REG-Serabi Gold plc : Unaudited Interim Financial Results for the three month period to 31 March 2016 <Origin Href="QuoteRef">SRB.L</Origin>
13/05/2016 07:05
For immediate release
13 May 2016
Serabi Gold plc
("Serabi" or the "Company")
Unaudited Interim Financial Results for the three month period to 31 March
2016 and Management's Discussion and Analysis
Serabi Gold (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, today releases its unaudited interim financial results
for the three month period ending 31 March 2016 and at the same time has
published its Management's Discussion and Analysis for the same period.
Key Financial Information (1)
SUMMARY FINANCIAL STATISTICS FOR THE FIRST QUARTER ENDING 31 MARCH 2016
3 months to 31 Mar 2016 US$ 3 months to 31 Mar 2015 US$
Revenue (1) 11,679,089 7.484,215
Cost of Sales (1) (6,689,506) (4,859,909)
Depreciation and amortisation charges (1,216,727) (1,117,720)
Gross profit 3,772,856 1,506,586
Profit / (loss) before tax 1,501,304 191,398
Profit after tax 1,347,665 191,398
Earnings per ordinary share (diluted) 0.195 cents 0.024 cents
Average gold price received 1,165 1,212
As at 31 Mar 2016 As at 31 Dec 2015
Cash and cash equivalents 4,410,589 2,191,759
Net assets 52,524,555 46,783,645
Cash Cost and All-In Sustaining Cost ("AISC")
3 months to 31 Mar 2016 3 months to 31 Mar 2015
Gold production for cash cost and AISC purposes 9,771 7,759
Total Cash Cost of production (per ounce) US$662 US$599
Total AISC of production (per ounce) US$858 US$759
2 The Sao Chico Mine was only declared to be in Commercial Production with
effect from 1 January 2016 and all costs and revenues relating to this mine
were capitalised prior to this date. The Income Statements for 2015
therefore only reflect the revenues and costs arising from the gold produced
from the Palito Mine and the Cash Cost and AISC for the 2015 comparative
period therefore also only reflect the activities from the Palito Mine.
Key Operational Information
SUMMARY PRODUCTION STATISTICS FOR THE FIRST QUARTER ENDING 31 MARCH 2016 (PALITO AND SAO CHICO)
Quarter 1 2016 Quarter 1 2015
Horizontal development Metres 2,925 1,825
Mined ore Tonnes 37,546 32,504
Gold grade (g/t) 11.02 10.51
Milled ore Tonnes 36,615 30,384
Gold grade (g/t) 8.58 8.52
Gold production (1) Ounces 9,771 7,389
(1) Gold production figures are subject to
amendment pending final agreed assays of the gold content of the copper/gold
concentrate and gold doré that is delivered to the refineries.
Financial Highlights
* Cash Cost for the first quarter of 2015 of US$662
* All-In Sustaining Cost for the first quarter of 2016 of US$858.
* Gross profit from operations has increased by over 140% from US$1.57
million to US$3.77 million compared to the fourth quarter of 2015 and by over
150% compared to the first quarter of 2015.
* Post tax profit of US$1.35 million compared with US$0.19 million for the
same quarter in 2015
* Earnings per share increased to 0.195 cents.
* Cash holdings of US$4.4 million at 31 March 2016.
* Average gold price of US$1,165 received on gold sales in the first quarter
of 2016.
2016 Guidance
* Forecast gold production for 2016 of approximately 37,000 ounces with
All-In Sustaining Cost between US$840 to US$870 per ounce.
Operational Highlights
* 9,771 ounces of gold produced for the first quarter of 2016 (fourth quarter
of 2015 - 7,924 ounces).
* Mine production totalled 37,546 tonnes.
* 26,752 tonnes at a grade of 11.84 grammes per tonne (g/t) of gold from
the Palito Mine.
* 10,794 tonnes at 9.00 g/t of gold from the Sao Chico Mine.
