TIDMSRB
For immediate release
14 August 2020
Serabi Gold plc
("Serabi" or the "Company")
Unaudited Results for the three and six month periods ended 30 June 2020
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 2020.
Financial Highlights
-- Cash Cost for the year to date of US$961 per ounce.
-- All-In Sustaining Cost for the year to date of US$1,265 per ounce.
-- EBITDA for the second quarter of 2020 of US$6.2 million (Q2 2019: US$3.3
million) an improvement of 89 per cent.
-- EBITDA for the year to date ("ytd") of US$9.4 million (2019 ytd US$7.6
million) an improvement of 24 per cent.
-- Post tax profit for the year to date of US$4.2 million (2019 ytd: US$1.7
million) an improvement of 142 per cent.
-- Earnings per share for the year to date of 7.05 cents.
-- Average gold price of US$1,647 received on gold sales in 2020.
-- Outstanding loan from Sprott (US$6.9 million at start of year) repaid in
full at 30 June 2020.
-- Agreement, concluded in April 2020, with Greenstone Resources II LP
("Greenstone") to subscribe for US$12 million Convertible Loan Notes --
US$2.0 million drawn down to date with balance available to be drawn
until 30 June 2021.
-- Agreement reached with Equinox Gold Corp. ("Equinox") allowing the
Company to pay, in monthly instalments, the remaining US$12 million
consideration for purchase of Coringa, until travel restrictions caused
by Coronavirus are lifted -- US$2.5 million settled to date.
Key Financial Information
6 months to 3 months to 6 months to 3 months to
30 June 2020 30 June 2020 30 June 2019 30 June 2019
US$ US$ US$ US$
--------------- ------------- ------------- ----------------- -----------------
Revenue 29,461,830 16,364,143 29,585,739 12,459,699
Cost of sales (16,421,213) (8,188,157) (19,164,989) (7,803,002)
------------- ------------- ----------------- -----------------
Gross operating
profit 13,040,617 8,175,986 10,420,750 4,656,697
Administration
and share
based
payments (3,670,066) (2,005,436) (2,803,500) (1,378,996)
------------- ------------- ----------------- -----------------
EBITDA 9,370,551 6,170,550 7,617,250 3,277,701
Depreciation
and
amortisation
charges (3,232,094) (1,527,733) (4,250,501) (1,960,956)
------------- ------------- ----------------- -----------------
Operating
profit /
(loss) before
finance and
tax 6,138,457 4,642,817 3,366,749 1,316,745
------------- ------------- ----------------- -----------------
Profit / (loss)
after tax 4,156,467 3,383,835 1,719,640 169,678
------------- ------------- ----------------- -----------------
Earnings per
ordinary share
(basic) 7.05c 5.74c 2.92c 0.29c
------------- ------------- ----------------- -----------------
Average gold
price received
(US$/oz) US$1,647 US$1,710 US$1,287 US$1,292
As at
30 June As at As at
2020 31 December 2019 31 December 2018
US$ US$ US$
--------------- ------------- ------------- ----------------- -----------------
Cash and cash
equivalents 9,627,412 14,234,612 9,216,048
Net assets 56,492,450 69,733,388 69,110,287
Cash Cost and
All-In
Sustaining
Cost ("AISC")
---------------
6 months to 6 months to 12 months to 12 months to
30 June 2020 30 June 2019 31 Dec 2019 31 Dec 2018
--------------- ------------- ------------- ----------------- -----------------
Gold production 17,524 ozs 19,691 ozs 40,101 ozs 37,108 ozs
for cash cost
and AISC
purposes
------------- ------------- ----------------- -----------------
Total Cash Cost US$961 US$860 US$832 US$821
of production
(per ounce)
------------- ------------- ----------------- -----------------
Total AISC of US$1,265 US$1,085 US$1,081 US$1,093
production
(per ounce)
------------- ------------- ----------------- -----------------
Operational Highlights
-- Second quarter gold production of 8,504 ounces, resulting in 17,524
ounces for the year to date.
-- 43,519 tonnes of ore mined during the quarter at 5.85 grams per tonne
("g/t") of gold.
-- 44,235 tonnes of run of mine ("ROM") ore were processed through the plant
from the combined Palito and Sao Chico orebodies, with an average grade
of 5.91 g/t of gold.
-- 3,004 metres of horizontal development completed during the quarter, the
highest level of development metres to date.
