SOURCE: Serabi Mining plc

May 16, 2011 08:00 ET

Serabi Mining plc: Financial Results for First Quarter 2011 and Management Discussion and Analysis

LONDON--(Marketwire - May 16, 2011) - Serabi Mining plc (AIM: SRB) (TSX: SBI) (TSX: SBI.WT), the Brazilian focused gold exploration company, advises that it has today published its unaudited financial results for the first quarter of 2011 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.serabimining.com and are also available on SEDAR at www.sedar.com. The full text of both the financial results and Management's Discussion and Analysis are also available by following the links contained in this press release.

Financial Highlights

                       Quarter ended 31   Quarter ended 31    Year ended 31
                          March 2011         March 2010       December 2010
                         (unaudited)        (unaudited)         (audited)
                            US$                US$                 US$

Operating Loss
 for period               (742,642)          (953,599)         (5,980,011)
Loss per ordinary
 share (basic and
 diluted)                (1.65) cents       (2.91) cents      (15.21) cents

Exploration
 expenditures during
 the period                1,639,267          305,019            2,481,665
Cash at end
 of period                11,100,828        3,423,326            8,598,755
Equity Shareholders
 funds at end
 of period                54,097,874       41,445,493           44,351,818

For the three month period ended 31 March 2010 the Company recorded a net loss of US$742,642 (1.65 US cents per share) compared to a net loss of US$953,599 (2.91 US cents per share) for the comparative period last year. The decrease in the loss reflects reduced administrative costs and a foreign exchange gain recorded during the period of US$187,297, compared with a foreign exchange loss in the comparative period of US$1,180. At the same time in the corresponding period in 2009, the Company had limited gold production which yielded a gross profit of US$78,866. There has been no mining operation during the three month period ended 31 March 2011 and as a result the Company incurred a gross loss of US$183,822.

Operational Highlights

-- January 2011 - Completed an additional 8,000 hectare helicopter borne electromagnetic ("VTEM") survey over adjacent areas to the original 2008 mine site survey area within the Jardim do Ouro project.

-- February 2011 - The Company received the positive outcome of its appeal to the Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis ("IBAMA") that the original penalty of Brazilian Reals 3,597,300 (~US$2.2 million) was cancelled with immediate effect.

-- February 2011 - Positive geochemical results received from trenching over the Piaui drill target including 1 metre at 33.6 g/t and 3.2 metres at 16.1 g/t (see press release 22 February 2011 for all results).

-- April 2011 - Results received for the first five drill holes into the Piaui target indicated significant gold mineralization in all five holes including 1.93 metres at 22.86 g/t and 2.5 metres at 6.22 g/t (see press release 7 April 2011 for all results).

Corporate Highlights

-- Following the completion of a private placement of 10,070,000 Special Warrants on 2 December 2010, for gross proceeds of C$5,538,500, the Company completed on 30 March 2011 an Initial Public Offering ("IPO") of 9,000,000 units in Canada at a price of C$0.55 per share for gross proceeds of C$4.95 million.

-- Each of the 9,000,000 units were comprised of one ordinary share and one half warrant of one ordinary share purchase warrant of the Company, with each warrant being exercisable to acquire one Ordinary Share at an exercise price of C$0.75 until 2 December 2012.

-- The completion of the IPO and the listing of the Ordinary Shares and Warrants on the TSX on 30 March also resulted in the automatic exercise of the 10,070,000 previously issued special warrants of the Company in December 2010.

-- The appointment on 30 March 2011 of Messrs Sean Harvey and Melvyn Williams and Dr Doug Jones as independent directors of the Company.

Outlook

Serabi's short term strategy for the JDO Project (phase 1) to be followed for the next 6 months continues to focus on 'head-frame' exploration with the objective of discovering more Palito style deposits. In further detail this will involve:

-- Continuing with the 8,100 metre discovery drilling programme into 9 high priority targets within 3km of the plant (2,700 metres of this programme had been drilled by the end of April)

-- Follow-up ground geophysics (Induced Polarisation) on the remaining five VTEM geophysical anomalies located in the original 2008 airborne survey area (6,000 Ha) with the objective of generating further drill targets - this is planned to commence July 2011.

-- Conduct a further 7,000 Ha airborne geophysical VTEM survey over further JDO tenements - (an 8,000 Ha survey was completed in January 2011 and results from which are expected later in May 2011).

-- Follow-up ground geophysics (Induced Polarisation) on the January 2011 8,000 Ha airborne geophysical VTEM survey area.

