REG-Serabi Gold plc : Completion of acquisition of the Coringa gold project, Brazil <Origin Href="QuoteRef">SRB.L</Origin>

Serabi GoldAnnouncement

22/12/2017 07:05

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For immediate release
            22 December 2017

Serabi Gold plc
("Serabi" or the "Company")
Completion of acquisition of the Coringa gold project, Brazil

Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian-focused gold mining and
development company, is pleased to report that it has now completed the
acquisition of 100 per cent of the issued share capital and inter-company debt
of Chapleau Resources Ltd ("Chapleau"), a Canadian registered company
previously wholly-owned by Anfield Gold Corp ("Anfield").  Chapleau holds the
Coringa gold project ("Coringa") located in the Tapajos gold province in Para,
Brazil.

Coringa hosts a mineral resource estimate of 376,000 ounces of gold, including
an Indicated Resource of 195,000 ounces of gold with an average grade of 8.4
grammes per tonne ("g/t"), which has been prepared in accordance with the
reporting requirements of the standards of NI 43-101.  Estimated mineral
reserves, included with the mineral resource, are 160,000 ounces of gold.
 Coringa is located some 70 kilometres to the south-east of the town of Novo
Progresso which is approximately 130 kilometres by road to the south of
Serabi's current mining operations at Palito.

Completion of the acquisition occurred on 21 December 2017 ("Closing"). Serabi
has made an initial payment to Anfield on Closing of US$5 million in cash
("Initial Consideration").  A further US$5 million in cash is payable within
three months of Closing and a final payment of US$12 million in cash will be
due upon the earlier of either the first gold being produced or 24 months from
the date of Closing (both payments together being the "Deferred
Consideration"). The total proposed consideration for the acquisition amounts
to US$22 million in aggregate.

Significant Benefits of the transaction

The Board of Serabi believes that the acquisition of the Coringa gold project
has a number of key benefits including:
* Coringa hosts an Indicated Mineral Resource of 195,000 ounces of gold at
8.36 g/t and an Inferred Mineral Resource of 181,000 ounces gold at 4.32 g/t
(the "Coringa Mineral Resource Estimate") prepared in accordance with the
reporting requirements of the standards of NI 43-101. 
* Coringa is located only 200 kilometres from Serabi's current Palito mining
operation and process plant, allowing synergies for management and
infrastructure and potential reduction of unit operating costs. 
* The Coringa project is a near 'carbon-copy' of Serabi's current operation,
which has been in production since 2014.  The similarities mean Serabi is
very well placed to expedite the successful development and future production
potential of the project.   
* Past gold discoveries at Coringa including the Mae de Leite, Come Quieto,
Demetrio and Valdette veins, have not been included in the current Coringa
Mineral Resource Estimate and provide scope for growing the resources and
expanding the life of the project. 
* A feasibility report on Coringa issued by Anfield in September 2017 (the
"Coringa Feasibility Study"), prepared in accordance with the reporting
requirements of the standards  of NI 43-101, estimated: * an average
production rate of 32,000 ounces per annum and a total mineable reserve of
approximately 160,000 ounces of gold; 
* average all-in sustaining costs of US$783 per ounce; and 
* a post-tax IRR of 30.8 per cent. 
 
* Serabi considers that scope exists to reduce capital and operating costs at
Coringa by utilising Serabi's existing gold processing facilities at Palito. 
* Book value, as at 30 September 2017, attributed by Anfield to property,
plant and equipment being acquired, including a 750 tonnes per day crushing,
milling and CIP process plant, is C$20.8 million.
Michael Hodgson, CEO of Serabi commented.

 "Coringa is an asset we have been trying to secure for some time now, and
its proximity, and similarity to the Palito and Sao Chico ore-bodies make this
acquisition something of a 'must have' for us. 

"We pride ourselves on being the best at what we do in Brazil.  The existing
Palito and Sao Chico operations demonstrate our strong credentials as
high-grade, quality, underground operators, and we see Coringa as the next
'cab off the rank'.