SUMMARY PRODUCTION STATISTICS FOR 2020 AND FOR 2019
Qtr 1 Qtr 2 YTD Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total
------------ -------
2020 2020 2020 2019 2019 2019 2019 2019
------------ ------- ------ ------ ------ ------ ------ ------ ------ -------
Gold
production
(1) (2) Ounces 9,020 8,504 17,524 10,164 9,527 10,187 10,233 40,101
Mined ore --
Total Tonnes 42,036 43,519 85,555 42,609 44,784 44,757 44,092 176,243
Gold grade (g/t) 6.54 5.85 6.19 7.47 6.72 7.14 6.69 7.00
Milled ore Tonnes 40,465 44,235 84,700 43,451 43,711 45,378 44,794 177,335
Gold grade (g/t) 6.66 5.91 6.27 7.69 6.72 6.84 6.81 7.02
Horizontal
development
-- Total Metres 2,878 3,004 5,882 1,868 2,419 2,433 2,908 9,628
------------ ------- ------ ------ ------ ------ ------ ------ ------ -------
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 2020 include treatment of 18,939 tonnes of
flotation tails at a grade of 3.80 g/t (H1 2019: 10,892 tonnes at a
grade of 4.38 g)
3. The table may not sum due to rounding.
Exploration and Development Highlights
--Results reported in the second quarter for a further eight surface
holes and ten underground holes at Sao Chico. These results demonstrate
the Main Vein structure now continues to host gold bearing
mineralisation for approximately 375 metres to the west of the current
mine limits, an extension of a further 75 metres.
Results included:
-- 5.30m @ 12.10g/t Au (Hole: 20-SC-166)
-- 3.40m @ 3.94g/t Au (Hole: 20-SC-164)
-- 1.37m @ 28.77g/t Au (Hole: 20-SCUD-341)
-- 2.72m @ 5.06g/t Au (Hole: 20-SCUD-343)
-- Reverse circulation percussion drilling on the Cicada terrestrial
geophysics anomaly indicates the strong likelihood that the anomaly is a
western extension of the Sao Chico vein structure, approximately 1,000
metres to the west of the current mine limits. Results include:
-- 3m @ 2.09g/t Au (Hole: SCRC-004)
-- 1m @ 1.17g/t Au (Hole: SCRC-007)
-- Regional geochemical sampling has highlighted an area, referred to as
Mata Cobra, which represents an eight kilometre by two kilometre soil
copper anomaly exceeding 100ppm. This anomaly is coincidental with
multiple molybdenum, bismuth, tellurium and arsenic multi-element
anomalies as well as the original airborne electromagnetic ("AEM")
anomalies
Key Objectives for 2020
-- Continue to implement measures to minimise short term impacts of
Coronavirus ("CV-19") on current operations and provide a safe and
responsible work environment for staff during the crisis.
-- Continue advancing the licensing process for Coringa along with ongoing
engineering studies.
-- Secure financing package for the Coringa project to fund plant assembly
and other site developments.
-- Complete, as soon as practically possible, exploration drilling at Sao
Chico with a view to producing a new resource estimation.
-- Complete exploration discovery drilling programme over the geophysical
anomalies to the west and south of Sao Chico.
-- Maintain payment programme required to complete acquisition of Coringa
gold project.
2020 Production Guidance
The impact of CV-19 pandemic has resulted in production of 17,524 ounces
of gold for the first six months of the year. The company is working
hard to expand the camp allowing for a return to full staffing levels
before the end of the third quarter. With this in mind third quarter
performance is anticipated to be similar to that of the second quarter,
with a return to full levels of production in the early part of the
fourth quarter. Should this be achieved, full year production would be
expected to be between 34,000 and 37,000 ounces.
Clive Line, CFO of Serabi has been interviewed by Crux Investors and BRR
Media. These interviews can be accessed using the following links
Crux Investors -
https://www.globenewswire.com/Tracker?data=JGi7Nyo_iisn0wijZgQKVxtmCQMv4eDEwsBryjQP--Yn5gL518kN1DKk1_HSXVHhhbbR9UKVhhfmt5oC4VGnDpL7QO2zB8OUvMwDWADdh_MZCjEYYWQPxTvOP1UEb2a1
https://youtu.be/jHyjme-IeJo
BRR Media -
https://www.globenewswire.com/Tracker?data=JGi7Nyo_iisn0wijZgQKV3fojJW_0mXWcQP3KfIeSPwxIB7mF53B8pzHOadkLP3N2YF3vN3r3nMXqf9VBWN0A_J-Tu99fSYJOfjdEh3SD-gCP6E-SZbKNDbkXS74E2wHBA9Xrt8t7tnEZGJ4onFMJ6t7NCTK-irRZNBMgBot8xH3Swb0pV2LdtOhPuu247uZaIq-P7Y8I9wF8jBvVL73AtRXJcClfXj__5iFCD-jo-6ttPGy9PVd0HjZ3NNG71ScFGPwgVYWhEdM_uHqNkXjZxMV4VNA9PJ_XRMb2mNJT8ROS-a-VHYwCn9s2q4cJL_GA6lUrVbReMnSL5wqAZ8vJEWL2di3zr1k0Ry4ovLmSM8=
https://www.brrmedia.co.uk/broadcasts-embed/5f33db75b14d872626436cbb/copied-from-5f292eef65023062edd7e282?popup=true
Clive Line, CFO of Serabi commented,
"The second quarter of the year has proved, financially, to be one of
our most successful ever and viewed in the context of the uncertainties
that we were facing at the end of March, both from a financial and
operational perspective, the workforce have produced an exceptional
result in extremely challenging circumstances.
