Unaudited interim results for 3 and 6 month periods to 30 June 2023
31/08/2023 07:00
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Unaudited interim results for the three and six month periods ended 30 June
2023
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development
company, today releases its unaudited results for the three and six month
periods ended 30 June 2023.
A copy of the full interim statements together with commentary can be accessed
on the Company’s website using the following link: https://bit.ly/4
(https://www.globenewswire.com/Tracker?data=h0OWqzKtxsqAQARLGmoVEJ_MJbLEJrgCLB9rU0HyoQDuheLfgAR8du6VUto01bDPhxjyX1BF9BxqHXYICWW4xA==)7VVUAg
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Financial Highlights
* Gold production for the second quarter of 8,518 ounces (2022: 8418 ounces)
for total production for the year to date of 16,524 ounces (2022: 15,480
ounces).
* Cash held at 30 June 2023 of US$13.3 million (31 December 2022: US$7.2
million).
* EBITDA for the six-month period of US$6.6 million (2022: US$5.2 million).
* Post tax profit for the six month period of US$5.0 million (2022: US$2.1
million),
* Profit per share of 6.58 cents compared with a profit per share of 2.74
cents for the same six month period of 2022.
* Net cash inflow from operations for the six-month period (after mine
development expenditure of US$1.3 million) of US$7.8 million (2022: US$1.5
million outflow).
* Average gold price of US$1,940 per ounce received on gold sales during the
six month period (2022: US$1,869).
* Cash Cost for the six-month period to 30 June 2023 of US$1,258 per ounce
(six months 2022 : US$1,415 per ounce) representing an 11% improvement
compared to the same period of 2022.
* All-In Sustaining Cost for the three-month period to 20 June 2023 of
US$1,519 per ounce (six months 2022 : US$1,716 per ounce) represents a 11.5%
improvement compared to the same period of 2022.
Key Financial Information
SUMMARY FINANCIAL STATISTICS
6 months to 3 0 June 202 3 US$ (unaudited) 6 months to 30 June 2022 US$ (unaudited) 3 months to 3 0 June 202 3 US$ (unaudited) 3 months to 30 June 2022 US$ (unaudited)
Revenue 30,523,582 31,200,863 17,086,213 18,315,843
Cost of sales (21,064,434) (23,268,585) (11,297,431) (13,995,113)
Gross operating profit 9,459,148 7,932,278 5,788,782 4,320,730
Administration and share based payments (2,838,267) (2,766,776) (1,483,692) (1,207,634)
EBITDA 6,620,881 5,165,502 4,305,090 3,113,096
Depreciation and amortisation charges (2,025,037) (2,923,245) (1,190,523) (1,751,357)
Operating profit before finance and tax 4,595,844 2,242,257 3,114,567 1,361,739
Profit after tax 4,979,891 2,072,939 3,512,412 343,336
Earnings per ordinary share (basic) 6.58 c 2.74c 4.64 c 0.45c
Average gold price received (US$/oz) US$ 1,940 US$1,845 US$ 1,980 US$1,846
As at 3 0 June 202 3 US$ (unaudited) As at 31 December 2022 US$ (audited)
Cash and cash equivalents 13, 285,448 7,196,313
Net assets 91,291,971 81,523,603
Cash Cost and All-In Sustaining Cost (“AISC”)
6 months to 3 0 June 202 3 6 months to 30 June 2022 12 months to 31 December 2022
Gold production for cash cost and AISC purposes 16,524 ozs 15,480 ozs 31,819 ozs
Total Cash Cost of production (per ounce) US$1,2 58 US$1,415 US$1,322
Total AISC of production (per ounce) US$1,5 19 US$1,716 US$1,615
“The last 12 months since my appointment has been an exciting period in the
development of the Company”, said Michael Lynch-Bell , Chairman.
