For immediate
release 30
March 2017
Serabi Gold plc("Serabi" or the
"Company")Audited Results for the year ended 31 December
2016
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused
gold mining and development company, today releases its audited
results for the year ended 31 December 2016.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND
TWELVE MONTHS ENDING 31 DECEMBER 2016 |
|
3 months to 31 Dec 2016US$ |
12 months to 31 Dec 2016US$ |
3 months to 31 Dec 2015(1)US$ |
12 months to 31 Dec 2015(1)US$ |
Revenue |
10,472,823 |
52,593,751 |
8,042,431 |
35,086,113 |
Cost
of Sales |
(7,077,485) |
(32,906,426) |
(4,235,007) |
(23,585,063) |
Depreciation and amortisation charges |
(1,832,637) |
(8,384,738) |
(2,236,959) |
(5,840,769) |
Gross
profit |
1,562,701 |
11,302,587 |
1,570,465 |
5,660,281 |
|
|
|
|
|
(Loss) / profit before tax |
(435,552) |
1,870,179 |
285,221 |
476,294 |
Profit / (loss) after tax |
2,958,630 |
4,430,292 |
(239,811) |
(48,738) |
Earnings / (loss) per ordinary share (basic) |
0.423 cents |
0.659 cents |
(0.036 cents) |
(0.01 cents) |
|
|
|
|
|
Average gold price received |
US$1,207 |
US$1,245 |
US$1,105 |
US$1,151 |
|
|
|
|
|
|
|
|
As at 31 Dec 2016 |
As at 31 Dec 2015 |
Cash
and cash equivalents |
|
|
4,160,923 |
2,191,759 |
Net
assets |
|
|
63,378,973 |
46,783,645 |
|
|
|
|
|
Cash
Cost and All-In Sustaining Cost ("AISC") |
|
|
|
|
|
|
|
12 months to 31 Dec 2016 |
12 months to 31 Dec 2015(1) |
Gold
production for cash cost and AISC purposes (3) |
|
|
39,390 |
29,841(2) |
|
|
|
|
|
Total
Cash Cost of production (per ounce) |
|
|
US$770 |
US$677 |
Total AISC of production (per ounce) |
|
|
US$965 |
US$892 |
- The Sao Chico Mine was only declared to be in Commercial
Production with effect from 1 January 2016 and all costs and
revenues relating to this mine were capitalised prior to this
date. The Income Statements for 2015 therefore only reflect
the revenues and costs arising from the gold produced from the
Palito Mine and the Cash Cost and AISC for the 2015 comparative
period therefore also only reflect the activities from the Palito
Mine.
- Excludes gold production of 2,788 ounces from the Sao Chico
Mine which was not in commercial production during 2015.
- 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.
2016 Financial Highlights
- Cash Cost for the year of US$770 per ounce.
- All-In Sustaining Cost for the year of US$965 per ounce.
- Gross profit from operations of US$11.30 million for 2016 which
represents an improvement of over 99 per cent compared to the same
12 month period of 2015.
- Post tax profit of US$4.43 million compared with a loss of
US$0.048 million for the same 12 month period of 2015.
- Earnings per share of 0.66 cents for 2016.
- Cash holdings of US$4.16 million at 31 December 2016 (31
December 2015 : US$2.2 million)
- Average gold price of US$1,245 received on gold sales in
2016.
- Negligible borrowings with secured debt facilities outstanding
at 31 December of only US$1.37 million.
- Borrowings of approximately US$8.50 million settled during the
year.
- Unit production costs per tonne reduced by 12.7 per cent in
local currency terms year on year.
2017 Guidance
- Forecast gold production for 2017 expected to be approximately
40,000 ounces.
- Cost guidance for 2017 of an All-In Sustaining Cost of US$950
to US$975 per ounce.
Post Year End Highlights
- Approximately 6,600 ounces of gold produced during the
first two months of 2017.
2016 Operational Highlights
- Record annual production of 39,390 ounces of gold, exceeding
guidance and representing a 21 per cent improvement compared with
the 2015 calendar year.
- Plant capacity increased with installation of third ball
mill. Average milled tonnage now approximately 500 tonnes per
day ("tpd").
- Total tonnage mined of approximately 159,000 tonnes, a 17 per
cent increase compared with the preceding year.
- Total tonnage processed of approximately 159,000 tonnes,
representing a 22 per cent improvement compared with 2015.
- Milled ore grades of 8.11 grammes per tonne ("g/t") of
gold.
