Serabi Gold plc (AIM: SRB) (TSX: SBI) (TSX: SBI.WT), the Brazilian
focused gold exploration and development company, is pleased to
announce the results of a Preliminary Economic Assessment (the
"PEA") for its 100%-owned Palito Gold Project ("Palito" or "the
Project"), located in Para State, Brazil. The PEA was completed by
NCL Ingenieria y Construccion SA ("NCL"), Serabi's independent
engineering consultant, who has offices located in Belo Horizonte,
Minas Gerais, Brazil and Santiago del Chile, Chile.
The PEA indicates a project after tax internal rate of return of
68% and has been based only on the previously declared mineral
resource estimates for the Palito gold mine and does not consider
any additional resources that could be developed from the three
discovery areas established in 2011 of Palito South, Currutela and
Piaui. The directors believe that the PEA results support a small
scale, high grade operation using selective mining techniques and
the Board intends, subject to financing, to undertake the necessary
mine development and remedial works as soon as possible with the
intention of the first gold being produced in the third quarter to
2013.
Highlights of the Palito PEA are as
follows:
- After-tax Internal Rate of Return ("IRR") of 68% at a realised
gold price of US$1,400 per ounce;
- Project payback within two years of first gold production;
- Net after-tax cash flow generated over project life of US$72.2
million at a realized gold price of US$1,400 per ounce;
- After-tax Net Present Value ("NPV") of US$38.2 million; based
on a 10% discount rate and a realised gold price of US$1,400 per
ounce;
- Average Life of Mine ("LOM") cash operating costs of US$739 per
ounce (gold equivalent) including royalties and refining
costs;
- Average annual free cash flow (after tax and sustaining capital
expenditure) of US$11.0 million;
- Average gold grade of 8.98 g/t gold producing a total gold
equivalent production of 201,300 ounces;
- Average annual production of 24,400 gold equivalent ounces over
the initial 8 year period with ranges between 19,000 to 30,000
ounces gold equivalent per annum;
- Initial capital expenditures of US$17.8 million prior to
production start-up;
- Sustaining capital expenditures of US$26.4 million to be funded
from project cash-flow;
- Measured and Indicated mineral resource inventory of 69,000
gold equivalent ounces, supported by a further Inferred resources
of 153,000 gold equivalent ounces from a total geological resource
of 224,000 measured and indicated gold equivalent ounces and
444,000 inferred gold equivalent ounces, to be produced by
underground open stoping using a cut-off grade of 3g/t gold;
- Total Life of Mine of 9 years;
- Subject to project financing, mine development start-up is
expected in the fourth quarter of 2012, with ore processing set to
commence during the third quarter of 2013.
Commenting on the announcement, Serabi's CEO, Mike Hodgson
stated: "The publishing of the Palito PEA is a major milestone for
Serabi. The established infrastructure, year-round road access and
a permitted fully licensed operation translate into the opportunity
for a rapid return to production. The focus on high grade quality
ounces through the introduction of selective mining and using an
experienced mining contractor with proven track record in these
types of deposits are key to the success of the project, and at
these increased gold prices the operation is a very attractive
proposition. The capital requirements are therefore relatively
modest and with much of the infrastructure in place an initial
capital estimate of US$17.8 million is considered sufficient to see
the mine into full production during the latter half of 2013. Most
encouraging is that the PEA only considers 30% of the total mineral
inventory and with plant capacity more than double the PEA
production rate, the opportunity to expand production in time from
satellite deposits is clear to see. The PEA excludes the recent
mine-site discoveries we have made at Palito, most notably the
strike extension to the south of Palito which, subject to funding,
we will be advancing in the coming months.
The project is a return to the initial and successful period of
operation for Palito which was undertaken during 2005 and 2006
prior to switching to bulk mining as a means to increase gold
production. During these two years the company averaged mining
rates of 250 tpd delivering ore to the plant at an average gold
grade of 9.35 g/t, very similar to what is envisaged under the
PEA.
We are exploring a variety of funding options and are in active
discussions with a number of sources to secure financing for the
project as soon as possible."
The project consists of the Palito gold deposit, a past
producer. The project development will begin with the de-watering
of part of the existing mine, followed by development of the Palito
Main Zone and Palito West sectors. Mine deepening will then follow
with subsequent mine development generating an ore stockpile.