“Operationally and financially it is pleasing to see the Company in such a
strong position after a very encouraging quarter during which we have
consistently improved our net cash position and the Company remaining on track
to meet our full year guidance of 33,500 to 35,000 ounces.
“We still have challenges ahead as we continue to grow the production base
with the development of Coringa, but having spent time with UK and Brazilian
management, I am confident the solutions being pursued will overcome these.
“Since my appointment we have strengthened the Board with the appointment of
Deborah Gudgeon who is also Chair of the Audit and Risk Committee and in
January we also welcomed Carolina Margozzini to the Board as the
representative for Fratelli Investments Limited, one of our two major
shareholders. I am pleased to be part of such a diverse board that is working
together to bring increased value to all Serabi’s stakeholders.
“We also signed an exciting copper exploration joint venture, with Vale SA,
the Brazilian mining major and drilling and other exploration activity
commenced immediately. Serabi’s projects are located in a relatively
under-explored part of Brazil and the involvement of Vale is, I believe, a
further endorsement of the mineral potential of the Tapajos region.
“We look forward to continued growth and development, and my objective is to
ensure that we achieve this in a manner that is sustainable and in keeping
with our core values, of developing gold mining opportunities that are
efficient, cost effective and operated in a manner that brings economic,
social and infrastructure benefits to all our stakeholders, including the
local region and its communities.”
Overview of the financial results
An improved level of gold production in the second quarter of the year of
8,518 ounces, a 6% increase on the first quarter, has resulted in total
production for the year to date of 16,524 ounces representing a 7% increase
over the same period in 2022 (2022: 15,480 ounces). With continued growth
anticipated for the second half of 2023, Serabi remains on track to meet its
full year guidance of 33,500 to 35,000 ounces.
The cash balance at the end of June 2023 had increased to US$13.3 million (Dec
2022: US$7.2 million). This does include approximately US$0.94 million of
funds held for the Vale Exploration Alliance but nonetheless the net cash
attributable to the Group has increased by US$5.1 million during the first six
months of the year.
Cash cost for the year to date is US$1,258 per ounce which represents a small
decrease compared to the first quarter of 2023 when reported cash costs were
US$1,281 per ounce and a significant reduction compared to the same six month
period of 2022 when a cash cost of US$1,415 was reported. AISC for the year to
date is US$1,519 per ounce, which is in line with the AISC of US$1,516 per
ounce reported in the first quarter of 2023. The current AISC compares very
favourably with the same six month period of 2022 when an AISC of US$1,716 was
reported, particularly given the levels of mine development incurred in the
period, particularly at Coringa, creating the opportunity for longer term
production growth. Capitalised mine development costs were US$1.0 million
higher in the last three month period compared with the first three months of
2023.
Gold sales for the quarter were 8,475 ounces, with inventory levels remaining
steady following the increase in gold inventory experienced in the first
quarter following the commissioning of new tanks in the leaching circuit.
Consistent with the results for the first quarter of 2023, amortisation costs
are lower in this quarter than previously, a consequence of the reduced
activity at Sao Chico and therefore minimal amortisation costs associated with
this project. In addition, because Coringa is only in a trial mining phase and
has not attained commercial production, the project costs are not currently
subject to amortisation charges. In accordance with accounting regulations the
gold sales and related operating costs of Coringa are being reflected in the
Group’s income statement.
On 10 May 2023, the Company announced that it had entered into an exploration
alliance with Vale SA focused on the Matilda prospect and other large regional
targets in the Tapajos region of Para, Brazil. The current exploration
activity under this alliance is being funded in its entirety by Vale up to an
initial US$5 million for the Phase 1 activities. However, Serabi is the
operator and undertaking the activity either directly or using contractors
where appropriate. Vale provides funding in advance to Serabi and at the end
of the quarter, Serabi held US$0.94 million of cash that will be used to meet
the accrued and future costs of the alliance exploration activity. The
exploration costs being incurred under the alliance are not being capitalised
but are being expensed through the Income Statement as they are incurred.