- New exploration licences at Sao Chico have been acquired
immediately to the east and west of the Sao Chico Mine deposit,
offering excellent opportunity to expand the deposit, with
exploration already underway.
- Ground induced polarisation ("IP") survey undertaken at Sao
Chico has identified some excellent targets within 500 metres of
the current operation.
- The Company has three additional gold discoveries within three
kilometres of the Palito deposit providing further potential for
near term resource and production growth.
- At Sao Chico the main ramp has now been deepened to the 71mRL,
some 170 vertical metres below surface.
- Two new sectors brought into development at Palito, being Senna
to the west and Chico da Santa to the east.
- In the Palito Main Zone, the main ramp has now reached the
-50mRL, where the G3 vein has been intersected and is ready to be
developed.
Fourth quarter 2016 Operational
Highlights
- Gold production of 9,413 ounces for the fourth quarter of 2016
(Q3 2016 - 10,233 ounces).
- Mine ore production totalled 44,579 tonnes for the fourth
quarter (Q3 2016 - 43,133 tonnes):
34,611 tonnes at a grade of 7.38 g/t of
gold from Palito. 9,968 tonnes at a grade of 14.38 g/t of gold
from Sao Chico.
- 40,485 tonnes of ore processed through the plant during the
quarter for the combined mining operations, at a combined grade of
7.60 g/t of gold.
- 2,624 metres of horizontal mine development completed in the
quarter with 1,928 metres completed at Palito and 696 metres at Sao
Chico.
- During the quarter, the installation of a new carbon
regeneration kiln was completed, this is now effectively
regenerating 'fouled' carbon and early results suggest significant
improvement in gold recoveries.
- At Palito the development of the Senna vein is continuing, with
sublevels being developed on 250mRL, 237mRL, 225mRL, 210mRL and
ramping down to the 180mRL.
- During the fourth quarter, a total of 2,814 metres of
underground diamond drilling was completed across both sites.
At Sao Chico, a combination of exploration and evaluation drilling
totalling 1,267 metres was completed, mostly drilling the inferred
resource blocks below the 86mRL. At Palito, a total of 1,547
metres of mostly exploration drilling was completed, principally
drilling the inferred resource blocks on the Senna vein below the
200mRL.
- At the year end, the combined surface stockpiles at Palito and
Sao Chico totalled 21,000 tonnes of ore with an average grade of
4.0 g/t of gold.
Mike Hodgson, CEO of Serabi commented,
"2016 has been an excellent year for the Company. As
announced on 23 January 2017 we produced 39,390 ounces of gold for
the year, exceeding our production guidance. The financial results
that we have released today reflect the strong operational
performance with a gross operating profit reported of over US$10.6
million. With the cash generated we have been able to settle
approximately US$8.50 million of debt that the Company had
outstanding at the end of 2015 and significantly strengthen the
balance sheet.
"We continue to look for efficiencies and improvements and it is
pleasing to report that our unit production costs per tonne have
decreased year on year by almost 13 per cent when looked at in
local currency terms. Our results have been unavoidably
impacted by the 20 per cent strengthening of the Brazilian Real
over the past 12 months and, whilst many of the forecasts that we
read indicate a weakening of the currency during 2017, we work on
the principal of focussing on the items that we can control and
therefore our simple objective is to reduce our costs to the lowest
levels possible.
"2017 will, from an operational perspective, be a period of
consolidation. Both the Palito and Sao Chico Mines are now in
a reasonably steady state and at the current time we are
forecasting production of 40,000 ounces for the year, similar to
the output for 2016. Whilst opportunities may present
themselves that could create gold production improvements at both
Palito and Sao Chico, significant future production growth is most
likely to come from establishing new mineable ore-bodies. I
am hopeful that during 2017 we can re-invest surplus cash into
exploration programmes that will generate these additional
ore-bodies. With four discoveries already made at Palito and
the Currutela discovery certainly looking as if it is a strike
extension of the Palito deposit I am very confident that the
probability of successfully increasing our production over the next
12 to 18 months is high.
"In addition, the Sao Chico Mine sits within what is a larger
regional shear structure and having secured the exploration
licences to the east and west and with numerous historic gold
occurrences in the area, it seems likely that future exploration
programmes will identify additional mineable resources within the
vicinity of the existing Sao Chico deposit. Whilst the
exploration here is less developed and, unlike Palito we have no
existing drilled discoveries, considering the geological setting,
we are of the view that the Sao Chico Mine, whilst smaller today
than Palito, has the scope to expand significantly and ultimately
host a larger mineral resource than Palito. Whilst the ground
geophysics programme that we started at the end of 2016 had to be
suspended due to an early onset of the wet season, the initial
results were very encouraging and identified a number of
significant anomalies that appear larger that Sao Chico
itself. We want to restart and complete the programme as soon
as conditions permit and, if successful, will look to follow this
up with some initial surface drilling.