During the twelve months commencing with the start of the mine
de-watering, the existing plant will be refurbished where required,
with the main areas of work being renovation of the flotation plant
and expansion of the Cyanide in Pulp plant ("CIP").
Table 1 Palito
Gold Project - Base Case
Metrics
----------------------------------------------------------------------------
Unit Amount
--------------------------------
Gold Price US$/oz $1,400
Cut-off grade g/t of gold 3.00
Run of Mine (ROM) Material to process Tonnes 740,000
Gold Production start up Year Q3 2013
Mining Method Open Stoping
Throughput Tonnes per annum 90,000
Gold recovery % 90.7%
Copper recovery % 90.0%
Total gold production (after refining) Ounces (AuEq) 201,300
Mine Life Years 9
Initial Capital Expenditures US$M $17.8
Sustaining capital expenditures US$M $26.4
Mine closure costs US$M $2.0
Cash Operating Costs (inc. Royalty + TC/RCs) US$/oz US$738.5
Total Cash Costs (inc. Sustaining capex) US$/oz US$958
Exchange Rate R$ : US$ 2.00
Royalties (CFEM&MSE) % 1.25%
Effective Tax Rate % 24.1%
----------------------------------------------------------------------------
Financial Analysis
The cash flow model that has been generated by NCL is based on
the mine production and processing schedule, associated gold
grades, metallurgical recoveries and capital and operating costs
summarised in Table 1 above. The economic analysis assumes delivery
of a copper concentrate to an appropriate refinery located outside
of Brazil which accounts for approximately 78% by volume of the
estimated gold production with the balance being delivered in the
form of gold doré to gold traders and refiners located in Brazil.
NCL has assumed that overall treatment and refining and insurance
charges will account for 9.5% of the value of the concentrate
delivered to the refinery whilst a 3% fee has been assumed for the
costs of refining gold doré.
The base case economic analysis assumes a gold price of US$1,400
per ounces and a copper price of US$3.00 per pound.
The average gross gold revenue per year is US$32.9 million for
the first 8 years of production with copper credits representing
additional average annual revenues of US$1.3 million over the same
period. The average annual free cash flow after accounting for
taxes and sustaining capital expenditure is estimated to be about
US$11.0 million.
Table 2 below summarises the sensitivity of the Project's Net
Present Value ("NPV") to variations in gold price, and capital and
operating costs.
Table 2 Project net present value
----------------------------------------------------------------------------
NPV NPV
(post (post IRR
Operating tax) tax) (post
Metal Prices Expenditure Capital Expenditure (10%) (5%) tax)
----------------------------------------------------------------------------
USD / USD /
USD/oz USD/lb tonne oz Initial Sustaining
(gold) (copper) ROM (AuEq) USD(m) USD(m) USD(m) USD(m)
----------------------------------------------------------------------------
1,600 3.50 149.4 756.8 17.8 26.4 56.8 75.6 94%
1,400 3.00 149.4 738.5 17.8 26.4 38.2 52.0 68%
1,200 2.50 149.4 720.3 17.8 26.4 19.6 28.4 42%
-----------------------------------------------------------------------
Sensitivity to Opex
-----------------------------------------------------------------------
+20% 1,600 3.50 179.3 866.6 17.8 26.4 45.4 61.3 79%
+20% 1,400 3.00 179.3 848.3 17.8 26.4 26.9 37.7 52%
+20% 1,200 2.50 179.3 830.3 17.8 26.4 8.0 13.6 24%
-20% 1,600 3.50 119.5 647.1 17.8 26.4 68.1 90.0 109%
-20% 1,400 3.00 119.5 628.7 17.8 26.4 49.5 66.4 84%
-20% 1,200 2.50 119.5 610.4 17.8 26.4 31.0 42.8 58%
-----------------------------------------------------------------------
Sensitivity to Capex
-----------------------------------------------------------------------
+20% 1,600 3.50 149.4 756.8 21.3 31.7 51.1 69.1 74%
+20% 1,400 3.00 149.4 738.5 21.3 31.7 32.5 45.5 52%
+20% 1,200 2.50 149.4 720.3 21.3 31.7 13.9 21.8 29%
-20% 1,600 3.50 149.4 756.8 14.2 21.1 62.5 82.2 123%
-20% 1,400 3.00 149.4 738.5 14.2 21.1 43.9 58.6 92%
-20% 1,200 2.50 149.4 720.3 14.2 21.1 25.3 35.0 59%
----------------------------------------------------------------------------
Palito Mineral Resource
The following table sets out the Company's Canadian Securities
Administrators National Instrument 43-101 ("NI 43-101") compliant
measured and indicated mineral resources of 224,000 ounces (gold
equivalent) and inferred mineral resources of 444,000 ounces (gold
equivalent) estimated as at March 2008 after which time circa
22,500 ounces (gold equivalent) were produced from a combination of
underground ore which was produced largely from outside the mineral
resource limits and near surface oxide ore which did not form part
of the resource calculation.