* 36,615 tonnes of ore processed through the plant for the combined mining
operations.
* 2,926 metres of horizontal mine development completed in the quarter with
1,901 metres completed at the Palito Mine and 1,025 metres at the Sao Chico
Mine.
* Installation of the third ball mill is almost complete, along with the
second flotation line and enhancements in the carbon in pulp ("CIP") plant.
The works are on schedule to be completed in May 2016. A carbon regeneration
kiln is also being acquired which will assist in enhancing gold recoveries
once the kiln is operational in the second half of the year.
* The Sao Chico Mine was declared to be in Commercial Production from 1
January 2016.
* The Sao Chico Mine is now being developed on the 171mRL, 156mRL and 141mRL,
with production ore being mined from the 186mRL level. The ramp continues to
be deepened to the 126mRL, the next planned development level, and will
continue this year to the 96mRL to accommodate underground drilling of the Sao
Chico deposit extension at depth.
* At the end of the first quarter of 2016, the combined surface coarse ore
stockpiles from the Palito and Sao Chico Mines totalled 17,000 tonnes at a
grade of 5.3 g/t of gold.
Mike Hodgson, CEO of Serabi commented, "The Board and management of Serabi
feel that a production level of 9,771 ounces at an All-In-Sustaining Cost of
US$858 per ounce is an extremely satisfying performance for this first quarter
of 2016. It is an excellent start to the year and puts Serabi in a strong
position to meet our guidance of 37,000 ounces with an All-In-Sustaining Cost
of between US$840 and US$870 per ounce. "Gross profit from operations has
increased by over 150% from US$1.5 million to US$3.8 million compared to the
same quarter in 2015 with post tax profit rising to US$1.35 million compared
with US$0.19 million for the same quarter in 2015. This improvement in
revenue reflects the increased level of gold production which, as was reported
in April 2016, represented a 32% improvement compared to the same quarter in
2015. Whilst, in part, this reflects the contribution from the Sao Chico
Mine, it also reflects the increase in plant capacity that was achieved with
the installation of a second ball mill during the second quarter of 2015.
Plant capacity will be further increased by the introduction of a third ball
mill later this month. "Serabi's cash generation and revenue recognition
always lags behind production because approximately 50% of the Group's
production is from sales of copper / gold concentrate which is shipped to a
refinery outside of Brazil for processing and sale. This affects when the
actual sale occurs and also when cash is received. During this first quarter
of 2016 we have also experienced an increase in the level of unsold production
of copper/gold concentrate that is waiting to be shipped from Brazil and
therefore waiting to be sold. At the end of the quarter the volume of
production waiting to be sold has increased since 31 December 2015 by
approximately 180 tonnes having an estimated sales value of US$1.75 million
with 140 tonnes of this increase being held in Brazil at the quarter end. This
is simply a timing issue linked to vessel sailing dates and we expect an
increased level of shipments during the second quarter. These shipments will
be reflected in the reported revenues in the second quarter and increased
level of cash receipts once the copper/gold concentrate leaves Brazil."
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
For the three months ended 31 March
2016 2015
(expressed in US$) Notes (unaudited) (unaudited)
CONTINUING OPERATIONS
Revenue 11,679,089 7,484,215
Cost of sales (6,689,506) (4,859,909)
Depreciation and amortisation charges (1,216,727) (1,117,720)
Gross profit 3,772,856 1,506,586
Administration expenses (1,132,200) (905,505)
Share-based payments (123,116) (101,019)
Profit on sale of fixed assets 2,568 -
Operating profit 2,520,108 500,062
Foreign exchange (loss) / gain (40,799) 228,663
Finance expense (978,040) (697,415)
Finance income 35 160,088
Profit before taxation 1,501,304 191,398
Income tax expense (153,369) -
Profit for the period from continuing operations (1) (2) 1,347,665 191,398
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 4,270,129 (11,013,526)
Total comprehensive profit for the period (2) 5,617,794 (10,882,128)
Profit per ordinary share (basic) (1) 3 0.205c 0.029c
Profit per ordinary share (diluted) (1) 3 0.195c 0.024c
(1) All revenue and expenses arise from continuing operations.