"When I look back to 12 months ago my priorities were to ensure
that we met our production guidance and paid down our debt. I
am pleased that we exceeded our initial guidance by 6.5 per cent
and settled almost 75 per cent of our debt. For this next 12
months we will focus on identifying and developing the future
production growth for the Group. Our target is to expand
annualised production by the end of 2018 to 60,000 to 70,000 ounces
and for a similar level of increase within a further two
years. I strongly believe that we can achieve this from the
opportunities that we have in our current tenements and I hope that
before the end of this year I can present hard evidence that this
growth plan is well underway to being realised."
Chairman's Statement
Serabi has successfully delivered another year
of production growth, with gold production for 2016 representing a
21 per cent year on year improvement and a very satisfying 6.5 per
cent improvement over the initial production guidance provided by
management. With the Palito and Sao Chico Mines now operating
at planned levels and 40,000 ounces of gold production is forecast
for 2017. Therefore, our focus is now, very much, on
evaluation of the existing discoveries and other exciting
exploration opportunities that exist around both mines and
successful development of these will bring a further opportunity to
increase production and a significant step change in the Group's
evolution.
Serabi's Board continues to see growth as the
key to the long term success for the Company, although it will
remain focused on maximising cash generation and it is not lost on
the Board that small producers such as Serabi can generate greater
levels of operational cash flow than larger producers by being
focused on establishing high quality operations. Ultimately
there should always be increased economies associated with
scale. To maximise the Group's leverage in the short term on
its existing skill, knowledge and contact base, Serabi remains very
much a Brazilian focused producer and developer. We have
established a loyal and experienced management team that has been
together for several years. The extensive collective
operational experience that they have has been a key factor in the
ability to bring two mines into production, on budget and within a
short time frame, and will be key to the Group's future growth.
The sentiment within the mining sector feels
more positive than 12 months ago and it is evident to me that the
larger mining groups having been focused on cost reduction for the
past few years and getting their houses in order, are once again
putting investment into their own exploration and have a renewed
appetite for looking to the junior sector for opportunities to
support their own growth. This, in turn, brings renewed
investor interest and support for the sector to boost growth and
new developments. After the last few difficult years it is a
welcome indicator for renewed optimism.
However, as the last 12 months have shown, the
world is an unpredictable place. Commodity price volatility
is not a friend to the resource sector and for good reason can
stimulate a cautionary approach. Your Board will therefore be
judicious in its own strategy for growth as it seeks to maximise
the value that it can achieve from each dollar spent. We will
insist that management continue to follow its tested risk reducing
formula and systematic approach to exploration activity. We
continue to be very excited about the prospects that we have in our
own tenements and whilst we insist on a pragmatic and risk
reduction approach, we are also aware that we need to build value
quickly and make the most of the Group's current position and
strength. This needs to be balanced with the concurrent need
to continue to improve the Group's working capital position and
improve its resilience to short term market movements that can
negatively impact on cash flow and margin.
We started the first phase of an increased
exploration effort during the second half of 2016 with some initial
geophysics programmes around the Palito and Sao Chico Mines.
The results at Palito from the down the hole electromagnetic ("EM")
programmes have helped us better understand the size and location
of existing discoveries and will help us plan the next phase of
evaluating these. At Sao Chico the work was suspended because
of weather conditions but the initial signs have been very
encouraging and continue to support management's belief that the
current Sao Chico Mine is just a small part of a much larger
regional feature and structure. In this respect the
successful acquisition of the exploration rights, during 2016, over
exploration tenements surrounding the current Sao Chico operations
was very important. The weather in the early part of the year
can limit the efficiency and nature of exploration programmes, but
management is actively planning the next stages of work and
considering the optimum solutions that will ensure the Group can
properly finance these.
Management continue to actively assess other
opportunities in Brazil and our track record of moving exploration
projects into production makes Serabi an attractive partner for
companies with less operational experience. However, it
remains difficult to find the blend of project and price that makes
an acquisition compelling and, whilst we recognise that Serabi
needs to grow and make a step change that will be reflected in its
valuation, the Board will only pursue opportunities that will bring
strong, long term returns to our existing shareholders.