Table 3 Palito Mine declared mineral
resources
----------------------------------------------------------------------------
Contained
Contained Gold
Gold Copper Gold Equivalent
Tonnage (g/t Au) (% Cu) (Ounces) (Ounces)
--------- --------- --------- ----------- -----------
Measured Resources 97,448 9.51 0.26 29,793 32,045
Indicated Resources 753,745 7.29 0.23 176,673 192,228
--------- --------- --------- ----------- -----------
Total Measured and
Indicated Resources 851,193 7.54 0.23 206,466 224,272
--------- --------- --------- ----------- -----------
Inferred Resources 2,087,741 5.85 0.27 392,817 443,956
----------------------------------------------------------------------------
(1) Mineral resources are reported at a cut-off grade of 1.0 g/t.
(2) Equivalent gold is calculated using an average long-term gold price of
US$700 per ounce, a long-term copper price of US$2.75 per pound,
average metallurgical recovery of 90.3% for gold and 93.9% for copper.
(3) The Mineral Resources as set out in the above table have been estimated
by Rodrigo Melo who is a competent person under NI 43-101.
(4) The Palito Mine is wholly owned by Serabi Mineraçăo SA, an
indirectly held, wholly owned subsidiary of the Company. The gross
mineral resources detailed above are therefore also the net mineral
resources attributable to the Company. Serabi Mineraçăo SA is the
operator of the Palito Mine.
(5) Numbers may not add up due to rounding.
Mineral Resources considered in the
PEA
The PEA is largely based on two previous technical reports
produced by NCL and dated September, 2008 and December, 2010.
The mineral resources reported in this PEA are CIM compliant and
continue to restate the mineral resource as stated as of March,
2008. A mine schedule is presented to support the assumption that
the mineral resources reported have reasonable prospects of
economic extraction. As the mineral resources are hosted in near
vertical two dimensional tabular ore-bodies, the blocks considered
for mining have been designed by increasing the ore-body width to a
minimum mining width of 1.2m assuming that any additional material
has zero grade. The ore-bodies have been divided into 30 x 30m
panels, leaving six metre crown and rib pillars between blocks.
Blocks that exceed a gold cut-off grade of 3.00 g/t are considered
to meet all production and development costs and included for
production purposes in generating the PEA. Blocks that do not
exceed 3.00g/t have been excluded. The most accessible areas have
been considered early in the schedule, with production limited at
250tpd or 90,000tpa, and a significant proportion of the mineral
resource has not been considered in the economic analysis.
The following tables are provided to illustrate the utilisation
of the NI 43-101 compliant mineral resources within the mine plan
assumed in the PEA and used to derive the average mined grade. Of
the total ore to be delivered to the plant 207,581 tonnes (28%)
will be derived from the total Measured and Indicated Resources of
851,193 tonnes and 373,670 tonnes (51%) from total Inferred
Resources of 2,087,741 tonnes with the remaining 158,551 tonnes
(21%) representing material with an assumed zero grade which it is
estimated will be extracted to achieve the planned minimum mining
widths.
