Audited Results for the year ended 31 December 2023
29/04/2024 07:00
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Audited Results for the year ended 31 December 2023
Serabi Gold plc (AIM:SRB,TSX:SBI), the Brazilian-focused gold mining and
development company, today releases its audited results for the year ended 31
December 2023.
HIGHLIGHTS
* Revenue of US$63.7 million (2022: US$58.7 million) reflecting higher
production year on year as well as positive movement in the average gold price
of achieved, (2023: US$1,945; 2022: US$1,785).
* Gold production for the full year of 2023 of 33,153 ounces (2022: 31,819
ounces).
* EBITDA for the year of US$13.78 million (2022: US$8.78 million), a 57%
improvement year on year.
* Post tax profit for the year of US$6.58 million, (2022: Post tax loss of
US$1.0 million).
* Cash held at 31 December 2022 of US$11.6 million (31 December 2022: US$7.2
million).
* Profit per share of 8.68 cents compared with a loss per share of 1.30 cents
for the 2022 calendar year.
* Net cash inflow from operations for the year of US$7.7 million (after mine
development expenditure of US$4.4 million); (2022 net cash outflow from
operations of US$1.7 after accounting for mine development of US$3.6 million).
* Cash Costs for the full year of US$1,300 per ounce (2022: US$1,322) and AISC
for the full year of US$1,635 per ounce (2022: US$1,615).
* Robust first quarter of 2024 with 9,007 ounces of gold production.
Production guidance of between 38,000 and 40,000 ounces of gold for the 2024
calendar year.
Use the following link to access the 2023 Serabi Gold Annual Report -
https://bit.ly/3wcNqqe
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND TWELVE MONTHS ENDING 31 DECEMBER 2023
12 months to 31 Dec 2023 US$ 3 months to 31 Dec 2023 US$ 12 months to 31 Dec 2022 US$ 3 months to 31 Dec 2022 US$
Revenue 63,707,468 15,810,204 58,709,328 14,321,024
Cost of Sales (43,414,739) (10,581,049) (44,262,769) (10,184,431)
Gross Operating Profit 20,292,729 5,229,155 14,446,559 4,136,593
Administration and share based payments (6,508,543) (1,806,076) (5,662,441) (1,218,799)
EBITDA 13,784,186 3,423,079 8,784,118 2,917,794
Depreciation and amortisation charges (6,239,556) (1,257,370) (6,572,461) (1,975,623)
Operating profit before finance and tax 7,544,165 2,165,709 2,211,657 942,171
Profit/(loss) after tax 6,575,612 1,954,833 (983,047) (112,527)
Earnings per ordinary share (basic) 8.68 cents 2.58 cents (1.30) cents (0.15) cents
Average gold price received US$1,945 US$1,972 US$1,785 US$1,726
As at 31 December 2023 As at 31 December 2022
Cash and cash equivalents 11,552,031 7,196,313
Net funds 4,998,723 247,894
Net assets 92,792,049 81,523,063
Cash Cost and All-In Sustaining Cost (“AISC”)
12 months to 31 December 2023 3 months to 31 December 2023 12 months to 31 December 2022 3 months to 31 December 2022
Gold production for cash cost and AISC purposes 33,152 ozs 7,891 ozs 31,819 ozs 7,798 ozs
Total Cash Cost of production (per ounce) US$1,300 US$1,343 US$1,322 US$1,227
Total AISC of production (per ounce) US$1,635 US$1,721 US$1,615 US$1,473
Clive Line, CFO of Serabi commented,
“Twelve months ago, I reported that 2022 had been planned as a year of
investment as the Group commenced the development of Coringa, which will drive
production growth over the next couple of years. The reward for that
investment has been manifesting itself through the year. Production from
Coringa was over 8,800 ounces and we anticipate a further significant uplift
during 2024 as we target 38,000 to 40,000 ounces, with that increase expected
to be primarily attributable to Coringa. Whilst overall gold production
improved by four per cent, sales revenue was up by almost nine per cent as we
benefited from continued improvement in the gold price. At the same time we
were able to maintain operating costs at a very similar level to the previous
year and as a result Operating Profit is up by US$5.3 million, a 241 per cent
increase, with EBITDA of US$13.7 million being up by US$4.9 million, a 57 per
cent improvement year on year.
“More importantly despite continued development of Coringa, cash has also
improved with net cash up by US$4.75 million. Cash generated from operations
and after capitalised mine development expenditure was US$7.7 million, a
significant improvement on the net outflow of US$1.7 million of 2022.
