Serabi Gold plc (AIM: SRB) (TSX: SBI) (LSE: SBI.WT), the Brazilian
focused gold exploration and development company, has published its
unaudited financial results for the three month period ending 31
March 2013 and at the same time has also published its Management's
Discussion and Analysis for the same period. Both documents,
together with this announcement, have been posted on the Company's
website at www.serabigold.com and are also available on SEDAR at
www.sedar.com.
Corporate Highlights for the last
quarter
Funding for Palito development
On 17 January 2013 the Company completed the placement of 270
million new ordinary shares to raise in aggregate UK£ 16.2 million
to finance the development and start-up of underground mining
operations at its Palito Mine. The placement of new shares was
underwritten by Fratelli Investments Limited, one of the Company's
major shareholders.
Progress on Palito Operations
- Mine dewatering completed in January 2013;
- New mine management team and contract mining personnel in
place;
- Development mining now underway;
- Stoping of remnant blocks commenced;
- Development ore stockpile being generated;
- Two main ventilation raises to surface have been started;
- Reassembly of the primary crushing circuit due for completion
by end of second quarter 2013;
- Remediation of flotation circuit due for completion by end of
second quarter 2013;
- Detailed engineering of milling circuit complete and
disassembly of old plant underway; and
- Initial mining fleet on site in February 2013. Further items
expected to be commissioned at start of third quarter of 2013.
Kenai Transaction
Announcement of proposed acquisition of Kenai Resources Limited
in May 2013
Significant Benefits of the transaction:
- Kenai's wholly owned subsidiary Gold Aura do Brasil Mineração
Ltda ("GOAB") owns the high-grade Sao Chico gold deposit, some 23
kilometres from Serabi's Palito gold mine. Sao Chico hosts a NI
43-101 compliant combined Measured and Indicated Mineral Resource
of 25,275 ounces of gold at 29.77 grammes per tonne ("g/t") and an
Inferred Mineral Resource of 71,385 ounces gold at 26.03 g/t.
- Serabi's nearby Palito gold mine is set to recommence gold
production by the end of 2013.
- The existing Palito gold recovery plant is currently being
refurbished and upgraded, and Sao Chico is expected to be the first
satellite gold resource to supplement Palito mine production with
high grade material, taking advantage of the excess plant capacity
available to quickly expand Serabi's future gold production.
- An exploration programme at Sao Chico including an approximate
6,000 metre drill campaign is expected to start mid-2013, with
strong potential to increase the current mineral resource.
Highlights of the Arrangement include:
- Shareholders of Kenai will receive 0.85 of one new ordinary
share of 5 pence par value of Serabi (a "Serabi Share") in exchange
for each Kenai Share held (the "Exchange Ratio").
- On completion of the Transaction, Kenai shareholders will own
approximately 20.8% of Serabi's enlarged issued share capital (and
22.1% on a fully diluted basis)
- Daniel Kunz, Chairman of Kenai will join the Serabi board on
closing (subject to satisfactory regulatory enquiries in compliance
with the AIM Rules)
- Kenai information circular to be issued before end May, with
Kenai's shareholder meeting to vote on the transaction scheduled
for July 5, 2013
Appointment of Peel Hunt as Joint
Broker
Peel Hunt LLP were appointed joint broker on April 22, 2013
Financial Highlights
3 months ended 3 months ended
31 March 2013 31 March 2012
(unaudited) (unaudited)
US$ US$
-------------- --------------
Operating Loss for period (1,359,226) (1,315,126)
Loss per ordinary share (basic and diluted) (0.43) cents (1.56) cents
3 months ended 3 months ended
31 March 2013 31 March 2012
(unaudited) (unaudited)
US$ US$
-------------- --------------
Mine development and fixed asset
expenditures during the period 2,079,391 51,910
Exploration and development expenditures
during the period 111,137 931,607
Cash at end of period 20,222,386 3,382,198
Equity Shareholders funds at end of period 63,907,398 47,388,560
Michael Hodgson, CEO,
said:
"We are continuing to make excellent progress with the mine
development and plant remediation works at Palito and remain
focused on starting up the plant and commencing gold production
before the end of 2013.
The announcement of the proposed acquisition of the nearby
high-grade Sao Chico project is a demonstration of our desire to
grow our production base through the development of satellite
deposits and we hope that Sao Chico will be the first of these. Sao
Chico has strong synergies with Palito in mining skills and ore
processing and in our opinion represents, like Palito, a low
capital, quick payback opportunity."