-- Commencing a thorough mine-site deep geochemistry Geochemical/Trenching/Auger program.

-- The initial phase one of the exploration budget is in the region of US$8 million and is aimed to investigate the mine site targets as well as some of the immediate surrounding tenements (within 20km of the operation).


                            SERABI MINING PLC
        Condensed Consolidated Statements of Comprehensive Income


                                    For the       For the       For the
                                  Three months  Three months      year
                                      ended         ended        ended
                                    31 March      31 March    31 December
                                      2011          2010          2010
(expressed in US$)                (unaudited)   (unaudited)     (audited)
                                  ------------  ------------  ------------
CONTINUING OPERATIONS
Revenue                                     --       840,639     1,229,551
Operating expenses                    (183,822)     (761,773)   (2,416,746)
                                  ------------  ------------  ------------
Gross (loss)/profit                   (183,822)       78,866    (1,187,195)
Administration expenses               (124,946)     (397,634)   (2,266,912)
Option costs                           (30,571)      (25,102)     (103,876)
Loss on asset disposals                (13,515)      (54,568)     (124,179)
Depreciation of plant and
 equipment                            (567,336)     (509,949)   (2,112,445)
                                  ------------  ------------  ------------
Operating loss                        (920,190)     (908,387)   (5,794,607)
Foreign exchange gain/ (loss)          187,297        (1,180)      (27,396)
Finance costs                          (22,152)      (44,032)     (187,912)
Investment income                       12,403            --        29,904
                                  ------------  ------------  ------------
Loss before taxation                  (742,642)     (953,599)   (5,980,011)
Income tax expense                          --            --            --
                                  ------------  ------------  ------------
Loss for the period from
 continuing operations (1) (2)        (742,642)     (953,599)   (5,980,011)
                                  ------------  ------------  ------------

Other comprehensive income (net
 of tax)
Exchange differences on
 translating foreign operations        943,210      (835,842)    1,613,011
                                  ------------  ------------  ------------
Total comprehensive income/(loss)
 for the period (2)                    200,568    (1,789,441)   (4,367,000)
                                  ------------  ------------  ------------

                                  ------------  ------------  ------------
Loss per ordinary share (basic
 and diluted) (1)                      (1.65c)       (2.91c)      (15.21c)
                                  ------------  ------------  ------------


(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 MINING PLC
                  Condensed Consolidated Balance Sheets



                                        As at        As at        As at
                                       31 March     31 March   31 December
                                         2011         2010         2010
(expressed in US$)                   (unaudited)  (unaudited)   (audited)
                                     -----------  -----------  -----------
Non-current assets
Development and deferred exploration
 costs                                11,679,390    7,058,548    9,797,406
Property, plant and equipment         34,088,905   33,917,842   33,951,140
                                     -----------  -----------  -----------
Total non-current assets              45,768,295   40,976,390   43,748,546
                                     -----------  -----------  -----------
Current assets
Inventories                            1,488,737    1,460,550    1,417,804
Trade and other receivables              168,419      156,494       96,143
Prepayments and accrued income         1,175,068    1,249,760    1,061,945
Cash at bank and cash equivalents     11,100,828    3,423,326    8,598,755
                                     -----------  -----------  -----------
Total current assets                  13,933,052    6,290,130   11,174,647
                                     -----------  -----------  -----------
Current liabilities
Trade and other payables               3,282,582    3,595,567    3,147,258
Accruals                                 313,577       83,752      174,348
Interest bearing liabilities                  --       31,285           --
Special warrants                              --           --    5,059,995
                                     -----------  -----------  -----------
Total current liabilities              3,596,159    3,710,604    8,381,601
                                     -----------  -----------  -----------
Net current assets                    10,336,893    2,579,526    2,793,046
                                     -----------  -----------  -----------
Total assets less current
 liabilities                          56,105,188   43,555,916   46,541,592
                                     -----------  -----------  -----------
Non-current liabilities
Trade and other payables                 340,174      496,103      552,027
Provisions                             1,396,249    1,367,225    1,388,571
Interest bearing liabilities             270,891      247,095      249,176
                                     -----------  -----------  -----------
Total non-current liabilities          2,007,314    2,110,423    2,189,774
                                     -----------  -----------  -----------
Net assets                            54,097,874   41,445,493   44,351,818
                                     -----------  -----------  -----------