“In my 2022 overview I indicated that we would only be able to secure the
necessary longer term funding for Coringa once adequate progress had been made
on the licencing situation. Roll forward 12 months to today, and with the
continued support from existing lenders and the cash flow we expect to
generate given current market conditions, we are confident that we can
continue the planned development of Coringa without any financing related
delays. The ore sorter has been purchased and cleared customs in Brazil in
early April. The area for its installation has been cleared and the civil
works for installation are already underway.
“2024 will nonetheless be another year of investment. In addition to the
purchase and installation of the crushing and ore-sorting plant, we are
undertaking an underground drilling campaign on the Serra orebody at Coringa.
This will allow the Group to issue a new Technical Report with updated mineral
reserves and resources for the Coringa project later this year. We are
specifically drilling the down dip extension of the Serra orebody. These
investments will be key to the Group positioning itself to deliver its
continued growth plans for 2025 which in turn can be expected to provide the
opportunity to reduce unit production costs. One of our largest cost items is
power and in particular the cost of diesel for generators to run the Palito
Complex and the process plant. In the latter part of 2023, we have been
increasingly reliant on these generators due to fluctuations in the voltage of
the power delivered by the grid, particularly during the wet season. We are
working with the local transmission company, and anticipate that later in 2024
we will have a more reliable and higher capacity transmission line connected
to the Palito Complex. This should in turn reduce our need for diesel sourced
power, providing both costs savings and improving our environmental
credentials as the grid power will come from renewable sources.”
STATEMENT FROM THE CHAIR OF SERABI
Dear Shareholders
Following a year in which the Company achieved some key milestones, I am
pleased to report that 2024 is already well on track to build on these, create
a solid platform from which to execute its production growth and move Serabi
into the next phase of its development. At Coringa we have engaged with all
stakeholders culminating in the renewal of the trial mining licence for three
years, whilst the recent reserve and resource estimation at Palito has
significantly increased the reserves compared with prior estimates and
resulted in a global mineral inventory for the Group of over one million
ounces.
The outlook for continued strength in the gold price remains positive and with
the exception of a short period at the end of the third quarter of last year,
the price has remained almost consistently above US$1,900 per ounce and for
the year to date above US$2,000 per ounce.
The change in government in Brazil at the start of 2023 has not brought
significant change to the regulations or financial treatment of the mining
sector and whilst the outlook for the country as a whole is relatively good,
as a company that incurs much of its costs locally, our planning and budgeting
processes have been helped by the exchange rate remaining fairly stable over
the last 12 months.
In this industry, scale is important. Your Board keenly recognises this and
Serabi’s production growth over last few years belies an exciting growth
story. We have not sat still. We have been building the team, strengthening
the board, focussing on our relationships with local indigenous groups,
improving our internal processes and governance, putting in place the building
blocks for the Coringa growth story and looking to leverage our geological
endowment for the benefit of shareholders. I believe we are now reaping the
benefits of all this hard work. But we continue to look to grow further in a
financially prudent manner. Our vision is to become the premier, Brazil
focussed, gold growth company generating superior returns to our investors. In
parallel with organic opportunities, we continue to explore appropriate
corporate opportunities to accelerate our objective of transitioning to a
200,000 ounce per year producer over the next few years. In turn we expect
that building such a business will increase the capital markets relevance of
Serabi, increase daily trading volumes amongst our shareholders, and attract
institutional funds for long term investment. Your Board considers that
reaching this level of critical mass, will open up our investor base, create
greater demand for our shares and result in an upward re-rating of our market
value. For this reason, and having strengthened the balance sheet and
operations in the last couple of years, selective M&A activity will be
required, in our view.
Our executive management is operationally focussed and experienced at
identifying and implementing innovative solutions. Our focus remains Brazil
where we have a long and successful track record but we must remain open to
looking at other jurisdictions offering a stable legislative environment in
which to develop mining opportunities.
Whilst we feel that the best use of surplus cash in the short-term would be to
help drive growth, this assumes suitable opportunities are available. We will
always be evaluating investment opportunities and risk against other options
that can generate rewards for our shareholders including the opportunity to
return funds potentially through dividends or share buyback arrangements.