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:
http://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
Joint UK Broker
Matthew Armitt Tel: +44 (0)20 7418 9000
Andy Crossley Tel: +44 (0)20 7418 9000
Fox Davies Capital Ltd
Joint UK Broker
Jonathan Evans Tel: +44 (0)20 3463 5010
Blythe Weigh Communications Ltd
Public Relations
Tim Blythe Tel: +44 (0)20 7138 3204
Mobile: +44 7816 924626
Rob Kellner Tel: +44 (0)20 7138 3204
Mobile: +44 7800 554377
Copies of this release are available from the Company's website
at www.serabimining.com
Forward-looking statements This press
release contains forward-looking statements. All statements, other
than of historical fact, that address activities, events or
developments that the Company believes, expects or anticipates will
or may occur in the future (including, without limitation,
statements regarding the estimation of mineral resources,
exploration results, potential mineralization, potential mineral
resources and mineral reserves) are forward-looking statements.
Forward-looking statements are often identifiable by the use of
words such as "anticipate", "believe", "plan", may", "could",
"would", "might" or "will", "estimates", "expect", "intend",
"budget", "scheduled", "forecasts" and similar expressions or
variations (including negative variations) of such words and
phrases. Forward-looking statements are subject to a number of
risks and uncertainties, that may cause actual results or events to
differ materially from those discussed in the forward-looking
statements. Factors that could cause actual results or events to
differ materially from current expectations include, among other
things, without limitation, failure to establish estimated mineral
resources, the possibility that future exploration results will not
be consistent with the Company's expectations, the price of gold
and other risks identified in the Company's most recent annual
information form filed with the Canadian securities regulatory
authorities on SEDAR.com. Any forward-looking statement speaks only
as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or
obligation to update any forward-looking statement.
Qualified Persons Statement The
information contained within this announcement has been reviewed
and verified by Michael Hodgson, CEO of the Company. Mr Hodgson is
an Economic Geologist by training with over 25 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.
Quality Assurance and Quality Control
Procedures Disclosure
The Company has implemented and maintains a Serabi quality
assurance/quality control (QA/QC) protocol at its JDO Project as
defined in its "NI 43-101 Technical Report for the Jardim Do Ouro
Project, Para State, Brazil" dated 22 December 2010. This ensures
best industry practice in sampling and analysis of exploration and
resource definition samples. The insertion of field duplicates,
certified standards and blank samples into the sample stream form
part of the Serabi procedure (these act as an independent check on
contamination, precision and accuracy in the analytical
laboratory).
Assay results are reported once rigorous QAQC procedures have
been approved
Neither the Toronto Stock Exchange, nor any other securities
regulatory authority, has approved or disapproved of the contents
of this news release.
The following information, comprising the Finance Review, the
Income Statement, the Group Balance Sheet, Group Statement of
Changes in Shareholders' Equity and Group Cash Flow, is extracted
from the Condensed Interim Financial Statements and the Management
Discussion and Analysis.
The Company will, in compliance with Canadian regulatory
requirements, post its Management Discussion and Analysis for the
three months ended 31 March 2013 together with the Condensed
Interim Financial Statements on SEDAR at www.sedar.com. These
documents will also available from the Company's website -
www.serabigold.com.
Outlook
Remediation and development works are progressing well and the
Company remains ahead of schedule with the underground mine
development work benefitting from the earlier than planned
completion of the de-watering of the mine. Rehabilitation of the
processing plant is progressing in line with expectations and
accordingly the Company still anticipates being able to start the
commissioning of the plant before the end of 2013.
A number of refining and trading groups have been approached to
provide terms to the refining and purchase of the copper/gold
concentrate that will be produced at the Palito Mine and which is
expected to account for in excess of 70% of the revenues of the
operation. The Company is evaluating the submissions and expects to
be in a position to finalise terms in the coming few months.
The Company's strategy has been to develop additional satellite
high grade gold mining opportunities in relatively close proximity
to the current Palito mine and process plant, with a view that ore
mined could be treated through a centralised processing facility
located at Palito. The high grade Sao Chico property is at a more
advanced stage than Serabi's own discoveries at Currutela, Palito
South and Piaui. The proposed acquisition of the Sao Chico property
therefore presents the Company, if the transaction is approved by
Kenai shareholders, with the opportunity to reduce the timeframe
for the development of its first satellite deposit to augment
Palito mine production with further high grade feed, taking
advantage of the excess plant capacity available.