Table 4 Reconciliation of mineral inventory
with the PEA mine plan
----------------------------------------------------------------------------
Geological Inventory in PEA Mining Inventory
Contained Gold
Contained Gold Equivalent
Category Tonnes Au g/t Cu % Ounces Ounces
----------------------------------------------------------------------------
Measured 2,258 5.42 0.21 393 416
Indicated 205,323 9.94 0.28 65,618 68,379
--------------- ----------------------------------------------------------
Total Measured
and Indicated 207,581 9.89 0.28 66,011 68,795
--------------- ----------------------------------------------------------
Inferred 373,670 12.28 0.32 147,570 153,375
Dilution 158,551 - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Geological Inventory in PEA Mining Inventory in Pillars
Contained Gold
Contained Gold Equivalent
Category Tonnes Au g/t Cu % Ounces Ounces
----------------------------------------------------------------------------
Measured - - - - -
Indicated 73,057 8.03 0.27 18,864 19,817
--------------- ----------------------------------------------------------
Total Measured
and Indicated 73,057 8.03 0.27 18,864 19,817
--------------- ----------------------------------------------------------
Inferred 264,528 9.98 0.25 84,869 88,104
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Geological Inventory not scheduled in PEA (low grade/isolated
areas/remnants)
Contained Gold
Contained Gold Equivalent
Category Tonnes Au g/t Cu % Ounces Ounces
----------------------------------------------------------------------------
Measured 95,190 9.61 0.26 29,399 30,587
Indicated 475,365 6.03 0.20 92,186 96,836
--------------- ----------------------------------------------------------
Total Measured
and Indicated 570,556 6.63 0.21 121,585 127,423
--------------- ----------------------------------------------------------
Inferred 1,449,543 3.44 0.26 160,365 178,842
----------------------------------------------------------------------------
(1) Geological inventory is reported at a cut-off grade of 1.0 g/t.
(2) Equivalent gold is calculated using an average long-term gold price of
US$1600 per ounce, a long-term copper price of US$3.38 per pound,
average metallurgical recovery of 90.3% for gold and 93.9% for copper.
(3) The geological inventory as set out in the above tables has been
derived from the NI 43-101 compliant Mineral Resources estimated by
Rodrigo Melo who is a competent person under NI 43-101.
(4) The Palito Mine is wholly owned by Serabi Mineraçăo SA, an
indirectly held, wholly owned subsidiary of the Company. The gross
geological inventory detailed above is therefore also the net
geological inventory attributable to the Company. Serabi Mineraçăo
SA is the operator of the Palito Mine.
(5) Numbers may not add up due to rounding.
(6) The provisions of NI 43-101 require that Inferred Resources may not be
aggregated with other categories of mineral resources. Accordingly it
is not permitted to provide in these tables the overall total tonnage
or weighted average grade for ore comprising each of the Mining
Inventory, the Mining Inventory in Pillars and material Not Scheduled
in the PEA.
NCL believes that the resource estimates shown in the table
above meets the CIM standards for a resource estimate based on CIM
Standards of Mineral Resources and Reserves Definitions and
Guidelines adopted by the CIM council December 13, 2005.
NCL notes that this technical report is a preliminary economic
assessment partially utilising inferred mineral resources. Inferred
mineral resources are considered too speculative geologically to
have the economic considerations applied to them that would enable
them to be categorized as mineral reserves and there is no
certainty that the preliminary economic assessment will be
realized. Mineral resources that are not mineral reserves do not
have demonstrated economic viability.
Mine Schedule and Production
The Palito gold project will employ a combination of contract
and owner-operated underground mining. The selective open stoping
will be undertaken by a mining contractor with relevant skills and
track record in narrow vein mining.
The mining operations include trackless underground ramps and
accesses, with lode development on each of the scheduled ore-bodies
at 35 metre vertical spacing. Sub-horizontal development will be
mined by single boom electrohydraulic jumbos. Mining blocks will be
developed above and below the block. Footwall drives and
draw-points will be excavated to allow extraction of the stope ore.
Ore and waste will be initially mucked by LHD scooptrams, and
loaded into 20 tonne trucks at the ramp loading bays by larger
front end loaders. The primary mining equipment will be
owner-operated using both the existing fleet and new fleet which
will need to be ordered.
Based on the mine schedule, the mine plan delivers some 740,000
tonnes of run-of-mine ("ROM") ore during a nine year period at
average gold and copper grades of 8.98 g/t and 0.24%
respectively.
The table below sets out the total Life of Mine ("LOM") annual
mining and production schedule.
