SOURCE: Serabi Mining plc

April 17, 2008 02:12 ET

Preliminary un-audited results for the year ended 31 December 2007

LONDON, UK--(Marketwire - April 17, 2008) -


SERABI MINING plc ("Serabi" or "the Company")

Serabi Mining plc (AIM: SRB), the gold production and exploration Company with operations in Brazil, today announces preliminary un-audited results for the year ended 31 December 2007.

Highlights:

*           Strong balance sheet with cash holdings of $18.5 million
  at the end of the year
*           Profit before tax and exploration write downs of
  US$633,273 (2006 loss : US$2.2 million)
*           Average operating expenses in H2 reduced by 2.6% in USD
  terms (16.6% in Brazilian Real terms) against Q4 2006.
*           Introduction of key mining equipment is now underway and
  set to underpin significant production improvements during 2008.
*           Initial results from geophysical survey indicate new
  areas of potential mineralisation and drill targets are being
  assessed.

Commenting on the results, Serabi's Chairman Graham Roberts, noted that 2007 had been a challenging year for Serabi despite favourable gold and copper prices, largely because of long lead times involved in bringing new machinery to the site. With this equipment now arriving he was confident that the Company was in a good position to deliver on its objectives for 2008.

He went on to say that "production issues have been well reported but despite manufacturing and delivery delays, the first of several deliveries of the new mining fleet (two mini-scoops and one mini-jumbo drill) have arrived and are now on site. The remaining machinery will arrive during the current quarter. We firmly believe that this equipment will play a significant role in improving production results this year, principally through the reduction of mining dilution that hampered our 2007 production. It is a testament to the quality of the ore-body that notwithstanding the excessive dilution, we were still able to attain a head grade of 5.8 g/t through 2007. We also anticipate that following last year's exploration success, up to 7 ore-bodies should be in production by the end of this year compared with 3 last year, providing much greater flexibility. Meanwhile the plant continues to perform well with recovery maintained above 90%, despite a 47% year on year increase in throughput. Work has already commenced to improve throughput further during the second half of 2008.

We have continued to concentrate on reducing operating costs. Gross average monthly production costs in Brazilian Reais were down 16.6% in the second half of 2007, compared with the fourth quarter of 2006 and 17.3% down against the first half of 2007. The continued strengthening of the Brazilian Real, however, reduces this effect when translated in US dollar terms to 2.6% and 8.1% respectively.

Despite the lower levels of production in the second half of the year, local unit cash costs increased only marginally from BrR$906 per gold equivalent ounce to BrR$947, a 4.5% increase compared with an 18.6% reduction in production ounces. A weakening US dollar and the lower H2 production resulted in dollar cash costs increasing by 16.1% for the second half of the year resulting in an overall US$474 per gold equivalent ounce for 2007. The US dollar to Brazilian Real exchange rate weakened from 2.14 to 1.77 over the twelve months. In the absence of further dollar to reais weakness, we remain confident that with improved production levels and a continued effort to reduce local operating costs, our target of sub US$400 per gold equivalent ounce remains achievable.

The Company has a strong financial base, with over $18 million in cash at the end of the year and the mining operations generating additional cash flow to help finance the future development of Serabi. During 2007 we spent $6.0 million on exploration, of which $5.3 million was focused on developing the resources at Palito. Our exploration programme continues to deliver good results and initial interpretation of the recently completed helicopter-borne, geophysical electromagnetic ("EM") survey is in line with our expectations, confirming the wider potential of the Palito mineral district. A more detailed assessment of the results is ongoing, which is expected to lead to the identification of important new drill targets. A further $2 million was committed during 2007 to plant and equipment principally for the mining operations.

The Board has reviewed its exploration portfolio and decided that it should not commit further resources to the Pombo project in Mato Grosso, which was originally acquired in 2005. Accordingly, the Company has relinquished its agreement on this property, resulting in a write down of past exploration costs of $628,000."