"The Coringa project brings with it approximately 400,000 ounces of high grade
resources which, combined with our own recently updated resource estimation
for the Palito and Sao Chico ore-bodies, brings the Group close to having one
million ounces of gold resources.  This is a key milestone for any junior
gold company, and within this resource we have a total combined mineral
reserve of approximately 350,000 ounces. 

"However, we very much see Coringa as an asset that can be grown, and grown
quickly, into what can become a significant, long-life asset.  The strike
extent and continuity of the historical artisanal gold mining activity shows
the deposit has very significant upside, with abundant drilling targets. We
therefore consider the current and maiden mineral reserve at Coringa as very
much just the start of what we believe to be a very exciting opportunity. 

"With our experience, team and the knowledge acquired from building Palito and
then Sao Chico, we feel very well positioned to develop Coringa quickly and
efficiently.  The orebody, the mining, the processing and environmental
management of the operation are all so similar to Palito and Sao Chico, that
it fits perfectly with our known strengths. Our management and key personnel
in Serabi will be able to accelerate project advancement and this will be the
third time that they will have worked together on developing such an
operation. 

"Coringa is ready to build once the final permits are in place and the early
part of 2018 will be a key time for advancing the issuance of the necessary
approvals and licences.  With Coringa being located in the state of Para, we
can benefit from the excellent relationships we already enjoy with such
agencies as the Departamento Nacional de Produção Mineral ("DNPM") and
Secretaria de Estado de Meio Ambiente e Sustentabilidade ("SEMAS") to get the
operation permitted efficiently and into production.    

"The proximity of the project to the current Palito complex also brings
obvious operational synergies.  Senior management, finance, H.R. and
maintenance, are all obvious areas where resources can be shared. 

"With exploration drilling now underway at Palito and shortly to begin at Sao
Chico, we see excellent organic growth prospects there, where we feel
confident we can quickly turn exploration success into increased production
ounces.  At Palito the 27 veins that comprise the mineral resource are
currently within an overall one kilometre strike length.  However, numerous
intersections suggest the veins are traceable for up to four kilometres, so
the current step-out drilling is essential.  The story is much the same at
Sao Chico where the main vein remains open in all directions along strike and
at depth. 

"Over the next 12-24 months, we aim to see the fruits of our organic growth
effort at Palito and Sao Chico along with the development of Coringa, place
Serabi in amongst the 100,000 ounces per annum producers, but, I emphasise,
not at the expense of compromising on quality.  Our niche is quality, high
grade mining and our aim, is to do more of it."

An interview with Michael Hodgson of Serabi, discussing the acquisition of
Coringa, can be accessed by using the following link:

https://www.brrmedia.co.uk/broadcasts-embed/5a3943e115a38759b1b01bc7/event/?livelink=true&popup=true

Acquisition Agreement

The acquisition agreement initially signed on 13 November provided for Serabi
to acquire 100 per cent of the issued share capital of Chapleau and to be
assigned the benefit of all of Chapleau's outstanding inter-company debts that
had been advanced by Anfield and other Anfield group companies (the
"Agreement").  Chapleau owns 100 per cent of the shares of Chapleau
Exploração Mineral Ltda ("Chapleau Brazil"). Chapleau Brazil holds mineral
rights consisting of seven concessions totalling 13,648 hectares, including
Coringa. Chapleau also owns 100 per cent of the shares of Chapleau Resources
(USA) Limited ("Chapleau USA") which holds a 10 per cent interest in the Patty
JV covering 616 mining claims in Nevada, USA.   The other JV participants
are Barrick Gold US Inc. and McEwen Mining Inc.  The projected costs to
Chapleau USA for 2018, in respect of the JV, are approximately US$20,000.

Serabi has paid the Initial Consideration from its existing cash resources.
Following Closing a completion balance sheet will now be prepared and the
Initial Consideration will be adjusted dollar-for-dollar for the amount, if
any, by which the working capital on Closing exceeds or is less than US$nil.
Anfield has assigned to Serabi all the benefit of all outstanding intercompany
loans between Chapleau and Anfield, and Chapleau is now obliged to repay these
to Serabi.