The next 12 months will continue to bring
challenges but also, I am sure, rewards. I am optimistic
about the outlook for gold and believe that we have now positioned
Serabi to benefit from and grow on the back of it. We have
built a strong platform for our longer term growth and will do all
that we can to realise this growth quickly and efficiently.
On behalf of the Board of Directors I would like
to extend my appreciation to the employees and management of Serabi
for a job well done during the past year. Their hard work and
determination to succeed means your Company is well positioned to
reap the benefits of the higher gold price environment we expect
during 2017 and beyond. Finally, thank you to our
shareholders, large and small, for your patience during the last
few years. I continue to believe the future is extremely
bright for Serabi.
T. Sean Harvey - Chairman
Serabi's Directors Report and Financial
Statements for the year ended 31 December 2016 together the
Chairman's Statement and the Management Discussion and Analysis,
are available from the Company's website - www.serabigold.com and
will be posted on SEDAR at www.sedar.com.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
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 LimitedNominated Adviser and Financial
Adviser |
|
Roland Cornish |
Tel:
+44 (0)20 7628 3396 |
Michael Cornish |
Tel:
+44 (0)20 7628 3396 |
|
|
Peel
Hunt LLPUK Broker |
|
Matthew Armitt |
Tel:
+44 (0)20 7418 9000 |
Ross
Allister |
Tel:
+44 (0)20 7418 9000 |
|
|
Blytheweigh Public Relations |
|
Tim
Blythe |
Tel:
+44 (0)20 7138 3204 |
Camilla Horsfall |
Tel:
+44 (0)20 7138 3224 |
Copies of this announcement are available from
the Company's website at www.serabigold.com.
Neither the Toronto Stock Exchange, nor any
other securities regulatory authority, has approved or disapproved
of the contents of this announcement.
The 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.
The Company will, in compliance with Canadian
regulatory requirements, post its Management Discussion and
Analysis for the year ended 31 December 2016 and its Annual
Information Form on SEDAR at www.sedar.com. These documents
will also available from the Company's website -
www.serabigold.com.
Annual ReportThe Annual Report has been
published by the Company on its website at www.serabigold.com and
printed copies are expected to be available by 15 May 2017.
Additional copies will be available to the public, free of charge,
from the Company's offices at 2nd floor, 30 - 32 Ludgate Hill,
London, EC4M 7DR and will be available to download from the
Company's website at www.serabigold.com.
The data included in the selected annual
information table below is taken from the Company's annual audited
financial statements for the year ended 31 December 2016, which
were prepared in accordance with International Financial Reporting
Standards in force at the reporting date and their interpretations
issued by the International Accounting Standards Board ("IASB") and
adopted for use within the European Union (IFRS) and with IFRS and
their interpretations issued by the IASB. There are no
material differences on application to the Group. The
consolidated financial statements have also been prepared in
accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The audited financial statements for the year
ended 31 December 2016 will be presented to shareholders for
adoption at the Company's next Annual General Meeting and filed
with the Registrar of Companies.
Statement of Comprehensive IncomeFor the year ended 31
December 2016
|
|
Group |
|
|
For the
year ended 31 December 2016 |
For the
year ended 31 December 2015 |
|
Notes |
US$ |
US$ |
CONTINUING
OPERATIONS |
|
|
|
Revenue |
|
52,593,751 |
35,086,113 |
Cost of sales |
|
(32,906,426) |
(23,585,063) |
Depreciation and amortisation charges |
|
(8,384,738) |
(5,840,769) |
Gross profit |
|
11,302,587 |
5,660,281 |
Administration
expenses |
|
(4,962,524) |
(4,379,770) |
Share-based payments |
|
(350,899) |
(404,075) |
Gain on disposal of fixed
asset |
|
34,742 |
- |
Operating profit |
|
6,023,906 |
876,436 |
Foreign exchange loss |
|
(236,619) |
(71,280) |
Finance expense |
4 |
(3,917,681) |
(1,533,008) |
Income on financial
instruments |
|
- |
1,203,023 |
Finance income |
4 |
573 |
1,123 |
Profit before
taxation |
|
1,870,179 |
476,294 |
Income tax benefit /
(expense) |
|
