Serabi Gold (SBI) - Exploration Update & Production to Exceed Forecast

Serabi Gold plc is a UK-based junior gold mining company, which is focused on its operating asset Sao Chico, the Palito Gold complex and its Coringa Gold project located in Brazil. The Palito Gold complex of the company is a high-grade, narrow vein underground mine, which is currently producing approximately 40,000 ounces of gold per annum. The Coringa project, when in production, is estimated to add approximately 40,000 ounces of gold per annum.

Company Overview

Serabi Gold plc announced in the middle of May 2022 that its Palito Complex had produced 2,919 ounces of gold in April 2022. The production levels of April were the highest recorded to date at the complex. The 2,919 ounces of gold produced consisted of the processing of 14,252 tons of ore at an average grade of 6.86 g/t of gold.

The company also announced that it was able to extend the underground on-lode development of the Coringa project for a total of 60 m. The underground extension initiatives of the company have continued to deliver better than anticipated results, with channel sampling initiatives returning intercepts with highlights of 70.06 g/t gold over 0.34 m, 263.83 g/t gold over 0.27 m and 37.92 g/t of gold over 0.57 m. The initial bulk sampling generated at the Coringa project has returned an average grade of 8.25 g/t gold which consists of a sample size of 894 tons of ore. The bulk sampling also includes a high-grade stockpile of 366 tons of ore at a grade of 17.76 g/t of gold.

Serabi Gold plc has also announced that the three drill holes drilled at the Matilda prospect of the Palito Complex have all intercepted porphyry-style mineralisation with assays of the drill holes pending.

Sao Chico Gold mine

The Sao Chico Gold mine of the company is a high-grade gold mine, which was set into commercial production in January 2016. The mine is located close to the village of Sao Chico and is in an area of 200 artisanal workings in the form of shallow pits and shafts. The main vein of the gold mine consists of a gold-rich quartz and sulphide lens over 900 m of strike and with true widths ranging between 0.50 m and 2.9 m wide. The mine’s deposit has been defined over approximately 900 m of strike length and to a depth of 300 m through a combination of both underground development as well as drilling campaigns.

The ore that is produced at the Sao Chico Gold Mine is transported via truck to the company’s Palito Gold processing plant. The mineralisation of Sao Chico is amenable to direct cyanidation extraction processes and following crushing and milling, is fed to a gravity concentration circuit. The ore is then fed to an In-Line Leach Reactor (ILR), where the gold is leached. The leached gold solution is then recovered through traditional methods of electrowinning and smelting processes to produce bars of gold doré.

The past two years were challenging at the Sao Chico Gold Mine for Serabi Gold plc, with various factors including supply chain issues, due to the Covid-19 pandemic, the loss of key personnel and the unanticipated modification of mining methodologies due to a change in mineralisation. Mike Hodgson, the CEO of the company explains that the company was affected by the pandemic, with various equipment not available, he states:

“…if people don’t understand what happened during the pandemic, they never will. 2021 was really the hangover of covid and we were behind with our development. A lot of that was down to supply chain issues, and not getting key equipment, and in Q1 2022, we had a tough start to the year.”

Hodgson further explains that the company was forced to adjust its mining methodology due to a variation in the ore intended to be mined, from what was shown in the reconnaissance drilling, he explains:

“…we had entered into an area, we were (implemented) mechanised mining, it had been drilled, and it looked pretty good after the drilling, but once we got into that part of the mine, a very unique part of the mine, we found something quite different to what the drill hole suggested. That’s occasionally, sadly what happens. It proved very difficult to mine, so we just had to do a mining methodology change on the fly.”

Hodgson states that the mine had gone through a challenging period, but that through the hard work and dedication of the Serabi Gold plc team, they have been able to turn things around. The mine has also been able to contribute to the 2,919 ounces of gold produced by the Palito Gold Processing plant in May 2022.

“…we had a tough first 2-months, which is pretty difficult to recover from. I’m pleased to say - I’ve been going down there every month really trying to help the guys out on very direct day-to-day mining problems. It has really worked; we’ve actually pulled it together. Month on month, things have improved.”

The company has also been able to re-employ various individuals that were previously involved at the Sao Chico gold mine, as well as at the Palito Gold mine previously.

“I’m glad to say at the end of last year, we got the original general manager back, the guy who built Palito back in 2012. He’s back in the company, he’s brought his team back, and a lot of familiar faces are back. These are the guys that are building Coringa. It’s super important, I’m so comfortable having those guys back in the company.”

Palito Gold Mine

The Palito Gold Mine is a high-grade, narrow vein underground mine which produced gold between 2003 and 2008, at which point it was placed in care and maintenance. Serabi Gold plc, published a preliminary economic assessment (PEA) of the project in 2012, which showed the possibility of producing 24,000 ounces of gold per annum. The PEA further showed that at a gold price of USD$ 1,400 per ounce, the mine would generate approximately USD$ 11 million of annual post-tax cash flow over 8 years. The average mined grades over the life of mine (LOM) were estimated to be 8.98 g/t of gold with approximately 90,000 tons of ore produced per year.