The first stage of activity at Sao Chico will be the
commencement of an estimated 6,000 metre diamond drilling programme
which will be supplemented by ground geophysics and surface
sampling to establish other potential areas of interest within the
Sao Chico exploration licence. The current Sao Chico resource
comprises approximately 25,000 Measured and Indicated ounces, and
71,000 Inferred ounces, both averaging over 26 g/t. over just 3
veins, and with 10 more veins identified.
Current design work on the Palito plant remediation will take
into account the potential future processing requirements of ore
taken from Sao Chico.
The Company's exploration activities at Palito will however be
limited whilst the Company focuses its attention and personnel
resources at Palito towards the remediation and development works.
The directors expect that future exploration activity at Palito
will be financed from the cash flow from gold production at Palito
and may therefore not be undertaken until such time as sufficient
and sustainable levels of cash flow are achieved.
FINANCE REVIEW
Results of Operations
The loss from operations decreased by US$320,001 from
US$1,384,267 for the 3 months ended 31 March 2012 to US$1,064,266
for the 3 month period ended 31 March 2013 a reduction of 23%
primarily arising from a change in the manner in which costs
associated with maintenance activities of the plant are treated for
accounting purposes and reduced depreciation costs.
In the 3 months to 31 March 2012 all costs relating to the
maintenance of the process plant were treated as an operating
expense as they were incurred, this cost for that 3 month period
being BrR$207,954 (US$117,694). Since the decision was taken by the
Board, at the end of June 2012, to proceed with the development of
the Palito Mine, the plant has been considered to be in a state of
refurbishment and all costs related to the plant are being
capitalised as part of the overall mine development costs and
therefore there is no comparable expense reported in the income
statement for the 3 month period to 31 March 2013.
Administration costs have shown an overall increase from
US$810,786 for the 3 month period ended 31 March 2012 to US$908,753
for the 3 month period to 31 March 2013. The expense for the 3
months to 31 March 2012 included a charge in respect of labour
claims amounting to US$182,531 and there has no similar expense
recorded for the period to 31 March 2013. The Company has made a
provision in the 3 month period ended 31 March 2013 of $300,000 in
respect of bonus payments that it anticipates making to senior
management personnel in respect of the preceding financial year's
performance review period. Excluding these two items from the
analysis, administration costs for the 3 months to 31 March 2103
show a small reduction of US$19,000 in comparison with the 3 months
to 31 March 2012.
The reduction in depreciation charges between the two periods
reflects many of the Company's assets reaching the end of their
original forecast lives for amortisation purposes and have
therefore now been fully amortised. Depreciation charges for the 3
months to 31 March 2013 are US$107,667 compared with US$426,637 for
the 3 month period to 31 March 2012
The Company recorded a foreign exchange loss of US$255,218 in
the 3 month period to 31 March 2013 which compares with a foreign
exchange gain of US$87,190 recorded for the 3 months ended 31 March
2012. The loss for the 3 months to 31 March 2013 primarily
comprises losses on cash holdings denominated in GB Pounds Sterling
and Euros. The Company holds funds in certain currencies in
anticipation of future expenditures that are anticipated to be
settled in those currencies. These currency holdings were acquired
early in the quarter, which saw a period of strengthening of the US
dollar against most major currencies resulting in these book
exchange losses. Subsequent strengthening of Sterling following the
end of the quarter will have reversed some of these recorded
losses.
Net interest charges for the 3 month period to 31 March 2013
were US$39,742 compared with US$18,049 for the corresponding period
3 month period to 31 March 2012. An analysis of the composition of
these charges is set out in the table below:
2013 2012
US$ US$
Interest on short term loan 26,630 -
Interest expense on convertible loan stock 15,639 13,927
Other interest and finance expenses 230 5,301
------------ -------------
42,499 19,228
Interest income (2,757) 1,179
------------ -------------
39,742 18,049
------------ -------------
Interest charges on the short term loan relate to a US$6.0
million facility provided by Fratelli Investments Limited
("Fratelli") which was entered into on 1 October 2012. Under the
loan agreement a facility fee of 3% was payable to Fratelli and
interest accrued at the rate of 12% per annum. The facility was
repaid in January 2013 from the proceeds of a UK£ 16.2 million
placement of new ordinary shares that was completed on 17 January
2013.