Similarly, the funds being received from Vale are also being reported through
the Income Statement as other income.
During May, the Group settled a US$5.0 million export linked loan facility
that had been advanced by Itau Bank BBA. The Group still has a further US$5.0
million export linked facility advanced by Santander Bank in Brazil which is
due to be repaid in February 2024 and carries a fixed interest rate of 7.97%.
To achieve production guidance for the rest of the year and in anticipation of
increasing mine output from Coringa in 2024, the production plan anticipates
further mine development activities. At Coringa we intersected the veins
on the next level at 260mRL shortly before the end of August and this will
present further development and production options. At Palito we are
developing the G3 structure which in the past was a backbone of production.
Re-establishing G3 as an additional production area is planned to provide
further flexibility within the Palto orebody. Nonetheless, I would hope that
we can maintain a broadly similar cost base for the remaining six months and
continue to benefit from the continued strength of the gold price.”
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018.
The person who arranged for the release of this announcement on behalf of the
Company was Clive Line, Director.
Enquiries
SERABI GOLD plc
Michael Hodgson t +44 (0)20 7246 6830
Chief Executive m +44 (0)7799 473621
Clive Line t +44 (0)20 7246 6830
Finance Director m +44 (0)7710 151692
e contact@serabigold.com
www.serabigold.com
BEAUMONT CORNISH Limited
Nominated Adviser & Financial Adviser
Roland Cornish / Michael Cornish t +44 (0)20 7628 3396
PEEL HUNT LLP
Joint UK Broker
Ross Allister t +44 (0)20 7418 9000
TAMESIS PARTNERS LLP
Joint UK Broker
Charlie Bendon/ Richard Greenfield t +44 (0)20 3882 2868
CAMARCO
Financial PR
Gordon Poole / Emily Hall t +44 (0)20 3757 4980
Copies of this announcement are available from the Company's website at
www.serabigold.com.
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.
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 35 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, recognizing 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.
Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this news release.
See www.serabigold.com for more information and follow us on twitter
@Serabi_Gold
The following information, comprising, the Income Statement, the Group Balance
Sheet, Group Statement of Changes in Shareholders’ Equity, and Group Cash
Flow, is extracted from the unaudited interim financial statements for the six
months to 30 June 2023.
Statement of Comprehensive Income
For the six month period ended 30 June 2023
For the six months ended 30 June For the three months ended 30 June
2023 2022 2023 2022
(expressed in US$) Notes (unaudited) (unaudited) (unaudited) (unaudited)
CONTINUING OPERATIONS
Revenue 30,523,582 31,200,863 17,086,213 18,315,843
Cost of sales (20,694,434) (23,268,585) (11,297,431) (13,995,113)
Stock impairment provision (370,000) – – –
Depreciation and amortisation charges (2,025,037) (2,923,245) (1,190,523) (1,751,357)
Total cost of sales (23,089,471) (26,191,830) (12,487,954) (15,746,470)
Gross profit 7,434,111 5,009,033 4,598,259 2,569,373
Administration expenses (2,899,894) (2,596,017) (1,449,726) (1,150,064)
Share-based payments (85,866) (213,922) (37,799) (101,797)
Gain on asset disposals 147,493 43,163 3,833 44,227
Operating profit 4,595,844 2,242,257 3,114,567 1,361,739
Other income – exploration receipts 2 1,050,535 – 1,050,535 –
Other expenses – exploration expenses 2 (1,019,911) – (1,019,911) –
Foreign exchange gain / (loss) 100,066 139,105 17,455 (37,481)
Finance expense 3 (434,748) (66,525) (273,578) (64,686)
Finance income 3 819,669 152,624 776,850 47,844
Profit before taxation 5,111,455 2,467,461 3,665,918 1,307,416
Income tax expense 4 (131,564) (394,522) (153,506) (964,080)
Profit after taxation 4,979,891 2,072,939 3,512,412 343,336
Other comprehensive income (net of tax)
Exchange differences on translating foreign operations 4,703,151 1,986,773 3,708,904 (6,872,683)
Total comprehensive profit / (loss) for the period ((1)) 9,683,042 4,059,712 7,221,316 (6,529,347)
Profit per ordinary share (basic) 5 6.58c 2.74c 4.64c 0.45c
Profit per ordinary share (diluted) 5 6.58c 2.68c 4.64c 0.44c
(1) The Group has no non-controlling interests, and all losses are
attributable to the equity holders of the parent company.
