Reports Financial Results

Serabi Mining plc
30 March 2006



SERABI MINING PLC REPORTS FINANCIAL RESULTS



LONDON 30 March 2006: Serabi Mining plc ('Serabi' or 'the Company') today
announces its preliminary financial results for the period from incorporation
(18 May 2004) to 30 September 2005 and for the three month period ended 31
December 2005.


As reported in the Company's Interim Financial Statements, Serabi is adopting a
fiscal year end of 31 December and all future financial statements will be
prepared on a calendar year basis.


The following Chairman's Statement will be reproduced in the Company's 2005
Annual Report which will be posted to shareholders shortly.



Highlights

-   Continuing mine development and operating improvements with an
    initial 17,261 ounces of gold equivalent production achieved

-   Process plant upgrade completed, leading to average gold
    recoveries of between 90% and 95% by year-end

-   Plans initiated to achieve higher mining and process rates in 2006

-   74% increase in resources to 825,900 ounces gold equivalent

-   Improved resource quality as Indicated Resources comprise 90% of
    total resource

-   Successful completion of the Company's initial public offering on
    London's AIM market


Chairman's Statement

2005 was a year of significant accomplishment for Serabi as the company made
tangible progress towards its goal of becoming a mid-tier gold producer.
Serabi's admission to London's AIM market on 10 May 2005 was the culmination of
more than five years of private development by the company's founders,
institutional and private investors and employees. The benefits of becoming a
public company combined with growing cash flow from the Palito mine now provides
a strong foundation for continued success.



Operationally, 2005 was characterised as a year of continuous improvement at the
Palito mine and preparation for the start of regional project evaluation. As an
operation still under development, production at Palito showed significant
improvements over the year, resulting in output of 17,261 ounces of gold
equivalent. Building on last year's success and with preparations for the coming
year, I expect the full potential of Serabi will become more evident during
2006, with the following goals:



-      further expansion of the mineral resource at Palito;

-      increase Palito annual mine production to 45,000 ounces gold
       equivalent with a targeted year-end cash cost of US$200 per ounce;

-      establish resources on other Jardim do Ouro projects;

-      review expansion potential and complete long-term Palito mine plan;

-      step up exploration across the Tapajos project portfolio; and

-      establish resource and initiate preliminary planning for a new
       Tapajos project.


2005 was also a solid year for gold and copper prices, our main products. Since
the start of 2005, the price of gold rose from US$436 per ounce to US$513 per
ounce at year-end, an increase of 18%. Similarly, the price of copper increased
from US$1.42 per pound to US$2.08 per pound over the same period, an increase of
46%. Copper is a significant by-product at Palito and currently represents
approximately 12% of total revenue. The full impact of these prices was partly
offset by a surprisingly strong Brazilian Real, which appreciated by 14% over
the same time period. Nevertheless, we anticipate enhanced benefits to revenue
during 2006 with metal prices remaining strong and limited potential for further
currency strengthening.



Palito Gold Mine

At our 100% owned Palito Gold Mine a significant amount of funds were invested
in projects designed to expand the rate of production, improve efficiencies and
increase the overall resource. By the end of 2005, these investments were
beginning to bear fruit, with daily underground mining production regularly
achieving above 250 tonnes, compared with less than 100 tonnes at the beginning
of the year; more recently this has risen to approximately 400 tonnes per day.
In addition, total resources at the Palito Main Zone increased by 74% to 825,900
ounces of gold equivalent. This substantial increase in the resource base will
now be assessed to determine the implications for long-term mine planning in
order to realise the full potential of the Palito Gold Mine.



Following an assessment of various alternatives during the second half of 2005,
the Board of Directors decided to introduce mechanised mining techniques into
the operation, specifically longhole stoping with decline access. The first
phase of the decline has been completed down to the 192 mRL and is expected to
be developed further in line with production scheduling and cash flow
generation. The introduction of longhole stoping is a major change that will
result in a safer and more efficient operation at Palito and secure our future.
As a result of these initiatives we now anticipate Palito moving to 'commercial
production' in the third quarter of 2006.



Exploration

Since 1999, the company has established a dominant land position over attractive
targets throughout the Tapajos region of Brazil of more than 100,000 hectares.
Proceeds from the company's IPO were used to purchase drill rigs, train crews
and begin testing projects throughout the Jardim do Ouro District and the
broader Tapajos region. Results from this work programme are expected to become
an important feature of the company's development potential during 2006.



Evaluation of soil geochemistry results, geophysics and geology by the company's
exploration team resulted in the initiation of drilling at two targets within
the Jardim do Ouro district late in 2005, namely Palito West and Bill's Pipe.
Initial results are encouraging and Serabi plans to continue work at these and
other projects within the Jardim do Ouro portfolio during 2006. Work will be
focused on developing resources at various satellite orebodies with a view to
incorporating these into the Palito mine plan where possible.