The exploration alliance with Vale, during 2023 provided a source of
exploration funding that allowed us to advance our gold exploration
opportunities whilst also giving the Group the opportunity to progress an
opportunity for copper exploration that the Group would not otherwise have
progressed. The results from the Phase 1 programme, whilst giving us greater
technical understanding of the Matilda prospect, allowed us to advance other
gold targets, we can now advance further as well as generating other potential
copper porphyry targets. Whilst Vale have now decided to not progress to Phase
2 we do have other parties interested to pick up their position, giving the
Group the potential for continued exposure to copper exploration but allowing
management to focus on the Group’s core gold activities.
As part of our efforts to widen the shareholder base of Serabi, in February
2024, Serabi was approved to have a quotation of its shares on the OTCQX in
the United States which we hope will enhance the visibility, liquidity and
accessibility of the Company to U.S. investors. We see this as a
cost-effective option for expanding the shareholder base without increasing
the regulatory burden. In the near term, we view attracting new investors as a
key component to maintaining and growing value for existing shareholders and
we will be stepping up our efforts over the next 12 months to grow our
presence among the investment communities in North America. As part of this
programme, we completely revamped our corporate website. I encourage investors
to acquaint themselves with our vision, strategy and the latest updates on our
operations and exploration opportunities. Our management will be attending a
number of investor events and conferences over the next 12 months, details of
which will be listed on the website, and investors are encouraged to use these
opportunities where possible to meet with management.
Since being appointed as Chair for Serabi in August 2022, I have sought to
strengthen the role of the Board, continue to challenge management and in the
light of increased regulation and accountability, reacted to the need to
strengthen the overall corporate governance processes. In January last year,
we welcomed Carolina Margozzini to the Board of Directors who was also
appointed as a member of the Remuneration Committee. This was followed, in May
2023, by the appointment of Deborah Gudgeon, a very experienced, non-executive
director working with a number of natural resources companies. Deborah has
also taken on the role a Chair of the Audit and Risk Committee. We also
appointed, in August 2023, Kerin Williams to take on the role of Company
Secretary, relieving our CFO of this responsibility which, had over recent
years, become increasingly time consuming.
Whilst the Board works closely with management to drive operational
improvements we are also very focussed on ensuring that this is done with
safety as a priority. It is pleasing to report that I have seen, during my own
visits to site, the quality and professionalism of our staff and their desire
to put health and safety very much in the forefront of thinking.
During the year, we have undertaken a full review of our governance processes,
updated the Terms of Reference for the Board and its sub-committees and
established new Sustainability and M&A Committees, to help streamline the
decision making processes. With an ever-increasing level of oversight by
regulators and other governmental and non-governmental bodies, the manner in
which companies operate, particularly those involved in natural resources, is
under growing scrutiny. Serabi prides itself on its constructive interaction
with the neighbouring communities, engaging in an open dialogue through
multiple meetings each month and supporting community programmes including
infrastructure, health and education. I was very pleased when, in October
2023, our efforts were recognised at the gold symposium hosted by the
Associação Brasileira de Empresas de Pesquisa Mineral e Mineração
(“ABPM”) when Serabi overwhelmingly won the category for Community
Relations securing 73% of more than 5,000 votes that were cast. Whilst
visiting the operations earlier in the year, I was privileged to meet the team
responsible and witness the excellent work they do and their levels of
commitment.
My first 21 months as Chair have been very exciting and rewarding. We have
challenges ahead, but I am very encouraged with what I have seen and the
shared vision of the Board and management for developing the Company. The next
six months, as we continue the development of the Coringa project, will be
pivotal for us and will provide the base for continued production growth in
2025 and 2026. I hope that I will be able to report further positive progress
at the Annual General Meeting to be held in June and over the rest of the
year.
Michael D Lynch-Bell
Chair
26 April 2024
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018.
The person who arranged for the release of this announcement on behalf of the
Company was Clive Line, Director.
Annual Report
The Annual Report has been published by the Company on its website at
www.serabigold.com and printed copies are expected to be available before 31
May 2024. Additional copies will be available to the public, free of charge,
from the Company's offices at The Long Barn, Cobham Park Road, Downside,
Surrey, KT11 3NE and will be available to download from the Company’s
website at www.serabigold.com.
The data included in the selected annual information tables below is taken
from the Company’s annual audited financial statements for the year ended 31
December 2023, which were prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006. The
Parent Company financial statements have also been prepared in accordance with
those parts of the Companies Act 2006 applicable to companies reporting under
International Financial Reporting Standards (“IFRS”).