Balance Sheet as at 30 June 2023
(expressed in US$) Notes As at 30 June 2023 (unaudited) As at 30 June 2022 (unaudited) As at 31 December 2022 (audited)
Non-current assets
Deferred exploration costs 7 20,367,929 39,608,630 18,621,180
Property, plant and equipment 8 51,678,058 28,254,138 48,482,519
Right of use assets 9 5,537,628 4,801,117 5,374,042
Taxes receivable 4,026,439 961,290 3,446,032
Deferred taxation 1,792,206 685,650 1,545,684
Total non-current assets 83,402,260 74,310,825 77,469,457
Current assets
Inventories 10 9,881,514 7,724,300 8,706,351
Trade and other receivables 2,533,055 4,952,331 5,291,924
Derivative financial assets 12 649,209 – –
Prepayments and accrued income 1,375,685 3,883,897 1,572,149
Cash and cash equivalents 13,285,448 9,819,882 7,196,313
Total current assets 27,724,911 26,380,410 22,766,737
Current liabilities
Trade and other payables 6,328,124 5,626,540 5,830,872
Interest bearing liabilities 11 6,430,023 5,726,808 6,111,126
Derivative financial liabilities 12 88,755 – –
Accruals 1,094,621 399,970 461,857
Total current liabilities 13,941,523 11,753,328 12,403,855
Net current assets 13,783,388 14,627,092 10,362,882
Total assets less current liabilities 97,185,648 88,937,917 87,832,339
Non-current liabilities
Trade and other payables 4,111,078 466,292 3,800,886
Interest bearing liabilities 11 469,910 1,152,087 837,293
Deferred tax liability – 381,483 480,922
Derivative financial liabilities 12 – 12,871 –
Provisions 1,312,689 2,766,049 1,190,175
Total non-current liabilities 5,893,677 4,778,782 6,309,276
Net assets 91,291,971 84,159,135 81,523,063
Equity
Share capital 14 11,213,618 11,213,618 11,213,618
Share premium reserve 36,158,068 36,158,068 36,158,068
Share incentive reserve 14 243,002 1,289,270 1,324,558
Other reserves 15,375,463 14,472,400 14,459,255
Translation reserve (61,573,620) (66,661,397) (66,276,771)
Retained surplus 89,875,440 87,687,176 84,644,335
Equity shareholders’ funds 91,291,971 84,159,135 81,523,063
.
