REG-Serabi Gold plc- Strong second quarter production consolidating mid-year position with guidance maintained. <Origin Href="QuoteRef">SRB.L</Origin>

Serabi GoldAnnouncement

26/07/2017 07:05

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For immediate release
            26 July 2017

Serabi Gold plc
("Serabi" or the "Company")

Strong second quarter production consolidating mid-year position with guidance
maintained.

Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, is pleased to report second quarter production of 8,148
ounces of gold its Palito/Sao Chico high grade gold operation in the Tapajos
region of Para State, Northern Brazil. 

HIGHLIGHTS
* Second quarter production of 8,148 ounces of gold.   
* Mine production totalled 42,075 tonnes at 7.80 grammes per tonne ("g/t") of
gold.  
* 43,905 tonnes processed through the plant for the combined mining
operations, with an average grade of 6.26 g/t of gold.
* 1,855 metres of horizontal mine development completed in the quarter. 
* At the Palito sector, expansion of working areas continues, with development
and production now coming from eight veins from the 25 included in the
geological resource.   The main ramp has now reached the -50mRL, with the G3
vein intersected, the deepest working area in the deposit.  To date grades
have been very encouraging.    
* At the Sao Chico sector, the main ramp has now been deepened to the 40mRL,
approximately 200 vertical metres below surface.   Production is coming from
the 140mRL and 128mRL levels with levels 116mRL, 100mRL, 86mRL, 70mRL and now
40mRL being developed, so development remains well ahead of production. 
* By the end of the second quarter, surface ore stocks were approximately
12,000 tonnes (31 March 2017: 13,000 tonnes) with an average grade of 3.15 g/t
of gold.
The following link can be used to access an interview by BRR Media with Mike
Hodgson, CEO discussing the second quarter operational results

https://www.brrmedia.co.uk/broadcasts-embed/597739289ff3a6521c9fd7ce/event/?livelink=true

Mike Hodgson, CEO, said:

"Following an excellent first quarter, when the Company produced almost 10,000
ounces of gold, we have enjoyed a satisfactory second quarter with further
production of over 8,000 ounces.  With the mid-year total standing at over
18,000 ounces, we can be very satisfied with the production results for the
year to date.

"Mine production from both the Palito and Sao Chico sectors progressed well,
although grades were a little lower than scheduled for April and May,
resulting in the second quarter gold production being lower than that of the
first quarter.  The lower grades which were behind this, were largely a
result of an operational issue (as further detailed below) in the Sao Chico
sector, where planned higher grade stope production had to be replaced by
lower grade development ore.  Production improved significantly in June and
the operational issue has now been fully resolved.   We therefore remain
confident that full year production guidance will be achieved.  At the Palito
sector, production remained steady.

"Overall mining rates of the Sao Chico orebody were in line with forecasts
though whilst the average grade at 8.30 g/t is very reasonable, it was below
our budget and less than the 'highs' of the first quarter where we mined ore
with average grades in excess of 12 g/t.  The reason behind this decrease was
quite simple.  The stoping method at Sao Chico requires the use of remote
controlled loaders to muck the broken ore.  As noted in our first quarter
update, stoping has only recently begun at the Sao Chico orebody, and
therefore we are still in the process of building up our fleet.  During the
first quarter, we had one new loader with a second new unit planned to arrive
in June.  Unfortunately the first loader, although itself only four months
old, suffered a major mechanical problem and this impacted significantly on
our stope production during April and much of May.  As a result, we had to
use development ore to provide mill feed.   Ore recovered from development
mining is unavoidably more diluted and is therefore generally lower grade. 
By June, with the original unit returned to full operation and the second new
unit commissioned and operating, production improved significantly, borne out
by 42 per cent of the gold production from the Sao Chico orebody for the
second quarter of 2017 being achieved in June.  With the additional
development completed in the quarter, making available additional stoping
blocks, we feel confident, the second quarter shortfall will be recovered over
the remainder of the year and we will meet our full year production guidance
of 40,000 ounces.

"At the Palito orebody, over eight veins are now in various stages of
development, with production mainly coming from the Pipocas, G3, Senna and
Jatoba veins.  The G3 vein has now been intersected on the -50mRL, our lowest
level in the mine, with excellent grades being encountered.  The other main
vein, Pipocas, is now being developed on the 30mRL, and it too is exhibiting
some excellent long-term potential.

"In the plant, the quarterly performance was excellent, with approximately
43,000 tonnes of run of mine ore ("ROM") milled.  With 42,000 tonnes mined,
the small difference was made up from the low grade development stockpile
which has shown minimal change between the end of the first quarter and the
end of this quarter.  We remain mill limited, and for this reason we have
sought to reduce development rates to try to make inroads into these surface
stockpiles, though as we can see, the mine has continued to generate
sufficient ROM. 

