Record Production at Serabi Gold Signals Execution Strength & Margin Expansion Potential in Brazil's Tapajós Belt

• Serabi Gold (AIM:SRB, TSX:SBI, OTCQX:SRBIF) delivered record Q3-2025 production of 12,090 oz Au, up 27% year-over-year from 9,489 oz, driven by grade improvement from 5.59 grams per tonne to 7.18 grams per tonne.
• Year-to-date production through September 30, 2025, totaled 32,635 oz, tracking toward full-year guidance of 44,000 to 47,000 oz Au.
• Cash balances increased to $38.8 million as of September 30, 2025, up from $30.4 million at June 30, 2025, with net cash of $33.0 million supporting self-funded expansion.
• The Coringa preliminary economic assessment projects all-in sustaining costs of $1,241 per ounce over an 11-year mine life producing 363,108 total ounces.
• The Serra South discovery yielded high-grade intercepts including 151 grams per tonne gold over 0.53 meters, supporting the company's objective to grow resources from one million to 1.5-2.0 million ounces.

Macro Context: Gold's Structural Support & Supply Constraints

The gold market entered the second half of 2025 supported by persistent inflation, elevated fiscal deficits, and ongoing geopolitical uncertainty. Central bank gold purchases have remained at historically elevated levels, reflecting a sustained shift toward monetary diversification. This institutional demand, combined with constrained primary mine supply, has created a pricing environment favorable to existing producers with capacity to expand output efficiently.

New mine supply additions have declined over the past decade, with longer lead times for permitting and construction limiting near-term production increases. Within this environment, investors have shown increased interest in smaller-scale, high-grade underground producers operating in jurisdictions with established mining frameworks. Brazil's Tapajós region presents a compelling case study: the district has yielded an estimated 30 million ounces through artisanal mining activity historically, yet only seven million ounces have been defined in hard-rock deposits to date, suggesting substantial exploration potential for operators with systematic development capability.

Against this backdrop, Serabi Gold's record quarter demonstrates the performance of an operator positioned to compound output through grade control and processing efficiency rather than large-scale capital deployment.

Operational Execution: Record Quarter Validates Strategy

Serabi Gold's third-quarter 2025 operational results reflected the benefits of systematic investments in grade control, processing efficiency, and mine sequencing. The company has pursued a strategy focused on maximizing production from existing facilities, an approach that reduces capital intensity while supporting cash flow generation.

Production & Grade Performance

The company produced 12,090 ounces of gold in Q3-2025, representing a 27% increase from 9,489 ounces in the prior-year quarter. Year-to-date production through September 30, 2025, totaled 32,635 ounces. The company maintained its full-year guidance of 44,000 to 47,000 ounces, with management noting that year-to-date performance is tracking well toward guidance.

Milled ore grade averaged 7.18 grams per tonne gold in Q3-2025, compared to 5.59 grams per tonne in Q3-2024, representing a 28% improvement. Mined ore grade averaged 7.24 grams per tonne gold in the quarter. The Coringa mine delivered mined grades of 8.23 grams per tonne gold during Q3-2025, driving the group's grade performance. The Palito Complex contributed 5,246 ounces in Q3-2025, while Coringa produced 6,843 ounces, with Coringa now representing 57% of consolidated production.

The company's production growth strategy centers on grade enhancement rather than capacity expansion, a capital-efficient approach that management views as the primary pathway to 60,000 ounces annually. Chief Executive Officer Mike Hodgson articulated this strategy:

"Our objective has been to maximize production from existing facilities… We're just upping that feed grade going in that plant, and that gets us to 60,000 ounces. What we want to do is be a 100,000 producer plus. We think we've got the two deposits that can deliver that."

This focus on grade optimization has yielded measurable results, with year-to-date grades through Q3-2025 approaching seven grams per tonne gold, compared to an average of 5.43 grams per tonne gold a year earlier.

Process Efficiency & Ore-Sorting Implementation

A key enabler of Serabi's production growth has been the performance of its ore-sorting technology, commissioned in December 2024 and operating continuously for nine months through Q3-2025. Management characterized the ore sorter's performance as excellent. Ore sorting enables the company to pre-concentrate material before milling, reducing dilution and lowering the volume of waste processed. This technology translates into lower unit costs, as higher-grade material is processed through the mill while barren rock is rejected upstream.