The audited financial statements for the year ended 31 December 2023 will be
presented to shareholders for adoption at the Annual General Meeting of the
Company’s shareholders and filed with the Registrar of Companies.
The following information, comprising, the Income Statement, the Group Balance
Sheet, Group Statement of Changes in Shareholders’ Equity, and Group Cash
Flow, is extracted from these financial statements.
Enquiries
SERABI GOLD plc
Michael Hodgson t +44 (0)20 7246 6830
Chief Executive m +44 (0)7799 473621
Clive Line t +44 (0)20 7246 6830
Finance Director m +44 (0)7710 151692
Andrew Khov m +1 647 885 4874
Vice President, Investor Relations &
Business Development
e contact@serabigold.com
www.serabigold.com
BEAUMONT CORNISH Limited
Nominated Adviser & Financial Adviser
Roland Cornish / Michael Cornish t +44 (0)20 7628 3396
PEEL HUNT LLP
Joint UK Broker
Ross Allister t +44 (0)20 7418 9000
TAMESIS PARTNERS LLP
Joint UK Broker
Charlie Bendon/ Richard Greenfield t +44 (0)20 3882 2868
CAMARCO
Financial PR - Europe
Gordon Poole / Emily Hall t +44 (0)20 3757 4980
HARBOR ACCESS
Financial PR – North America
Jonathan Patterson / Lisa Micali t +1 475 477
9404
Copies of this announcement 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 announcement.
See www.serabigold.com for more information and follow us on twitter
@Serabi_Gold
Statement of Comprehensive Income
For the year ended 31 December 2023
Group
For the year ended 31 December 2023 For the year ended 31 December 2022
Notes US$ US$
Revenue from continuing operations 63,707,468 58,709,328
Cost of sales (43,184,739) (43,110,870)
Stock impairment provision (230,000) —
Provision for impairment of taxes receivable — (1,151,899)
Depreciation and amortisation charges (6,239,556) (6,572,461)
Total cost of sales (49,654,295) (50,835,230)
Gross operating profit 14,053,173 7,874,098
Administration expenses (6,492,165) (5,447,224)
Share-based payments (197,344) (249,210)
Gain on disposal of fixed assets 180,966 33,993
Operating profit 7,544,630 2,211,657
Foreign exchange gain 174,105 131,938
Other income – exploration receipts 5 4,680,414 —
Other expenses – exploration expenses 5 (4,339,554) —
Finance expense 6 (739,245) (3,411,784)
Finance income 6 847,523 291,885
Profit / (loss) before taxation 8,167,873 (776,304)
Income tax expense 7 (1,592,261) (206,743)
Profit / (loss) for the period ((1) ) 6,575,612 (983,047)
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 4,496,030 2,371,399
Total comprehensive profit for the period ((1)) 11,071,642 1,388,352
Earnings per ordinary share (basic) ((1) ) 8 8.68c (1.30c)
Earnings per ordinary share (diluted) ( (1) ) 8 8.68c (1.30c)
(1) The Group has no non-controlling interests, and all losses are
attributable to the equity holders of the parent company
.