Mr Roberts concluded by saying, "I look forward to a good year for Serabi during 2008. We had expected the first elements of the new mining fleet to be operational during the latter part of quarter one. The delivery delays have impacted plans but we are nevertheless optimistic that we will recover this position during the remainder of the year, following the introduction of specialized new equipment that is now underway, as well as extensive development of new ore-bodies. The Company has a strong balance sheet, positive cash flow, attractive projects and a clear strategy to increase the value of its assets."

Enquiries

  Serabi Mining plc:
  Graham Roberts       Tel: 020 7246 6830
  Chairman             Mobile: 07768 902475

  Michael Hodgson      Tel: 020 7246 6830
  Chief Executive      Mobile: 07799 473621

  Clive Line           Tel: 020 7246 6830
  Finance Director     Mobile: 07710 151692

  Robyn Hodson         Tel: 020 7246 6830
  Investor Relations

  E-mail:              contact@serabimining.com
  Website:             www.serabimining.com

  Numis Securities Limited:
  John Harrison        Tel: 020 7260 1000
  James Black          Tel: 020 7260 1000

  Farm Street Communications
  Simon Robinson       Tel: 07887 985671


  Consolidated Income Statement
  for the year ended 31 December 2007


                                                  For the     For the
                                               year ended  year ended
                                              31 December 31 December
  (expressed in US$)                                 2007        2006
  Revenue                                      25,099,118   7,256,136
  Operating expenses                         (19,708,212) (4,846,122)
  Profit from operations                        5,390,906   2,410,014
  Administration expenses                     (3,446,849) (2,860,522)
  Share-based payments                          (177,913)   (331,338)
  Write-off of past exploration costs           (628,066)           -
  Depreciation of plant and equipment         (1,530,243) (1,426,004)
  Depreciation of mine asset                    (795,878)   (232,097)
  Loss on ordinary activities before          (1,188,043) (2,439,947)
  interest and other income
  Foreign exchange gain                         1,725,397     449,857
  Interest payable                            (1,119,116)   (339,328)
  Interest receivable                             586,969     120,649
  Profit / (loss) on ordinary activities            5,207 (2,208,769)
  before taxation
  Taxation                                      (128,086)           -
  Loss on ordinary activities after taxation    (122,879) (2,208,769)
  Loss per ordinary share (basic and              (0.10)c     (2.04c)
  diluted)



  Consolidated Balance Sheet
  as at 31 December 2007


  (expressed in US$)                                2007        2006
  Non-current assets
  Goodwill                                     1,752,516   1,752,516
  Development and deferred exploration costs  13,254,658   6,454,074
  Property, plant and equipment               25,831,006  22,203,706
  Total non-current assets                    40,838,180  30,410,296
  Current assets
  Inventories                                  3,341,954   2,441,783
  Trade and other receivables                  1,903,452   1,128,830
  Prepayments and accrued income               2,118,158   1,521,347
  Cash at bank and in hand                    18,629,402   3,856,878
  Total current assets                        25,992,966   8,948,838
  Current liabilities
  Trade and other payables                     4,163,638   4,053,744
  Accruals                                        87,111     176,252
  Interest bearing liabilities                   839,986     582,491
  Total current liabilities                    5,090,735   4,812,487
  Net current assets                          20,902,231   4,136,351
  Total assets less current liabilities       61,740,411  34,546,647
  Non-current liabilities
  Trade and other payables                        39,896     180,314
  Provisions                                     920,135     799,749
  Interest bearing liabilities                   376,132     368,778
  Total non-current liabilities                1,336,163   1,348,841
  Net assets                                  60,404,248  33,197,806
  Equity
  Called up share capital                     25,285,679  19,338,351
  Share premium reserve                       33,402,649  15,351,674
  Option reserve                               2,923,543   2,818,722
  Translation reserve                          3,499,865     382,502
  Profit and loss account                    (4,707,488) (4,693,443)
  Equity shareholders' funds                  60,404,248  33,197,806



  Consolidated Statement of Changes in Shareholder's Equity
  for the year ended 31 December 2007