"Cashflow generated from operations was US$5.85 million and after
accounting for capital expenditures the net operational cash flow of
US$4.2 million represents the best level of quarterly cash flow
generated by the Company to date.
"Operating profit (before finance costs) of US$4.64 million, is up by
253% compared to the same quarter in 2019 and for the year to date there
has been an 82% improvement year on year. The financial performance has
been assisted by the strong gold price and the continued weakness of the
Brazilian Real. Since the end of the quarter we have seen continued
improvement in the gold price, with record highs being reached in early
August, and an average gold price for this current third quarter of
approximately US$1,880 to date, compared with the average price achieved
for the year to date of US$1,647 per ounce. With the expectation of
gold production for the third quarter being at similar levels to that of
the second quarter levels, this bodes well for the Company's cash
generation going forward.
"The Company was able to repay the US$3.5 million outstanding secured
loan liability to Sprott Resource Lending during the quarter without any
impact on our cash position. In light of the operational uncertainties
created by the COVID-19 pandemic we were able to renegotiate the terms
for the settlement of the final payment for the Coringa gold project and
this is now being paid down, whilst there are travel restrictions in
place both internationally and within Brazil, in monthly instalments.
We also put in place a US$12 million Convertible Loan Note facility (the
"Loan Note Facility") arrangement with Greenstone Resources II LP
("Greenstone"), one of our major shareholders, which provided certainty
that the Company had funding available to it to meet this acquisition
obligation. At the end of the second quarter Serabi had drawn down
US$1.5 million against the Loan Note Facility and settled US$1.0 million
of the acquisition obligation. Subsequent to the end of the quarter, a
further US$1.5 million of the acquisition obligation has been paid, with
only US$0.5 million of additional funding being drawn down against the
Loan Note Facility. With the Sprott debt now repaid and given the
levels of cash currently expected to be generated, management will
continue to try to pay the on-going instalment payments for Coringa from
cash flow generated from operations, and minimise the requirement to
make further draw-downs against the Loan Note Facility.
"The cash cost per ounce and the AISC per ounce for the year to date
need to be viewed in context. Gold production for the year to date has
been lower than was originally forecast. In the first quarter this was
the result of a breakdown of the largest of the three ball mils during
February, and although we quickly bounced back and were able to report
our highest ever monthly level of production for March 2020, we could
not fully recover the earlier shortfall. The second quarter production
has been affected by the need to reduce the workforce on site to allow
socially distanced working conditions. By the end of the quarter, the
Company recorded over 85 per cent of its original production estimate
with just 65 per cent of the normal level of workforce at site. Those
staff that were at site, voluntarily extended their work rosters. Many
spent up to three months at site to maintain the mining operations as
restrictions on travel and a lack of testing capacity at the time
rendered team changes very difficult. However, taking this action kept
the camp safe. Nevertheless, additional costs have been incurred as a
result of the pandemic, including hardship payments to staff that
remained at site, salary payments whilst staff were quarantining in
advance of starting their work rosters and additional medical and other
costs as the Company adapted the conditions in the live-in camp to the
changing requirements imposed by the pandemic, ensuring that it provides,
as much as possible, a safe and secure work and living environment. Had
production been at the original levels expected, this would have
potentially translated into a 12.5 per cent improvement in the AISC and
Cash Costs.
"Looking at the operational statistics during the first six months of
the 2020, mined tonnage and plant throughput have been at similar levels
to the same period in 2019 with lower mine grades being the major
contributor to the reduction in gold production. The original plan for
2020 was to increase mining rates compared with 2019, and to use the ore
sorter to beneficiate the lower grade material and deliver a sorted
higher grade product to the process plant. The mine plan was therefore
deliberately designed to undertake more development (more diluted ore
given the mining method) as well as more lower grade stopes. The
intention was to beneficiate this lower grade material through the ore
sorter, screen out the majority of the waste and send the resultant
lower volume of higher grade product to the plant. However, despite the
Company continuing to follow the original mine plan, the reduced
workforce meant the mining rates could not attain budgeted levels. As
we begin to return to normal mining rates during the second part of this
year mine output is expected to exceed the current plant capacity and
with that, the effects of the ore sorter will really come into their
own. With this, I would fully expect to see unit costs coming down as
we spread the costs of the operation, many of which are relatively fixed
in the short term, over a growing production base.