Equity
Share capital                         29,291,551   26,848,814   27,752,834
Share premium                         48,282,042   36,268,991   40,754,032
Option reserve                         1,686,032    1,553,661    1,648,484
Other reserves                           702,095      260,882      260,882
Translation reserve                    4,825,378    1,433,315    3,882,168
Accumulated loss                     (30,689,224) (24,920,170) (29,946,582)
                                     -----------  -----------  -----------
Equity shareholders' funds            54,097,874   41,445,493   44,351,818
                                     -----------  -----------  -----------

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 2010, prepared under IFRS as adopted in the EU and with IFRS and their interpretations adopted by the International Accounting Standards Board have been filed with the Registrar of Companies. The auditors' report on these accounts was unqualified but did contain an Emphasis of Matter with respect to the ability of the Company and the Group regarding the future availability of project finance. The auditors' report did not contain a statement under Section 498 (2) or 498 (3) of the Companies Act 2006.

                            SERABI MINING PLC
                Condensed Consolidated Cash Flow Statements



                                     For the       For the       For the
                                  three months  three months      Year
                                      ended         ended         Ended
                                    31 March      31 March    31 December
                                      2011          2010          2010
(expressed in US$)                (unaudited)   (unaudited)     (audited)
                                  ------------  ------------  ------------
Operating activities
Operating loss                        (920,190)     (908,387)   (5,794,607)
Depreciation - plant, equipment
 and mining properties                 567,336       509,949     2,112,445
Loss on sale of assets                  13,515        54,568       124,179
Option costs                            30,571        25,102       103,876
Interest paid                          (10,326)      (34,542)     (149,439)
Foreign exchange loss                  (48,930)       (1,460)     (175,671)
Changes in working capital
  (Increase) / decrease in
   inventories                         (37,481)      (17,385)      (95,530)
  (Increase) / decrease in
   receivables, prepayments and
   accrued income                     (158,356)       39,088       569,010
  (Decrease) / increase in
   payables, accruals and
   provisions                          (11,749)      (75,840)     (631,396)
                                  ------------  ------------  ------------
Net cash flow from operations         (575,610)     (408,907)   (3,937,133)
                                  ------------  ------------  ------------

Investing activities
Proceeds from sale of fixed
 assets                                 40,642       106,851       501,209
Purchase of property, plant and
 equipment                             (27,383)           --        (7,225)
Exploration and development
 expenditure                        (1,639,267)     (305,019)   (2,481,665)
Interest received                       12,403            --        29,904
                                  ------------  ------------  ------------
Net cash outflow on investing
 activities                         (1,613,605)     (198,168)   (1,957,777)
                                  ------------  ------------  ------------

Financing activities
Issue of ordinary share capital      4,961,179            --     5,424,120
Issue of warrants                      208,229            --            --
Issue of special warrants                   --            --     5,453,761
Capital element of finance lease
 payments                                   --       (46,052)      (79,303)
Payment of share issue costs          (706,564)           --       (35,059)
Payment of special warrant issue
 costs                                 (14,900)           --      (393,765)
                                  ------------  ------------  ------------
Net cash inflow/(outflow) from
 financing activities                4,447,944       (46,052)   10,369,754
                                  ------------  ------------  ------------

Net increase/(decrease) in cash
 and cash equivalents                2,258,729      (653,127)    4,474,844
Cash and cash equivalents at
 beginning of period                 8,598,754     4,081,882     4,081,882
Exchange difference on cash            243,345        (5,429)       42,029
                                  ------------  ------------  ------------
Cash and cash equivalents at end
 of period                          11,100,828     3,423,326     8,598,755
                                  ------------  ------------  ------------


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. Oil and Gas Companies dated March 2006.

Q1 2011 Financial Results (PDF version): http://hugin.info/137617/R/1516111/452402.pdf

Q1 2011 Management Discussion and Analysis (PDF version): http://hugin.info/137617/R/1516111/452405.pdf

Contact Information

  • Enquiries:

    Serabi Mining 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@serabimining.com
    Website: www.serabimining.com

    Beaumont Cornish Limited
    Nominated Adviser
    Roland Cornish
    Tel: 020 7628 3396
    Michael Cornish
    Tel: 020 7628 3396

    Hybridan LLP
    UK Broker
    Claire Noyce
    Tel: 020 7947 4350

    Farm Street Communications
    Public Relations
    Simon Robinson
    Tel: 07593 340107

    Fig House Communications
    Investor Relations
    Rebecca Greco
    Tel: + 1 416 822 6483