2nd Quarter Investor Update
(Thomson Reuters ONE) - For immediaterelease 30 July 2009 SERABI MINING plc ("Serabi" or "the Company") Release of Investor Update for Quarter 2Serabi announces that it has today issued its Investor Update inrespect of the second quarter of 2009 ending 30 June 2009.Highlights and operating results reported for the quarter were: * Production of 1,802 ounces of gold for the quarter from surface oxide mining * Continued positive operational cash flow for the year to date * Potential for the identification and continued mining of oxide gold deposits at Palito - with approval for a US$250,000 surface oxide drilling programme * Continued reduction in overheads * Geophysical targets at Palito provide principal focus for future exploration to increase resources Palito - Operating Results (1) 2009 2008 Q1 Q2 YTD YTDMilled t 17,580 19,151 36,731 66,506(per day) (197) (210) (203) (365)Head Grade (2) g/t 3.78 3.09 3.42 4.82Recovery % 92.3 94.7 93.6 89.0Gold (3) oz 1,973 1,802 3,775 10,738(1) Provisional (2) Ore feed to the process plant (3) For 2008gold production Includes copper and silver creditsThe following is the text of the Investor Update. A copy of theInvestor Update can be accessed by following the link in this newsrelease and is also available from the company's offices or from thecompany's website - www.serabimining.com.MANAGEMENT REVIEWThe second quarter of 2009 ("Q2"), saw continued positive cash-flowfor the Palito Operation. Gold production from surface oxide oresources continued much as reported in the first quarter of 2009, with1,802 ounces produced during Q2. For the year to date this meansthat production has met the costs of the Brazilian operation, aconsequence of the previous dramatic reduction in overheads, acontinued strong US dollar gold price and a favourable Brazilian Realto US dollar exchange rate over the period.Considering the continued, albeit very modest success of surfacemining and gold production at Palito, the Directors have approved aUS $250,000 surface oxide drilling programme with the objective oftesting a series of anomalies, that it is hoped can be readily turnedinto mineable oxide deposits. Initial results from this programmeshould be available by the Q3 2009 update.The surface gold production has been a welcome success for thecompany, and whilst we have had to take tough decisions in theprocess of downsizing the company and its immediate aspirations, theresultant cash-flow has avoided the need for distressed asset salesand placed the Company on a better footing to consider a wider rangeof options for re-building value. That said, it is unlikely theoxide ore sources on their own will be sufficient for us to grow thebusiness and pursue the direction we wish without additional fundingand we continue therefore to pursue all strategic options for raisingnew funds for the Company and/or the projects. These options includethe sale or joint venture in whole or part of its mining andexploration assets. The Directors are also continuing to pursueopportunities that might result in an injection of new capital eitherinto the Company or directly into its Brazilian operatingsubsidiary. In this regard we are working with a selection of NorthAmerican and UK based groups to identify parties both from within theindustry or as strategic partners that are interested in investing inthe Company, its projects and its strategy.As reported in Q1 2009 we pursue a strategy going forward thatde-risks the business and are firmly of the view that beforeunderground operations at Palito are fully resumed, the followingshould be in place:1. A return to selective mining methods, which would bringreduced ounces, but quality ounces yielding the highest margins.2. A larger resource and reserve base is established.Our near-term objective is therefore to focus on maintaining and ifpossible expanding surface mining activities, along with thenecessary exploration to support this in order to at least continueto cover costs. This is now in progress with the surface drillingprogramme mentioned above, which will be funded from cash flowsupplemented if required, from current cash holdings.In the medium term, and conditional on securing further funding,additional underground ore sources are required. The real value inthe Serabi's land-holdings is the hard rock ore sources thatundoubtedly underlie the area and from which the oxidized ore isderived that historically the garimpeiros and now Serabi generatesproduction. It was this potential that drew Serabi to the Tapajos inthe first place, and this potential has now been enhanced by resultsof the airborne geophysical survey flown by the Company in early2008.Operations in any remote region of the world bring with them a needto independently establish infrastructure and support services. Thesuccess of such ventures is the ability to grow production tocomfortably meet and exceed such costs. At Palito, the difficultiesencountered expanding production meant that this cost could not bespread over sufficient ounces resulting in a high and unsustainablecost per ounce.To realistically overcome this, a second and third mine in the Palitodistrict is the best option, and the Directors feel the mostrealistic one. The model is to feed the central process plant, froma selection of small mines. The 18 principal anomalies that werelargely identified from the 2008 airborne geophysical survey aretherefore a priority. These anomalies exhibit very similargeophysical characteristics to the Palito deposit, and their closeproximity to the Palito infrastructure makes them all the moreimportant. We believe testing (through a combination of drilling andfurther geophysics, and geochemistry) and advancing these targetscould be achieved with an initial budget of around US$1.4M for thefirst 12 months, followed by a