A further US$17 million is the Deferred Consideration,  of which an initial
payment of US$5 million in cash is payable within three months of Closing and
a final payment of US$12 million in cash will be due upon the earlier of
either the first gold being produced or 24 months from the date of Closing.
The total consideration for the acquisition amounts to US$22 million in
aggregate (before any working capital adjustments).

Anfield has provided Serabi with certain indemnities in respect of future
claims relating to activities prior to Closing, including labour and tax
liabilities and the Agreement includes representations and warranties from
Anfield in favour of Serabi as would be customary for a transaction of this
nature.

Serabi has, with the approval of Serabi's secured lender and sub-ordinated to
the security granted by Serabi to its secured lender, granted to Anfield a
pledge over the shares of Chapleau as security for the full and irrevocable
payment of the Deferred Consideration.

Further information on Coringa

Coringa is located in north-central Brazil, in the State of Pará, 70
kilometres southeast of the city of Novo Progresso.  Access to the property
is provided by paved (National Highway BR-163) and gravel roads.  Coringa is
in the south eastern part of the Tapajós gold district, Brazil's main source
of gold from the late 1970s to the late 1990s. Artisanal mining at Coringa
produced an estimated 10 tonnes of gold (322,600 ounces) from alluvial and
primary sources within the deep saprolite or oxidized parts of shear zones
being mined using high-pressure water hoses or hand-cobbing to depths of 15
metres. Other than the artisanal workings, no other production has occurred at
Coringa. Artisanal mining activity ceased in 1991 and a local Brazilian
company (Tamin Mineração Ltda.) staked the area in 1990.  Subsequently, the
concessions were optioned to Chapleau (via its then subsidiary, Chapleau
Brazil) in August 2006. On 1 September 2009, Magellan Minerals Ltd. ("Magellan
Minerals") acquired Chapleau.  Between 2007 and 2013, extensive exploration
programmes were completed on the property, including airborne magnetic,
radiometric and electro-magnetic surveys; surface IP surveys; stream, soil,
and rock sampling; and trenching and diamond drilling (179 holes for a total
length of 28,437 meters).  On 9 May 2016, Anfield acquired Magellan Minerals.
Anfield subsequently completed an infill drill programme (183 holes for a
total length of 26,413 meters) for the Serra and Meio veins in 2016 and
2017. 

Coringa is an advanced project currently at the resource development stage.

Following completion of the drilling programme undertaken by Anfield and the
Coringa Feasibility Study, activity has been significantly reduced whilst
Anfield has progressed the licencing and permitting process.  There are
currently approximately 35 personnel employed by Chapleau Brazil.  

The Coringa Feasibility Study has an effective date of 1 July 2017 and it
incorporates all expenditures prior to that date. The base case economics are
based on a gold price of US$1,250 per ounce, silver price of US$18 per ounce
and an exchange rate of 3.2 (US$ to Brazilian Real). The Coringa Feasibility
Study highlights included the following estimates:

·       Gold production of approximately 32,000 ouncse per year averaged
over a 4.8 year mine life;

·       Average life of mine process fully-diluted gold grade of 6.5
g/t;

·       Post-tax internal rate of return of 30.8 per cent;

·       Post-tax net present value of US$31.0 million at a 5 per cent
discount rate;

·       Remaining capital costs of US$28.8 million;

·       Average net cash operating costs of US$585 per ounce and all-in
sustaining costs of US$783 per ounce; and

·       Probable mineral reserves of 161,000 ounces of gold and 324,000
ounces of silver.