"We have re-started some of the investment programmes that were put on
hold at the end of March 2020 in particular underground drilling at Sao
Chico which is required for longer term mine planning purposes and
orders for capital equipment to replace some of the mining fleet.
Exploration programmes are expected to re-start in the fourth quarter
once additional accommodation units and other infrastructure changes are
installed to house and support Serabi's own full workforce complement.
"It has been said before, but I would like to take this opportunity to
personally thank all of our Brazilian staff and management for the
efforts they have made over the recent months. They have shown a
commitment, flexibility, patience and loyalty that has allowed the
Company to weather this storm and emerge in a strong position and the
Board of Serabi is extremely grateful for their dedication."
This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014. The person who arranged the release of this
statement on behalf of the Company was Clive Line, Director.
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
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
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 following information, comprising, the Income Statement, the Group
Balance Sheet, Group Statement of Changes in Shareholders' Equity, and
Group Cash Flow, is extracted from these financial statements.
Statement of Comprehensive Income
For the three and six month periods ended 30 June 2020
For the three months ended For the six months ended
30 June 30 June
2020 2019 2020 2019
(expressed in US$) Notes (unaudited) (unaudited) (unaudited) (unaudited)
-------------------------- --------- ------------------- ------------- ------------ ------------
CONTINUING OPERATIONS
Revenue 16,364,143 12,459,699 29,461,830 29,585,739
Cost of sales (8,188,157) (7,803,002) (16,421,213) (19,664,989)
Release of inventory
impairment provision -- -- -- 500,000
Depreciation and
amortisation charges (1,527,733) (1,960,956) (3,232,094) (4,250,501)
-------------------------- --------- ------------------- ------------- ------------ ------------
Total cost of sales (9,715,890) (9,763,958) (19,653,307) (23,415,490)
Gross profit 6,648,253 2,695,741 9,808,523 6,170,249
Administration expenses (1,922,181) (1,415,133) (3,663,145) (2,798,964)
Share-based payments (136,600) (65,486) (161,838) (130,971)
Gain on sales of assets
disposal 53,345 101,623 154,917 126,435
-------------------------- --------- ------------------- ------------- ------------ ------------
Operating profit 4,642,817 1,316,745 6,138,457 3,366,749
Foreign exchange loss (141,816) (51,486) (150,674) (66,103)
Finance expense 2 (918,061) (849,336) (1,103,052) (1,123,599)
Finance income 2 725,349 159,600 725,349 161,817
-------------------------- --------- ------------------- ------------- ------------ ------------
Profit before taxation 4,308,289 575,523 5,610,080 2,338,864
Income tax expense 3 (924,454) (405,845) (1,453,613) (619,224)
-------------------------- --------- ------------------- ------------- ------------ ------------
Profit after taxation 3,383,835 169,678 4,156,467 1,719,640
-------------------------- --------- ------------------- ------------- ------------ ------------
Other comprehensive income
(net of tax)
Items that may be reclassified subsequently to profit
or loss
Exchange differences on
translating foreign
operations (2,637,441) 1,053,943 (17,613,949) 491,850
-------------------------- --------- ------------------- ------------- ------------ ------------
Total comprehensive profit
/(loss) for the
period(1) 746,394 1,223,621 (13,457,482) 2,211,490
-------------------------- --------- ------------------- ------------- ------------ ------------
Profit per ordinary share 4 5.74c 0.29c 7.05c 2.92c
(basic)()
-------------------------- --------- ------------------- ------------- ------------ ------------
Profit per ordinary share 4 5.56c 0.28c 6.83c 2.85c
(diluted)
-------------------------- --------- ------------------- ------------- ------------ ------------
(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 2020
As at As at As at
30 June 30 June 31 December
2020 2019 2019
(expressed in US$) (unaudited) (unaudited) (audited)
------------------------------ ------------ ------------ ------------
Non-current assets
Deferred exploration costs 25,724,189 29,591,753 30,686,652
Property, plant and equipment 28,413,097 39,055,069 37,597,100
Right of use assets 1,863,595 2,173,269 1,997,176
Taxes receivable 829,555 1,556,125 848,845
Deferred taxation 490,890 2,008,732 1,321,782
-------------------------------- ------------ ------------ ------------
Total non-current assets 57,321,326 74,384,948 72,451,555