Balance Sheet as at 31 December 2023
Group
At 31 December 2023 At 31 December 2022
US$ US$
Non-current assets
Deferred exploration costs 20,499,257 18,621,180
Property, plant and equipment 53,340,903 48,482,519
Right of use assets 5,316,330 5,374,042
Taxes receivable 4,653,063 3,446,032
Deferred taxation 1,791,983 1,545,684
Total non-current assets 85,061,536 77,469,457
Current assets
Inventories 12,797,951 8,706,351
Trade and other receivables 2,858,072 5,291,924
Prepayments 2,320,256 1,572,149
Derivative financial assets 115,840 —
Cash and cash equivalents 11,552,031 7,196,313
Total current assets 29,644,150 22,766,737
Current liabilities
Trade and other payables 8,626,292 5,830,872
Interest-bearing liabilities 6,403,084 6,111,126
Accruals 649,225 461,857
Total current liabilities 15,678,601 12,403,855
Net current assets 13,965,549 10,362,882
Total assets less current liabilities 99,567,085 87,832,339
Non-current liabilities
Trade and other payables 3,960,920 3,800,886
Provisions 2,663,892 1,190,175
Deferred tax liability — 480,922
Interest-bearing liabilities 150,224 837,293
Total non-current liabilities 6,775,036 6,309,276
Net assets 92,792,049 81,523,063
Equity
Share capital 11,213,618 11,213,618
Share premium reserve 36,158,068 36,158,068
Share incentive reserve 175,573 1,324,558
Other reserves 15,960,006 14,459,255
Translation reserve (61,780,741) (66,276,771)
Retained surplus 91,065,525 84,644,335
Equity shareholders’ funds attributable to owners of the parent 92,792,049 81,523,063
Statements of Changes in Shareholders’ Equity
For the twelve month period ended 31 December 2023
Group Share capital Share premium Share incentive reserve Other reserves Translation reserve Retained surplus Total equity
US$ US$ US$ US$ US$ US$ US$
Equity shareholders’ funds at 31 December 2021 11,213,618 36,158,068 1,075,348 13,694,731 (68,648,170) 86,391,906 79,885,501
Foreign currency adjustments – – – – 2,371,399 – 2,371,399
Profit for year – – – – – (983,047) (983,047)
Total comprehensive income for the year – – – – 2,371,399 (983,047) 1,388,352
Transfer to taxation reserve – – – 764,524 – (764,524) –
Share based incentive expense – – 249,210 – – – 249,210
Equity shareholders’ funds at 31 December 2022 11,213,618 36,158,068 1,324,558 14,459,255 (66,276,771) 84,644,335 81,523,063
Foreign currency adjustments – – – – 4,496,030 – 4,496,030
Profit for year – – – – – 6,575,612 6,575,612
Total comprehensive income for the year – – – – 4,496,030 6,575,612 11,071,642
Transfer to taxation reserve – – – 1,500,751 – (1,500,751) –
Share based incentives lapsed in period – – (1,346,329) – – 1,346,329 –
Share based incentive expense – – 197,344 – – – 197,344
Equity shareholders’ funds at 31 December 2023 11,213,618 36,158,068 175,573 15,960,006 (61,870,741) 91,065,525 92,792,049
Other reserves comprise a merger reserve of US$361,461 and a taxation reserve
of US$15,598,545 (2022: merger reserve of US$361,461 and taxation reserve of
US$14,097,794).
Cash Flow Statement
For the twelve month period ended 31 December 2023
Group
For the year ended 31 December 2023 For the year ended 31 December 2022
US$ US$
Cash outflows from operating activities
Profit/(loss) for the period 6,575,612 (983,047)
Net financial (income)/expense (623,243) 2,987,961
Depreciation – plant, equipment and mining properties 6,239,556 6,572,461
Provision for impairment of taxes receivable – 1,151,899
Provision for inventory impairment 230,000 –
Taxation expense 1,592,261 206,743
Share-based payments 197,344 249,210
Gain on fixed asset sales and other items (180,966) (33,993)
Taxation paid (1,400,365) (129,426)
Interest paid (426,366) (208,592)
Foreign exchange (loss)/gain (82,829) (191,328)
Changes in working capital
Increase in inventories (2,830,651) (1,435,025)
Increase in receivables, prepayments and accrued income 1,614,497 (6,465,608)
Increase/(decrease) in payables, accruals and provisions 1,188,337 234,314
Increase in short-term intercompany payables – –
Net cash inflow/(outflow) from operations 12,093,187 1,955,569
Investing activities
Purchase of property, plant, equipment, and projects in construction (2,378,317) (4,447,588)
Mine development expenditure (4,425,839) (3,629,505)
Geological exploration expenditure (571,411) (855,607)
Pre-operational project costs – (2,328,113)
Proceeds from sale of assets 326,727 171,824
Investment in subsidiaries – –
Interest received and other finance income 313,106 126,390
Net cash outflow on investing activities (6,735,734) (10,962,599)
Financing activities
Receipt of short-term loan 5,000,000 4,917,775
Repayment of short-term loan (5,096,397) –
Payment of lease liabilities (1,171,602) (1,027,151)
Net cash (outflow)/inflow from financing activities (1,267,999) 3,890,624
Net increase/(decrease) in cash and cash equivalents 4,089,454 (5,116,406)
Cash and cash equivalents at beginning of period 7,196,313 12,217,751
Exchange difference on cash 266,264 94,968
Cash and cash equivalents at end of period 11,552,031 7,196,313
Notes
1. General Information
The financial information set out above for the years ended 31 December 2023
and 31 December 2022 does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006 but is derived from those accounts.
