REG-Serabi Gold plc : Unaudited Interim Financial Results for the three and nine month periods to 30 September 2017 <Origin Href="QuoteRef">SRB.L</Origin>
14/11/2017 07:05
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14 November 2017
Serabi Gold plc
("Serabi" or the "Company")
Unaudited Interim Financial Results for the three and nine month periods to 30
September 2017 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 and nine month periods ending 30 September 2017 and at the same
time has published its Management's Discussion and Analysis for the same
period.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND NINE MONTHS ENDING 30 SEPTEMBER 2017
3 months to 30 September 2017 US$ 9 months to 30 September 2017 US$ 3 months to 30 September 2016 US$ 9 months to 30 September 2016 US$
Revenue 12,908,790 36,225,050 16,209,753 42,120,928
Cost of Sales (7,695,870) (24,558,180) (10,216,119) (25,828,941)
Depreciation and amortisation charges (2,934,986) (7,545,847) (2,907,161) (6,552,101)
Gross profit 2,277,934 4,121,023 3,086,473 9,739,886
Profit / (loss) before tax 490,532 (337,135) 743,503 2,305,731
Profit after tax 235,051 (770,629) 465,480 1,471,662
Earnings per ordinary share (basic) 0.03c (0.11c) 0.07c 0.22c
Average gold price received US$1,238 US$1,256
As at 30 September 2017 US$ As at 31 December 2016 US$
Cash and cash equivalents 9,753,385 4,160,923
Net assets 64,598,323 63,378,973
Cash Cost and All-In Sustaining Cost ("AISC")
9 months to 30 September 2017 9 months to 30 September 2016
Gold production for cash cost and AISC purposes 27,666 29,900
Total Cash Cost of production (per ounce) US$795 US$772
Total AISC of production (per ounce) US$1,058 US$951
Key Operational Information
SUMMARY PRODUCTION STATISTICS FOR THE THREE QUARTERS TO 30 SEPTEMBER 2017
Quarter 1 Quarter 2 Quarter 3 Year to Date Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
2017 2017 2017 2017 2016 2016 2016 2016 2016
Horizontal development - Total Metres 2,251 1,855 2,996 7,102 2,925 2,941 2,649 2,694 11,209
Mined ore - Total Tonnes 36,918 42,075 41,263 120,256 37,546 33,606 43,133 44,579 158,864
Gold grade (g/t) 10.12 7.80 9.80 9.20 11.02 9.56 9.61 8.94 9.74
Milled ore Tonnes 46,663 43,905 44,954 135,522 36,615 39,402 42,464 40,485 158,966
Gold grade (g/t) 7.09 6.26 7.21 6.86 8.58 8.17 8.08 7.60 8.11
Gold production ((1) (2)) Ounces 9,861 8,148 9,657 27,666 9,771 9,896 10,310 9,413 39,390
(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.
(2) Gold production totals for 2017 include treatment of 4,941 tonnes of
flotation tails (2016 full year : 16,716 tonnes)
Financial Highlights
* Cash Cost for the year to date of US$795 per ounce of gold.
* All-In Sustaining Cost for the year to date of US$1,058 per ounce of gold.
* Gross profit from operations for the first nine months of 2017 of US$4.12
million.
* Profit per share of 3 cents for Q3 and loss per share of 11 cents for the
first nine months of 2017.
* Cash holdings of US$9.75 million at 30 September 2017.
* Average gold price of US$1,238 per ounce received on gold sales in the first
nine months of 2017.
2017 Guidance
* Forecast gold production for the fourth quarter of 2017 of approximately
10,000 ounces to achieve full year production of approximately 38,000
ounces.
* Cost guidance for 2017 of an All-In Sustaining Cost ("AISC") of US$1,000 to
US$1,025 per ounce.
Operational 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 in 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.
* A surface diamond drill programme of approximately 10,000 metres has
commenced and will principally focus on the strike extensions of the veins in
the Palito orebody.
* The results of a new 43-101 Technical Report comprising the geological
resource and mineable reserve are close to completion and are expected to be
issued before the end of November.