2,560,113 |
(525,032) |
Profit / (loss) for the period from continuing
operations(1) |
|
4,430,292 |
(48,738) |
|
|
|
|
Other comprehensive
income (net of tax) |
|
|
|
Items that may be
reclassified subsequently to profit or loss |
|
|
|
Exchange differences on translating foreign operations |
|
8,618,687 |
(20,490,243) |
Total comprehensive
profit / (loss) for the period(1) |
|
13,048,980 |
(20,538,981) |
Profit / (loss) per
ordinary share (basic) |
5 |
0.66c |
(0.01c) |
Profit / (loss) per ordinary share (diluted) |
5 |
0.61c |
(0.01c) |
(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 31 December 2016
|
|
|
Group |
|
|
|
|
2016 |
2015 |
|
|
|
|
US$ |
US$ |
Non-current assets |
|
|
|
|
|
Development and deferred
exploration costs |
|
|
|
9,990,789 |
8,679,246 |
Property, plant and
equipment |
|
|
|
45,396,140 |
40,150,484 |
Deferred taxation |
|
|
|
3,253,630 |
- |
Total non-current assets |
|
|
|
58,640,559 |
48,829,730 |
Current assets |
|
|
|
|
|
Inventories |
|
|
|
8,110,373 |
6,908,790 |
Trade and other
receivables |
|
|
|
1,233,049 |
6,133,284 |
Prepayments |
|
|
|
3,696,550 |
2,429,506 |
Cash and cash equivalents |
|
|
|
4,160,923 |
2,191,759 |
Total current assets |
|
|
|
17,200,895 |
17,663,339 |
Current
liabilities |
|
|
|
|
|
Trade and other
payables |
|
|
|
4,722,139 |
4,212,803 |
Interest-bearing
liabilities |
|
|
|
2,964,057 |
11,385,155 |
Accruals |
|
|
|
635,446 |
226,197 |
Total current liabilities |
|
|
|
8,321,642 |
15,824,155 |
Net current assets |
|
|
|
8,879,253 |
1,839,184 |
Total assets less current liabilities |
|
|
|
67,519,812 |
50,668,914 |
Non-current
liabilities |
|
|
|
|
|
Trade and other
payables |
|
|
|
2,211,078 |
1,857,914 |
Provisions |
|
|
|
1,851,963 |
1,898,714 |
Interest-bearing liabilities |
|
|
|
77,798 |
128,641 |
Total non-current liabilities |
|
|
|
4,140,839 |
3,885,269 |
Net assets |
|
|
|
63,378,973 |
46,783,645 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
|
|
5,540,960 |
5,263,182 |
Share premium reserve |
|
|
|
1,722,222 |
- |
Option reserve |
|
|
|
1,338,652 |
2,747,415 |
Other reserves |
|
|
|
3,051,862 |
450,262 |
Translation reserve |
|
|
|
(30,607,848) |
(39,226,535) |
Retained surplus |
|
|
|
82,333,125 |
77,549,321 |
Equity shareholders' funds attributable to owners of the
parent |
|
|
|
63,378,973 |
46,783,645 |
Statements of Changes in Shareholders' EquityFor the year
ended 31 December 2016
Group |
Sharecapital |
Sharepremium |
Share
optionreserve |
Otherreserves |
Translationreserve |
(Accumulated losses) / retained surplus |
Total
equity |
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
Equity
shareholders' funds at 31 December 2014 |
61,668,212 |
67,656,848 |
2,400,080 |
450,262 |
(18,736,292) |
(46,520,559) |
66,918,551 |
Foreign currency
adjustments |
- |
- |
- |
- |
(20,490,243) |
- |
(20,
490,243) |
Loss for
year |
- |
- |
- |
- |
- |
(48,738) |
(48,738) |
Total comprehensive
loss for the year |
- |
- |
- |
- |
(20,490,243) |
(48,738) |
(20,538,981) |
Cancellation of share
premium |
|
(67,656,848) |
- |
- |
- |
67,656,848 |
- |
Cancellation of
deferred shares |
(56,405,030) |
- |
- |
- |
- |
56,405,030 |
- |
Share options lapsed in
period |
- |
- |
(56,740) |
- |
- |
56,740 |
- |
Share option
expense |
- |
- |
404,075 |
- |
- |
- |
404,075 |
Equity shareholders' funds at 31 December 2015 |
5,263,182 |
- |
2,747,415 |
450,262 |
(39,226,535) |
77,549,321 |
46,783,645 |
Foreign currency
adjustments |
- |
- |
- |
- |
8,618,687 |
- |
8,618,687 |
Profit for year |
|
|
|
|
|
4,430,292 |
4,430,292 |
Total comprehensive income for the year |
- |
- |
- |
- |
8,618,687 |
4,430,292 |
13,048,979 |
Transfer to taxation
reserve |
- |
- |
- |
2,690,401 |
- |
(2,690,401) |
- |
Shares issued in
period |
277,778 |
1,722,222 |
- |
- |
- |
- |
2,000,000 |
Release of fair value
provision on convertible loan |
- |
- |
- |
- |
- |
1,195,450 |
1,195,450 |
Warrants lapsed |
- |
- |
- |
(88,801) |
- |
88,801 |
- |
Share options lapsed in
period |
- |
- |
(1,759,662) |
- |
- |
1,759,662 |
- |
Share
option expense |
|
|
350,899 |
|
|
|
350,899 |
Equity
shareholders' funds at 31 December 2016 |
5,540,960 |
1,722,222 |
1,338,652 |
3,051,862 |
(30,607,848) |
82,333,125 |
63,378,973 |
Other reserves comprises a merger reserve of US$361,461 and a
taxation reserve of US$2,690,401 (2015: merger reserve of
US$361,461 and warrant reserve of US$88,801).