-------------------------------- ------------ ------------ ------------
Current assets
Inventories 5,587,300 6,898,033 6,577,968
Trade and other receivables 1,344,595 1,291,505 802,275
Prepayments and accrued income 2,078,415 4,706,018 3,473,288
Cash and cash equivalents 9,627,412 12,366,683 14,234,612
-------------------------------- ------------ ------------ ------------
Total current assets 18,637,722 25,262,239 25,088,143
-------------------------------- ------------ ------------ ------------
Current liabilities
Trade and other payables 5,514,477 7,389,818 6,113,789
Acquisition payment outstanding 10,430,799 11,530,027 12,000,000
Other interest bearing
liabilities -- 6,122,584 6,952,542
Derivative financial
liabilities -- 681,765 --
Accruals 281,712 335,142 319,670
------------ ------------ ------------
Total current liabilities 16,226,988 26,059,336 25,386,001
-------------------------------- ------------ ------------ ------------
Net current assets 2,410,734 (797,097) (297,858)
-------------------------------- ------------ ------------ ------------
Total assets less current
liabilities 59,732,060 73,587,851 72,153,697
-------------------------------- ------------ ------------ ------------
Non-current liabilities
Trade and other payables 88,707 562,627 183,043
Other interest bearing
liabilities 1,163,683 -- --
Derivative financial
liabilities 340,508 -- --
Provisions 1,646,712 1,572,476 2,237,266
Total non-current liabilities 3,239,610 2,135,103 2,420,309
-------------------------------- ------------ ------------ ------------
Net assets 56,492,450 71,452,748 69,733,388
-------------------------------- ------------ ------------ ------------
Equity
Share capital 8,888,963 8,882,803 8,882,803
Share premium reserve 21,800,976 21,752,430 21,752,430
Option reserve 833,370 1,106,017 1,019,589
Other reserves 9,017,420 5,590,190 7,149,274
Translation reserve (61,892,895) (40,315,273) (44,278,946)
Retained surplus 77,844,616 74,436,581 75,208,238
-------------------------------- ------------ ------------ ------------
Equity shareholders' funds 56,492,450 71,452,748 69,733,388
-------------------------------- ------------ ------------ ------------
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 2019 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
2020 Annual General Meeting. 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.
Statements of Changes in Shareholders' Equity
For the three and six month periods ended 30 June 2020
(expressed in
US$)
Share Other
Share Share option reserves Translation Retained
(unaudited) capital premium reserve (1) reserve Earnings Total equity
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
December
2018 8,882,803 21,752,430 1,363,367 4,763,819 (40,807,123) 73,154,991 69,110,287
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- 491,850 -- 491,850
Profit for the
period -- -- -- -- -- 1,719,640 1,719,640
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- 491,850 1,719,640 2,211,490
Transfer to
taxation
reserve -- -- -- 826,371 -- (826,371) --
Share options
lapsed in
period -- -- (388,321) -- -- 388,321 --
Share option
expense -- -- 130,971 -- -- -- 130,971
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 30
June 2019 8,882,803 21,752,430 1,106,017 5,590,190 (40,315,273) 74,436,581 71,452,748
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- (3,963,673) -- (3,963,673)
Profit for the
period -- -- -- -- -- 2,113,344 2,113,344
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- (3,963,673) 2,113,344 (1,850,329)
Transfer to
taxation
reserve -- -- -- 1,559,084 -- (1,559,084) --
Share options
lapsed in
period -- -- (217,397) -- -- 217,397 --
Share option
expense -- -- 130,969 -- -- -- 130,969
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
December
2019 8,882,803 21,752,430 1,019,589 7,149,274 (44,278,946) 75,208,238 69,733,388
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- (17,613,949) -- (17,613,949)
Profit for the
period -- -- -- -- -- 4,156,467 4,156,467
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- (17,613,949) 4,156,467 (13,457,482)
Shares issued
in the
period 6,160 48,546 -- -- -- -- 54,706
Transfer to
taxation
reserve -- -- -- 1,868,146 -- (1,868,146) --
Share options
lapsed in
period -- -- (348,057) -- -- 348,057 --
Share option
expense -- -- 161,838 -- -- -- 161,838
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 30
June 2020 8,888,963 21,800,976 833,370 9,017,420 (61,892,895) 77,844,616 56,492,450
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
(1) Other reserves comprise a merger reserve of US$361,461 and a
taxation reserve of US$8,655,959 (31 December 2019: merger reserve of
US$361,461 and a taxation reserve of US$6,787,813).