Mike Hodgson, CEO of Serabi commented, "It was very pleasing to see third
quarter production returning to expected levels, after a slightly
disappointing second quarter. We have now achieved total production for the
first nine months of the year of 27,666 ounces. Whilst a little below the
production for the same period in 2016, the shortfall was simply due to a
short term operational problem at Sao Chico during April and May, when we lost
remote scoop capability and therefore had to rely on lower grade development
ore for this period. By June the problem was over, and we have seen strong
monthly productions figures since. "Even more pleasing is the
relative financial strength of the Company at the end of the quarter, with
cash holdings increasing to over US$9.7 million. We have benefitted during
the third quarter from a relatively weak Real and a good gold price and with
so much of our costs being in Reais, it is the gold price in Reais that really
dictates our margins and cash generation. "We have earmarked some of this
cash to be reinvested back into the operations and in addition to the
acquisition of an ore-sorter, other major capital investment include the
acquisition of some new mine trucks, and expansion our tailings management
facilities. "We have also commenced a 10,000 metre surface drilling
programme which is concentrating on the strike extensions of the veins at the
Palito orebody. We anticipate this is just the start of a larger programme
which will identify new orebodies, expand the resource base and support
increased levels of gold production in the longer term. "Whilst
profitability is down compared with 2016, it must be remembered that not only
is production slightly down, resulting in lower revenue, but the Group has
been impacted by the relative strength of the Real in 2017 when compared with
2016. The average exchange rate for the nine months to 30 September 2016
was BrR$3.55 to US$1.00 and BrR$3.15 to US$1.00 for the first nine months of
2017 a swing of almost eleven per cent. Nonetheless our operating costs for
the nine months have fallen by almost US$2 million or over 7 percent, a
reflection of the improvements and efficiencies that we are constantly seeking
to implement. "We have reported a small profit before tax of US$0.5 million
for the third quarter which is a pleasing turnaround after the loss reported
for the second quarter and I hope that, if production during the fourth
quarter is in line with expectation, this can be continued."
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
For the three months ended 30 September For the nine months ended 30 September
2017 2016 2017 2016
(expressed in US$) Notes (unaudited) (unaudited) (unaudited) (unaudited)
CONTINUING OPERATIONS
Revenue 12,908,790 16,209,753 36,225,050 42,120,928
Operating expenses (7,295,870) (10,216,119) (23,938,180) (25,828,941)
Provision for impairment of inventory (400,000) - (620,000) -
Depreciation of plant and equipment (2,934,986) (2,907,161) (7,545,847) (6,552,101)
Gross profit 2,277,934 3,086,473 4,121,023 9,739,886
Administration expenses (1,407,836) (1,267,898) (3,828,194) (3,812,218)
Share based payments (101,665) (101,072) (279,697) (249,828)
Gain on disposal of assets 15,621 2,070 131,596 29,039
Operating profit 784,054 1,719,573 144,728 5,706,879
Foreign exchange loss (24,021) (28,860) (144,420) (101,268)
Finance expense (269,532) (947,250) (337,543) (3,299,989)
Investment income 31 40 100 109
Profit / (loss) before taxation 490,532 743,503 (337,135) 2,305,731
Income tax expense (255,481) (278,023) (433,494) (834,069)
Profit / (loss) for the period from continuing operations ((1) (2)) 235,051 465,480 (770,629) 1,471,662
Other comprehensive income Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 2,367,977 (588,314) 1,710,282 9,041,254
Total comprehensive profit / (loss) for the period ((2)) 2,602,028 (122,834) 939,653 10,512,916
Profit / (loss) per ordinary share (basic) ((1)) 3 0.03c 0.07c (0.11c) 0.22c
Profit / (loss) per ordinary share (diluted) ((1)) 3 0.03c 0.06c (0.11c) 0.21c
(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
30 September 30 September 31 December
2017 2016 2016
(expressed in US$) (unaudited) (unaudited) (audited)
Non-current assets
Deferred exploration costs 10,235,454 9,731,144 9,990,789
Property, plant and equipment 44,260,723 44,860,837 45,396,140
Deferred Taxation 3,164,441 - 3,253,630
Total non-current assets 57,660,618 54,591,981 58,640,559
Current assets
Inventories 7,196,529 7,865,290 8,110,373
Trade and other receivables 1,433,010 9,165,344 1,233,049
Prepayments and accrued income 4,950,976 2,652,081 3,696,550
Cash and cash equivalents 9,753,385 3,116,123 4,160,923
Total current assets 23,333,900 22,798,838 17,200,895
Current liabilities
Trade and other payables 5,313,706 6,564,033 4,722,139