Cash Flow Statements For the year ended 31 December
2016
|
|
Group |
|
|
|
For
theyear ended31 December2016 |
For
theyear ended31 December2015 |
|
|
|
US$ |
US$ |
Cash outflows from
operating activities |
|
|
|
|
Operating profit /
(loss) |
|
|
4,430,292 |
(48,738) |
Net financial expense |
|
|
4,153,727 |
400,142 |
Depreciation - plant,
equipment and mining properties |
|
|
8,384,738 |
5,840,769 |
Taxation (benefit) /
expense |
|
|
(2,560,113) |
525,032 |
Share-based payments |
|
|
350,899 |
404,075 |
Interest paid |
|
|
(2,049,900) |
(1,006,508) |
Foreign exchange |
|
|
(1,045,460) |
(1,482,239) |
Finance charges |
|
|
(37,500) |
(171,500) |
Changes in working
capital |
|
|
|
|
Decrease / (increase) in
inventories |
|
|
153,314 |
(1,617,365) |
Decrease / (increase) in
receivables, prepayments and accrued income |
|
|
4,177,110 |
(272,978) |
Increase / (decrease) in
payables, accruals and provisions |
|
|
195,845 |
1,831,710 |
Net cash flow from operations |
|
|
16,152,952 |
4,402,400 |
|
|
|
|
|
Investing
activities |
|
|
|
|
Sales revenues -
capitalised |
|
|
- |
3,337,071 |
Capitalised pre-operating
costs |
|
|
- |
(5,422,606) |
Purchase of property,
plant, equipment and projects in construction |
|
|
(3,042,043) |
(2,985,139) |
Mine development
expenditure |
|
|
(2,366,486) |
(1,539,729) |
Geological exploration
expenditure |
|
|
(525,444) |
- |
Proceeds from sale of
assets |
|
|
34,742 |
- |
Interest received and other finance income |
|
|
573 |
675,643 |
Net cash outflow on investing activities |
|
|
(5,898,658) |
(5,934,760) |
|
|
|
|
|
Financing
activities |
|
|
|
|
Convertible loan received
and subsequent conversion to ordinary shares |
|
|
2,000,000 |
- |
Repayment of short term
secured loan |
|
|
(3,111,111) |
(4,000,000) |
Receipt from repayment of
intercompany loan |
|
|
- |
- |
Payment of finance lease
liabilities |
|
|
(755,858) |
(757,596) |
Receipts for short term
trade finance |
|
|
15,146,817 |
21,787,907 |
Repayment of short term
trade finance |
|
|
(21,384,139) |
(22,899,024) |
Net cash (outflow) / inflow from financing activities |
|
|
(8,104,291) |
(5,868,713) |
|
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents |
|
|
2,150,003 |
(7,401,073) |
Cash and cash
equivalents at beginning of period |
|
|
2,191,759 |
9,813,602 |
Exchange difference on cash |
|
|
(180,839) |
(220,770) |
Cash and cash equivalents at end of period |
|
|
4,160,923 |
2,191,759 |
Notes
1.
General InformationThe financial information set out above for
the years ended 31 December 2016 and 31 December 2015 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006, but is derived from those accounts. Whilst the
financial information included in this announcement has been
compiled in accordance with International Financial Reporting
Standards ("IFRS") this announcement itself does not contain
sufficient financial information to comply with IFRS. A copy of the
statutory accounts for 2015 has been delivered to the Registrar of
Companies and those for 2016 will be submitted for approval by
shareholders at the Annual General Meeting. The full audited
financial statements for the years end 31 December 2016 and 31
December 2015 do comply with IFRS.