The company announced in the middle of April 2022, that the exploration works carried out at the eastern limit of the Palito mining operation, within its Chica Da Santa sector, had continued to generate positive results from the drilling of the Ipe and Mogno veins and additional drilling from both underground and on surface. The Mineralisation highlights include an intercept of 1.5 m at a grade of 76.09 g/t gold underground. The surface drilling initiatives have encountered an intercept at 33.76 g/t of gold over 2.00 m. Hodgson states that the recent exploration initiatives prove the operations potential, he states:

“At Palito, we’ve got a lot more optionality, we’ve got many more veins, we’ve got a lot of new faces, we’ve got some fantastic grades coming out of an area called Chica da Santa where we’ve got 3 veins on 3 levels.”

Hodgson also notes that even though the operation was shrunk in the pandemic, to not only be more economic but also simpler to operate, the recent exploration initiatives have enabled the company to grow the operation, he states:

“We’ve got as I say multiple efforts or faces in Palito that allow us to work in several areas. We shrank the mine during the pandemic just because we needed simplicity with fewer people. Now, we’re growing it and expanding it again and we’ve got a lot of options. We’re working about 6 or 7 different veins now on 2 or 3 levels, so a lot of options, which is really good.”

Coringa Project

The Coringa gold project of the company is located in North-Central Brazil, in the state of Pará. The property is accessible through paved and gravel roads, with previous artisanal mining at Coringa producing an estimated 322,600 ounces of gold. The area has not seen any form of production apart from artisanal mining, with the area staked in 1990 by Tamin Mineração Ltda.

Serabi Gold plc acquired the project in December of 2017 and believes that the Coringa project is similar in mineralisation and geology to the Palito Gold operation. The property previously has undergone extensive exploration initiatives between 2007 and 2013, by Magellan Minerals Ltd. The exploration initiatives included airborne magnetic, radiometric and electromagnetic surveys, surface IP surveys, stream, soil, and rock sampling and 28,437 m of diamond drilling. The project underwent further exploration in 2016 which consisted of 26,413 m of exploration drilling.

Serabi Gold plc announced in the middle of May 2022, that its underground on-lode development initiatives that was extended to a total of 60 m had shown better than anticipated grades with channel samples showing highlights including 87.95 g/t of gold over 0.24 m and 153.48 g/t of gold over 0.22 m. Hodgson states:

“Some really quite amazing channel sample grades in the early development. Narrow grain, narrow vein, high grade, but the nice thing was the vein was very relatively regular, and it meant with development, not to get too technical, it meant we could employ a methodology called split blasting, which meant where, as you advance the tunnels through following the vein, you could actually blast the ore and the waste separately, which meant the product will be generating a smaller stockpile, but a much higher-grade stockpile.”

The company is currently underway investigating the possibility of transporting both the Initial bulk sample, that was generated in the development of the Coringa project, which is 894 tons of ore at 8.25 g/t, as well as the high-grade stockpile of 366 tons at 17.76 g/t of gold, to the Palito Gold Processing plant for further processing. The company previously decided against trucking the stockpile to the Palito Gold Mine, due to the previous condition of the road as well as the scarcity of trucks in Brazil. Hodgson explains that as the infrastructure of the area has improved, the viability of trucking the stockpiles to the Palito gold processing plant has also improved.

“This obviously is bringing infrastructure, bringing improvement, it’s brought a lot of trucks and there are now too many trucks for the work that’s out there, so when we looked at this 3-years ago, resource, reserve grade of 8 g at Coringa, it cost us more or less 3 g/t to move that ore from Coringa to Palito, so it wasn’t a very attractive option. We did look at it. The upshot of what I’ve just said is the costs now are 1 g/t.”

The company plans to implement the possible funds from the processing of the Coringa project’s stockpiles towards the licensing and construction of a gold processing plant at the project.

Future plans

Serabi Gold plc plans to continue with its exploration initiatives at the Sao Chico and Palito gold mines, with the company aiming to publish an updated mineral resource at the Palito gold mine before the end of the year. The company will also investigate the opportunity of a joint venture at its operations to further advance the projects. Hodgson states that Serabi Gold plc is focused on creating value for its shareholders, and believes that its initiatives at the Coringa project as well as the Palito project will enable it to do so.

“We are focusing on bringing back value for shareholders, I know a lot of people are very disappointed with where we’ve got to, but I do think we’re hoping for positive news on permitting at Coringa pretty soon, that’s all moving in the right direction. We’ve got this very exciting opportunity, I think proof to the economics will be to actually get Coringa ounces into our cash flow a lot sooner than we previously forecast, and basically avoiding a big capital requirement, and the ever-improving Palito.”

To find out more, go to the Serabi Gold website