(2) The Group has no non-controlling interests and all losses are
attributable to the equity holders of the parent company.
SERABI GOLD PLC
Condensed Consolidated Balance Sheets
As at As at As at
31 March 31 March 31 December
2016 2015 2015
(expressed in US$) (unaudited) (unaudited) (audited)
Non-current assets
Deferred exploration costs 8,767,288 9,769,327 8,679,246
Property, plant and equipment 42,680,815 47,508,148 40,150,484
Total non-current assets 51,448,103 57,277,475 48,829,730
Current assets
Inventories 9,709,839 8,701,256 6,908,790
Trade and other receivables 5,646,516 5,596,179 6,133,284
Prepayments and accrued income 3,325,117 2,699,898 2,429,506
Cash and cash equivalents 4,410,589 5,794,982 2,191,759
Total current assets 23,092,061 22,792,315 17,663,339
Current liabilities
Trade and other payables 5,045,368 4,803,134 4,212,803
Interest bearing loan 3,812,500 5,808,000 4,000,000
Convertible loan facility 1,846,605 - -
Trade and asset finance facilities 6,112,668 8,078,719 7,385,155
Derivative financial liabilities 674,145 763,171 -
Accruals 263,520 133,376 226,197
Total current liabilities 17,754,826 19,586,400 15,824,155
Net current assets 5,337,235 3,205,915 1,839,184
Total assets less current liabilities 56,785,338 60,483,390 50,668,914
Non-current liabilities
Trade and other payables 2,042,840 1,738,040 1,857,914
Provisions 2,083,286 2,342,687 1,898,714
Interest bearing liabilities 134,657 205,221 128,641
Total non-current liabilities 4,260,783 4,285,948 3,885,269
Net assets 52,524,555 56,197,442 46,783,645
Equity
Share capital 5,263,182 61,668,212 5,263,182
Share premium reserve - 67,656,848 -
Option reserve 2,481,576 2,501,099 2,747,415
Other reserves 361,461 450,262 450,262
Translation reserve (34,956,406) (29,749,818) (39,226,535)
Retained earnings 79,374,742 (46,329,161) 77,549,321
Equity shareholders' funds 52,524,555 56,197,442 46,783,645
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 2015 prepared under IFRS as adopted in the EU and with IFRS
and their interpretations adopted by the International Accounting Standards
Board will be filed with the Registrar of Companies following their adoption
by shareholders at the next Annual General Meeting. The auditor's report on
these accounts was unqualified but did contain an Emphasis of Matter with
respect to the Company and the Group regarding Going Concern. The auditor's
report did not contain a statement under Section 498 (2) or 498 (3) of the
Companies Act 2006.
