine. If, as
anticipated, the outcome of the PEA is positive the company will
then seek to raise further finance from investors in order to
provide sufficient funds to recommence mining operations and
provide sufficient working capital for the Group's operations.
Subject to raising this finance and gaining any necessary
approval from shareholders in general meeting, the Directors
consider that the Group will thereafter 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 they are taking all the
necessary steps to ensure that the funding will be available, there
can be no certainty that this will be the case. Were future funding
not to become available in an appropriate timescale, which might be
the case if the outcome of the PEA was not in line with
expectations, 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 the 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 amortization
charge has been recorded in the period.
(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 "$"). Other currencies referred to in these
condensed financial statements are UK pounds ("UK£"), Canadian
dollars ("C$") 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.serabimining.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.
Enquiries: Serabi Mining 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@serabimining.com Website:
www.serabimining.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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