Table 5 Annual Mining and Production
Schedule
----------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
----------------------------------------------------------------------------
Mine plan
Tonnes 90,047 89,960 89,888 90,021 89,892
Gold Grade 9.58 8.45 9.96 7.36 6.89
Copper Grade 0.23 0.18 0.21 0.32 0.28
Gold recovery (total) 90.7% 90.7% 90.7% 90.7% 90.7%
Production Statistics
Concentrate produced (tonnes) 728 552 646 984 866
Gold production in
concentrate (ozs) 19,689 17,347 20,446 15,115 14,139
Gold production in bullion
(ozs) 5,469 4,818 5,679 4,198 3,927
Copper (lbs) 417,553 316,667 370,123 564,162 496,567
Copper (AuEq ounces) 895 679 793 1,209 1,064
Total Production (AuEq
ounces) 26,053 22,844 26,918 20,522 19,130
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Year 6 Year 7 Year 8 Year 9 Total LOM
----------------------------------------------------------------------------
Mine plan
Tonnes 89,501 90,089 89,875 20,528 739,801
Gold Grade 7.13 11.05 11.3 9.43 8.98
Copper Grade 0.23 0.25 0.21 0.3 0.24
Gold recovery (total) 90.7% 90.7% 90.7% 90.7% 90.7%
Production Statistics
Concentrate produced (tonnes) 720 764 666 210 6,138
Gold production in
concentrate (ozs) 14,577 22,728 23,180 4,421 151,642
Gold production in bullion
(ozs) 4,049 6,313 6,438 1,228 42,118
Copper (lbs) 412,683 438,069 381,864 120,567 3,518,255
Copper (AuEq ounces) 884 939 818 258 7,539
Total Production (AuEq
ounces) 19,510 29,980 30,436 5,907 201,300
----------------------------------------------------------------------------
Metallurgy and Processing
The Palito project has a fully implemented process plant that
operated continuously producing copper-gold concentrate and bullion
for almost five years, from September 2004 until mid-2010. During
this period of time, the plant was fed with 550,000 tonnes of ore,
of which 85% came from underground portion of the Palito Mine at
the Palito Main Zone area. The rest came from small scale near
surface open pit mining.
The plant was previously operating with a capacity to process
over 600 tpd of sulphide ore, however in this PEA process rates are
limited to 250tpd, and the opportunity exists for the future to
create substantial surplus capacity in the plant. Additional mill
feed opportunities are being investigated.
The process flow-sheet comprises a crushing circuit, a milling
circuit, and a flotation circuit followed by concentrate filtration
and storage facilities. The flotation tailings are fed to a cyanide
agitation leaching CIP plant, followed by elution and gold
refinement circuits, to produce bullion.
The tailings from the CIP circuit flow to detoxification tanks
for neutralisation of cyanide, and are eventually pumped to a
tailings storage dam situated 1.5km from the process plant.
Infrastructure
Power Supply - the Palito mine-site has
been supplied with mains grid power to site for over six years. The
Power supply is available from the regional electrical utility
company, CELPA (Centrais Elétricas do Para) and the immediate area
is served by several hydroelectric power plants. A demand
requirement in the order of 1.6mW is estimated at full production
capacity, some 0.6mW less than when the mine was in production
during 2003-2008. The project also has a back-up power plant
capable of delivering 1.0mW of power if required.
Water Supply - the site has an abundance
of water, with adequate water storage for all mining and processing
needs in numerous water dams. Mine camp water is drawn from
boreholes.
Camp - Serabi has established a full
mining camp at the Palito Mine. The camp consists of accommodation
for the personnel, offices, warehouses, maintenance facilities, and
a medical centre operated by qualified personnel. The accommodation
facilities consist of four units that can host up to 250 people.
Workshops and warehouses are adequate. Fuel is stored on site in
storage tanks with an approximate capacity of 90,000 litres of
diesel. All of the fuel storage tanks are located in a contained
fuel storage area. There is an explosives storage facility located
away from the main offices usage of which has been suspended whilst
the mine itself has been on care and maintenance.
There is a well-equipped laboratory on site, currently
maintained but not in use. The site is self-sufficient for most of
the required services. The mine has access to radio telephones (two
lines), high speed broadband satellite internet within a secure
domain, two telephone land lines and radio communications. Serabi
has the facilities to provide catering services for all the
personnel.