Cash Flow Statement
For the three and six month periods ended 30 June 2020
For the three months For the six months
ended ended
30 June 30 June
2020 2019 2020 2019
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
------------------------------------------------------ ----------- ----------- ----------- -----------
Operating activities
Post tax (loss) / profit for period 3,383,835 169,678 4,156,467 1,719,640
Depreciation -- plant, equipment and mining properties 1,527,733 1,960,956 3,232,094 4,250,501
Net financial expense 334,528 741,222 528,377 1,027,885
Provision for impairment of inventory -- -- -- (500,000)
Provision for taxation 924,454 405,845 1,453,613 619,224
Share-based payments 191,306 65,486 216,544 130,971
Foreign exchange (loss) / gain (123,744) (404,652) (45,805) (382,801)
Changes in working capital
(Increase)/decrease in inventories 568,519 (572,470) (789,533) 2,165,340
(Increase) in receivables, prepayments and accrued
income (521,624) (376,417) (1,000,176) (1,113,022)
Increase/(decrease) in payables, accruals and
provisions (800,544) 979,894 (57,232) 1,518,388
----------------------------------------------------- ----------- ----------- ----------- -----------
Net cash inflow from operations 5,484,463 2,969,542 7,694,349 9,436,126
------------------------------------------------------ ----------- ----------- ----------- -----------
Investing activities
Purchase of property, plant and equipment and assets
in construction (181,643) (1,071,564) (1,189,953) (1,461,292)
Mine development expenditure (634,068) (654,253) (1,221,677) (1,492,563)
Geological exploration expenditure (248,911) (208,062) (1,085,272) (796,524)
Pre-operational project costs (262,344) (403,580) (477,640) (843,522)
Acquisition of mining project (1,000,000) -- (1,000,000) --
Acquisition of other property rights (149,274) (120,988) (332,513) (1,156,075)
Proceeds from sale of assets 88,856 118,039 327,859 153,081
Interest received 911 -- 911 2,217
------------------------------------------------------ ----------- ----------- ----------- -----------
Net cash outflow on investing activities (2,386,473) (2,340,408) (4,978,285) (5,594,678)
------------------------------------------------------ ----------- ----------- ----------- -----------
Financing activities
Drawdown of convertible loan 1,500,000 -- 1,500,000 --
Repayment of secured loan (3,491,746) (195,043) (6,983,492) (195,043)
Payment of finance lease liabilities (9,966) (81,573) (46,274) (267,178)
Interest paid and other finance costs (58,330) (151,137) (262,999) (303,933)
----------- ----------- ----------- -----------
Net cash (outflow) / inflow from financing activities (2,060,042) (427,753) (5,792,765) (766,154)
------------------------------------------------------ ----------- ----------- ----------- -----------
Net increase / (decrease) in cash and cash equivalents 1,037,948 201,381 (3,076,701) 3,075,294
Cash and cash equivalents at beginning of period 9,149,274 12,133,712 14,234,612 9,216,048
Exchange difference on cash (559,810) 31,590 (1,530,499) 75,341
------------------------------------------------------ ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period 9,627,412 12,366,683 9,627,412 12,366,683
------------------------------------------------------ ----------- ----------- ----------- -----------
Notes
1. Basis of Preparation
These interim condensed consolidated financial statements are for the
three and six month periods ended 30 June 2020. Comparative information
has been provided for the unaudited three and six month periods ended 30
June 2019 and, where applicable, the audited twelve month period from 1
January 2019 to 31 December 2019. 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 2019 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 2019 and those envisaged for the financial statements for the
year ending 31 December 2020.
.
Accounting standards, amendments and interpretations effective in 2020
The Group has not adopted any standards or interpretations in advance of
the required implementation dates.
The following Accounting standard has come into effect as of 1 January
2020 have been
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment -- Definition of Material)
The adoption of this standard has had no effect on the financial results
of the Group.
There are a number of standards, amendments to standards, and
interpretations which have been issued that are effective in future
periods and which the Group has chosen not to adopt early. None of
these are expected to have a significant effect on the Group, in
particular
IAS 1 Presentation of Financial Statements
IFRS 3 Business Combinations (Amendment -- Definition of a Business)
These financial statements do not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006
Going concern and availability of finance
As at 30 June 2020 the Group had cash in hand of US$9.63 million and net
assets of US$56.49 million.
The occurrence of the Coronavirus (COVID-19) pandemic has created
significant uncertainty for all business sectors including Serabi.
However during the second quarter of 2020, the Group has maintained its
gold mining operations without interruption, albeit that the Group took
the decision to reduce the levels of workforce at site as a
pre-cautionary measure to improve social distancing whilst additional
accommodation and other facilities could be put in place prior to a
return to full workforce numbers. Whilst production levels during the
second quarter of 2002 were approximately 85 per cent of the levels that
the Group had originally forecast, the weakness of the Brazilian Real
and the increased gold price that prevailed during the second quarter,
resulted in strong cash flow being generated by the Group. This has
permitted the Group to repay in full US$3.5 million of secured loan that
was outstanding at 31 March 2020.