The total fully-diluted estimate of mineral resources for Coringa, prepared in
accordance with the reporting requirements of the standards of NI 43-101,
included in the Coringa Feasibility Study were reported as follows:

 Classification            Tonnes ('000's)  Au grade (g/t)  Ag grade (g/t)  Contained gold (oz)  Contained Silver (oz)  Cut-off grade (g/t Au)  
 Serra Probable Reserves         498              6.0            12.8              97,000               204,000                  2.50           
 Meio Probable Reserves          196              7.4            14.6              46,000                92,000                  2.38           
 Galena Probable Reserves         74              7.1            11.2              17,000                27,000                  2.50           
 Total Probable Reserves         769              6.5            13.1             161,000               324,000                                 
                                                                                                                                                
 Indicated Resource              726              8.4            17.0             195,000               396,000                  2.00           
 Inferred Resource              1,301             4.3             5.1             181,000               215,000                  2.00           

Notes:
1. Additional information, including with respect to the mineral resource
estimate, metallurgy, data verification and quality control measures, can be
found in Anfield's technical report titled "Coringa Gold Project, Brazil,
Feasibility Study NI 43-101 Technical Report" with an effective date of 1 July
2017, which is filed on SEDAR at www.sedar.com The mineral resource estimate
was prepared in accordance with the standard of CIM and NI 43-101. 
2. Totals in the above table may not add due to rounding. 
3. Grades are reported on a fully-diluted basis. 
4. Chapleau Brazil is the Operator and owns 100% of Coringa such that gross
and net attributable resources are the same. 
5. Serabi has not independently verified the information.
There are approximately 40,000 ounces of estimated inferred mineral resource,
which are not included in the Coringa Feasibility Study's mine plan, that are
adjacent to areas mined as part of the Coringa Feasibility Study. In addition,
Chapleau Brazil controls a 20 kilometre area in the district with delineated
gold soil anomalies, of which, the drill-defined mineral resource strike
length is approximately two kilometres.

On 14 August 2017, Anfield announced that it had received key permits required
to commence construction of the Coringa project, being (1) the license of
operation for exploration and trial mining, (2) the vegetation suppression
permit and (3) fauna capture permit, all issued by the SEMAS. The SEMAS
permits contain a list of conditions for the conservation and protection of
fauna and flora. In addition, Chapleau Brazil is required to comply with
requirements related to: fuel storage; waste storage; transportation, storage
and use of explosives; surface water drainage; archaeology; and worker health
and safety programmes. The Company is also required to submit regular reports
on operational, environmental, and social performance. These conditions and
requirements will be met as part of normal course operations.

The next step in the permitting process will be for a formal trial mining
licence to be issued by the DNPM.  The trial mining licence will authorise
the Company to commence mine development and production from Coringa.   The
trial mining license will authorise mining and processing of up to 50,000
tonnes of ore per year at Coringa. Under applicable regulations, once the mine
is operational, Chapleau Brazil may apply to the DNPM to increase the
processing limit.

On 27 September 2017, Anfield announced that it understood the Brazilian
Ministério Público Federal ("MPF") was bringing an action against SEMAS, the
DNPM and Chapleau Brazil. The action seeks to nullify the operating license
previously granted to Chapleau Brazil by SEMAS and states that SEMAS should
not have granted the license without requiring Chapleau Brazil to prepare a
full socio-economic analysis and Environmental Impact Study ("EIS") for
Coringa. Anfield and its legal counsel believe that Chapleau Brazil has
complied with all applicable regulations.  At an initial hearing the court
denied a request from the MPF to cancel the operating licence and requested
submissions from SEMAS, DNPM and Chapleau Brazil.  A further hearing has not
yet been scheduled. Anfield and Chapleau Brazil have in the meantime continued
to progress the completion of a full EIS and this was submitted to SEMAS for
approval on 24 November 2017.

Serabi and its legal advisers have considered the position adopted by the MPF,
and believe that the completion of the EIS should significantly address the
main concerns of the MPF and have concluded, based on the current available
information, that there is a low risk of significant delay to the licencing
and permitting process. 

Progress has also been made in several other areas relating to the development
of Coringa. Applications for required camp and start-up water were submitted
prior to the date of the Agreement and the tailings storage permit request was
submitted on 11 December 2017. Discussions for long-term land access
agreements are underway with the Instituto Nacional de Colonização e Reforma
Agrária ("INCRA"), a government agency which claims ownership of the surface
rights where the project is situated.