S ERABI GOLD PLC
Condensed Consolidated Statements of Changes in Shareholders' Equity
(expressed in US$)
(unaudited) Share capital Share premium Share option reserve Other reserves (1) Translation reserve Retained Earnings Total equity
Equity shareholders' funds at 31 December 2014 61,668,212 67,656,848 2,400,080 450,262 ( 18,736,292 ) (46,520,559) 66,918,551
Foreign currency adjustments - - - - (11,013,526) - (11,013,526)
Profit for the period - - - - - 191,398 191,398
Total comprehensive income for the period - - - - (11,013,526) 191,398 (10,822,128)
Warrants lapsed in period
Share option expense - - 101,019 - - - 101,019
Equity shareholders' funds at 31 March 2015 61,668,212 67,656,848 2,501,099 450,262 (29,749,818) (46,329,161) 56,197,442
Foreign currency adjustments - - - - (9,476,717) - (9,476,717)
Loss for the period - - - - - (240,136) (240,136)
Total comprehensive income for the period - - - - (9,476,717) (240,136) (9,716,853)
Cancellation of share premium - (67,656,848) - - - 67,656,848 -
Cancellation of deferred shares (56,405,030) - - - - 56,405,030 -
Share options lapsed in period - - (56,740) - - 56,740 -
Share option expense - - 303,056 - - - 303,056
Equity shareholders' funds at 31 December 2015 5,263,182 - 2,747,415 450,262 (39,226,535) 77,549,321 46,783,645
Foreign currency adjustments - - - - 4,270,129 - 4,270,129
Profit for the period - - - - - 1,347,665 1,347,665
Total comprehensive income for the period - - - - 4,270,129 1,347,665 5,617,794
Share options lapsed in period - - (388,955) - - 388,955 -
Warrants lapsed - - - (88,801) - 88,801 -
Share option expense - - 123,116 - - - 123,116
Equity shareholders' funds at 31 March 2016 5,263,182 - 2,481,576 361,461 (34,956,406) 79,374,742 52,524,555
2 Other reserves comprise a merger reserve of US$361,461 (2015: US$361,461
and a warrant reserve US$88,801)
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
For the three months ended 31 March
2016 2015
(expressed in US$) (unaudited) (unaudited)
Operating activities
Operating profit 1,347,665 191,398
Net financial expense 1,018,804 308,664
Depreciation - plant, equipment and mining properties 1,216,727 1,117,720
Provision for taxation 153,639 -
Share based payments 123,116 101,019
Foreign exchange 202,883 75,080
Changes in working capital
Increase in inventories (607,704) (1,916,783)
Increase in receivables, prepayments and accrued income (26,441) 352,624
(Decrease)/increase in payables, accruals and provisions (255,977) 834,947
Net cash inflow from operations 3,172,712 1,064,669
Investing activities ,
Purchase of property, plant and equipment and assets in construction (520,141) (1,739,544)
Capitalised mine development costs (663,961) (227,750)
Proceeds from Sale of Assets 2,568 -
Interest received 35 775
Net cash outflow on investing activities (1,181,499) (1,966,519)
Financing activities
Draw-down of short-term loan facility 2,000,000 -
Repayment of short-term secured loan - (2,000,000)
Receipts from short-term trade finance 5,150,289 5,420,758
Repayment of short-term trade finance (6,315,744) (5,840,180)
Repayment of finance lease liabilities (211,728) (156,480)
Interest paid (187,896) (434,167)
Finance charges (37,500) -
Net cash inflow / (outflow) from financing activities 397,421 (3,010,069)
Net increase / (decrease) in cash and cash equivalents 2,388,634 (3,911,919)
Cash and cash equivalents at beginning of period 2,191,759 9,813,602
Exchange difference on cash (169,804) (106,701)
Cash and cash equivalents at end of period 4,410,589 5,794,982
Notes
1. General Information
The financial information set out above 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. A copy of the statutory accounts for 2015 will be filed with
the Registrar of Companies following their adoption by shareholders at the
next Annual General Meeting. The full audited financial statements for the
years end 31 December 2015 do comply with IFRS.
2. Basis of Preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") in force at the reporting date and
their interpretations issued by the International Accounting Standards Board
("IASB") as adopted for use within the European Union and with IFRS and their
interpretations issued by the IASB. The consolidated financial statements have
also been prepared in accordance with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The financial statements do
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006.
It is not anticipated that the adoption in the future of the new or revised
standards or interpretations that have been issued by the International
Accounting Standards Board but are not yet effective will have a material
impact on the Group's earnings or shareholders' funds. The Company has not
adopted any new standards in advance of the effective dates.
Going concern and availability of project finance
Having commenced initial development activities for the Sao Chico Mine at the
end of 2014, this mine has been in development during 2015. On 1 February
2016, the Group announced that, with effect from 1 January 2016, the Sao Chico
Mine had achieved Commercial Production. The Palito Mine has been in
Commercial Production since 1 July 2014.