Serabi contracts its own security service and there is a guard
house at the entrance to the mine.
Access Roads and Air Strip - the mine is
accessed by unsealed road from the nearest town of Jardim do Ouro
and delays can be expected during the wet season. An airstrip,
suitable for light planes, was implemented in 2006, and is
currently fully operational. Serabi owns sufficient bulldozers,
front end loaders and trucks which are used for site construction,
road building and road maintenance.
Capital and Operating Expenditures
Capital expenditure
The initial capital expenditure ("CAPEX") amounts to US$17.8
million. This includes approximately US$7.6 million to fund the
mine de-watering, the acquisition of the necessary mobile fleet and
ramp development and stope preparation activities in the first year
prior to the start-up of the plant and consequent revenue
generation. A further US$2.3 million is considered necessary for
mine-site overhead costs ("G&A") during this same period. The
plant replacement and refurbishment costs have been estimated at
US$7.2 million which includes a 15% contingency.
Sustaining capital expenditure during the operation totals
US$26.4 million, including US$17.1 million for continued
underground capital development, fleet overhaul and replacement,
and the overhaul of some key surface infrastructure during the
project life. US$7.25 million is considered for future tailings
management facilities and a US$2 million provision has been
included at the end of the project to cover estimated mine closure
costs.
The table below details the total initial and sustaining capital
expenditure requirements.
Table 6 Projected capital expenditure
requirements
----------------------------------------------------------------------------
Sustaining
Initial Capital Total Capital
Category Capital (US$m) (US$m) (US$m)
----------------------------------------------------------------------------
Underground mining equipment,
Development & pre-production
operations 7.64 17.13 24.77
Pre-production overhead 2.27 2.27
Plant 7.13 7.13
Tailings Storage Facility 0.75 7.25 8.00
Closure 2.00 2.00
----------------------------------------------------------------------------
TOTAL 17.79 26.38 44.17
----------------------------------------------------------------------------
Operating expenditure
The LOM average operating cash cost is US$549 per gold
equivalent ounce or US$150 per tonne of ROM. The total cash cost
per gold equivalent ounce including refining and treatment costs
plus government royalties (CFEM) is US$738.5. The breakdown of
Serabi's mining, processing and general and administration costs
are presented in the table below.
--------------------------------------------------------------------
US$ / oz (AuEq) US$ / tonne
--------------------------------------------------------------------
Mining Ore 257.3 70.0
Process Plant 138.8 37.8
G&A 152.9 41.6
Op. Cash Costs 549.1 149.4
Refining Costs 171.9
Royalties (CFEM) 17.5
Total Cash Costs 738.5
--------------------------------------------------------------------
Taxation
The profits tax assessable on the project takes into account a
tax incentive that was granted to the company during 2008 by SUDAM
(Amazon Development Superintendence). This incentive consists of a
reduction by 75% of the regular corporate income tax (also referred
to as IRPJ and currently levied at a rate of 25% for a ten-year
period. Thereafter it has been assumed that the normal rate of
corporate income tax of 25% will be applied. The CSLL tax (a social
welfare tax amounting to 9%) has been assumed to apply for the
duration of the project life.
Other tax incentives are available and in particular the RECAP
is a special tax regime for the acquisition of goods by export
companies and applies to the exemption of PIS and COFINS (Brazilian
social contribution taxes) on purchases of imported machinery and
equipment. In the past Serabi has been able to benefit from this
tax regime and will make application again in respect of the
project, However at this time no application has been made and the
project economics have not considered the potential benefits that
such a tax regime may bring to the project.
Permitting
During 2007, on submission of the 'Plano de Aproveitamento
Econômico' (PAE) to the DNPM, Serabi successfully converted
exploration license 850.175/2003 into a mining concession. The
mining concession itself is granted for an indeterminate period of
time, however the award of a mining concession is subject to
certain conditions. It is also required that an annual
environmental 'Licensa do Operacao' (LO) is obtained. The LO is
generally renewed annually subject to compliance with environmental
matters.
The Palito Mine has valid operating permits that allow both
exploration and operating activities to take place. The key permit,
the LO Protocol #2711/2008 issued by Secretaria de Estado de
Qualidade Ambiental (SEMA), was last renewed April 27th 2012.
