TIDMSRB
For immediate release
18 June 2021
Serabi Gold plc
("Serabi" or the "Company")
Finance update and extension to reporting deadline
Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian-focused gold
mining and development company, is pleased to update the market on
financial performance for the year to date and to provide an update
on the audit of the financial results for the 2020 calendar
year.
Highlights
-- Following the successful equity placing closed on 9 March 2021 raising
gross proceeds of GBP12.5 million:
- The convertible loan notes that had been issued during 2020 (the "Loan Notes") have been fully repaid together with accrued interest and arrangement fees (US$2.5 million).
- Acquisition of Coringa project completed with payments during 2021 (including accrued interest) made to Anfield Gold Corp ("Anfield") of US$6.56 million.
-- Cash balances at end of May 2021 were US$16.4 million with all debt
obligations now repaid.
-- Cash balance at end June 2021 projected to be in excess of US$17.25
million.
Financial Performance for the year to date
During the five months ended 31 May 2021 (the "Period"), Serabi
and its subsidiaries (the "Group") has made ten shipments of gold
bullion and three shipments of copper/gold concentrate for an
estimated total of 13,836 ounces of gold. Two additional bullion
shipments are expected to be completed before the end of June 2021
with an additional shipment of copper/gold concentrate also
expected before the end of June 2021. The Group receives an 85 per
cent payment for sales of copper/gold concentrate at the date of
the initial sale with any balancing payment up to 5 to 6 months
later when final metal content and sales value is confirmed. A 90
per cent initial payment for bullion is made on the date of initial
sale with the balance approximately 10 days later once refining is
completed. Total net cash receipts for sales of bullion and
copper/gold concentrate to the end of May 2021 amounted to US$25.92
million including US$1.5 million being the initial cash payment for
a sale of copper/gold concentrate completed at the end of December
2020. The average gold price achieved for 2021 to date has been
US$1,796 per ounce.
In the Period cash expenditure for the mine operating costs,
including all mine development and underground drilling, amounted
to US$18.55 million.
Net cash generation in the Period before Group administration
costs, loan repayments, acquisition payments, taxes and capital
expenditure amounted to US$7.365 million.
In the Period the outstanding convertible loan notes together
with accrued interest and fees totalling approximately US$2.5
million have all been repaid and the remaining liability for the
purchase of the Coringa project, together with all accrued
interest, has also been repaid.
Cash balances at the Period end were US$16.4 million (US$6.6
million as at 31 December 2020) with no outstanding debt
obligations. All security that had been granted by the Group in
respect of the convertible loan notes and the outstanding Coringa
Project purchase price obligation has been released.
The Group's unaudited management accounts statement of cash
movements for the Period is set out below:
For the 5 months to
31 May 2021
UNAUDITED STATEMENT OF CASH MOVEMENTS (Note 1) US$000's
-------------------------------------------------------- -------------------
OPERATING ACTIVITIES
Net cash receipts from sales of bullion 16,289
Net cash receipts from sales of copper/gold concentrate 9,631
Cash payments for mine operating costs (18,554)
-------------------------------------------------------- -------------------
Net cash generated by operations 7,365
-------------------------------------------------------- -------------------
Administration expenditures (2,260)
Profits tax payments (145)
Net cash inflow from operational activities 4,960
-------------------------------------------------------- -------------------
INVESTING ACTIVITIES
Capital expenditure (980)
Exploration expenditure (1,236)
Predevelopment activities for Coringa (603)
Other acquisition payments (101)
Proceeds from sale of assets
Cash used for investing activities (2,920)
-------------------------------------------------------- -------------------
FINANCING ACTIVITIES
Net proceeds from issue of new equity 16,763
Repayment of Convertible Loan Notes, interest and
fee (2,534)
Purchase consideration for Coringa including interest (6,560)
Lease liabilities (158)
Net cash generated from financing activities 7,511
-------------------------------------------------------- -------------------
Net increase in cash and cash equivalents 9,551
Cash and cash equivalents at beginning of period 6,603
Exchange differences on cash 237
-------------------
Cash and cash equivalents at end of period 16,391
-------------------------------------------------------- -------------------
(1) The above statement of cash movements does not represent
accounting information prepared under IFRS or any other applicable
accounting standards. The figures quoted represent cash payments
and receipts only. The level of cash payments may include movements
in working capital, including increases or decreases in
inventories, amounts receivable or amount payable that may have
occurred between 31 December 2020 and 31 May 2021. As such the
Statement of Cash Movements is indicative only and does not
represent the Statement of Comprehensive Income for the same period
which will take account of changes in working capital,
depreciation, amortisation and other non-cash items of income and
expenditure. The figures have been prepared by management and have
not been subject to any external review or audit.