Secured loan 1,290,000 1,425,058 1,371,489
Trade and asset finance facilities 1,054,632 3,260,272 1,592,568
Derivative financial liabilities 732,470 262,000 -
Accruals 450,867 367,646 635,446
Total current liabilities 8,841,675 11,879,009 8,321,642
Net current assets 14,492,225 10,919,829 8,879,253
Total assets less current liabilities 69,135,527 65,511,810 67,519,812
Non-current liabilities
Trade and other payables 2,276,769 2,275,312 2,211,078
Secured loan 3,125,000 - -
Provisions 1,905,230 2,284,002 1,851,963
Trade and asset finance facilities 247,521 210,657 77,798
Total non-current liabilities 7,554,520 4,769,971 4,140,839
Net assets 64,598,323 60,741,839 63,378,973
Equity
Share capital 5,540,960 5,540,960 5,540,960
Share premium 1,722,222 1,722,222 1,722,222
Option reserve 1,355,583 1,237,581 1,338,652
Other reserves 3,404,624 361,461 3,051,862
Translation reserve (28,897,566) (30,185,281) (30,607,848)
Distributable surplus 81,472,500 82,064,896 82,333,125
Equity shareholders' funds 64,598,323 60,741,839 63,378,973
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 2016 prepared under IFRS as adopted in the EU and with IFRS and their
interpretations adopted by the International Accounting Standards Board have
been 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.
SERABI GOLD PLC
Condensed Consolidated Statements of Changes in Shareholders' Equity
(expressed in US$) Share Share Share option Other Translation Retained
capital premium reserve reserves ((1)) reserve earnings Total equity
Equity shareholders' funds at 31 December 2015 (audited) 5,263,182 - 2,747,415 450,262 (39,226,535) 77,549,321 46,783,645
Foreign currency adjustments - - - - 9,041,254 - 9,041,254
Profit for the period - - - - - 1,471,662 1,471,662
Total comprehensive income for the period - - - - 9,041,254 1,471,662 10,512,916
Warrants lapsed - - - (88,801) - 88,801 -
Shares Issued in period 277,778 1,722,222 - - - - 2,000,000
Release of fair value provision on convertible loan - - - - 1,195,450 1,195,450
Share options lapsed in period - - (1,759,662) - - 1,759,662 -
Share option expense - - 249,828 - - - 249,828
Equity shareholders' funds at 30 September 2016 (unaudited) 5,540,960 1,722,222 1,237,581 361,461 (30,185,281) 82,064,896 60,741,839
Foreign currency adjustments - - - - - 2,958,630 2,958,630
Loss for the period - - - - (422,567) - (422,567)
Total comprehensive income for the period - - - - (422,567) 2,958,630 2,536,063
Transfer to taxation reserve - - - 2,690,401 - (2,690,401) -
Share option expense - - 101,071 - - - 101,071
Equity shareholders' funds at 31 December 2016 (audited) 5,540,960 1,722,222 1,338,652 3,051,862 (30,607,848) 82,333,125 63,378,973
Foreign currency adjustments - - - - 1,710,282 - 1,710,282
Loss for the period - - - - - (770,629) (770,629)
Total comprehensive income for the period - - - - 1,710,282 (770,629) 939,653
Transfer to taxation reserve - - - 352,762 - (352,762) -
Share options lapsed in period - - (262,766) - - 262,766 -
Share option expense - - 279,697 - - - 279,697
Equity shareholders' funds at 30 September 2017 (unaudited) 5,540,960 1,722,222 1,355,583 3,404,624 (28,897,566) 81,472,500 64,598,323
1. Other reserves comprise a merger reserve of US$361,461 and a taxation
reserve of US$3,043,163 (2016: merger reserve of US$ 361,461 and a taxation
reserve of US$2,690,401)
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
For the three months ended 30 September For the nine months ended 30 September
2017 2016 2017 2016
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
Operating activities
Profit / (loss) before taxation 235,051 465,480 (770,629) 1,471,662
Depreciation - plant, and equipment 2,934,986 2,907,161 7,545,847 6,552,101
Net financial expense 293,522 976,071 481,863 3,401,148
Provision for impairment of inventory 400,000 - 620,000 -
Taxation 255,481 278,023 433,494 834,069
Share-based payments 101,665 101,072 279,697 249,828
Foreign exchange (gain) / loss (359,590) 38,109 (319,030) 207,785
Changes in working capital
(Increase) / decrease in inventories (374,877) 1,286,509 612,487 505,768
Decrease / (increase) in receivables, prepayments and accrued income 1,076,370 330,084 (1,500,915) (2,434,886)
(Decrease) / increase in payables, accruals and provisions (409,010) (68,421) (405,421) 1,411,427
Net cash inflow from operations 4,153,598 6,314,088 6,977,393 12,198,902
Investing activities
Purchase of property, plant and equipment and projects in construction (265,246) (713,069) (1,349,085) (2,840,740)
Mine development expenditures (1,191,322) (469,608) (3,155,641) (1,718,759)
Exploration and development expenditure - (247,479) (2,501) (247,479)
Proceeds from sale of assets 59,659 2,070 175,634 29,039
Interest received 31 40 100 109
Net cash outflow on investing activities (1,396,878) (1,428,046) (4,331,493) (4,777,830)
