OREANDA-NEWS. Serabi Gold (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development company, today releases its unaudited interim financial results for the three month period ending 31 March 2016 and at the same time has published its Management's Discussion and Analysis for the same period.

Financial Highlights

  • Cash Cost for the first quarter of 2015 of US$662
  • All-In Sustaining Cost for the first quarter of 2016 of US$858.
  • Gross profit from operations has increased by over 140% from US$1.57 million to US$3.77 million compared to the fourth quarter of 2015 and by over 150% compared to the first quarter of 2015.
  • Post tax profit of US$1.35 million compared with US$0.19 million for the same quarter in 2015
  • Earnings per share increased to 0.195 cents.
  • Cash holdings of US$4.4 million at 31 March 2016.
  • Average gold price of US$1,165 received on gold sales in the first quarter of 2016.

2016 Guidance

  • Forecast gold production for 2016 of approximately 37,000 ounces with All-In Sustaining Cost between US$840 to US$870 per ounce.

Operational Highlights

  • 9,771 ounces of gold produced for the first quarter of 2016 (fourth quarter of 2015 - 7,924 ounces).  
  • Mine production totalled 37,546 tonnes.
    •  26,752 tonnes at a grade of 11.84 grammes per tonne (g/t) of gold from the Palito Mine.
    •  10,794 tonnes at 9.00 g/t of gold from the Sao Chico Mine.  
  • 36,615 tonnes of ore processed through the plant for the combined mining operations.
  • 2,926 metres of horizontal mine development completed in the quarter with 1,901 metres completed at the Palito Mine and 1,025 metres at the Sao Chico Mine.
  • Installation of the third ball mill is almost complete, along with the second flotation line and enhancements in the carbon in pulp ("CIP") plant.  The works are on schedule to be completed in May 2016.  A carbon regeneration kiln is also being acquired which will assist in enhancing gold recoveries once the kiln is operational in the second half of the year.
  • The Sao Chico Mine was declared to be in Commercial Production from 1 January 2016.
  • The Sao Chico Mine is now being developed on the 171mRL, 156mRL and 141mRL, with production ore being mined from the 186mRL level. The ramp continues to be deepened to the 126mRL, the next planned development level, and will continue this year to the 96mRL to accommodate underground drilling of the Sao Chico deposit extension at depth.
  • At the end of the first quarter of 2016, the combined surface coarse ore stockpiles from the Palito and Sao Chico Mines totalled 17,000 tonnes at a grade of 5.3 g/t of gold.

Mike Hodgson, CEO of Serabi commented,

"The Board and management of Serabi feel that a production level of 9,771 ounces at an All-In-Sustaining Cost of US$858 per ounce is an extremely satisfying performance for this first quarter of 2016.  It is an excellent start to the year and puts Serabi in a strong position to meet our guidance of 37,000 ounces with an All-In-Sustaining Cost of between US$840 and US$870 per ounce.

"Gross profit from operations has increased by over 150% from US$1.5 million to US$3.8 million compared to the same quarter in 2015 with post tax profit rising to US$1.35 million compared with US$0.19 million for the same quarter in 2015.   This improvement in revenue reflects the increased level of gold production which, as was reported in April 2016, represented a 32% improvement compared to the same quarter in 2015.  Whilst, in part, this reflects the contribution from the Sao Chico Mine, it also reflects the increase in plant capacity that was achieved with the installation of a second ball mill during the second quarter of 2015.  Plant capacity will be further increased by the introduction of a third ball mill later this month.

"Serabi's cash generation and revenue recognition always lags behind production because approximately 50% of the Group's production is from sales of copper / gold concentrate which is shipped to a refinery outside of Brazil for processing and sale.  This affects when the actual sale occurs and also when cash is received.  During this first quarter of 2016 we have also experienced an increase in the level of unsold production of copper/gold concentrate that is waiting to be shipped from Brazil and therefore waiting to be sold.  At the end of the quarter the volume of production waiting to be sold has increased since 31 December 2015 by approximately 180 tonnes having an estimated sales value of US$1.75 million with 140 tonnes of this increase being held in Brazil at the quarter end. This is simply a timing issue linked to vessel sailing dates and we expect an increased level of shipments during the second quarter.  These shipments will be reflected in the reported revenues in the second quarter and increased level of cash receipts once the copper/gold concentrate leaves Brazil."