The company has implemented mechanised stoping at the Serra zone of the Coringa mine, enabled by favorable rock conditions and ore-sorter performance. Mechanised stoping provides faster extraction rates, improves worker safety by reducing manual drilling requirements, and lowers labor costs per tonne mined. Management noted that initial attempts at mechanised mining in the Meio zone have proved challenging, underscoring the importance of matching mining methods to geological conditions.

Financial Discipline & Cash Generation

Serabi Gold's balance sheet strengthened materially in the third quarter, reflecting operational cash flow generation and disciplined capital allocation. Cash balances increased to $38.8 million as of September 30, 2025, up from $30.4 million at June 30, 2025. Net cash, after accounting for interest-bearing loans and lease liabilities, stood at $33.0 million at quarter-end. This liquidity position provides the company with financial flexibility to fund exploration programs and sustaining capital requirements without reliance on external financing.

On January 22, 2025, the company secured a $5.0 million loan from Banco Santander carrying an interest rate of 6.16%, repayable as a bullet payment on January 21, 2026. The financing replaced higher-cost debt and reduced annual interest expense. The company's expansion from approximately 45,000 ounces in 2025 to a targeted 60,000 ounces in 2026 requires minimal initial capital expenditure of less than $10 million, which management indicated can be funded from operating cash flow.

The company has planned $9.5 million of underground development for 2025, reflecting the ongoing investment in mine infrastructure necessary to access higher-grade zones and sustain production growth. Management characterized the future capital requirements for plant expansion to support 100,000 ounces per year as not onerous, suggesting the company's brownfield expansion approach limits capital intensity relative to greenfield development.

The company's strengthening financial position reflects management's confidence in self-funded growth without dilution. Hodgson emphasized the company's cash generation capacity:

"We're doing exploration as much as we can… We can fund all of the plant growth out of cash flow when we come to do it."

This financial independence positions Serabi to execute its growth strategy without the equity dilution that often accompanies production expansion at smaller producers.

Cost Competitiveness & Margin Expansion Trajectory

Serabi Gold's cost trajectory demonstrates the margin expansion potential inherent in its production growth strategy. The company's all-in sustaining costs averaged $1,700 per ounce in 2024. The updated 2024 preliminary economic assessment for Coringa projects all-in sustaining costs of $1,241 per ounce over an 11-year mine life, representing a 27% improvement from the 3Q 2024 actual costs. This cost reduction is driven by higher feed grades, ore-sorting efficiency, mechanised mining implementation, and economies of scale as production increases.

Several structural factors support this cost trajectory. First, the company benefits from shared processing facilities between the Palito Complex and Coringa, avoiding the capital intensity of building dedicated mills for each mine. Second, ore sorting reduces both processing costs and tailings volumes, yielding savings across multiple cost centers. Third, the company's workforce composition provides operational advantages: 68% of employment is sourced from Para State, with 24% drawn from local communities, mitigating labor inflation pressures and supporting social license to operate.

The margin expansion from declining unit costs positions Serabi favorably as production scales. At the preliminary economic assessment cost target of $1,241 per ounce, the company would operate with substantially wider margins than achieved in 2024, translating to material free cash flow generation that can be redeployed into exploration or returned to shareholders. As production grows toward 60,000 ounces in 2026, fixed costs are spread across a larger ounce base, further compressing unit costs.

Exploration Momentum: Building the Foundation for Phase II Growth

While operational execution has driven near-term production growth, Serabi's exploration program is positioning the company for expansion beyond 60,000 ounces per year. The company is conducting a 30,000-meter brownfield exploration program in 2025, split evenly between the Palito Complex and Coringa. Six drill rigs were active as of the company's most recent update, with three rigs operating at each complex.

Serra South Discovery & Resource Growth Objective

A significant development during 2025 has been the discovery of the Serra South zone, located approximately 500 meters south of the existing Serra mining area at Coringa. The discovery occurred within the first three months of systematic drilling in 2025. Initial results returned high-grade intercepts, including 151 grams per tonne gold over 0.53 meters from 60.68 meters depth in hole 25-SR-010, and 137.48 grams per tonne gold over 0.87 meters from 303.00 meters depth in hole 25-SR-028, which included a higher-grade interval of 322.10 grams per tonne gold over 0.32 meters.

