REG-Serabi Gold plc : Strong third quarter production consolidating 2017 production.  <Origin Href="QuoteRef">SRB.L</Origin>

Serabi GoldAnnouncement

23/10/2017 07:06

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For immediate release
            23 October 2017

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

Strong third quarter production consolidating 2017 production. 

Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, is pleased to report third quarter production of 9,657
ounces of gold at its Palito/Sao Chico high grade gold operation in the
Tapajos region of Para State, Northern Brazil. 

HIGHLIGHTS
* Third quarter production of 9,657 ounces of gold.   
* Mine production totalled 41,263 tonnes at 9.80 grammes per tonne ("g/t") of
gold.  
* 44,954 tonnes processed through the plant for the combined mining
operations, with an average grade of 7.21 g/t of gold.
 * 2,996 metres of horizontal mine development completed in the quarter. 
* The Palito orebody saw development and production focus on the Senna,
Pipocas, G3 and Mogno veins principally, with three other veins, (Zonta, G1,
Jatoba) in development.      
* The mine ramp accessing the Sao Chico orebody has now reached the 26mRL,
approximately 230 vertical metres below surface.   Production is coming from
the 128mRL and 100mRL levels with levels 86mRL, 70mRL, 56mRL, 40mRL and now
26mRL all either developed or being development, comfortably ahead of
production. 
* By the end of the third quarter, surface ore stocks were approximately
15,000 tonnes (30 June 2017: 12,000 tonnes) with an average grade of 3.2 g/t
of gold. 
* An initial 8,000 metre surface drill programme to commence before the end of
the year.
Mike Hodgson, CEO, said:

"Following an excellent first quarter and a moderate second quarter, it is
very satisfying to report that the operation has bounced back and performed
very well in the third quarter of the year.  With approximately 9,700 ounces
of gold produced in the quarter, the Company's total production for the year
to date is now approximately 28,000 ounces. 

"Mine production from both the Palito and Sao Chico orebodies progressed well,
and there were improvements in the average grades mined from both orebodies
during the third quarter, with average mined grades of over 9 g/t of gold
being reported.  Mine developmentfrom the Sao Chico orebody in particular has
been very encouraging, especially on the 40mRL, the lowest level currently in
development.  To date, the 40mRL level exhibits greater than forecast payable
strike lengths compared with the upper levels.  We are eagerly anticipating
the next level, the 26mRL, to see if this trend continues.  The exciting
results from level 40mRL has meant mill feed ore from the Sao Chico orebody is
predominantly from development and relatively little from stoping.  In
addition, development is now comfortably ahead of stoping, with over two years
of ore now developed and 'blast ready' at current production rates.  

 "At the Palito orebody, seven veins out of the 25 veins that comprise the
total geological resource, are now in various stages of development and
production.  The Pipocas, G3, and Senna veins remain the backbone of our
sources of ore, with smaller contributions from the newly developed Jatoba,
Mogno, Zonta and G1 veins.  As was reported in the Company's second quarter
operational update, the G3 vein has been intersected on the -50mRL, the lowest
level in the mine, and development on this level has been on-going through the
third quarter.  The mineralised vein remains strong, with very good grades
being encountered.  The Pipocas vein is in development on the 30mRL and 0mRL
levels, with deepening underway to access the          -30mRL level.

"In the plant, the performance during the quarter was excellent, with
approximately 45,000 tonnes of run of mine ore ("ROM") milled.  With 41,000
tonnes having been mined, the balance of the plant throughput was made up by
processing the low grade surface stockpiled ore.  However, with over 15,000
tonnes of coarse ore still in stockpiles and over 35,000 tonnes of flotation
tails stockpiled (with an average grade of around 3g/t of gold) and this level
having been fairly static since 2014, we remain plant constrained, which is
both comforting and frustrating. 

"With current plant limitations, we have had little success in running down
the levels of the flotation tails, for two primary reasons.  To date we have
pumped the tailings 'wet' to the CIP plant, but this has proved to be slow and
labour intensive.  Passing the material 'dry' through the ore feed system is
restricted by belt capacity, and therefore we would be displacing higher grade
ore.  We are now designing and constructing an independent conveyor to feed
these tails directly into the ball mills, which means this material can be
added to the current dry mill feed, and therefore increase the levels that can
be treated each month.  We hope to be operational with this solution by
mid-November. 