The license allows the extraction and processing of gold and
associated minerals in the mine license area of 1,712ha up to a
maximum rate of 700 tonnes per day.
Other valid permits include:
1. Cadastro Ambiental Rural (proof of land ownership and use for
industrial purposes) - Protocol # 12787/2010 - issued by SEMA 2.
Outorga (license to extract water for industrial use) valid until
12/01/2013 and issued by SEMA - #193/2010 3. Anexo - Outorga
(license to extract water for domestic use) valid until 12/01/2013
and issued by SEMA 4. License to Procure, Store, Use Explosives at
site - # 1871 issued by Ministry of Defence valid until
31/10/2013
Technical Report
Serabi expects to file a National Instrument 43-101 compliant
technical report in support of the PEA in the near future.
The technical information in this announcement, the Preliminary
Economic Assessment and the Mineral Resource estimate was prepared
in compliance with the Canadian regulation NI 43-101 in accordance
with the rules of the Canadian Institute of Mining, Metallurgy and
Petroleum ("CIM"), which is an internationally recognised standard
pursuant to the AIM Rules.
The information in this Stock Exchange regulatory announcement
that relates to the Preliminary Economic Assessment and Mineral
Resources estimate is extracted from information that has been
compiled by Mr Carlos Guzmán, MAusIMM (229036) and Registered
Member of The Chilean Mining Commission (0119), who carried out the
assignment as Principal and Project Director with the firm NCL
Ingeniería y Construcción Ltda ("NCL"). Mr Guzmán is familiar with
NI 43-101 and, by reason of education, experience and professional
registration, fulfils the requirements of a Qualified Person as
defined in NI 43-101 and for the purposes of the AIM Rules. Mr
Guzmán is responsible for the preparation of the Preliminary
Economic Assessment. Mr Guzmán consents to the publication of the
Preliminary Economic Assessment and Mineral Resources estimate and
the inclusion of the information contained in this announcement in
the form and context in which it appears.
The PEA study was completed by NCL which led a consortium of
consultants and specialists assembled for the study. NCL was
responsible for the preparation of the overall study as well as
mine design, mine capital cost, mine operating cost, and economic
models. Other members of the consortium included: Ingeniería y
Construcción AJG Ltda that was responsible for the design and
costing for the process plant replacement, refurbishment and
operating and WALM Engenharia e Tecnologia Ambiental Ltda that was
responsible for tailings impoundment and tailings dam costs
estimate.
NCL is not an associate or affiliate neither of Serabi, nor of
any associated company, or any joint-venture company. NCL's fees
for this Technical Report are not dependent in whole or in part on
any prior or future engagement or understanding resulting from the
conclusions of this report. These fees are in accordance with
standard industry fees for work of this nature, and NCL's
previously provided estimates are based solely on the approximate
time needed to assess the various data and reach appropriate
conclusions. This report is based on information known to NCL as of
31 March 2012.
Qualified Persons Statement The scientific
and technical information contained within this announcement has
been reviewed and approved 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.
Copies of this release are available from the Company's website
at www.serabigold.com.
Neither the Toronto Stock Exchange, nor any other securities
regulatory authority, has approved or disapproved of the contents
of this news release.
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 or copper 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.
GLOSSARY OF MINING TERMS
The following is a glossary of technical terms:
"Au" means gold.
"AuEq" means gold equivalent -- see
definition below.
"assay" in economic geology, means to
analyze the proportions of metal in a rock or overburden sample; to
test an ore or mineral for composition, purity, weight or other
properties of commercial interest.
"CIM" means the Canadian Institute of
Mining, Metallurgy and Petroleum.
"CIP" or "Carbon in Pulp" means a process
used in gold extraction by addition of cyanide.
"COFINS" (Contribuição para o
Financiamento da Seguridade Social) is a tax on sales with
deductions allowed in respect of services and material costs
incurred in operating activities payable as a contribution to the
health, social work assistance and social security programme of the
Federal government.
"CSLL" is a social contribution tax levied
by the federal tax authorities on the net profits of a company.
"Cu" means copper.
"cut-off grade" the lowest grade of
mineralized material that qualifies as ore in a given deposit; rock
of the lowest assay included in an ore estimate.
