AGM Statement
(Thomson Reuters ONE) - SERABI MINING plc ("Serabi" or "the Company") AGM StatementSerabi Mining plc advises that at 11:00 today, it will be holding itsAnnual General Meeting.The following reproduces the text of the statement that will be madeby Graham Roberts, Chairman of the Company:"The continuing modest success of the oxide mining operations atPalito has made a valuable contribution to the Company's cash flowthis year potentially allowing us the opportunity to benefit from theimproved markets and investor sentiments, compared with thoseprevailing in the earlier part of this year. The oxide ores had notpreviously formed a significant part of our production strategy forPalito because of processing issues when being treated together withthe sulphide ore. For this reason we had never focused before onestablishing significant oxide resources; what resources had beenidentified were an incidental consequence of exploration targetedtowards the underlying sulphide mineral deposits.Heavy seasonal rains earlier this year have precluded us fromundertaking any more systematic exploration of the oxide potentialand, for this reason, production has so far only been derived fromthe limited number of known occurrences previously outlined.However, now the rains have finished I am pleased to say that thismonth we will start a drill programme that we hope will lead to theidentification of additional oxide ore feed and thus establish alonger term source of gold production. In addition we are currentlyassessing the potential to reprocess Palito's tailings as a furthersource of gold production.We consider there are now two paths that can be pursued in order togenerate returns for shareholders. A transaction could be undertakenthat would result in value being generated through the disposal ofthe projects in Brazil or we raise new funding in order to advanceidentified projects and thus enhance the underlying value of thoseassets. As noted in our investor newsletters, the production levelsthat we are likely to be able to sustain from the oxide gold sourcesand the resulting cash flow this will generate, is unlikely to beadequate to allow the Company to grow and so new capital is neededfor this purpose.Whilst we understand that any new funds raised would be dilutive forexisting shareholders, the Directors are of the view that this shouldbe outweighed by the potential for a successful outcome of theplanned exploration and development programmes, that could result ina significant upward revision of the project values and hence theCompany. In considering the potential success of this strategy it isnoteworthy that some 66 anomalies were successfully identifiedfollowing last year's airborne geophysical survey, of which 18 areconsidered priority targets. These anomalies exhibit very similarcharacteristics to the known Palito mineralisation, and their closeproximity to the Palito infrastructure makes them all the moreimportant.As has been noted in the recent quarterly Investor Updates, theDirectors believe that the long term success for Palito requires areturn to more selective mining methods and the establishment of alarger reserve and resource base to support an expanded operation.For this reason we are unlikely to pursue a strategy that would seethe early re-opening of Palito and currently prefer to focus onsecuring a larger reserve and resource base by concentrating theCompany's efforts and capital on exploration and evaluation of thenear mine anomalies that have already been identified. We considerthat it could take up to four years to fully undertake the worknecessary to bring the project to a stage which would permit projectfinance to be used to cover the cost of additional plant,infrastructure and mining equipment required to support an expandedoperation; the final time frame will of course be dictated byresults. During this time the company's operations will continue tofocus on the oxide mining opportunities, which would be expected togenerate limited cash flow to supplement any new capital raised.We are working closely with our advisers on indentifying newpotential funding, the levels required and timing. In the event ofsuccessfully pursuing this strategy it should, however, be expectedthat further funding would be required over the evaluation period,though in this event each further raising of new funds would beundertaken with a greater degree of confidence as to the outcome ofthe programmes being financed. We are also working to raise "softloans" from one of the Brazilian development agencies SUDAM. We havelodged an initial application which has been accepted by the agencybut is still subject to amongst other things, technical and legal duediligence, approval of the business strategy and financial review ofthe business plan.An alternative to progressing Palito on our own would be theintroduction of an industry partner as a means to achieving ourobjectives. Accordingly we are continuing our discussions with anumber of potential partners who are interested in the Tapajos regionand the potential that the company's asset base offers. In such asituation we would look to a partner with sufficient cash resourcesthat would allow them to follow their initial investment rightthrough to a project development decision. Whilst to-date none ofour discussions have yet resulted in a suitable proposal, we continueto be active in pursuing this route as an alternative means ofachieving improved value for shareholders.It should be remembered that Palito and the related explorationtargets are already a very advanced project, with significantinfrastructure in place, that is clearly not reflected in the currentmarket valuation of the parent company. Notwithstanding the currentgenerally depressed valuations placed on mining and explorationproperties worldwide, in the opinion of the Directors Serabi stillrepresents a significantly undervalued opportunity. The success ofthe oxide mining and better markets now provides us with options tosecure this value for shareholders.As matters progress we will of course continue to keep shareholdersinformed."EnquiriesSerabi Mining plcGraham Roberts Tel: 01737 773691Chairman Mobile: 07768 902475Clive Line Tel: 020 7246 6830Finance Director Mobile: 07710 151 692Email: contact(at)serabimining.comWebsite: www.serabimining.comBeaumont Cornish LimitedNominated Adviser and BrokerRoland Cornish Tel: 020 7628 3396Michael Cornish Tel: 020 7628 3396---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 18.08.2009 - 11:01 Uhr
Sprache: Deutsch
News-ID 4818
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