2.
Auditor's OpinionThe auditor has issued an unqualified opinion
in respect of the financial statements which does not contain any
statements under the Companies Act 2006, Section 498(2) or Section
498(3). The auditor has raised an Emphasis of Matter in
relation to going concern and the availability of finance as
follows:
"In forming our opinion, which is not modified,
we have considered the adequacy of the disclosures made in Note
1(a) to the financial statements concerning the group's ability to
continue as a going concern.
Whilst the Group expects to have sufficient cash
flow from its forecast production to finance its on-going
operational requirements, to repay its secured loan facilities and
to, at least in part, fund exploration and development activity on
its other gold properties, the Group remains a small scale gold
producer with limited cash resources. It is therefore susceptible
to any unplanned interruption or reduction in gold production,
unforeseen reductions in the gold price or appreciation of the
Brazilian currency all of which could adversely affect the level of
free cash flow that the Group can generate on a monthly
basis. In the event that the Group is unable to generate
sufficient free cash flow to meet its financial obligations as they
fall due or to allow it to finance exploration and development
activity on its other gold properties additional sources of finance
may be required. The Group is currently in negotiations to increase
and extend its loan facilities, but they have not been
finalised.
These conditions indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
Company and the Group were unable to continue as a going
concern."
NB: The reference to note 1(a) in the above is a
reference to the Basis of preparation note contained within the
financial statements from which the extract reproduced below
referring to Going Concern is taken.
3.
Basis of PreparationThe financial statements have been prepared
in accordance with International Financial Reporting Standards
("IFRS") in force at the reporting date and their interpretations
issued by the International Accounting Standards Board ("IASB") as
adopted for use within the European Union and with IFRS and their
interpretations issued by the IASB. The consolidated financial
statements have also been prepared in accordance with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
At the date of authorisation of the financial
statements, the following standards and relevant interpretations,
which have not been applied in these financial statements, were in
issue but not yet effective (and some of which were pending
endorsement by the EU):
IAS 12 (amended) Recognition of Deferred Tax
Asset for Unrealised LossesIFRS 16 LeasesIAS 7 Disclosure
InitiativelFRIC 22 Foreign Currency Transactions and Advance
ConsiderationlFRS 9 Financial InstrumentslFRS 15 Revenue from
ContractslFRS 2 (amended) Classification and Measurement of
Share-based Payment TransactionslFRS 15 Clarification to IFRS 15
Revenue from Contracts with CustomersAnnual improvements to IFRSs:
2014-2016 Cycle
The Group considers that the only standard that
may have any impact is IFRS 9. The new standard will replace
existing accounting standards. It is applicable to financial assets
and liabilities and will introduce changes to existing accounting
concerning classification, measurement and impairment (introducing
an expected loss method). The Group considers that whilst
IFRS 15 and IFRS 16 may impact on the Group the effect will not be
significant. The operating leases held by the Company are of low
value and revenue contracts usually contain a single performance
criteria that is satisfied at a point in time. The Group will
adopt the above standards at the time stipulated by that
standard. The Group does not at this time anticipate
voluntary early adoption of any of the standards.
Going concern and availability of
financeOn 1 February 2016, the Group announced that, with
effect from 1 January 2016, the Sao Chico Mine had achieved
Commercial Production. The Palito Mine has been in Commercial
Production since 1 July 2014.The Directors anticipate the Group now
has access to sufficient funding for its immediate projected
needs. The Group expects to have sufficient cash flow from
its forecast production to finance its on-going operational
requirements, to repay its secured loan facilities and to, at least
in part, fund exploration and development activity on its other
gold properties. The secured loan facility is repayable by 31
August 2017 and at 31 December 2016, the amount outstanding under
this facility was US$1.37 million (2015: US$4.0 million). The
Group is currently in negotiations to increase and extend the terms
of its loan facilities.The Directors consider that the Group's
operations are performing at the levels that they anticipate but
the Group remains a small scale gold producer with limited cash
resources to support any unplanned interruption or reduction in
gold production, unforeseen reductions in the gold price or
appreciation of the Brazilian currency, all of which could
adversely affect the level of free cash flow that the Group can
generate on a monthly basis. In the event that the Group is
unable to generate sufficient free cash flow to meet its financial
obligations as they fall due or to allow it to finance exploration
and development activity on its other gold properties, additional
sources of finance may be required. Should additional
working capital be required the Directors consider that further
sources of finance could be secured within the required
timescale. On this basis, the Directors have therefore
concluded that it is appropriate to prepare the financial
statements on a going concern basis. However, there is no certainty
that such additional funds either for working capital or for future
development will be forthcoming and these conditions indicate the
existence of a material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern and,
therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
4.