Step-out drilling from the Palito Main Zone during 2005 has already resulted in
the important new discovery of a series of high-grade gold veins, collectively
termed the Compressor Lode. The significance of this discovery is two-fold.
Firstly, it illustrates the potential for additional satellite orebodies
parallel to the Palito Main Zone, within close proximity to the existing
operation. Secondly, the Compressor Lode demonstrates the positive impact of
being able to quickly bring such mineralisation into production. In the span of
only five months, Serabi has discovered, evaluated, planned and begun mining at
the Compressor Lode. The potential to incorporate other similar orebodies into
the mine plan is considered to be good, with positive benefits on the overall
project economics of Palito.



The company was also active in the broader Tapajos region. In October 2005
Serabi purchased an option to acquire 100% of the Pombo gold project in the
southern area of the Tapajos. Drilling has recently commenced and we expect to
report results in due course. Drilling is also planned at other Tapajos projects
during 2006.



Strategy Going Forward

It has been six years since Serabi was established in Brazil. Over this period,
the Company has built the only operating mine in the Tapajos, built an exciting
portfolio of exploration projects, built an experienced team and a positive
reputation, which has resulted in important strategic and operating advantages
for the Company. As a result, we believe we have the ability to leverage our
existing assets and develop new projects quickly. Furthermore, there is immense
geological potential in the Tapajos region, from which we are now well
positioned to build shareholder value. Our criteria for evaluating projects are:

1.       mineable resource potential of at least 500,000 ounces gold equivalent;

2.       annual production potential of between 50,000 to 100,000 ounces gold
         equivalent; and

3.       projected life of mine total cash costs of less than US$250 per ounce.



Serabi will continue to pursue its development programme guided by this set of
evaluation criteria, with a goal of becoming a significant multi-mine, low cost
gold producer.



Acknowledgements

The accomplishments in 2005 could not have been realised without the efforts and
determination of Serabi's employees toward the goal of becoming a successful
mid-tier gold producer. I thank those that have contributed to our success to
date and welcome those that have recently joined.



I would also like to welcome Richard Robinson and Roger Davey to the Board of
Directors of the Company. Their counsel and experience will be an invaluable
asset to Serabi as the company pursues its growth strategy going forward.



A final acknowledgement goes to our shareholders for their continued support of
Serabi. We all look forward to an exciting and rewarding future as Serabi
continues to grow in 2006 and beyond.



Graham Roberts, Chairman



Profit and loss account
(expressed in US$)
                                                                                 Group
                                                                  1 October 2005 to    From incorporation to
                                                                   31 December 2005        30 September 2005

Turnover                                                                          -                  343,064

Operating expenses                                                                -                (255,913)
Profit from operations                                                            -                   87,151

Administration expenses                                                 (1,383,272)              (3,865,896)
Loss on ordinary activities before interest and other
income
                                                                        (1,383,272)              (3,778,745)
Foreign exchange loss
                                                                           (35,703)                (171,310)
Interest payable
                                                                           (69,929)                 (99,973)
Interest receivable
                                                                             21,044                  156,959
Loss on ordinary activities before taxation                             (1,467,860)              (3,893,069)

Taxation                                                                          -                    (524)
Loss on ordinary activities after taxation                              (1,467,860)              (3,893,593)
Loss per ordinary share (basic and diluted)                                 (1.42c)                  (6.51c)



Statement of total recognised gains and losses

                                                                                Group
                                                                   1 October 2005 to   From incorporation to
                                                                    31 December 2005       30 September 2005

Loss for the period                                                      (1,467,860)             (3,893,593)
Exchange loss on foreign currency net investment                           (175,330)               (314,444)
Total recognised losses for the period                                   (1,643,190)             (4,208,037)

All transactions arise from continuing operations.



Balance sheets
(expressed in US$)
                                                            Group                     Holding company
                                                 31 December    30 September     31 December    30 September
                                                    2005            2005            2005            2005
Fixed assets

Intangible assets
Goodwill on acquisition                              1,752,516       1,752,516               -              -
Tangible assets

Property, plant and equipment                        5,375,621       4,088,030          46,802         20,986
Exploration and development costs                   15,831,875      14,609,905       1,073,225        789,001
Investments                                                  -               -      17,339,256     17,339,256

Current assets
Stock and work in progress                           1,825,479         902,123               -              -
Debtors due within one year                          2,818,551       1,162,271         425,362        292,759
Debtors due after more than one year                         -               -       9,594,130      4,357,374
Cash at bank and in hand                             2,152,452       7,557,138       1,552,048      7,238,688
                                                     6,796,482       9,621,532      11,571,540     11,888,821
Creditors: amounts falling due within one year     (2,451,537)     (2,052,507)       (646,558)      (577,959)
Net current assets                                   4,344,945       7,569,025      10,924,982     11,310,862