"deposit" is a mineralized body which has
been physically delineated by sufficient drilling, trenching,
and/or underground work, and found to contain a sufficient average
grade of metal or metals to warrant further exploration and/or
development expenditures; such a deposit does not qualify as a
commercially mineable ore body or as containing ore reserves, until
final legal, technical, and economic factors have been
resolved.
"DNPM" means the Departamento Nacional de
Producao Mineral.
"footwall" means that body of rock that
lies below the mineralised ore body.
"gold equivalent" refers to quantities of
materials other than gold stated in units of gold by reference to
relative product values at prevailing market prices.
"grade" is the concentration of mineral
within the host rock typically quoted as grams per tonne (g/t),
parts per million (ppm) or parts per billion (ppb).
"g/t" means grams per tonne.
"hectare" or a "ha"
is a unit of measurement equal to 10,000 square metres.
"IBAMA" means the Instituto Brasileiro do
Meio Ambiente e dos Recursos Naturais Renovaveis.
"indicated mineral resource" is that part
of a mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics, can be estimated
with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine
planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill
holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.
"inferred mineral resource" is that part
of a mineral resource for which quantity and grade or quality can
be estimated on the basis of geological evidence and limited
sampling and reasonably assumed, but not verified, geological and
grade continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes.
"IRPJ" is a corporate income tax levied by
the federal tax authorities on the net profits of a company.
"jumbo" means a self-propelled
mechanically powered item of equipment used for drilling into
rock.
"LHD" means a Load-Haul-Dump vehicle
commonly used in underground mining operations.
"measured mineral resource" is that part
of a mineral resource for which quantity, grade or quality,
densities, shape, and physical characteristics are so well
established that they can be estimated with confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on
detailed and reliable exploration, sampling and testing information
gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
"mineralization" the concentration of
metals and their chemical compounds within a body of rock.
"mineralized" refers to rock which
contains minerals e.g. iron, copper, gold.
"mineral reserve" is the economically
mineable part of a measured or indicated mineral resource
demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can
be justified. A mineral reserve includes diluting materials and
allowances for losses that may occur when the material is
mined.
"mineral resource" is a concentration or
occurrence of diamonds, natural solid inorganic material or natural
fossilized organic material including base and precious metals,
coal, and industrial minerals in or on the Earth's crust in such
form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction. The location,
quantity, grade, geological characteristics and continuity of a
mineral resource are known, estimated or interpreted from specific
geological evidence and knowledge.
"mt" means million tonnes.
"NI 43-101" means Canadian Securities
Administrators' National Instrument 43-101 - Standards of
Disclosure for Mineral Projects.
"open stoping" is the mining of ore where
the host rock is sufficiently strong that the remaining material
will not collapse (cave) into the open space created and the open
space requires little by way of external support.
"ore" means a metal or mineral or a
combination of these of sufficient value as to quality and quantity
to enable it to be mined at a profit.
"oxides" are near surface bed-rock which
has been weathered and oxidised by long-term exposure to the
effects of water and air.
"PIS" (Programa de Integração Social) is a
tax on sales payable with deductions allowed in respect of services
and material costs incurred in operating activities as a
contribution to the Social Integration Program being a fund for
employees.
"RECAP" is a special tax regime for the
acquisition of goods by exporting companies
"SEMA" means the Secretaria de Estado de
Qualidade Ambiental
"stope" is the open space created through
the process of open stoping.
"tailings" are the residual waste material
that it is produced by the processing of mineralized rock.
"tpd" means tonnes per day.
"Vein" is a generic term to describe an
occurrence of mineralized rock within an area of non mineralized
rock.
Enquiries: Serabi Gold plc Michael Hodgson Chief
Executive Tel: 020 7246 6830 Mobile: 07799 473621 Clive Line
Finance Director Tel: 020 7246 6830 Mobile: 07710 151692 Email:
contact@serabigold.com Website: www.serabigold.com Beaumont
Cornish Limited Nominated Adviser Roland Cornish Tel: 020 7628
3396 Michael Cornish Tel: 020 7628 3396 Fox Davies Capital
Limited UK Broker Simon Leathers Tel: 020 3463 5010 Jonathan
Evans Tel: 020 3463 5010
Serabi Gold (TSX:SBI)
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