Other interest and finance expenses are primarily related to the
Brazilian operation and the reduction in the 3 months to 31 March
2013 compared with the 3 months to 31 March 2012 reflects reduced
levels of settlements with long term creditors to which interest is
being applied and also reduced levels of penalties from tax
authorities for past adjustments of taxes due to be collected by
the Company on behalf of both the Federal and State tax
authorities.
Liquidity and Capital Resources
The Company had a working capital position of US$19,177,385, at
31 March 2013 compared to US$(2,760,102) at 31 December 2012. The
working capital position at 31 December 2012 was inclusive of a
US$4.5 million short term loan received from a major shareholder
which was repaid in January 2013, following the successful
completion of a share placement on 17 January 2013 raising gross
proceeds of UK£ 16.2 million This share placement and the repayment
of the loan comprise the principle reasons for the significant
improvement in the working capital position of the Company which
has resulted in an increase in cash resources available to the
company of US$17.64 million compared with 31 December 2012.
The levels of inventories have increased by US$73,000 compared
with 31 December 2012, reflecting the increasing levels of activity
and comprise consumables for the development mining activities that
are now underway. Equally the level of creditors has increased by
approximately US$294,000 as orders for equipment and consumables
are placed.
The Company does not have any asset backed commercial paper
investments. As the Company has no revenue and has in recent years
primarily supported its activities by the issue of further equity,
the working capital position at any time reflects the timing of the
most recent share placement completed by the Company.
During the three month period ended 31 March 2013, the Company
issued 270,000,000 Ordinary Shares for gross cash proceeds of UK£
16.2 million. The placement had been underwritten by one of the
Company's major shareholders who received an underwriting fee of
8,135,035 Warrants in respect of the placement. Each Warrant
entitles the holder to subscribe for one Ordinary Share at a price
of UK£ 0.10 at any time until 16 January 2015.
The Company has, during the three month period ended 31 March
2013, incurred costs of US$111,000 for development and exploration
expenditures on its mineral properties, US$240,000 on asset
purchases, US$1,839,000 related to the rehabilitation and
development of the Palito Mine and used cash of US$1,127,000 to
support its operating activities. Further details of the
exploration and development activities conducted during the period
are set out elsewhere in this MD&A.
On 31 March 2013, the Company's total assets amounted to
US$68,764,922 which compares to the US$48,203,224 reported at 31
December 2012. The current asset component has increased by some
US$17,888,000 million reflecting the higher cash balances following
the completion of the share placement with the non-current asset
component increasing by US$2,674,049 Whilst some US$2.2 million has
been expended on non-current assets the exchange rate movements
between the Brazilian Real and the United States Dollar has
resulted in exchange variations increasing the carrying value of
exploration interests by US$0.2 million and of mining property,
plant and equipment by US$0.37 million. Depreciation charges of
US$0.1 million during the 3 months ended 31 March 2013 account for
the remaining change in value compared to 31 December 2012. Total
assets are mostly comprised of property, plant and equipment, which
as at 31 March 2013 totalled US$29,187,365 (December 2012:
US$26,848,991), of which US$3.7 million relates to recent project
development expenditures at the Palito Mine and deferred
exploration and development cost which as at 31 March 2013 totalled
US$17,696,480 (December 2012: US$17,360,805), of which US$16.6
million relates to capitalised exploration expenditures at, or in
close proximity to, the Palito Mine. The Company's total assets
also included cash holdings of US$20,222,386 (December 2012:
US$2,582,046).
Receivables of US$182,018 as at 31 March 2013 have increased
compared to 31 December 2012 when the receivables balance was
US$85,509. The receivables as of 31 March 2013 includes a down
payment of approximately US$87,000 in respect of mining equipment
that is due to be delivered to the project site during the second
quarter of 2013. The remaining balance represents other deposits
paid by the Company. Prepayments as of 31 March 2013 were
US$681,188 compared with US$603,005 as at 31 December 2012, an
increase of US$78,000. The prepayments primarily represent prepaid
taxes in Brazil amounting to US$536,000, of which the majority is
federal and state sales taxes which the Company expects to recover
either through off-set against other federal tax liabilities or
through recovery directly.