(expressed           Share       Share     Share
in US$)                                   option
                   capital     Premium   reserve

Equity
shareholders'
funds
at 31 December  17,974,336  11,818,128 2,690,052
2005
Foreign currency         -           -         -
adjustments
Loss for year            -           -         -
Total recognised         -           -         -
loss for the
period
Share option             -           -   246,076
expense
Issue of         1,282,386   3,698,827
ordinary shares
Conversion of       81,629      88,741 (117,406)
options
Share issue              -   (254,022)         -
expenses
Equity
shareholders'
funds
at 31 December  19,338,351  15,351,674 2,818,722
2006
Foreign currency         -           -         -
adjustments
Loss for year            -           -         -
Total                    -           -         -
recognised
loss for the
year
Share option             -           -   213,655
expense
Issue of         5,884,593  19,419,158         -
ordinary
shares
Conversion          62,735      31,368 (108,834)
of options
Share issue              - (1,399,551)         -
expenses
Equity
shareholders'
funds
at 31           25,285,679  33,402,649 2,923,543
December
2007


(expressed       Translation  Profit and
in US$)
                     reserve        loss       Total
                                 account      equity
Equity
shareholders'
funds
at 31 December   (1,273,264) (2,602,080)  28,607,172
2005
Foreign currency   1,655,766           -   1,655,766
adjustments
Loss for year              - (2,208,769) (2,208,769)
Total recognised   1,655,766 (2,208,769)   (553,003)
loss for the
period
Share option               -           -     246,076
expense
Issue of                   -           -   4,981,213
ordinary shares
Conversion of              -     117,406     170,370
options
Share issue                -           -   (254,022)
expenses
Equity
shareholders'
funds
at 31 December       382,502 (4,693,443)  33,197,806
2006
Foreign currency   3,117,363           -   3,117,363
adjustments
Loss for year              -   (122,879)   (122,879)
Total              3,117,363   (122,879)   2,994,484
recognised
loss for the
year
Share option               -           -     213,655
expense
Issue of                   -           -  25,303,751
ordinary
shares
Conversion                 -     108,834      94,103
of options
Share issue                -           - (1,399,551)
expenses
Equity
shareholders'
funds
at 31              3,499,865 (4,707,488)  60,404,248
December
2007



  Consolidated Cash flow Statement


                                                  For the     For the
                                               year ended  year ended
                                              31 December 31 December
  (expressed in US$)                                 2007        2006
  Cash outflows from operating
  activities
  Operating loss                              (1,188,043) (2,439,947)
  Depreciation - plant, equipment and mining    2,326,121   1,658,101
  properties
  Option costs                                    177,913     142,443
  Share-based payments                                  -     188,895
  Write-off of past exploration                   628,066           -
  costs
  Interest paid                               (1,119,116)   (339,328)
  Foreign exchange                              (968,729)   (281,231)
  Changes in working capital
         (Increase) in                          (348,915)   (443,136)
         inventories
         (Increase) / decrease in receivables,  (691,942)     399,765
         prepayments and accrued income
         (Decrease) / increase in payables,     (795,730)   1,314,609
         accruals and provisions
  Net cash flow from operations               (1,980,375)     200,171
  Investing activities
  Proceeds of sale of fixed                             -     114,681
  assets
  Purchase of tangible fixed                  (1,155,963) (2,826,077)
  assets
  Exploration and development expenditure     (6,017,472)   (373,568)
  (1)
  Interest received                               586,969     120,649
  Net cash outflow on investing               (6,586,466) (2,964,315)
  activities
  Financing activities
  Issue of ordinary share                      25,303,751   4,536,220
  capital
  Capital element of finance lease              (702,689)   (327,406)
  payments
  Conversion of options                            94,103     170,370
  Payment of share issue costs                (1,399,551)   (254,022)
  Net cash inflow from financing               23,295,614   4,125,162
  activities
  Net increase in cash and cash                14,728,773   1,361,018
  equivalents
  Cash and cash equivalents at                  3,791,202   2,152,452
  beginning of period
  Exchange difference on cash                       9,820     277,732
  Cash and cash equivalents at                 18,529,795   3,791,202
  end
  of period

  (1)        Exploration and development expenditure of the Group for
  2006 is stated net of pre-operating income of US$2,839,018.