Finance Income and expense
|
|
|
|
Group |
|
|
|
|
For
the |
For
the |
|
|
|
|
year
ended |
year
ended |
|
|
|
|
31
December |
31
December |
|
|
|
|
2016 |
2015 |
|
|
|
|
US$ |
US$ |
Interest on trade
financing loan |
|
|
|
(256,898) |
(364,656) |
Finance
cost on secured loan facility |
|
|
|
(672,331) |
(526,500) |
Interest
payable on secured loan facility |
|
|
|
(281,333) |
(586,667) |
Interest payable on
finance leases |
|
|
|
(36,194) |
(32,388) |
Interest payable on
convertible loan |
|
|
|
(137,049) |
- |
Fair value provision on
convertible loan (1) |
|
|
|
(1,195,450) |
- |
Expense from gold hedging
activities |
|
|
|
(1,338,426) |
- |
Other finance-related expenses |
|
|
|
- |
(22,797) |
Interest payable |
|
|
|
(3,917,681) |
(1,533,008) |
Release of fair value for
call options granted |
|
|
|
- |
196,330 |
Release of fair value for
warrants issued (2) |
|
|
|
- |
332,173 |
Income from gold hedging activities |
|
|
|
- |
674,520 |
Gains on financial instruments |
|
|
|
- |
1,203,023 |
Finance income on short-term deposits |
|
|
|
573 |
1,123 |
Net finance expense |
|
|
|
(3,917,108) |
(328,862) |
- The fair value provision relates to the implied value of the
equity conversion right included as part of the loan terms.
The value was estimated at the date of drawdown and updated until
the date of exercise to reflect the price of the Group's ordinary
shares and the remaining period during which the conversion rights
may be exercised.
- The release of fair value for warrants issued in 2015 relates
to 100,000,000 warrants to subscribe for new ordinary shares issued
by the Company on 3 March 2014. The Company accounted for the
issue of these warrants in accordance with IAS32 and recorded a
liability of US$1.68 million at the date of issue. As at 31
December 2015 the fair value of these warrants was assessed to be
US$nil and the reduction in fair value was recognised through the
income statement. The warrants expired on 2 March 2016 with
none having been exercised.
5.
Earnings per Share
|
|
For the year ended 31 December 2016 |
For the year ended 31 December 2015 |
Profit / (loss) attributable to ordinary shareholders (US$) |
|
4,430,292 |
(48,738) |
Weighted average ordinary
shares in issue |
|
672,502,757 |
656,389,204 |
Basic profit/(loss) per share (US cents) |
|
0.659 |
(0.01) |
Diluted ordinary shares
in issue |
|
722,412,757 (1) |
656,389,204 |
Diluted
profit /(loss) per share (US cents) |
|
0.613 |
(0.01)(2) |
(1)
Assumes exercise of all options and warrants outstanding as of that
date.(2)
As the effect of dilution is to reduce the loss per share, the
diluted loss per share is considered to be the same as the basic
loss per share.
6.
Post balance sheet eventsOn 23 February, the Group extended the
term for repayment of its secured loan facility with Sprott to 31
August 2017. With this exception 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 StatementThe scientific
and technical information contained within this announcement has
been reviewed and approved by Michael Hodgson, a Director of the
Company. Mr Hodgson is an Economic Geologist by training with over
26 years' experience in the mining industry. He holds a BSc (Hons)
Geology, University of London, a MSc Mining Geology, University of
Leicester and is a Fellow of the Institute of Materials, Minerals
and Mining and a Chartered Engineer of the Engineering Council of
UK, recognising him as both a Qualified Person for the purposes of
Canadian National Instrument 43-101 and by the AIM Guidance Note on
Mining and Oil & Gas Companies dated June 2009.
Forward Looking StatementsCertain
statements in this announcement are, or may be deemed to be,
forward looking statements. Forward looking statements are
identified by their use of terms and phrases such as ''believe'',
''could'', "should" ''envisage'', ''estimate'', ''intend'',
''may'', ''plan'', ''will'' or the negative of those, variations or
comparable expressions, including references to assumptions. These
forward looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements reflect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements.
ENDS
Serabi Gold (TSX:SBI)
Historical Stock Chart
From Apr 2024 to May 2024
Serabi Gold (TSX:SBI)
Historical Stock Chart
From May 2023 to May 2024