Statements of Changes in Shareholders’ Equity
For the six month period ended 30 June 2023
(expressed in US$)
(unaudited) Share capital Share premium Share incentive reserve Other reserves ((1)) Translation reserve Retained Earnings Total equity
Equity shareholders’ funds at 31 December 2021 11,213,618 36,158,068 1,075,348 13,694,731 (68,648,170) 86,391,906 79,885,501
Foreign currency adjustments — — — — 1,986,773 — 1,986,773
Profit for the period — — — — — 2,072,939 2,072,939
Total comprehensive income for the period — — — — 1,986,773 2,072,939 4,059,712
Transfer to taxation reserve — — — 777,669 — (777,669) —
Share incentives expense — — 213,922 — — — 213,922
Equity shareholders’ funds at 30 June 2022 11,213,618 36,158,068 1,289,270 14,472,400 (66,661,397) 87,687,176 84,159,135
Foreign currency adjustments — — — — 384,626 — 384,626
Loss for the period — — — — — (3,055,986) (3,055,986)
Total comprehensive income for the period — — — — 384,626 (3,055,986) (2,671,360)
Transfer to taxation reserve — — — (13,145) — 13,145 —
Share incentives expense — — 35,288 — — — 35,288
Equity shareholders’ funds at 31 December 2022 11,213,618 36,158,068 1,324,558 14,459,255 (66,276,771) 84,644,335 81,523,063
Foreign currency adjustments — — — — 4,703,151 — 4,703,151
Profit for the period — — — — — 4,979,891 4,979,891
Total comprehensive income for the period — — — — 4,703,151 4,979,891 9,683,042
Transfer to taxation reserve — — — 916,208 — (916,208) —
Share incentives expired — — (1,167,422) — — 1,167,422 —
Share incentives expense — — 85,866 — — — 85,866
Equity shareholders’ funds at 30 June 2023 11,213,618 36,158,068 243,002 15,375,463 (61,573,620) 89,875,440 91,929,971
(1) Other reserves comprise a merger reserve of US$361,461 and a
taxation reserve of US$15,014,002 (31 December 2022: merger reserve of
US$361,461 and a taxation reserve of US$14,097,794).
Condensed Consolidated Cash Flow Statement
For the three month period ended 30 June 2023
For the six months ended 30 June For the three months ended 30 June
2023 2022 2023 2022
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
Operating activities
Post tax (loss) / profit for period 4,979,891 2,072,939 3,512,412 343,336
Depreciation – plant, equipment and mining properties 2,025,037 2,923,245 1,190,523 1,751,357
Stock impairment provision 370,000 — — —
Net financial expense (484,987) (225,204) (520,727) 54,323
Provision for taxation 131,564 394,522 153,506 964,080
Gain / (loss) on disposals (147,493) (43,163) (3,833) (44,227)
Share-based payments 85,866 213,922 37,799 101,797
Taxation paid (395,890) (131,462) (109,153) (3,813)
Interest paid (385,814) (51,838) (359,404) (31,612)
Foreign exchange (loss) / gain (72,071) (211,323) 18,350 (71,395)
Changes in working capital
(Increase)/decrease in inventories (781) (394,806) 348,963 1,504,893
Decrease/(increase) in receivables, prepayments and accrued income 2,765,042 (3,912,322) 883,597 (2,164,981)
(Decrease)/increase in payables, accruals and provisions 247,961 (339,994) 934,445 (657,737)
Net cash inflow from operations 9,118,325 294,516 6,086,478 1,746,021
Investing activities
Purchase of property, plant and equipment and assets in construction (980,086) (2,490,502) (238,179) (1,521,615)
Mine development expenditure (1,339,090) (1,849,462) (966,690) (783,577)
Geological exploration expenditure (357,424) (692,980) (357,424) (223,730)
Pre-operational project costs — (2,266,252) 206,546 (1,124,670)
Proceeds from sale of assets 191,515 64,762 33,044 51,605
Interest Received 79,799 — 36,980 —
Net cash outflow on investing activities (2,405,286) (7,234,434) (1,285,723) (3,601,987)
Financing activities
Receipt of short-term loan 5,000,000 4,923,586 — 4,923,586
Repayment of short-term loan (5,096,397) — (5,096,397) —
Payment of finance lease liabilities (610,982) (502,225) (307,841) (314,908)
Net cash (outflow)/inflow from financing activities (707,379) 4,421,361 (5,404,238) 4,608,678
Net increase/(decrease) in cash and cash equivalents 6,005,660 (2,518,557) (603,483) 2,752,712
Cash and cash equivalents at beginning of period 7,196,313 12,217,751 13,920,999 6,932,625
Exchange difference on cash 83,475 120,688 (32,068) 134,545
Cash and cash equivalents at end of period 13,285,448 9,819,882 13,285,448 9,819,882
Notes
1. Basis of preparation
These interim condensed consolidated financial statements are for the three
and six month periods ended 30 June 2023. Comparative information has been
provided for the unaudited three and six month periods ended 30 June 2022 and,
where applicable, the audited twelve month period from 1 January 2022 to 31
December 2022. 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 2022 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 2022 and
those envisaged for the financial statements for the year ending 31 December
2023.