Notes


1. General Information

The financial information set out above for the years ended 31 December 2007 and 31 December 2006 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985, but is derived from those accounts. Whilst the financial information included in this preliminary 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. A copy of the statutory accounts for 2006 has been delivered to the Registrar of Companies and those for 2007 will be issued to shareholders prior to the Company's Annual General Meeting. The Company expects to publish full financial statements that comply with IFRS in its Annual Report and Accounts 2007. This announcement has been agreed with the auditors and was approved by the Board on 16 April 2008. Whilst the auditors have not yet reported on the financial statements for the year ended 31 December 2007, they anticipate issuing an unqualified report which will not contain statements under the Companies Act 1985, s237 (2) or (3). The auditors issued an unqualified report in respect of the 2006 Financial Statements.

2. Basis of preparation

The financial information has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and with IFRS as adopted for use in the European Union.

3. Earnings per share

The calculation of the basic loss per share of 0.10 cents per share is based on the loss attributable to ordinary shareholders of $122,879 and on the weighted average number of ordinary shares of 124,716,130 in issue during the period.

4. Inventories

                               31 December 2007 31 December
                                              $        2006
                                                          $
  Bullion and work in progress          948,437     918,269
  Consumables                         2,393,517   1,523,514
                                      3,341,954   2,441,783

5. Development and Deferred Exploration costs

                                    31 December 2007 31 December 2006
                                                   $                $
  Cost
  Opening balance                          6,454,074       17,420,146
  Exploration and development              6,017,472          733,298
  expenditure (1)
  Write-off of past exploration            (628,066)                -
  costs
  Exchange                                 1,411,178        1,423,809
  Transfer to tangible assets (mine                -     (13,123,179)
  asset)
  Total as at 31 December 2007            13,254,658        6,454,074


  (1)     Exploration and development expenditure for 2006 is stated
  net of pre-operating income of US$2,839,018

  The value of these investments  is dependent on the development  of
  mineral deposits.

6. Property, plant and equipment

                         Land and               Plant and
                        buildings               equipment
                        - at cost  Mine Asset   - at cost       Total
                                $           $           $           $
  Cost
  Balance at 31
  December 2006         2,201,439  13,623,179   8,860,453  24,685,071
  Additions                     -     497,425   1,516,232   2,013,657
  Exchange                452,175   2,341,404   1,835,070   4,628,649
  Disposals                     -           -     (2,131)     (2,131)
  At 31 December 2007   2,653,614  16,462,008  12,209,624  31,325,246
  Depreciation
  Balance at 31
  December 2006         (532,884)   (232,097) (1,716,384) (2,481,365)
  Charge for period     (465,745)   (795,878) (1,064,498) (2,326,121)
  Exchange              (156,049)   (106,118)   (425,688)   (687,855)
  Eliminated on sale
  of asset                                          1,101       1,101
  At 31 December 2007 (1,154,678) (1,134,093) (3,205,469) (5,494,240)
  Net book value at
  31 December 2007      1,498,936  15,327,915   9,004,155  25,831,006
  Net book value at
  31 December 2006      1,668,555  13,391,082   7,144,069  22,203,706

7. Cash and cash equivalents

                           31 December 2007 31 December 2006
                                          $                $
  Cash at bank and in hand       18,629,402        3,856,878
  Bank overdrafts                  (99,607)         (65,676)
  Net cash holdings              18,529,795        3,791,202

Annual Report

The Annual Report will be sent to shareholders on or around 9th May 2008. Additional copies will be available to the public, free of charge, from the Company's offices at 2nd floor, 30 - 32 Ludgate Hill, London, EC4M 7DR



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