The Company's total liabilities at 31 March 2013 were
US$4,857,524 (December 2012: US$8,942,223). The total liabilities
at 31 December 2012 included the short term loan payable to
Fratelli Investments Limited which, including interest, amounted to
US$4,580,745 as well as accounts payable to suppliers and other
accrued liabilities of US$2,384,724. At 31 March 2013 accounts
payable to suppliers and other accrued liabilities totalled
$2,834,933. This increase reflects a provision of $300,000 for 2012
bonus entitlements for senior management as well as a general
increase reflecting the higher levels of activity. The total
liabilities include US$386,729 including accrued interest (December
2012: US$364,656) attributable to the £ 300,000 loan from a related
party, which has a repayment date of 31 October 2014 subject to the
right of the holder at any time, on one or more occasions, on or
before the repayment date, to convert any of the outstanding
amounts owed by the Company to Ordinary Shares at a price of 15
pence per Ordinary Share. It also includes the amount of
US$1,635,873 (December 2012: US$1,612,098) in respect of provisions
including US$1,241,434 (December 2012: US$1,223,392) for the cost
of remediation of the current Palito Mine site at the conclusion of
operational activity.
During the early part of 2012 the Company commissioned a
Preliminary Economic Assessment ("PEA") of the viability of
re-commencing mining operations at the Palito Mine. The report
which was completed and published in June 2012 was positive and the
Company entered into a conditional subscription agreement with
Fratelli Investments Limited ("Fratelli") on 2 October 2012 to
subscribe for and underwrite a placement of new shares to finance
the development and start-up of production at the Palito gold mine.
In addition, Fratelli agreed to provide an interim secured loan
facility of US$6.0 million to provide additional working capital to
the Company and to enable it to commence the initial works at
Palito. The placing of 270 million new Ordinary Shares with
Fratelli and other subscribers was completed on 17 January 2013,
raising gross proceeds of UK£ 16.2 million. The Company has repaid
out of the proceeds the amount of the loan facility that had been
drawn down, which at that time was US$4.5 million plus accrued
interest. Management considers that the Company has adequate access
to capital to be able to complete the necessary mine development
and process plant and infrastructure rehabilitation works that are
required in order to be able to commence gold production before the
end of 2013. From the time that production operations commence at
planned rates management anticipates that the Company will have
sufficient cash flow to be able to meet all its obligations as and
when they fall due and to, at least in part, finance the
exploration and development activities that it would like to
undertake on its other exploration projects.
There are, however, risks associated with the commencement of
any new mining and processing operation whereby unforeseen
technical and logistical events result in additional time being
required for commissioning or additional costs needing to be
incurred, giving rise to the possibility that additional working
capital may be required to fund these delays or additional capital
requirements. Should additional working capital be required the
Directors consider that further sources of finance could be secured
within the required timescale.
SERABI GOLD PLC
Condensed Consolidated Statements of Comprehensive Income
--------------------------
For the three months ended
31 March
2013 2012
(expressed in US$) (unaudited) (unaudited)
------------ ------------
CONTINUING OPERATIONS
Revenue -- --
Operating expenses -- (117,694)
------------ ------------
Gross loss -- (117,694)
Administration expenses (908,753) (810,786)
Share based payments (47,846) (29,150)
Depreciation of plant and equipment (107,667) (426,637)
------------ ------------
Operating loss (1,064,266) (1,384,267)
Foreign exchange (loss)/gain (255,218) 87,190
Finance expense (42,499) (19,228)
Finance income 2,757 1,179
------------ ------------
Loss before taxation (1,359,226) (1,315,126)
Income tax expense -- --
------------ ------------
Loss for the period from continuing operations
(1) (2) (1,359,226) (1,315,126)
------------ ------------
Other comprehensive income (net of tax)
Exchange differences on translating foreign
operations 609,475 1,166,852
------------ ------------
Total comprehensive loss for the period (2) (749,751) (148,274)
------------ ------------