Financing activities
Repayment of short-term secured loan - (1,333,334) - (2,666,667)
Draw-down of short-term loan facility 3,628,511 - 3,628,511 -
Draw-down of short-term convertible loan facility - - - 2,000,000
Receipts from short-term trade finance - 4,454,632 - 16,355,730
Repayment of short-term trade finance - (9,411,663) - (20,921,538)
Payment of finance lease liabilities (346,566) (161,210) (478,730) (542,731)
Interest paid and other finance costs (166,363) (125,901) (233,818) (624,233)
Net cash inflow / (outflow) from financing activities 3,115,582 (6,577,476) 2,915,963 (6,399,439)
Net increase / (decrease) in cash and cash equivalents 5,872,302 (1,691,434) 5,561,863 1,021,633
Cash and cash equivalents at beginning of period 3,832,218 4,774,537 4,160,923 2,191,759
Exchange difference on cash 48,865 33,020 30,599 (97,269)
Cash and cash equivalents at end of period 9,753,385 3,116,123 9,753,385 3,116,123
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 2016 has been filed with the Registrar of
Companies following their adoption by shareholders at the last Annual General
Meeting. The full audited financial statements, for the year end 31 December
2016, do comply with IFRS.
2. Basis of Preparation
These interim condensed consolidated financial statements are for the three
and nine month periods ended 30 September 2017. Comparative information has
been provided for the unaudited three and nine month periods ended 30
September 2016 and, where applicable, the audited twelve month period from 1
January 2016 to 31 December 2016. These condensed consolidated financial
statements do not include all the disclosures that would otherwise be required
in a complete set of financial statements and should be read in conjunction
with the 2016 annual report.
The condensed consolidated financial statements for the periods have been
prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting" and the accounting policies are consistent with those of
the annual financial statements for the year ended 31 December 2016 and those
envisaged for the financial statements for the year ending 31 December 2017.
The Group has not adopted any standards or interpretation in advance of the
required implementation dates. 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 will have a material
impact on the Group's earnings or shareholders' funds.
These financial statements do not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006.
1. Going concern
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.
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 loan facilities and to, at least in part,
fund exploration and development activity on its other gold properties. On 30
June the Group completed a re-negotiation of an increased secured loan
facility of US$5 million (including the existing loan to US$1.37 million).
The new facility is repayable by 31 December 2019 and the incremental funds
were received by the Company on 5 July 2017.
The Directors consider that the Group's operations are performing at the
levels that they anticipate, but the Group remains a small scale gold producer
with limited cash resources to support any unplanned interruption or reduction
in gold production, unforeseen reductions in the gold price, or appreciation
of the Brazilian currency, all of which could adversely affect the level of
free cash flow that the Group can generate on a monthly basis. In the event
that the Group is unable to generate sufficient free cash flow to meet its
financial obligations as they fall due, or to allow it to finance exploration
and development activity on its other gold properties, additional sources of
finance may be required. 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 condensed consolidated financial statements do not
include the adjustments that would result if the Group was unable to continue
as a going concern.
(ii) Use of estimates and judgements
There have been no material revisions to the nature and amount of changes in
estimates of amounts reported in the 2016 annual financial statements.
(iii) Impairment
At each balance sheet date, the Group reviews the carrying amounts of its
property, plant and equipment and intangible assets to determine whether there
is any indication that those assets have suffered impairment. Prior to
carrying out of impairment reviews, the significant cash generating units are
assessed to determine whether they should be reviewed under the requirements
of IFRS 6 - Exploration for and Evaluation of Mineral Resources or IAS 36 -
Impairment of Assets. Such determination is by reference to the stage of
development of the project and the level of reliability and surety of
information used in calculating value in use or fair value less costs to sell.
