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3rd Quarter Investor Update 2008

October 28, 2008

Serabi Mining plc (“Serabi or “the Company”) the AIM listed gold production and exploration company, with operations in Brazil (AIM: SRB), announces that it has today issued its 3rd Quarter shareholder update.

The full pdf file can be accessed directly from the Company’s website www.serabimining.com

The highlights of the update are:

– Production of 5,406 gold equivalent ounces for the quarter

– Strategic review indicates the need to return the Palito mine to an extended period of development mining in order to achieve stable long term profitability

– Revised mine planning and improved operating margins indicates short term production opportunities may be extended

– Drill results indicate a significant expansion of mineralised structures at Palito

– Detailed assessment of the airborne geophysical survey and other related exploration results across the Palito district, indicates 66 anomalies, including 16 high priority zones

– Review of preliminary exploration results at Pison confirms the widespread occurrence of gold and the potential for large areas of mineralisation

                Palito - Operating Results (1)                                     2008              2007                           Q1     Q2     Q3     YTD     YTD Total Mined          t  57,542 59,772 64,289 181,603 173,721 (per day)               (632)  (657)  (699)   (663)   (636) Mined Ore            t  33,022 34,829 37,519 105,370 138,029 (per day)               (363)  (383)  (408)   (385)   (506) Milled               t  32,479 34,027 35,369 101,875 133,004 (per day)               (357)  (374)  (384)   (372)   (487) Head Grade          g/t  4.52   5.1    4.69   4.77     5.9 Recovery             %  88.97    89    87.4   88.44   90.2 Gold                oz  4,217  4,963  4,658  13,838  22,953 Copper               t  85.81  78.97  81.07  245.85   348.8 Gold Equivalent (2) oz  4,985  5,754  5,406  16,144  26,894 

(1) Provisional (2) Includes Copper and Silver

The Management Review presented by the Chairman and Chief Executive summarises the quarter as follows:

Continued mining problems experienced during the last quarter have detracted from what has been a successful period on the exploration front.

– New Reserve and Resources statement on 9th July and, for the first time, an ore reserve reported for Palito.

– Exploration around Palito has confirmed significant extensions to the known mineralisation around the Palito Main Zone and Palito West areas.

– Detailed analysis of the airborne electromagnetic survey over and around the Palito area has highlighted a total of 66 anomalies, including 16 high priority zones.

– Stream sediment sampling programme completed over the entire Pison tenement area identifying a number of large anomalies.

– Limited drill programme commenced on the Rio Marupa prospect some 150 km south-west of Palito.

Operationally, the Strategic Review of 17th September and the statement that accompanied the Interim Report released on 29th September set out in detail the issues and some options that we face at the Palito mine. What is of greater interest to shareholders now however, is how we move forward.

Serabi’s management has been exploring a number of options but with global economic factors weighing heavily on decision-making, solutions are taking more time and proving more difficult to achieve. We have completed studies to assist interested parties in their due diligence and it is clear from these that if the operational inefficiencies can be overcome – through the introduction of more experienced day-to-day management and operators – Palito remains a viable and valuable asset.

To re-establish full scale operations at Palito we consider that the best plan will require placing the mine into a dedicated phase of development for a period of some 12 months in order to re- establish adequate mining faces and stoping panels. After that it would be expected that the resulting ratio of stoping-ore to development- ore would ensure that a higher, optimised grade could be fed to the mills at all times. The effect of such a plan, however, is that during the first six months there would be insufficient ore to feed the plant. Initially, ore recovered from development mining would therefore be stockpiled, and the plant restarted after a six month period when a blend of stockpiled and newly-mined development ore would ensure that the plant could be kept operating at its optimal rate. The working capital required to support such a plan is estimated to be in the region of US$7million.

Parties that have visited Palito have all been intrigued by the longer term potential and the possibility to secure an operation producing significantly more than 30,000 to 40,000 ounces per year through establishing a number of satellite operations. A programme that would put the mine back into full production, whilst continuing an aggressive exploration programme both at Palito and at Serabi’s other tenement areas, would clearly require an up front commitment of working capital of more than US$7 million.