------------ ------------
Loss per ordinary share (basic and diluted) (1) (0.43c) (1.56c)
------------ ------------
(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
31 March 31 March 31 December
2013 2012 2012
(expressed in US$) (unaudited) (unaudited) (audited)
----------- ----------- -----------
Non-current assets
Development and deferred exploration 17,696,480 17,998,296 17,360,805
costs
Property, plant and equipment 29,187,365 28,690,108 26,848,991
----------- ----------- -----------
Total non-current assets 46,883,845 46,688,404 44,209,796
----------- ----------- -----------
Current assets
Inventories 795,485 1,140,908 722,868
Trade and other receivables 182,018 107,047 85,509
Prepayments and accrued income 681,188 661,105 603,005
Cash and cash equivalents 20,222,386 3,382,198 2,582,046
----------- ----------- -----------
Total current assets 21,881,077 5,291,258 3,993,428
----------- ----------- -----------
Current liabilities
Trade and other payables 2,295,152 2,186,333 2,001,683
Interest bearing liabilities -- -- 4,580,745
Accruals 408,540 115,214 171,102
----------- ----------- -----------
Total current liabilities 2,703,692 2,301,547 6,753,530
----------- ----------- -----------
Net current assets / (liabilities) 19,177,385 2,989,711 (2,760,102)
----------- ----------- -----------
Total assets less current liabilities 66,061,230 49,678,115 41,449,694
----------- ----------- -----------
Non-current liabilities
Trade and other payables 131,230 510,506 211,939
Provisions 1,635,873 1,460,029 1,612,098
Interest bearing liabilities 386,729 319,020 364,656
----------- ----------- -----------
Total non-current liabilities 2,153,832 2,289,555 2,188,693
----------- ----------- -----------
Net assets 63,907,398 47,388,560 39,261,001
----------- ----------- -----------
Equity
Share capital 52,773,993 31,416,993 31,416,993
Share premium reserve 54,083,565 50,306,920 50,182,624
Option reserve 2,069,189 1,990,465 2,019,782
Other reserves 427,615 780,028 780,028
Translation reserve (3,996,836) 91,685 (4,606,311)
Accumulated losses (41,450,128) (37,197,531) (40,532,115)
----------- ----------- -----------
Equity shareholders' funds 63,907,398 47,388,560 39,261,001
----------- ----------- -----------
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 2012 prepared under IFRS as adopted in
the EU and with IFRS and their interpretations adopted by the
International Accounting Standards Board will be 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 and
the future availability of project finance. 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
(unaudited) capital premium reserve
------------ ----------- -----------
Equity shareholders'
funds at 31 December
2011 29,291,551 48,292,057 1,956,349
------------ ----------- -----------
Foreign currency
adjustments -- -- --
Loss for the period -- -- --
------------ ----------- -----------
Total comprehensive
income for the period -- -- --
Issue of new ordinary
shares for cash 2,125,442 2,047,509 --
Costs associated with
issue of new ordinary
shares for cash -- (32,646) --
Share option expense -- -- 34,116
------------ ----------- -----------
Equity shareholders'
funds at 31 March 2012 31,416,993 50,306,920 1,990,465
------------ ----------- -----------
Foreign currency
adjustments -- -- --
Loss for the period -- -- --
------------ ----------- -----------
Total comprehensive
income for the period -- -- --
Costs associated with
issue of new ordinary
shares for cash -- (124,296) --
Share options lapsed -- -- (87,276)
Share option expense -- -- 116,593
------------ ----------- -----------
Equity shareholders'
funds at 31 December
2012 31,416,993 50,182,624 2,019,782
------------ ----------- -----------
Foreign currency
adjustments -- -- --
Loss for the period -- -- --
------------ ----------- -----------
Total comprehensive
income for the period -- -- --
Issue of new ordinary
shares for cash 21,357,000 4,182,600 --
Costs associated with
issue of new ordinary
shares for cash -- (281,659) --
Warrants lapsed in period -- -- --
Share option expense -- -- 49,407
------------ ----------- -----------
Equity shareholders'
funds at 31 March 2013 52,773,993 54,083,565 2,069,189
------------ ----------- -----------
(expressed in US$)
Other Translation Accumulated Total
(unaudited) reserves reserve losses equity
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 December
2011 702,095 (1,075,167) (35,882,405) 43,284,480
----------- ----------- ----------- -----------
Foreign currency
adjustments -- 1,166,852 -- 1,166,852