The Directors have reviewed the principal risks and uncertainties facing the
Group and have concluded that those facing the Group for the remaining six
months of the current financial year are unchanged from the risks set out in
the 2022 Annual Report and Accounts. In reaching this conclusion, the
Directors considered changes in the internal and external environment during
the intervening period which could threaten the Group's business model, future
performance, liquidity, solvency or reputation. Details of these principal
risks and how they are being managed are set out on pages 25 to 32 of the 2022
Annual Report and Accounts.
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
2022 prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 have been filed
with the Registrar of Companies. The auditor’s report on these accounts was
unqualified. The auditor’s report did not contain a statement under Section
498 (2) or 498 (3) of the Companies Act 2006
Accounting standards, amendments and interpretations effective in 2023
The Group has not adopted any standards or interpretations in advance of the
required implementation dates.
The following Accounting standards came into effect as of 1 January 2023
IFRS 17 Insurance Contracts, including Amendments to IFRS 17 1 January 2023
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) and Classification of Liabilities as Current or Non-current – Deferral of Effective Date 1 January 2023
There is no material impact on the financial statements from the adoption of
these new accounting standards or amendments to accounting standards,
Certain new accounting standards and interpretations have been published that
are not mandatory for the current period and have not been early adopted.
These standards are not expected to have a material impact on the Company’s
current or future reporting periods.
These financial statements do not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006.
(i) Going concern
At 30 June 2023 the Group held cash of US$13.29 million which represents an
increase of US$6.09 million compared to 31 December 2022. This increase
includes the receipt of a US$5.0 million loan, from Santander Bank in Brazil,
on 22 February 2023. The proceeds raised from the loan will be used for
working capital and provided the Group with adequate liquidity to repay a
similar arrangement which was repaid on 12 May 2023.
Management prepares, for Board review, regular updates of its operational
plans and cash flow forecasts based on their best judgement of the expected
operational performance of the Group and using economic assumptions that the
Directors consider are reasonable in the current global economic climate. The
most recent plans assume that during 2023 the Group will continue gold
production from its Palito Complex operation as well as increase production
from the Coringa mine and will be able to increase gold production to exceed
the levels of 2022.
The Directors will, however, continue to limit the Group’s discretionary
expenditures including the continued development of Coringa which, on a longer
term basis, may require additional external sources of finance to be secured.
The Directors have concluded that, based on the current operational
projections, it remains appropriate to adopt the going concern basis of
accounting in the preparation of these interim unaudited financial statements.
The Directors acknowledge that the Group remains subject to operational and
economic risks and any unplanned interruption or reduction in gold production
or unforeseen changes in economic assumptions may adversely affect the level
of free cash flow that the Group can generate on a monthly basis and its
ability to secure further finance as and when required The Directors consider
that the Group will be able to secure the necessary external finance for the
development of its Coringa project but that the timing of this may be
dependent on the receipt of further permits and licences. The Directors
believe that all the necessary permits and licenses will be awarded when all
current information requests of the relevant authorities have been met.
2. Other Income and Expenses
Under its copper exploration alliance with Vale announced on 10 May 2023, the
related exploration activities being undertaken by the Group under the
management of a working committee (comprising representatives from Vale and
Serabi), are being funded in their entirety by Vale up to a value of US$5
million during Phase 1 of the programme. The Group at this time has no
certainty that the exploration for copper deposits will result in a project
that is commercially viable recognising that exploration and development of
copper deposits is not the core activity of the Group, there is a significant
cost involved in developing new copper deposits and it is unlikely that
without the financial support of Vale that the Group would independently seek
to develop a copper project in preference to any of its existing gold projects
and discoveries.