The current market conditions have, for good reason, made many companies nervous of committing capital to existing projects and they are therefore even more reluctant to take on new opportunities. It also means that many other junior mining groups are seeking joint venture arrangements for their projects as an alternative to equity or debt funding. Competition for the available investment funding is therefore intense and growing.

In the meantime, and whilst we have significantly reduced the workforce, we are now looking at options which will allow us to continue a reduced level of production for a longer period than we had originally estimated. We are helped in this by the continued strength of the gold price (which has not experienced the price fall of many other commodities) and the depreciation of the Brazilian Real, which has fallen by some 30% over the last two months.

On the exploration front, whilst we have had to reduce the level of activity to conserve cash, we have continued with priority programmes that were already in progress and commenced a limited initial work programme at the Rio Marupa project. As noted earlier, we consider that the results received over the quarter have been very positive. At Palito we have outlined an extension of the principal G3 vein structure for a further 400 metres to the south east of the previous strike extent. The G3 structure previously had a strike length of some one kilometre and contributed approximately 25% of the proven and probable reserve in the recent reserve and resource estimate. This new extension is therefore considered significant in terms of being able to add further reserves and resources when a new estimation is undertaken.

The Palito West high-grade structure was, at the time of the reserve and resource estimation, confined to a strike extension of 150 metres. Further drilling has now extended this feature to 300 metres and, whilst we previously believed the extension to the north-west to have been closed off, new drill intersections now indicate that the structures actually remain open in this direction too.

On the Pison prospect we have completed an initial 12 month screening programme over the entire 120,000 hectare tenement area. The Pison area is a target for large volume, low tonnage gold deposits but there has previously been very little available data over the area. Only one garimpo operation exists – but this reflects its location and means that the near- surface oxide material remains intact – potentially a major benefit for any new operation that might be established. The screening results have confirmed the presence of a number of areas containing widespread gold occurrences. A number of these drainage catchments also reported highly anomalous copper, lead and zinc results, indicative of close proximity to a primary mineralised source.

Operating Review

Having taken the decision to reduce the level of mining activity at Palito, the first stage of redundancies was completed at the end of September. As a result we have reduced the total Brazilian labour force to a total of 130 people. Notwithstanding, mining activities are continuing, with efforts concentrated on those areas where development has been completed and the stopes exposed for the mining of ore. During the first three weeks of October, we have mined some 7,000 tonnes of ore of which 5,700 has been processed at a grade of 6.1 g/t, realising some 990 ounces of gold production. Whilst enough crews have been retained to mine at these rates on a 24 hour basis, the plant will operate at a reduced number of hours, reflecting the lower tonnages expected to be available. Surplus mined ore is being stockpiled and will then be batch processed.

Meanwhile, the current relative weakness of the Brazilian Real is having a significant, positive effect on operating margins. As a result, we are examining options which will allow us to continue limited mining activities for a longer period than had originally been anticipated, thus generating cash flow for the Company whilst we continue to explore strategic options with other parties.

As previously noted, we are of the view that the way forward for the continued exploitation of the Palito mine is effectively to treat it as a new operation. This would involve putting in place a significantly greater level of development than has previously been possible and opening up access to the veins within the currently defined ore reserve estimate. The failure during August and September to make any further meaningful progress on recovering the metres of development that were lost as a result of the equipment issues in the first part of the year, meant that it became increasingly likely that a phase of long term development would become necessary. This brings with it a significant working capital requirement. We considered it prudent to plan for this outcome rather than having a less attractive fait accompli forced upon us in the short term.

Exploration Review

Exploration during Q3 has continued, albeit at a reduced pace to conserve cash resources. Drilling programmes have been executed in the Palito and near mine area, together with compilation, integration and re-interpretation of geochemistry, geology and geophysics results across the Palito district and on the regional projects.

Highlights from this work include:

– Strike extension of the high grade G3 ore zone to the south- east, demonstrates mineralisation continues for a further 400m strike and remains open, including an intersection of 0.93m @ 34.75g/t Au & 0.24% Cu.

– Strike extension of the high grade Palito West mineralisation (Pipoca Zone) for a further 100m to the north-west, including 0.82m @ 17.10g/t Au and 0.95m @ 11.46g/t Au continues to indicate the ore shoot remains open along strike and at depth.