Loss for the period -- -- (1,315,126) (1,315,126)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- 1,166,852 (1,315,126) (148,274)
Issue of new ordinary
shares for cash 77,933 -- -- 4,250,884
Costs associated with
issue of new ordinary
shares for cash -- -- -- (32,646)
Share option expense -- -- -- 34,116
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 March 2012 780,028 91,685 (37,197,531) 47,388,560
----------- ----------- ----------- -----------
Foreign currency
adjustments -- (4,697,996) -- (4,697,996)
Loss for the period -- -- (3,421,860) (3,421,860)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- (4,697,996) (3,421,860) (8,119,856)
Costs associated with
issue of new ordinary
shares for cash -- -- -- (124,296)
Share options lapsed -- -- 87,276 --
Share option expense -- -- -- 116,593
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 December
2012 780,028 (4,606,311) (40,532,115) 39,261,001
----------- ----------- ----------- -----------
Foreign currency
adjustments -- 609,475 -- 609,475
Loss for the period -- -- (1,359,226) (1,359,226)
----------- ----------- ----------- -----------
Total comprehensive
income for the period -- 609,475 (1,359,226) (749,751)
Issue of new ordinary
shares for cash 88,800 -- -- 25,628,400
Costs associated with
issue of new ordinary
shares for cash -- -- -- (281,659)
Warrants lapsed in period (441,213) -- 441,213 --
Share option expense -- -- -- 49,407
----------- ----------- ----------- -----------
Equity shareholders'
funds at 31 March 2013 427,615 (3,996,836) (41,450,128) 63,907,398
----------- ----------- ----------- -----------
SERABI GOLD PLC
Condensed Consolidated Cash Flow Statements
For the three months
ended
31 March
2013 2012
(expressed in US$) (unaudited) (unaudited)
------------ ------------
Operating activities
Operating loss (1,064,266) (1,384,267)
Depreciation - plant, equipment and mining
properties 107,667 426,637
Option costs 47,846 29,150
Interest paid (107,605) (5,301)
Foreign exchange (305,314) 55,616
Changes in working capital
Increase in inventories (61,587) (6,379)
Increase in receivables, prepayments and
accrued income (166,936) (42,208)
Increase/(decrease) in payables, accruals and
provisions 423,347 (480,318)
------------ ------------
Net cash outflow from operations (1,126,848) (1,309,896)
------------ ------------
Investing activities
Purchase of property, plant and equipment and
projects in construction (2,079,391) (51,910)
Exploration and development expenditure (111,137) (931,607)
Interest received 2,757 1,179
------------ ------------
Net cash outflow on investing activities (2,187,771) (982,338)
------------ ------------
Financing activities
Issue of ordinary share capital 25,628,400 4,250,883
Repayment of short-term loan (4,500,000) --
Payment of share issue costs (281,659) (32,645)
------------ ------------
Net cash inflow from financing activities 20,846,741 4,218,238
------------ ------------
Net increase in cash and cash equivalents 17,532,122 1,926,004
Cash and cash equivalents at beginning of period 2,582,046 1,406,458
Exchange difference on cash 108,218 49,736
------------ ------------
Cash and cash equivalents at end of period 20,222,386 3,382,198
------------ ------------
1. Basis of preparation These interim
accounts are for the three month period ended 31 March 2013.
Comparative information has been provided for the unaudited three
month period ended 31 March 2012 and, where applicable, the audited
twelve month period from 1 January 2012 to 31 December 2012.
The accounts 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 2012
and those envisaged for the financial statements for the year
ending 31 December 2013. 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.
The condensed set of financial statements for the three month
period ended 31 March 2013 has been reviewed by the auditors as set
out in their report.
(i) Going concern and availability of project
finance In common with many companies in the exploration and
development stages, the Company raises its finance for exploration
and development programmes in discrete tranches. During the early
part of 2012 the Company commissioned a Preliminary Economic
Assessment ("PEA") of the viability of re-commencing mining
operations at the Palito Mine. The report which was completed and
published in June 2012 was positive and the Company entered into a
conditional subscription agreement with Fratelli Investments
Limited ("Fratelli") on 2 October 2012 to subscribe for and
underwrite a placement of new shares to finance the development and
start-up of underground mining activities at the Palito gold mine.