At the current time the Directors have assumed that mining operations
and gold production will continue at the Palito Complex at similar
levels of production for the third quarter and expect that, with a
return to a full workforce during the fourth quarter, production in the
fourth quarter will increase. There is no evidence, at this time, to
suggest that the authorities in Brazil have any intention to try and
close down or suspend mining activities as a result of the current
Coronavirus pandemic. On 20 March 2020, it was stipulated in Decree
10,282/20 that mineral activity was considered an essential business
sector and further actions have subsequently been invoked to prevent any
restrictive measures being applied to the supplies required by the
mining industry including transportation of supplies, availability of
materials required for processing, and the sale and transportation of
the mineral products.
The Group has renegotiated the terms relating to the settlement of a
final acquisition payment of US$12 million due to Equinox Gold Inc
("Equinox") in respect of the purchase of Chapleau Resources Limited and
its Coringa gold project (the "Coringa Deferred Consideration"). Under
the revised arrangement the Group will pay monthly instalments
commencing 1 May 2020 of US$500,000 per month, increasing to US$1
million per month from 1 August 2020 and payable thereafter ("the
"Deferral Period") until such time as certain conditions relating to
travel into and within Brazil are lifted (the "Travel Restriction
Conditions"). Within 6 weeks of the satisfaction of the Travel
Restriction Conditions the remaining portion of the Coringa Deferred
Consideration will become payable.
The Company announced on 22 January 2020 that it had entered into an
agreement with Greenstone Resources II LP ("Greenstone") for the issue
of and subscription by Greenstone of US$12 million of Convertible Loan
Notes the proceeds of which would be used to satisfy the Coringa
Deferred Consideration. However, due to the uncertainties created by
the impact of the Coronavirus, the Company and Greenstone agreed to
extend the period for the satisfaction of the conditions required for
completion of the subscription by Greenstone. On 24 April 2020 the
Company announced that it had agreed certain amendments to the original
agreement with Greenstone (the "Amended Subscription Deed").
Under the Amended Subscription Deed and a further subsequent amendment
agreed with Greenstone
(a) the Company may, prior to the satisfaction of the Travel
Restriction Condition only submit a subscription request in respect of
Convertible Loan Notes in the amount of US$500,000 each month. Following
the satisfaction of the Travel Restriction Condition, the Company may
then issue further subscription request for amounts of not less than
US$100,000 and not exceeding an amount equal to US$12,000,000 less the
sum of the aggregate principal amount of all Notes outstanding at that
time.
(b) the Convertible Loan Notes were initially unsecured and
subordinated to the Sprott Loan. Following the completion of the
repayment of the Sprott Loan on 30 June 2020, the security interests of
Sprott have been discharged and the Company has granted to Greenstone
the security package as originally envisaged save that a pledge of the
shares of Chapleau Resources Limited ("CRL") will continue to be held by
Equinox until such time as the Coringa Deferred Consideration is settled
in full. CRL holds 100% of the shares of Chapleau Exploração
Mineral Ltda which in turn holds the exploration licences for the
Coringa gold project
(d) The period during which the Company may issue an Issue
Notice to Greenstone expires on 30 June 2021
(e) Subject to Greenstone not having exercised its option to
convert the amount outstanding into Conversion Shares, the Convertible
Loan Notes are due to be repaid 16 months after the first Issue Date
which was 30 April 2020.
Based on the performance of the Group during the second quarter, and
having discharged the Sprott Loan, the Board considers, if current
production levels can be maintained and gold prices remain at current
levels, that the Group can generate adequate cash flow, at least in the
short term, to satisfy the on-going commitment in respect of the Coringa
Deferred Consideration without needing to make further drawdowns against
the Convertible Loan Notes. As at the current date, US$2.0 million has
been drawn down against the Convertible Loan Notes and US$9.5 million
remains outstanding in respect of the Coringa Deferred Consideration.
The Balance Sheet of the Group shows a net liability position of US$0.83
million at 30 June 2020 including the fair value of a cash liability of
US$11 million in respect of Coringa Deferred Consideration (reduced to
US$9.5 million subsequent to the period end. The Group plans to try and
finance this liability as much as possible from its operational cash
flow but can also obtain additional working capital through the issue of
the balance of US$12 million of Convertible Loan Notes to Greenstone
which will not be repayable until 31 August 2021.
Whilst the Directors consider that the assumptions they have used are
reasonable and based on the information currently available to them,
there remains significant uncertainty regarding further actions that
have not been anticipated but which may be required or imposed and may
impact on the ability of the Group to meet the operational plan and cash
flow forecast.