Three drill rigs are dedicated to the Serra South target, with systematic drilling designed to define the extents of mineralization. Management characterized the discovery as effectively doubling the size of the Serra zone based on initial drilling results. The company's current combined resources stand at approximately one million ounces, with management targeting growth to 1.5 to 2.0 million ounces by the end of 2026.

The resource expansion objective directly supports the company's long-term production ambitions and reflects management's confidence in the geological continuity of mineralization. Hodgson outlined the company's medium-term resource development targets:

"We are aiming by the end of 2026 to have grown our resource from one million to 1.5 million ounces, hopefully beyond that. We will have a reserve base inside it that can support a mining rate of 100,000 ounces per year."

This resource growth pathway provides the geological foundation for production scaling beyond the near-term 60,000-ounce target, positioning Serabi for potential transition to mid-tier producer status.

Palito Complex Extensions

At the Palito Complex, drilling has continued at the Senna north and south extensions. These zones provide feed flexibility, allowing the company to blend material from multiple sources to maintain mill feed grades. The Palito Complex has historically produced between 30,000 and 40,000 ounces per year. An updated National Instrument 43-101 mineral resource estimate and mineral reserve estimate for the Palito Complex was published on July 31, 2025, reflecting the company's commitment to transparent disclosure.

Copper-Gold Porphyry Discovery

The company confirmed it has made a copper-gold porphyry discovery on its extensive exploration license. While early-stage, this discovery introduces strategic optionality. Porphyry systems, if sufficiently large, can support bulk-tonnage mining operations that complement high-grade underground production. The presence of such a target suggests that resource growth may extend beyond extensions of known gold deposits, providing a potential long-term value lever for the company.

Positioning within the Tapajós Belt

The Tapajós Belt represents one of Brazil's most prospective yet underexplored gold districts. The region has yielded an estimated 30 million ounces through historical artisanal mining activity, yet only seven million ounces have been defined in hard-rock deposits, highlighting significant untapped potential for operators with systematic exploration capability and local relationships.

Infrastructure development in the Tapajós has improved operational access and logistics. The paving of federal highways has enhanced year-round access reliability, reducing transportation costs for consumables and equipment. These infrastructure improvements lower operational risk and support cost competitiveness, though regulatory timelines remain subject to political and administrative variability characteristic of Brazilian mining jurisdictions.

Serabi has demonstrated operational consistency over more than 20 years in Brazil. The company's workforce composition provides operational advantages and supports community relationships: 68% of employment is sourced from Para State, with 24% drawn from local communities. This employment profile reduces social friction and positions Serabi favorably in permitting processes, where community support is often decisive.

Management Track Record & Technical Expertise

Chief Executive Mike Hodgson provides over 40 years of worldwide mining experience focused on operating and building underground mines, with previous executive roles at Orvana Minerals and qualification as a Chartered Engineer and Qualified Person under NI 43-101 standards.

The company's operational track record includes meeting or exceeding production guidance, building credibility with investors. The updated National Instrument 43-101 technical report published in July 2025 reflects the company's commitment to transparent disclosure and compliance with Canadian securities standards. Bilingual local leadership within the company's Brazilian operations ensures effective communication with regulatory authorities, community stakeholders, and the workforce.

Production Growth Trajectory & Long-Term Objectives

Serabi Gold's production growth trajectory targets an increase from approximately 45,000 ounces in 2025 to over 60,000 ounces in 2026, achieved primarily through higher feed grades rather than significant processing capacity expansion. The company's long-term objective is to build production capacity toward 100,000 ounces per year or more, supported by resource growth to 1.5 to 2.0 million ounces by end-2026.

Management's production scaling ambitions reflect a phased approach designed to minimize execution risk while maintaining financial discipline. Hodgson articulated the company's multi-year production growth trajectory:

This growth trajectory reflects a measured approach to capacity expansion, with each phase funded from operating cash flow to minimize dilution risk. The company benefits from shared processing infrastructure, with brownfield expansion costs substantially lower than greenfield development alternatives.