Whilst the financial information included in this announcement has been
compiled in accordance with UK-adopted international accounting standards (UK
IAS), this announcement itself does not contain sufficient financial
information to comply with UK IAS. A copy of the statutory accounts for 2022
has been delivered to the Registrar of Companies and those for 2023 will be
delivered to the Registrar of Companies following approval by shareholders at
the Annual General Meeting. The full audited financial statements for the
years end 31 December 2023 and 31 December 2022 comply with IFRS.
2. Auditor’s Opinion
The auditor has issued an unqualified opinion in respect of the financial
statements for both 2023 and 2022 which do not contain any statements under
the Companies Act 2006, Section 498(2) or Section 498(3).
3. Basis of Preparation
The financial statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006. The parent and consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards (UK IAS) and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into the UK law and became UK-adopted international accounting
standards, with future changes being subject to endorsement by the UK
Endorsement Board. The Group prepares its consolidated financial statements in
accordance with UK IAS.
Accounting standards, amendments and interpretations effective in 2022
The Group has not adopted any standards or interpretations in advance of the
required implementation dates.
The following Accounting standards came into effect as of 1 January 2023
IFRS 17 Insurance Contracts, including Amendments to IFRS 17 1 January 2023
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) and Classification of Liabilities as Current or Non-current – Deferral of Effective Date 1 January 2023
There is no material impact on the financial statements from the adoption of
these new accounting standards or amendments to accounting standards,
Certain new accounting standards and interpretations have been published that
are not mandatory for the current period and have not been early adopted.
These standards are not expected to have a material impact on the Company’s
current or future reporting periods.
4. Going concern and availability of finance
The Group’s business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Group
Strategic Report. The financial position of the Group, its cash flows, and
liquidity position are described in the Chief Financial Officer’s Review and
set out in the Group Financial Statements. Further details of the Group’s
commitments and maturity analysis of financial liabilities are set out in note
24 and 26 respectively of the Group Financial Statements. In addition, note 23
to the Group Financial Statements includes the Group’s objectives, policies
and processes for managing its capital; its financial risk management
objectives; details of its financial instruments; and its exposures to credit
risk and liquidity risk.
The Directors have a reasonable expectation that, after taking into account
reasonably possible changes in trading performance, and the current
macroeconomic situation, the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the Financial Statements.
Further details are provided in Going Concern section of the Group Strategic
Report on pages 26 and 27.
5 Other income and expense
Under its copper exploration alliance with Vale announced on 10 May 2023, the
related exploration activities being undertaken by the Group under the
management of a working committee (comprising representatives from Vale and
Serabi), are being funded in their entirety by Vale up to a value of US$5
million during Phase 1 of the programme. The Group at this time has no
certainty that the exploration for copper deposits will result in a project
that is commercially viable recognising that exploration and development of
copper deposits is not the core activity of the Group, there is a significant
cost involved in developing new copper deposits and it is unlikely that
without the financial support of Vale that the Group would independently seek
to develop a copper project in preference to any of its existing gold projects
and discoveries.
As a result, it is recognising both the funding received from Vale and the
related exploration expenditures through its income statement. As this is not
the principal business activity of the Group these receipts and expenditures
are classified as other income and other expenses.
6. Finance expense and income
Group
12 months ended 31 December 2023 12 months ended 31 December 2022
US$ US$
Interest and fines on state sales tax — (1,819,909)
Provision for interest on disputed tax refunds claimed — (1,090,586)
Interest on short term unsecured bank loan (453,675) (211,793)
Interest in finance leases (103,568) (148,650)
Interest on short term trade loan (90,586) (59,942)
Variation on discount on rehabilitation provision (91,416) (80,904)
Total finance expense (739,245) (3,411,784)
Gain on revaluation of warrants — 165,495
Gain on revaluation of derivatives 431,348 —
Realised gain on hedging activities 103,069 —
Interest income 313,106 126,390
Total finance income 847,523 291,885
Net finance (expense)/income 108,278 (3,119,899)
7. Taxation
The Group has incurred a tax charge on profits in Brazil for the year to 31
December 2023 of US$2,199,658 (31 December 2022 - US$890,176)
The Group has also recognised a deferred tax asset to the extent that the
Group has reasonable certainty as to the level and timing of future profits
that might be generated and against which the asset may be recovered. The
Group has registered a net deferred tax credit of US$607,397 during the year
to 31 December 2023 (31 December 2022 – credit of US$683,433).