Whilst recognising all the above uncertainties, the Directors have
prepared the financial statements on a going concern basis. In the
event that additional short term funding is required, the Directors
believe there is a reasonable prospect of the Group securing further
funds as and when required in order that the Group can meet all
liabilities including the Coringa Deferred Consideration as and when
they fall due in the next 12 months. The Directors have been successful
in raising funding as and when required in the past and consider that
the Group continues to have strong support from its major shareholders
who been supportive of and provided additional funding when required on
previous occasions.
As at the date of this report both the medium and long term impact of
COVID-19 on the underlying operations, and the outcome of raising any
further funds that may be required, remains uncertain and this
represents a material uncertainty surrounding going concern. If the
Group fails to achieve the operational plan or to raise any additional
necessary funds, the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. The matters
explained indicate that a material uncertainty exists that may cast
significant doubt on the Group and Company's ability to continue as a
going concern. These financial statements do not show the adjustments to
the assets and liabilities of the Group or the Company if this was to
occur.
2. Finance expense and income
3 months ended 3 months ended 6 months ended
30 June 2020 30 June 2019 30 June 2020 6 months ended
(unaudited) (unaudited) (unaudited) 30 June 2019 (unaudited)
US$ US$ US$ US$
Interest expense on secured loan (58,036) (150,956) (203,127) (300,540)
Interest expense on convertible loan (38,907) -- (38,907) --
Interest expense on mineral property acquisition
liability (584,290) -- (584,290) --
Unwinding of discount on mineral property acquisition
liability -- (270,750) -- (532,271)
Expense in respect of non-substantial modification (195,137) (13,300) (235,037) (13,300)
Amortisation of arrangement fee for convertible loan (37,500) -- (37,500) --
Loss on revaluation of derivatives (4,191) (427,630) (4,191) (290,788)
(918,061) (862,636) (1,103,052) (1,136,899)
Gain in respect of non-substantial modification 724,438 172,900 724,438 172,900
Interest income 911 -- 911 2,217
-------------- -------------- -------------- -------------------------
Net finance expense (192,712) (689,736) (377,703) (961,782)
-------------- -------------- -------------- -------------------------
3. 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 Group has released the amount of US$536,270 as a
deferred tax charge during the six month period to 30 June 2020.
The Group has also incurred a tax charge in Brazil for the six month
period of US$917,343.
4. Earnings per Share
3 months ended 30 June 2020 3 months ended 30 June 2019 6 months ended 30 June 2020 6 months ended 30 June 2019
(unaudited) (unaudited) (unaudited) (unaudited)
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Profit
attributable
to ordinary
shareholders
(US$) 3,383,835 169,678 4,156,467 1,719,640
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Weighted
average
ordinary
shares in
issue 58,947,463 58,909,551 58,928,611 58,909,551
Basic profit
per share (US
cents) 5.74c 0.29c 7.05c 2.92c
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Diluted
ordinary
shares in
issue (1) 62,459,640 60,430,473 62,440,788 60,430,473
Diluted 5.42c 0.28c 6.66c 2.85c
profit per
share (US
cents)
------------- --------------------------- --------------------------- --------------------------- ---------------------------
(1) Based on 1,903,425 options vested and exercisable as at 30 June 2020
and 1,608,750 shares that could be issued pursuant to any exercise of
conversion rights attaching to the Convertible Loan Notes as at 30 June
2020 (30 June 2019: 1,520,922 options)
4. Post balance sheet events
On 4 August 2020, the Company announced that the period during which the
Company may issue an Issue Notice in respect of the US$12 million
Convertible Loan Note facility with Greenstone was extended from 31
December 2020 to 30 June 2021.
Save for the above and subsequent to the end of the quarter, 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.
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.
Assay Results
The assay results reported within this release include those provided by
the Company's own on-site laboratory facilities at Palito which may not
have been independently verified. Serabi closely monitors the
performance of its own facility against results from independent
laboratory analysis for quality control purpose. As a matter of normal
practice the Company sends duplicate samples derived from a variety of
the Company's activities to accredited laboratory facilities for
independent verification. Based on the results of this work, the
Company's management are satisfied that the Company's own facility shows
good correlation with independent laboratory facilities. The Company
would expect that in the preparation of any future independent
Reserve/Resource statement undertaken in compliance with a recognised
standard, the independent authors of such a statement would not use
Palito assay results but only use assay results reported by an
appropriately certificated laboratory.
Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be,
forward looking statements. Forward looking statements are identi ed 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 re ect 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
Attachment
-- Serabi - Q2 Results News Release
https://ml-eu.globenewswire.com/Resource/Download/c8fdc635-485b-4709-a6e2-bb833ecd9177
(END) Dow Jones Newswires
August 14, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Serabi Gold (LSE:SRB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Serabi Gold (LSE:SRB)
Historical Stock Chart
From Apr 2023 to Apr 2024