– High grade intersections in Palito West within a parallel vein structure (Farias Zone) including 0.85m @ 52.15g/t Au, 1.49m @ 25.61g/t Au and 0.66 @ 9.51g/t Au improves definition and confidence in payability of the Palito West prospect.

– Re-interpretation of the recent near-mine geophysics and integration with geology and satellite imagery has revealed a number of significant anomalous trends. These trends contain coincident geochemistry, geology, structural and geophysical features.

– First pass soil and/or deep augur drilling in the Palito near- mine area indicates the presence of supergene and primary mineralisation along a number of the anomalous trends.

– At the Pison project, a review of stream sediment sampling results and integration with the satellite and magnetic lineaments indicates a number of anomalous multi-element drainages coincident with regional north-north-west and north-east structural trends.

Palito South – G3 Extensions

In the Exploration Update dated 22 July, Serabi reported the extension of both the plunge and strike of the G3 ore zone to the south-east of Palito. Subsequent to this in Q3 Serabi completed a six hole drilling programme designed to test for the presence of shallow mineralisation further along this open south-east extension of the G3 structure, beyond the boundary of the 2008 Reserve and Resource estimation.

The results received have confirmed the strike extension of the G3 structure for a further 400 metres, with intersections encountered in five of the six holes. The programme has also indicated, within the structure, the possible existence of a south-east plunging, high grade ore shoot at shallow depths over some 250 metres. This shoot had already been encountered in earlier drilling with a reported intersection in hole PDD0288 of 0.75m @ 8.87g/t Au and 0.41% Cu, which has now been supplemented with the recent intercepts of drill holes PDD0444: 0.93m @ 34.75g/t Au and 0.24% Cu, PDD0450: 1.15m @ 3.47g/t Au & 1.1% Cu and PDD0452: 0.91m @ 5.01g/t Au and 0.04% Cu.

 Table 1: Palito South Drill Hole Assay Intercepts.   Hole     From        To        Interval  Au    Cu            (m)         (m)                 g/t   %  PDD0444  55.15       56.12        0.97   3.43  0.04            58.9       59.83        0.93   34.75 0.24  PDD0446         no intersection  PDD0447  227.7      228.33        0.63   0.36  0.22  PDD0448  175.23     176.33        1.1    0.99  0.12           180.08       181         0.92   1.06  0.01  PDD0450  54.25       56.8         2.55   2.43  0.55 including 55.65       56.8         1.15   3.56  1.1  PDD0452  75.64       76.55        0.91   5.01  0.04 

Note: Assay intercepts are calculated based on a minimum grade 1g/t Au using a 0.5gm Au low cut and a maximum internal waste interval of 1.2m.

Palito West

In the July Exploration Update, Serabi also reported results extending the strike and plunge extent of the Palito West ore shoot to dimensions of approximately 200 metres strike length and 300 metres plunge extent, which remained open both along the north- west strike and south-east plunge extensions.

Following on from this in Q3, Serabi undertook a further six hole drill programme on the Palito West prospect.

Drilling results from this programme are very encouraging confirming the presence of shallow, higher grade intersections to the north- west along strike within the Pipoca Zone. The mineralisation was intersected in the 2 northernmost holes and trends behind historic drill holes which were collared further along strike to the north-west and thought to close off the strike. This mineralisation continues to remain open to the north-west where it trends into a ‘data gap’ in the drilling and a corresponding induced polarisation (IP) geophysical anomaly which remains untested.

 Table 2: Palito West Drill Hole Assay Intercepts.    Hole      From     To   Interval    Au    Cu               (m)     (m)             g/t     %   PDD0445    22.35   23.2    0.85    52.15  0.88              57.7   58.63    0.93     1.33  0.08  PDD0346Ex  177.17  178.2    1.03     1.52  0.32   PDD0449    15.62  16.28    0.66     9.51  1.74              93.06   95.2    2.14     9.04  0.16   PDD0451      7     8.8      1.8     6.01  0.07              20.81   22.3    1.49    25.61  0.41              98.74  99.28    0.54     2.02  0.31   PDD0453    85.84  86.66    0.82     17.1  0.15   PDD0454    79.5   80.45    0.95    11.46  0.11 

Note: Assay intercepts are calculated based on a minimum grade 1g/t Au using a 0.5gm Au low cut and a maximum internal waste interval of 1.2m.