On 30 December 2015, the Group entered into an agreement with Fratelli
Investments Ltd ("Fratelli"), its major shareholder, whereby Fratelli agreed
to provide an unsecured short term working capital convertible loan facility
of US$5 million ("the Facility") to provide additional working capital
facilities. On 6 January 2016, the Group announced that it had made an
initial draw down of US$2 million against the Facility. The balance of the
Facility may be drawdown at any time up to 30 June 2016. The facility is to
be repaid by 31 January 2017.
The Group has an additional secured loan facility which is repayable by 31
December 2016. At 31 March 2016, the amount outstanding under this facility
was US$4.0 million.
The Directors anticipate the Group now has access to sufficient funding for
its immediate projected needs. The Group expects to have sufficient cash
flow from its forecast production to finance its on-going operational
requirements to repay its secured and unsecured loan facilities and to, at
least in part, fund exploration and development activity on its other gold
properties.
However, the forecasted cash flow projections for the next twelve months
include a significant increase in production from the Sao Chico Mine compared
with the preceding calendar year. Whilst the Group has declared Commercial
Production at the Sao Chico Mine, there are risks associated with the
commencement of any new mining operation whereby unforeseen technical and
logistical events result in additional costs needing to be incurred, giving
rise to the possibility that additional working capital may be required.
Additionally the Group is exposed to changes in gold price and currency
exchange rates. Should additional working capital be required the Directors
consider that further sources of finance could be secured within the required
timescale.
On this basis, the Directors have therefore concluded that it is appropriate
to prepare the financial statements on a going concern basis. However, there
is no certainty that such additional funds either for working capital or for
future development will be forthcoming and these conditions indicate the
existence of a material uncertainty which may cast significant doubt over the
Group's ability to continue as a going concern and, therefore, that it may be
unable to realise its assets and discharge its liabilities in the normal
course of business. The financial statements do not include the adjustments
that would result if the Group was unable to continue as a going concern.
3. Earnings per Share
3 months ended 31 March 2016 (unaudited) 3 months ended 31 March 2015 (unaudited)
Profit attributable to ordinary shareholders (US$) 1,347,665 191,398
Weighted average ordinary shares in issue 656,389,204 656,389,204
Basic profit per share (US cents) 0.205 0.029
Diluted ordinary shares in issue (1) 692,774,989 789,035,498
Diluted profit per share (US cents) 0.195 0.024
2 Assumes the exercise of 36,385,785 share options that were in issue as at
31 March 2016
4. Post balance sheet events
Between the end of the financial period and the date of this management
discussion and analysis, there has been no item, transaction or event of a
material or unusual nature likely, in the opinion of the Directors of the
Group, to affect significantly the continuing operations of the entity, the
results of these operations, or the state of affairs of the entity in future
financial periods.
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
Matthew Armitt Tel: +44 (0)20 7418 9000
Ross Allister 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.
The Company will, in compliance with Canadian regulatory requirements, post
the Unaudited Interim Financial Statements and the Management Discussion and
Analysis for the three month and the six month periods ended 30 June 2015 on
SEDAR at www.sedar.com . These documents will also available from the
Company's website - www.serabigold.com .
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.
"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.
"Intrusive" is a body of igneous rock that invades older rocks.
"on-lode development" - Development that is undertaken in and following the
direction of the Vein
"mRL" - depth in metres measured relative to a fixed point - in the case of
Palito and Sao Chico this is sea-level. The mine entrance at Palito is at
250mRL.
"saprolite" is a weathered or decomposed clay-rich rock.
"stoping blocks" - a discrete area of mineralised rock established for
planning and scheduling purposes that will be mined using one of the various
stoping methods.
"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 26 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 OMX Corporate Solutions on behalf
of NASDAQ OMX 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
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