As a result, it is recognising both the funding received from Vale and the
related exploration expenditures through its income statement. As this is not
the principal business activity of the Group these receipts and expenditures
are classified as other income and other expenses.
3. Finance Costs
6 months ended 30 June 2023 (unaudited) 6 months ended 30 June 2022 (unaudited) 3 months ended 30 June 2023 2021 (unaudited) 3 months ended 30 June 2022 (unaudited)
US$ US$ US$ US$
Loss on revaluations of hedging derivatives (88,755) — (88,755) —
Interest expense on short term loan (243,318) (53,859) (131,608) (53,859)
Interest expense on trade finance (41,891) (12,666) (25,056) (10,827)
Interest expense on finance leases (60,784) — (28,159) —
Total Financial expense (434,748) (66,525) (273,578) (64,686)
Interest Income 79,799 — 36,980 —
Gain on revaluation of warrants — 152,624 — 47,844
Gain on revaluation of hedging derivatives 570,863 — 570,863 —
Realised gain on hedging derivatives 169,007 — 169,007 —
Total Financial expense 819,669 152,624 776,850 47,844
Net finance income / (expense) 384,921 86,099 503,272 (16,842)
4. Taxation
The Group has recognised a deferred tax asset to the extent that the Group has
reasonable certainty as to the level and timing of future profits that might
be generated and against which the asset may be recovered. The deferred tax
liability arising on unrealised exchange gains has been eliminated in the
six-month period to 30 June 2023 reflecting the stronger Brazilian Real
exchange rate at the end of the period and resulting in deferred tax income of
US$607,223 (six months to 30 June 2022 – benefit of US$199,222).
The Group has also incurred a tax charge in Brazil for the six month period of
US$738,787 (six months to 30 June 2022 - US$593,744).
5. Earnings per share
6 months ended 30 June 2023 (unaudited) 6 months ended 30 June 2022 (unaudited) 3 months ended 30 June 2023 (unaudited) 3 months ended 30 June 2022 (unaudited)
Profit attributable to ordinary shareholders (US$) 4,979,891 2,072,939 3,512,412 343,336
Weighted average ordinary shares in issue 75,734,551 75,734,551 75,734,551 75,734,551
Basic profit per share (US cents) 6.58c 2.74c 4.64c 0.45c
Diluted ordinary shares in issue ((1)) 75,734,551 77,484,551 75,734,551 77,484,551
Diluted profit per share (US cents) 6.58c 2.68c 4.64c 0.44c
(1) There were no share options outstanding at 30 June 2023 (30 June 2022:
1,750,000 options vested and exercisable as at 30 June 2022). At 30 June 2023
and 30 June 2022, there were 864,500 Conditional Share Awards in issue under
the Serabi 2020 Restricted Share Plan (the “2020 Plan”) (see Note 13(c)).
The underlying shares to be issued pursuant to these Conditional Share Awards
can only be issued if certain performance conditions have been met and at the
end of the stipulated vesting period. Subsequent to the end of the period the
Company announced that 404,700 Conditional Share Awards had lapsed as the
performance conditions had not been achieved. The vesting period for the
remaining 459,800 Conditional Share Awards has not yet been completed.
Accordingly, none of the Conditional Share Awards that may be issued in the
future have been included in the calculation of diluted earnings per share.
5. Post balance sheet events
Subsequent to the end of the period, there has been no item, transaction or
event of a material or unusual nature likely, in the opinion of the Directors
of the Company to affect significantly the continuing operation of the entity,
the results of these operations, or the state of affairs of the entity in
future financial periods.
Attachment
* Q2 2023 Financial Report
(https://ml-eu.globenewswire.com/Resource/Download/c6e29d29-5644-4f9c-9493-ba8c39f8c4a5)
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