"One very encouraging development this year has been our test work on ore
sorting on the Palito and Sao Chico ores. We are mining narrow veins with an
approximate width of 0.5 metres, and whilst we employ the most selective
methods possible, unavoidably our minimum stope mining width is generally 1.0
metre. Therefore, despite excellent mining quality, we still experience
considerable dilution from stope mining with even higher levels in the
development mining activities. Having undertaken test work initially in Brazil
and more recently on bulk samples at the manufacturer's facilities in Poland,
we have achieved excellent results using X-ray scanning to physically separate
crushed ore between the sulphide bearing ore and granite waste.  The contrast
and results have been quite remarkable.  The intention now is to introduce an
X-ray ore sorter after the main crushing plant that will separate material
ahead of milling and remove from the mill feed a significant percentage of the
waste that would otherwise have formed part of the feed into the plant.  Not
only will this reduce process costs per ounce recovered, it will also liberate
capacity in a mill constrained operation.  We therefore hope we can
debottleneck the plant using this technology, elevating mill feed grade in the
process, and freeing up plant capacity for the future organic growth.   This
equipment is unfortunately built to order and we anticipate it will take
between nine months and a year before it can be fabricated, installed and
commissioned.  Payback of the estimated US$1.2 million cost is however
expected to be less than 12 months.

"On the subject of organic growth, with improved metal prices and exchange
rates, we have recently been enjoying better margins and cash generation.  We
have now been able to commit to an initial 8,000 metre surface drill
programme, which will focus on drilling the many potential vein extensions we
have at Palito."

"The full programme that we would like to undertake is substantially greater
than 8,000 metres, and, both orebodies could benefit from significantly higher
levels of strike extension drilling.  The Palito orebody hosts a resource
that extends over a one kilometre strike length, but sits within a trend that
now clearly indicates the veins mineralisation is traceable over approximately
four kilometres.  The continuity of the ore payability in these veins remains
to be seen, but clearly only drilling will determine this.  The Sao Chico
orebody is completely open along strike with very little information outside
the immediate mine limits.  Again there are strong indications that
substantial strike extensions of the principal vein and adjacent veins are
waiting to be defined.

"Ultimately, we have plans that would involve a much more ambitious drilling
programme targeting a two million ounce total mineral resource across the two
ore-zones, with the full programme, totalling 60,000 meters, to be completed
in two phases.  This initial 8,000 metres forms part of phase one and is a
programme we can start comfortably and commit to out of operational cash
flow.  Drilling will get underway in November, and I look forward to updating
you on this during the first quarter of 2018.  

http://hugin.info/137617/R/2143365/821257.png

Indicative locations and allocation of the planned 8,000 metre drill programme
(Please click on hyperlink to access image)

"This excellent third quarter has been extremely satisfying, after the slight
disappointment of the second quarter.  The plant is always full, and rarely
misses a beat, and with the ore blocks to be mined in this current fourth
quarter and a healthy stockpile in front of the plant, I see every reason to
look forward to a good final three months of the year." 

Results

Total production for the third quarter of 2017 was 9,657 ounces of gold,
generated from the processing of 44,954 tonnes of ore at overall average
grades of 7.21 g/t of 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 41,263 tonnes
with a grade of 9.80 g/t of gold.   

At 30 September 2017, there were coarse ore stocks of approximately 15,000
tonnes of ore with an average grade of 3.20 g/t of gold, and approximately
35,000 tonnes of flotation tails with an average grade of 3.00 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 2,996 metres of horizontal development has been completed during
the quarter, of which approximately 1,489 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
All In Sustaining Cost of between $950 and $975 per ounce, broadly in line
with the cost guidance of 2016.  Gold production for the first nine months
remains broadly in line with the Company's forecast.  

With year to date production standing at 27,666 ounces, an additional fourth
quarter of 10,000 ounces forecast should result in full year production of a
minimum of approximately 38,000 ounces.  Management hope that production for
the fourth quarter will improve on prior quarters with the addition of
increased levels of processing of 2014 flotation tails during the final
quarter, a benefit which will continue through 2018 as well.

                                            Quarter 1  Quarter 2  Quarter 3    Total    Total    Total 
                                                 2017       2017       2017     2017     2016     2015 
 Horizontal development  Metres                 2,251      1,855      2,996    7,102   11,209    9,600 
                                                                                                       
 Mined ore               Tonnes                36,918     42,075     41,263  120,256  158,864  135,847 
                         Gold grade (g/t)       10.12       7.80       9.80     9.20     9.74     9.80 
                                                                                                       
 Milled ore              Tonnes                46,663     43,905     44,954  135,522  158,966  130,299 
                         Gold grade (g/t)        7.09       6.26       7.21     6.86     8.11     8.43 
 Gold production         Ounces                 9,861      8,148      9,657   27,666   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 4,941 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                                                                       
 Ross Allister                                                     Tel: +44 (0)20 7418 8900    
 Chris Burrows                                                     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 grammes 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
Diagram for drill programme (http://hugin.info/137617/R/2143365/821257.png)



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Source: Serabi Gold plc via Globenewswire