Reporting timetable update
Further to the guidance provided in "Inside AIM" on 27 January
2021, the London Stock Exchange and Companies House have agreed to
extend the reporting deadline for the Company to publish its
Accounts for up to three months to 30 September 2021, coinciding
with the date the Company is required to file the Accounts at
Companies House. The Board currently expects that the audited
results for 2020 will be issued during August 2021.
As previously reported, the 2020 audit process identified that
cash had been withdrawn without authorisation from the Group's
Brazilian subsidiary Serabi Mineracão SA ("SMSA"). This has delayed
the completion of the audit and the issue of the 2020 Financial
Statements. The 2020 audit identified that cash withdrawals
amounting to approximately US$80,000 had been made during 2020. The
Group's Brazilian lawyers FFA Legal ("FFA") identified further
instances of unauthorised cash withdrawals having been made dating
back to 2015 and following further work undertaken by the Forensic
Investigations group of Deloitte in Brazil a total of a further
US$260,000 of unauthorised cash payments has been identified for
which Deloitte and FFA consider that SMSA did not receive the
services documented to have been provided. Management believes that
FFA and Deloitte have now identified all material instances of
unauthorised or undocumented cash withdrawals and payments during
the review period and are not expecting the completion of the audit
to identify further material instances.
At this stage, the Company has received confirmation that all
the payments under review, were recorded through the accounts of
SMSA and expensed in the period in which they were incurred.
Management is therefore also satisfied that previously issued
financial statements of all periods being reviewed have accurately
reported the profit before tax of the Group and as a result
management does not expect there to be any requirement to restate
the previously reported profit before tax of any prior period. This
remains subject to finalisation of the Deloitte review and any
further work that the Group's UK auditor may request.
The work of Deloitte was initially focussed on the verification
of the initial findings of FFA to support any legal proceedings
that the Company may wish to instigate against any individuals and
at the request of the Board has been expanded to give the Board
comfort that the matter has been thoroughly investigated and all
control weaknesses identified and rectified as well as to cover the
work that the Group's UK auditor requires to be completed prior to
being able to deliver its audit opinion on the 2020 financial
results. Continued restrictions on internal travel within Brazil
and the need for Deloitte and Serabi to take appropriate
precautions to protect their employees against COVID-19 has
resulted in this work taking longer than originally projected. The
completion of the audit of the 2020 financial statements remains
dependent on completion of Deloitte's work programme. Management
currently expects that matters can be concluded promptly and that
the audited results for 2020 can be issued during August 2021.
Clive Line, Finance Director for Serabi commented:
"I am pleased to report that we have carried the momentum of the
fourth quarter of last year into the first five months of this
year, with operations continuing to perform well. The positive cash
flow being generated by the Company is being used to help fund the
exploration programmes as well as prepare for the commencement of
the portal development at Coringa which is expected to begin in
July 2021. As already reported in April, production for the first
quarter of 2021 of 8,087 ounces was a 16 per cent improvement
compared to the Group's budget and represented a 19 per cent and 11
per cent improvement compared to the gold production of Q3 and Q4
of 2020 respectively. Gold production for April and May has
continued to improve and the Group remains on course to achieve its
production guidance for the full year of between 33,000 and 36,000
ounces. The cash position is strong with cash at the end of May of
US$16.4 million and with the benefit of the initial proceeds from a
shipment of copper/gold concentrate due to be received before the
end of June are expected improve further to be in excess of
US$17.25 million at the end of June 2021.
"The Company's financial performance has continued to be
relatively strong and following the successful equity placing
completed in March 2021, the Group has pressed ahead with its
32,000 metre diamond drilling programme and is now finalising the
recruitment of the personnel required to start the portal
development at Coringa. We look forward to updating shareholders on
these developments in due course.
"With the delay in the completion of the 2020 Financial
Statements, the Company has been unable to provide its usual
quarterly financial updates. We have chosen to provide this
five-month cash flow report to keep the market updated with the
most recent financial information that it is able to provide. As
soon as it is practical and possible to do so, the Company will
revert to its normal quarterly reporting schedule."
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 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 / Michael Cornish Tel: +44 (0)20 7628 3396
Peel Hunt LLP
Joint UK Broker
Ross Allister / Alexander Allen Tel: +44 (0)20 7418 9000
Tamesis Partners LLP
Joint UK Broker
Charlie Bendon / Richard Greenfield Tel: +44 (0)20 3882 2868
Camarco
Financial PR
Gordon Poole / Nick Hennis Tel: +44(0) 20 3757 4980
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.
See
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(END) Dow Jones Newswires
June 18, 2021 05:00 ET (09:00 GMT)
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