Impairment reviews performed under IFRS 6 are carried out on a project by
project basis, with each project representing a potential single cash
generating unit. An impairment review is undertaken when indicators of
impairment arise; typically when one of the following circumstances applies:
(i) sufficient data exists that render the resource
uneconomic and unlikely to be developed
(ii) title to the asset is compromised
(iii) budgeted or planned expenditure is not expected in the
foreseeable future
(iv) insufficient discovery of commercially viable resources
leading to the discontinuation of activities
Impairment reviews performed under IAS 36 are carried out when there is an
indication that the carrying value may be impaired. Such key indicators
(though not exhaustive) to the industry include:
(i) a significant deterioration in the spot price of
gold
(ii) a significant increase in production costs
(iii) a significant revision to, and reduction in, the life of
mine plan
If any indication of impairment exists, the recoverable amount of the asset is
estimated, being the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. Such impairment
losses are recognised in profit or loss for the year.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised in profit or loss for the year.
3. Earnings per share
3 months ended 30 September 2017 US$ (unaudited) 3 months ended 30 September 2016 US$ (unaudited) 9 months ended 30 September 2017 US$ (unaudited) 9 months ended 30 September 2016 US$ (unaudited)
Profit / (loss) attributable to ordinary shareholders (US$) 235,051 465,480 (770,629) 1,471,662
Weighted average ordinary shares in issue 698,701,772 678,005,407 698,701,772 663,647,199
Basic profit/ (loss) per share (US cents) 0.03 0.07 (0.11) 0.22
Diluted ordinary shares in issue ((1)) 748,461,772 727,915,407 698,701,772 713,557,199
Diluted profit / (loss) per share (US cents) 0.03 0.06 (0.11) ((2)) 0.21
1. Assumes exercise of all options and warrants outstanding as of that date
where the Group has reported a profit for the period.
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.
4. Post balance sheet events
On 13 November 2017, Serabi signed a conditional acquisition agreement to
acquire 100 per cent. of the issued share capital and inter-company debt of
Chapleau Resources Ltd ("Chapleau"), a Canadian registered company
wholly-owned by Anfield Gold Corp ("Anfield"), which holds the Coringa gold
project ("Coringa") located in the Tapajos gold province in Para, Brazil.
Serabi will acquire the entire issued share capital of Chapleau together with
its outstanding inter-company debts owed to Anfield. Serabi will make an
initial payment to Anfield on closing of the transaction ("Closing") of US$5
million in cash from existing resources. A further US$5 million in cash is
payable within three months of Closing. 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 proposed consideration for the
acquisition amounts to US$22 million in aggregate.
The Agreement is conditional on a number of items including:
* Completion by Serabi of its due diligence, including the receipt of
satisfactory legal opinions as to mining title, labour, environmental and tax
matters;
* Approval of the shareholders of Anfield and approval of the TSX-V; and
* Approval of Serabi's secured lender (Sprott).
Pursuant to the Agreement, Anfield has provided Serabi with certain
indemnities in respect of future claims relating to activities prior to
Closing, including labour and tax liabilities. In addition, the Agreement
includes representations and warranties from Anfield in favour of Serabi as
would be customary for a transaction of this nature both on execution of the
Agreement and at Closing.
Serabi has agreed, on Closing, to grant to Anfield, subject to the approval of
Serabi's secured lender and, if required, sub-ordinated to any security
granted by Serabi to its secured lender, a pledge over the shares of Chapleau
as security for the full and irrevocable payment of the Deferred
Consideration.
Anfield proposes to hold its shareholder meeting to approve the proposed
transaction on 19 December 2017, and Closing is anticipated to occur shortly
thereafter.
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.
The Company will, in compliance with Canadian regulatory requirements, post
the Unaudited Interim Financial Statements and the Management Discussion and
Analysis for the three and nine-month periods ended 31 September 2017 on SEDAR
at www.sedar.com. These documents will also available from the Company's
website - www.serabigold.com.
Serabi's Directors Report and Financial Statements for the year ended 31
December 2016 together the Chairman's Statement and the Management Discussion
and Analysis, are available from the Company's website - www.serabigold.com
and on SEDAR at www.sedar.com.
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.
"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 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.
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