In addition Fratelli agreed to provide an interim secured loan
facility of US$6 million to provide additional working capital to
the Company and to enable it to commence the initial works at
Palito. The placing of 270 million new Ordinary Shares with
Fratelli and other subscribers was completed on 17 January 2013,
raising gross proceeds of UK£ 16.2 million. The Company has repaid
out of the proceeds the amount of the loan facility that had been
drawn down, which at that time was US$4.5 million plus accrued
interest. Management considers that the Company has adequate access
to capital to be able to complete the necessary mine development
and process plant and infrastructure rehabilitation works that are
required in order to be able to commence gold production before the
end of 2013. From that time management anticipate that the Company
will have sufficient cash flow to be able to meet all its
obligations as and when they fall due and to, at least in part,
finance the exploration and development activities that it would
like to undertake on its other exploration projects.
There are, however, risks associated with the commencement of
any new mining and processing operation whereby unforeseen
technical and logistical events result in additional time being
required for commissioning or additional costs needing to be
incurred, giving rise to the possibility that additional working
capital may be required to fund these delays or additional capital
requirements. 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 will be forthcoming. These conditions
indicate the existence of a material uncertainty which may cast
doubt over the Group's and the Company'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.
These financial statements do not reflect the adjustments to
carrying values of assets and liabilities and the reported expenses
and balance sheet classifications that would be necessary should
the going concern assumption be inappropriate. These adjustments
could be material.
(ii) Impairment The Directors have
undertaken a review of the carrying value of the mining and
exploration assets of the Group and given particular consideration
to the results of the PEA, the current operational status of Palito
and the potential risks and implications of starting up a past
producing gold mine. As part of this review they have assessed the
value of the existing Palito Mine asset on the basis of the
projected value in use that could be expected should the Company
follow the re-development, start-up and future mining plans
proposed in the PEA. The carrying values of assets have not been
adjusted to reflect a failure to raise sufficient funds, not
achieving the projected levels of operation or that, if a sale
transaction were undertaken, the proceeds may not realise the value
as stated in the accounts.
(iii) Inventories Inventories are valued
at the lower of cost and net realisable value.
(iv) Property, plant and equipment
Property, plant and equipment are depreciated over their estimated
useful lives.
(v) Mining property and assets in
construction The Group commenced commercial production at the
Palito mine effective 1 October 2006. Prior to this date all
revenues and operating costs were capitalised as part of the
development costs of the mine. Effective from 1 October 2006 the
accumulated development costs of the mine were re-classified as
Mining Property costs and such cost will be amortised over the
anticipated life of the mine on a unit of production basis. As the
underground mine is currently on care and maintenance and there is
no depletion of the reserves and resources attributable to the
mine, no amortization charge has been recorded in the period.
Costs related to work on the remediation, rehabilitation and
development of the Palito mine, the process plant and other site
infrastructure are being capitalised together with a portion of
general administration costs incurred in Brazil as Assets in
Construction. Upon the successful commencement of commercial
production, these costs will be transferred to Mining Assets and
amortised on a unit of production basis.
(vi) Revenue Revenue represents amounts
receivable in respect of sales of gold and by-products. Revenue
represents only sales for which contracts have been agreed and for
which the product has been delivered to the purchaser in the manner
set out in the contract. Revenue is stated net of any applicable
sales taxes. Any unsold production and in particular concentrate is
held as inventory and valued at production cost until sold.
(vii) Currencies The condensed financial
statements are presented in United States dollars (US$ or "$").
Other currencies referred to in these condensed financial
statements are GB pounds ("GB£ "), Canadian dollars ("C$") and
Brazilian Reais ("BrR$").
Transactions in currencies other than the functional currency of
a company are recorded at a rate of exchange approximating to that
prevailing at the date of the transaction. At each balance sheet
date, monetary assets and liabilities that are denominated in
currencies other than the functional currency are translated at the
amounts prevailing at the balance sheet date and any gains or
losses arising are recognised in profit or loss.
On consolidation, the assets and liabilities of the Group's
overseas operations that do not have a US Dollar functional
currency are translated at exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average
exchange rate for the period. Exchange differences arising on the
net investment in subsidiaries are recognised in other
comprehensive income.
(viii) Cash and cash equivalents Cash and
cash equivalents include cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts. Bank
overdrafts are shown within interest bearing liabilities in current
liabilities on the balance sheet.
Enquiries: Serabi Gold plc Michael Hodgson Chief
Executive Tel: +44 (0)20 7246 6830 Mobile: +44 (0)7799
473621
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