8. Earnings per share
For the year ended 31 December 2023 For the year ended 31 December 2022
(Loss) / profit attributable to ordinary shareholders (US$) 6,575,612 (983,047)
Weighted average ordinary shares in issue 75,734,551 75,734,551
Basic profit per share (US cents) 8.68 (1.30)
Diluted ordinary shares in issue ((1)) 75,734,551 81,488,078
Diluted profit per share (US cents) 8.68 (1.30) ((2))
(1) At 31 December 2023 there were 2,075,400 conditional
share awards in issue (31 December 2022 864,500). These are subject to
performance conditions which may or not be fulfilled in full or in part. These
CSA’s have not been included in the calculation of the diluted earnings per
share.. At 31 December 2022: there were also 1,750,000 options and 4,003,527
unexercised warrants in issue.
(2) As the effect of dilution is to reduce the loss per
share, the diluted loss per share is considered to be the same as the basic
loss per share
9. Post balance sheet events
On 7 January 2024, the Group completed a US$5.0 million unsecured loan
arrangement with Itau Bank in Brazil. The loan is repayable as a bullet
payment on 6 January 2025 and carries an interest coupon of 8.47 per cent. The
proceeds raised from the loan are being used for working capital and secure
adequate liquidity to repay a similar arrangement which was repaid on 22
February 2023.
Except as set out above, there has been no item, transaction or event of a
material or unusual nature likely, in the opinion of the Directors of the
Company, to affect significantly the continuing operation of the entity, the
results of these operations, or the state of affairs of the entity in future
financial periods.
Assay Results
Assay results reported within this release include those provided by the
Company's own on-site laboratory facilities at Palito and have not yet been
independently verified. Serabi closely monitors the performance of its own
facility against results from independent laboratory analysis for quality
control purpose. As a matter of normal practice, the Company sends duplicate
samples derived from a variety of the Company's activities to accredited
laboratory facilities for independent verification. Since mid-2019, over
10,000 exploration drill core samples have been assayed at both the Palito
laboratory and certified external laboratory, in most cases the ALS laboratory
in Belo Horizonte, Brazil. When comparing significant assays with grades
exceeding 1 g/t gold, comparison between Palito versus external results record
an average over-estimation by the Palito laboratory of 6.7% over this period.
Based on the results of this work, the Company's management are satisfied that
the Company's own facility shows sufficiently good correlation with
independent laboratory facilities for exploration drill samples. The Company
would expect that in the preparation of any future independent
Reserve/Resource statement undertaken in compliance with a recognised
standard, the independent authors of such a statement would not use Palito
assay results without sufficient duplicates from an appropriately certificated
laboratory.
Forward-looking statements
Certain statements in this announcement are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ‘‘believe’’, ‘‘could’’, “should”
‘‘envisage’’, ‘‘estimate’’, ‘‘intend’’,
‘‘may’’, ‘‘plan’’, ‘‘will’’ or the negative of those,
variations or comparable expressions, including references to assumptions.
These forward-looking statements are not based on historical facts but rather
on the Directors’ current expectations and assumptions regarding the
Company’s future growth, results of operations, performance, future capital
and other expenditures (including the amount, nature and sources of funding
thereof), competitive advantages, business prospects and opportunities. Such
forward looking statements reflect the Directors’ current beliefs and
assumptions and are based on information currently available to the Directors.
A number of factors could cause actual results to differ materially from the
results discussed in the forward-looking statements including risks associated
with vulnerability to general economic and business conditions, competition,
environmental and other regulatory changes, actions by governmental
authorities, the availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which are beyond
the control of the Company. Although any forward-looking statements contained
in this announcement are based upon what the Directors believe to be
reasonable assumptions, the Company cannot assure investors that actual
results will be consistent with such forward looking statements.
Qualified Persons Statement
The scientific and technical information contained within this announcement
has been reviewed and approved by Michael Hodgson, a Director of the Company.
Mr Hodgson is an Economic Geologist by training with over 30 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.
Notice
Beaumont Cornish Limited, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as nominated adviser to
the Company in relation to the matters referred herein. Beaumont Cornish
Limited is acting exclusively for the Company and for no one else in relation
to the matters described in this announcement and is not advising any other
person and accordingly will not be responsible to anyone other than the
Company for providing the protections afforded to clients of Beaumont Cornish
Limited, or for providing advice in relation to the contents of this
announcement or any matter referred to in it.
Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this news release
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