Geophysics – Geology Interpretation and Integration

In Q3, Serabi completed a comprehensive review and reinterpretation of all available geophysical and geological data sets, along with lineament analysis of detailed satellite imagery of the Palito deposit and near-mine district. This exercise has revealed a number of important exploration targets with similar characteristics to that of the known mineralisation at Palito, NW-SE trending lineaments, corresponding with electromagnetic and/or soil geochemical anomalies and cross cut by NE to ENE structures.

Within the 6000 hectare airborne geophysical survey area completed in January 2008, a total of 66 anomalies have now been interpreted, including 16 high priority points or zones. The nine points coincidently fall along NW-SE trending lineaments of similar orientation to the known Palito mineralisation, whilst the seven anomalous zones appear to broadly correspond with north-east cross-cutting, structural features.

Integrating the airborne geophysical survey with existing broader-scale satellite and aeromagnetic imagery, geological mapping as well as soil and stream sediment geochemical coverage, has resulted in us being able to elevate the priority of several of the anomalies previously identified by the airborne survey, where we have identified coincident results from other exploration data. Initial testing of a number of these coincident features in Q3 has returned promising results from within the saprolite profile. Drilling of deep augur traverses has yielded a number of saprolite-hosted gold intercepts, returning grades of more than 3g/t gold, whilst soil geochemistry has returned a number of results with grades in excess 0.3g/t gold.

At the same time, a new review has been undertaken of results obtained from an earlier IP geophysical survey around the Palito district, as a result of which a number of previously untested chargeability and conductive anomalies have been identified. These anomalies were again coincident with a number of positive indicators from other datasets and will now require priority testing.

Pison

Situated some 250 km north-west of Palito, the Pison project is located in volcanics and volcanoclastic sediments of intermediate to felsic composition with associated high level granitoid intrusions. Primary exploration targets in this district are large tonnage, low-grade, gold deposits. In the July exploration update Serabi had only just received in their totality the results of a stream sediment sampling programme as part of a 12 month campaign to screen the entire 123,000 hectare tenement holding.

In Q3 Serabi completed a review and interpretation of these results and integrated these with existing data sets. The results confirmed large drainage catchment areas containing widespread gold occurrences. A number of these catchments also reported highly anomalous copper, lead and zinc results, indicative of close proximity to a primary mineralised source.

Integration of these results with lineament analysis and geological mapping and interpretation has demonstrated that a large number of these anomalies lie along a NW or ENE trend, within the same stratigraphic units.

Serabi will continue to prospect these anomalies and programme a series of detailed geophysical surveys and surface sampling campaigns to further advance these targets towards drilling.

Rio Marupa

Exploration activity at the Rio Marupa project, located 150 km south-west of Palito, was started during Q3. Drilling of the Goiano prospect commenced mid-August, with a 1,000m diamond drill programme. Preliminary results have indicated anomalous intersections and assaying of the recovered drill core is in progress. The program is scheduled for completion in Q4.

Stream sediment coverage is being conducted concurrently with the drill programme, with approximately 70% of the 50,000 hectare project area completed. The programme will be completed by end of Q4. A number of highly anomalous drainage catchment trends have been revealed to date, corresponding to interpreted aeromagnetic structural features. Significantly, a number of these anomalies are located away from historical artisanal activity and could therefore represent new discoveries.

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 Enquiries  Serabi Mining plc  Graham Roberts Tel: 020 7246 6830 Chairman Mobile: 07768 902 475  Mike Hodgson Tel: 020 7246 6830 Chief Executive Mobile: 07799 473 621  Robyn Hodson Tel: 020 7246 6830 Investor Relations  Email: Email Contact Website:  www.serabimining.com  Numis Securities Limited John Harrison Tel: 020 7260 1000 Nominated Adviser  James Black Tel: 020 7260 1000 Corporate Broker  Farm Street Communications Simon Robinson Tel: 07887 985 671 Public and Media Relations  4C-Burvale Limited Carina Corbett Tel: 020 7559 6715 John Carrick-Smith Tel: 020 7559 6712 Investor Relations  

SOURCE: Serabi Mining plc




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