The Investment Thesis for Gold & Serabi Gold

• Persistent inflation and fiscal deficits across major economies have sustained central bank gold buying at historically elevated levels, supporting price resilience for gold producers.
• Limited new mine supply creates structural constraints on production growth, with longer permitting and construction timelines supporting pricing for existing producers with expansion capacity.

• Operational leverage through high-grade production with milled grades improving in Q3-2025, driving production growth to record quarterly output of 12,090 ounces.
• Declining all-in sustaining costs from $1,700 per ounce in 2024 toward the Coringa preliminary economic assessment target of $1,241 per ounce, representing a 27% cost reduction that expands margins as production scales.
• Self-funded growth trajectory supported by strong cash generation, with net cash of $33.0 million as of September 30, 2025, and management guidance that expansion to 60,000 ounces requires less than $10 million in capital expenditure funded from operating cash flow.
• Exploration upside through the Serra South discovery and copper-gold porphyry potential, with systematic brownfield drilling targeting resource growth from one million ounces to 1.5 to 2.0 million ounces by end-2026 to support long-term production of 100,000 ounces per year.
• Jurisdictional advantage within the Tapajós Belt, where only seven million ounces have been defined in hard-rock deposits despite 30 million ounces of historical artisanal production, suggesting substantial district-scale exploration potential.
• Experienced technical management with Chief Executive Officer Mike Hodgson's recognition as a Qualified Person under National Instrument 43-101, over 40 years of mining industry experience, and track record of meeting production guidance.
• Processing efficiency improvements through ore-sorting technology commissioned in December 2024 and mechanised stoping implementation at the Serra zone, supporting margin expansion as production scales toward 60,000 ounces in 2026.
• Community relationships supported by workforce composition with 68% employment sourced from Para State and 24% from local communities, providing operational stability and social license advantages in a region with over 20 years of company operational presence.

Execution Platform for Sustainable Growth

Serabi Gold's record Q3-2025 production and strengthening balance sheet validate a multi-year execution strategy focused on grade-driven growth and operational efficiency. The company achieved 12,090 ounces of production in Q3-2025, up 27% from the prior-year quarter, while increasing milled grades 28% to 7.18 grams per tonne gold. Cash balances increased by $8.4 million during the quarter to $38.8 million, with year-to-date production of 32,635 ounces tracking well toward full-year guidance.

The company has demonstrated its ability to compound production while maintaining financial discipline and driving cost improvements. With 2024 all-in sustaining costs of $1,700 per ounce and a Coringa preliminary economic assessment projecting $1,241 per ounce over an 11-year mine life, Serabi is positioned for material margin expansion as production scales. The expansion to 60,000 ounces in 2026 requires minimal capital expenditure of less than $10 million, which management indicated can be funded from operating cash flow, minimizing dilution risk.

The Serra South discovery, copper-gold porphyry potential, and ongoing drilling provide multiple vectors for resource expansion from the current one million ounces toward 1.5 to 2.0 million ounces by end-2026. The Tapajós Belt's structural opportunity—with only seven million ounces defined in hard rock despite 30 million ounces of historical artisanal production—underscores the district-scale potential available to operators with systematic exploration capability. For investors seeking exposure to gold with operational leverage and self-funded growth, Serabi Gold represents a disciplined approach to brownfield expansion with declining unit costs and an established operational presence supporting its transition to mid-tier producer status.

TL;DR

Serabi Gold delivered record Q3-2025 production of 12,090 ounces, driven by a 28% grade improvement to 7.18 grams per tonne gold. Cash balances strengthened to $38.8 million with net cash of $33 million, enabling self-funded expansion to 60,000 ounces in 2026 requiring less than $10 million in capital. All-in sustaining costs are declining from $1,700 per ounce in 2024 toward the Coringa preliminary economic assessment target of $1,241 per ounce, representing 27% cost reduction. The Serra South discovery and ongoing brownfield drilling target resource growth from one million to 1.5-2.0 million ounces by end-2026, supporting a long-term production objective of 100,000 ounces per year within Brazil's underexplored Tapajós Belt.

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