further US$2.2M over a subsequent 12month period. It is also believed that oxide ore sources are likelyto accompany these targets, and therefore continued low cost surfaceoxide ore gold production can be additional benefit from such aprogramme.As reported last quarter, regionally the Company has suspended itsactivities. Our outlying tenements are not core assets, andtherefore we are pursuing partners with whom to advance theseproperties.OPERATING REVIEWSince the beginning of the year, limited gold production hascontinued at Palito through the mining of surface oxide ore. Theoperation is mining and processing approximately 6,000 tonnes ofoxide ore per month.Key points: * Since suspension of underground mining at the end of 2008, surface oxide operations have produced over 37,000 tonnes (200 tonnes per day) at grades of approximately 3.4 g/t gold. * Mining has to date been limited to the Senna Zone. Up to 10 other areas are now being evaluated. * Plant has capacity to process over 700 tpd of oxide ore * Considering current gold prices and exchange rates, at a 200-250 tpd production rate, operating cut off grades are between 2.2-2.5 g/t gold.The oxide ore is mostly free-dig and therefore does not requiredrilling and blasting. As a result, very little ore requirescrushing. The feed only requires treatment through the existing CIPplant and as a result, the flotation circuit is currently idle.As reported last quarter, the dramatic reduction in overheads hasresulted in gold production from oxides being able to more than meetthe costs of the Brazilian operation year-to-date. The modestoperating cash surplus has been used for paying down residualpayables from 2008 and also to pursue limited oxide exploration.More importantly, the success to date has been sufficientlyencouraging for the Directors to approve a US $250,000 surface oxidedrilling programme with the objective of testing a series of knownsoil anomalies, which it is hoped can be readily turned into mineableoxide deposits in the near term. Initial results from this programmeshould be available by the Q3 2009 update.Conditional upon the success of this oxide drilling programme, it isour intention to continue to identify additional minable oxideresources and if sustainable, gradually increase oxide goldproduction further. The process plant has capacity to treat over 700tonnes per day of oxide ore, and whilst we do not currently envisagesuch throughput levels adequate capacity is available to meet anyincrease in mining volumes. The drilling rig required for this typeof evaluation drilling is expected to be on site by early August andwill be operated by an independent contractor experienced in thistype of exploration activity.The Palito underground mine has been on care and maintenance sinceJanuary 2009, but remains in a condition whereby mining operationscould re-commence at relatively short notice. Any re-establishmentof underground mining at Palito to levels of production similar tothose originally targeted for 2008, would require a phase oflong-term development (up to 12 months), bringing with it asubstantial working capital requirement. However, in the light ofexperience of the past 3 years, the Directors are firmly of theopinion, that the re-introduction of selective manual mining atPalito is necessary, and even this would require a significantworking capital outlay and require identification and recruitment ofsuitable mining personnel. Selective mining whilst yielding lowerore volumes would produce a higher grade ore feed to the plant andthus be expected to produce lower cost ounces and improved and morerobust economics. The unavoidable higher fixed costs of operating ina remote location mean that to achieve sustainable profitable ounceswith healthy margins, an increase in geological resource and mineablereserves are also required.EXPLORATION REVIEWSince the beginning of the year, exploration activity has beenlargely suspended with the exception of exploration activity designedto delineate oxide resource amenable to surface mining. As mentionedearlier, the board has now approved a US$250,000 surface oxidedrilling programme, which will focus on a combination of targetswhich include geochemical, geophysical and historical indications offurther oxide ore potential.Key points: * 10 target areas located within the mine operating license area * Targets have been defined by anomalous gold in soil geochemistry, trenching and shallow drilling results * Further evaluation will be by power auger and shallow percussion drilling and follow up trenching * 50,000 tonnes at more than 2 g/t gold oxide ore is targetedRegionally, the Company has suspended its activities. Our outlyingtenements are not core assets, and therefore we are pursuing partnerswith whom to advance these properties.Enquiries:Serabi Mining plcGraham Roberts Tel: 020 7246 6830Chairman Mobile: 07768 902 475Clive Line Tel: 020 7246 6830Finance Director Mobile: 07710 151 692Email: contact(at)serabimining.comWebsite: www.serabimining.comBeaumont Cornish LimitedRoland Cornish Tel: 020 7628 3396Michael Cornish Tel: 020 7628 3396Qualified Persons StatementThe information contained within this announcement has been reviewedand verified by Michael Hodgson as required by the AIM Guidance Noteon Mining. Oil and Gas Companies dated March 2006. Michael Hodgsonis an Economic Geologist by training with 20 years experience in themining industry. He holds a BSc (Hons) Geology, University ofLondon, a MSc Mining Geology, University of Leicester and is a Fellowof the Institute of Materials, Minerals and Mining and a CharteredEngineer of the Engineering Council of UK.---END OF MESSAGE---http://hugin.info/137617/R/1331492/315056.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 30.07.2009 - 13:29 Uhr
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