Serabi's plans for Coringa following Closing of the Acquisition

Serabi intends to continue the work started by Anfield on the permitting and
licencing process and will pursue the formal approval of the EIS and undertake
any supplementary work or reports that may be requested.  Serabi will review
the cost estimates contained in the Coringa Feasibility Study and optimise
these, prepare its own development plan and evaluate alternative construction
development and processing options that Serabi's management could enhance the
economics of the project.

Following Closing, development and construction at Coringa will be placed on
care and maintenance whilst the permitting process is completed.

Additional disclosures pursuant to the AIM Rules

Chapleau is not required to prepare audited financial statements.  Based on
information provided by Anfield and extracted from the unaudited consolidated
financial statements of Anfield to 31 December 2016, Chapleau on a
consolidated basis, reported a loss before taxation of C$22.3 million for the
12 month period ended 31 December 2016 after (i) expensing exploration and
evaluation expenditure of C$7.9 million, (ii) recognising a foreign exchange
loss of the capitalisation of intergroup loans into shares of Chapleau Brazil
of C$13.7 million, and (iii) other one-off costs estimated at C$1.3 million.
Chapleau had no revenues. As at 30 June 2017 total assets and shareholders'
equity amounted to C$19.6 million and C$(20.3 million) respectively with
shareholder loans totalling C$38.6 million. The balance sheet carrying value
of property, plant and equipment associated with the Coringa project as at 30
June 2017 amounted to C$16.6 million which excludes past exploration costs as
these have been expensed.   As at 30 June 2017 Chapleau had net cash and
cash equivalents of C$2.5 million and except for intercompany loans (amounting
to C$38.6 million), which will be assigned to Serabi on Closing, had no
borrowings.

Enquiries:

Serabi Gold plc 
Michael Hodgson             Tel: +44 (0)20 7246 6830
Chief Executive                 Mobile: +44 (0)7799 473621
Clive Line                             Tel: +44
(0)20 7246 6830
Finance Director               Mobile: +44 (0)7710 151692 
Email: contact@serabigold.com 
Website:  www.serabigold.com

Beaumont Cornish Limited
Nominated Adviser and Financial Adviser           
Roland Cornish                  Tel: +44 (0)20 7628 3396
Michael Cornish                               
Tel: +44 (0)20 7628 3396

Peel Hunt LLP
UK Broker           
Ross Allister                        Tel: +44 (0)20 7418
9000
Chris Burrows                    Tel: +44 (0)20 7418 9000

Blytheweigh 
Public Relations               
Tim Blythe                           Tel: +44 (0)20
7138 3204
Camilla Horsfall                 Tel: +44 (0)20 7138 3224

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.

This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014.

GLOSSARY OF TERMS
The following is a glossary of technical terms:

"Au" means gold.

 "assay" in economic geology, means to analyse 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" is the Canadian Institute of Mining, Metallurgy and Petroleum.

"development" - excavations used to  establish access to the mineralised rock
and other workings.

"doré - a semi-pure alloy of gold silver and other metals produced by the
smelting process at a mine that will be subject to further refining.

"DNPM" is the Departamento Nacional de Produção Mineral.

"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.

"granodiorite" is an igneous intrusive rock similar to granite.

"igneous" is a rock that has solidified from molten material or magma.

"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.

"Intrusive" is a body of igneous rock that invades older rocks.

"Induced polarization" or "IP" is a geophysical imaging technique used to
identify the electrical chargeability of subsurface materials, such as ore.

"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.

"Mineral Resource" is a concentration or occurrence of diamonds, natural solid
inorganic material, or natural solid 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.

"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.

"Probable Mineral Reserve" is the economically mineable part of an Indicated
and, in some circumstances, a Measured 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.

 "saprolite" is a weathered or decomposed clay-rich rock.

 "Vein" is a generic term to describe an occurrence of mineralised rock
within an area of non-mineralised rock.

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, recognising 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.

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.

ENDS
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
Source: Serabi Gold plc via Globenewswire