"As I reported last quarter, during the latter half of 2016 the Company
reported that, following the extension of its exploration license holdings
around the Sao Chico orebody, it had recommenced surface exploration, with an
IP geophysical survey.   The results revealed two excellent anomalies 600
metres to the north and 300 metres to the south of the current mining
operations, which, from a geophysical perspective, look even stronger than the
orebody being mined.  These anomalies appear to possess a geometry consistent
with the known orebody and the potential for parallel mineralisation.  These
targets are just beyond the capability of the underground drill rigs we have,
hence we have not been able to recommence the programme as planned and will
now pursue this during the second half of the year. 

"Exploration and evaluation drilling underground continued with approximately
2,000 metres of diamond drilling completed.  This drilling is focusing on
drilling into inferred resources of the down dip extension of the Main Vein in
the Sao Chico orebody as well as the inferred resource in the Senna, Pipocas
and G3 veins in the Palito sector.   

 "Following the excellent first quarter, this second quarter has been
satisfying given the issues that we faced in April and early May, and I am
pleased to say the improvement in the latter part of May and an excellent June
has got things back on track for the year as a whole.  This improvement has
continued in July which to date has also been a very good month, so we look
forward to a good third quarter.  With the dry season upon us, we also hope
to see our exploration efforts stepped up during the second half of the year."

Results

Total production for the second quarter of 2017 was 8,148 ounces of gold,
generated from the processing of the ROM ore from the Palito and Sao Chico
sectors, combined with the Palito surface coarse ore and the stockpiled
flotation tailings accumulated from Palito mine production in 2014.

Gold production for the second quarter came from the processing of 43,905
tonnes of ore at overall combined grades of 6.26 g/t gold, which was sourced
from mined ore from the Palito and Sao Chico orebodies, supplemented with
lower grade surface stockpiled ROM and flotation tailings.  Mined tonnage for
the quarter totalled 42,075 tonnes with a grade of 7.80 g/t of gold.   

At 30 June 2017, there were coarse ore stocks of approximately 12,000 tonnes
with an average grade of 3.15 g/t of gold, and approximately 35,000 tonnes of
flotation tails with an average grade of 2.50 g/t of gold. This stock is being
consumed, albeit not as quickly as forecast, and for now the operation remains
plant constrained. 

A total of 1,855 metres of horizontal development has been completed during
the quarter, of which approximately 950 metres was ore development.  The
balance is the ramp, cross cuts and stope preparation development.

2017 Guidance

The Company forecast 40,000 ounces of gold production for the year, with an
AISC of between $950 and $975 per ounce, broadly in line with the cost
guidance of 2016.  Gold production for the first half remains broadly in line
with the Company's forecast.  

The 2017 guidance of 40,000 ounces is an eight per cent improvement on
Serabi's initial guidance for 2016 which was 37,000 ounces. Management hope
that despite the operational challenges faced in April and May, production
efficiencies and improvements will allow Serabi to meet its production
guidance.

                                                       Quarter 1  Quarter 2   Total    H1      H2     Total    Total   
                                           2017                      2017     2017    2016    2016     2016     2015   
 Horizontal development - Palito     Metres              1,669      1,393     3,062   3,810   3,605   7,345    6,800   
 Horizontal development - Sao Chico  Metres               582        462      1,044   2,056   1,738   3,794    2,800   
 Horizontal development - Total      Metres              2,251      1,855     4,106   5,866   5,343   11,209   9,600   
                                                                                                                       
 Mined ore - Palito                  Tonnes              26,093     27,890   53,983  51,950  66,527  118,477  111,751  
                                     Gold grade (g/t)     9.07       7.55     8.29    11.18   8.41     9.62    10.05   
 Mined ore - Sao Chico               Tonnes              10,825     14,185   25,010  19,202  21,185   40,387   24,096  
                                     Gold grade (g/t)    12.64       8.30     10.18   8.04    12.00   10.12     8.66   
 Mined ore - Total                   Tonnes              36,918     42,075   78,993  71,152  87,712  158,864  135,847  
                                     Gold grade (g/t)    10.12       7.80     8.89    10.33   9.27     9.74     9.8    
                                                                                                                       
 Milled ore                          Tonnes              46,663     43,905   90,568  76,017  82,949  158,966  130,299  
                                     Gold grade (g/t)     7.09       6.26     6.69    8.37    7.85     8.11     8.43   
 Gold production                     Ounces              9,861      8,148    18,009  19,667  19,723   39,390   32,629  
1. Gold production figures are subject to amendment pending final agreed
assays of the gold content of the copper/gold concentrate and the gold bullion
when smelting and refining processes are completed. 
2. Gold production totals for 2017 include treatment of 4,042 tonnes of
flotation tails (2016 full year: 16,716 tonnes)
This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014.

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 8900    
 Ross Allister                                                     Tel: +44 (0)20 7418 8900    
                                                                                               
 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.

GLOSSARY OF TERMS

The following is a glossary of technical terms:

 "Au" means gold.

 "assay" in economic geology, means to analyze 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

"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 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