Total assets less current liabilities               27,304,957      28,019,476      29,384,265     29,460,105
Creditors: amounts falling due after
more than one year                                   (244,724)               -               -              -
Provisions for liabilities and charges               (428,944)       (451,528)               -              -
Net assets                                          26,631,289      27,567,948      29,384,265     29,460,105


Capital and reserves

Called up share capital                             17,974,336      17,974,336      17,974,336     17,974,336
Share premium reserve                               11,818,128      11,818,128      11,818,128     11,818,128
Option reserve                                       2,690,052       1,983,521       2,690,052      1,983,521
Profit and loss account                            (5,851,227)     (4,208,037)     (3,098,251)    (2,315,880)
Equity shareholders' funds                          26,631,289      27,567,948      29,384,265     29,460,105


Consolidated cash flow statement

 (expressed in US$)
                                                                                   Group
                                                                     1 October 2005 to  From incorporation to
                                                                      31 December 2005      30 September 2005

Net cash flow from operations                                              (2,725,970)            (2,363,302)
Returns on investment and servicing of finance

Interest received                                                               21,044                156,959

Interest paid                                                                 (69,929)               (99,973)
Net cash (outflow)/inflow from returns on investments and                     (48,885)                 56,986

servicing of finance
Capital expenditure and financial investment

Purchase of tangible fixed assets                                          (1,627,113)            (2,603,143)

Exploration and development expenditure                                      (967,746)            (8,538,215)
Net cash outflow on capital expenditure and financial                      (2,594,859)           (11,141,358)
investment
Acquisitions and disposals                                                           -                      -

Capital and loan investments to subsidiaries                                         -                      -

Cash acquired with subsidiaries
Net cash outflow on acquisitions and disposals                                       -                      -
Cash outflow before financing                                              (5,369,714)           (13,447,674)
Financing activities

Issue of ordinary share capital                                                      -             29,875,674

Repayment of shareholder loans                                                       -            (8,174,336)
Net cash inflow from financing activities                                            -             21,701,338
(Decrease)/Increase in cash at bank and in hand                            (5,369,714)              8,253,664



Reconciliation of operating loss to net cash flow
(expressed in US$)
                                                                                 Group
                                                                  1 October 2005 to      From incorporation to
                                                                   31 December 2005          30 September 2005

Operating loss                                                          (1,383,272)                (3,778,745)

Depreciation                                                                339,522                    285,512

Write off of exploration and development costs                                    -                     48,993

Increase in stocks                                                      (1,003,810)                  (740,257)

Option costs                                                                422,298                  1,194,520

(Increase) in debtors and prepayments                                   (1,754,743)                  (545,030)

Increase in creditors and accruals                                          709,714                  1,190,992

Foreign exchange                                                           (55,679)                   (19,287)
Net cash outflow from operating activities                              (2,725,970)                (2,363,302)




Reconciliation of cash to net funds
 (expressed in US$)
                                                                                    Group
                                                                     1 October 2005 to     From incorporation to
                                                                      31 December 2005         30 September 2005

Cash at bank and in hand at beginning of period                              7,557,138                         -

Cash flow                                                                  (5,369,714)                 8,253,664

Exchange loss                                                                 (34,972)                 (696,526)
Cash at bank and in hand at end of period                                    2,152,452                 7,557,138



Post Balance Sheet Event



On 30th March the Company announced that it had placed 6,500,000 new Ordinary
Shares of 10 pence each at a price of 40 pence per share.  Once completed the
placing would raise approximately £2,460,000 (net of expenses).  The placing is
conditional upon the shares being admitted to trading on AIM.  Application for
the shares to be admitted to trading was made on 30 March and dealings in the
new Ordinary Shares are expected to commence on 5th April.



Basis of Preparation



These financial results represent two accounting periods, being the period from
incorporation (18 May 2004) to 30 September 2005 and the three month period from
1 October 2005 to 31 December 2005.



The financial results for both periods have been prepared in accordance with the
accounting policies adopted by the Company, notably:

1.       The financial statements have been prepared under the historical cost
conversion and in accordance with applicable Accounting Standards in the United
Kingdom;

2.       The Group capitalises exploration and development costs relating to the
license areas it holds and will amortise these costs over the life of the mine
once commercial production has been achieved. On an annual basis the carrying
value attributed to each of the mineral properties is compared with the
estimated future value that will be derived from the property. Any impairment is
written off to the profit and loss account;

3.       Stocks are valued at the lower of cost and net realisable value;

4.       Property, plant and equipment is depreciated over its useful working
life;

5.       The Group has adopted the US dollar as its reporting currency as the
bulk of its revenues are anticipated to be linked to the US dollar. Transactions
in currencies other than US dollars are translated at the rates prevailing at
the dates of the transactions;

6.       The Company is currently undertaking mining from an area know as Palito
Hill. Given the history of the development of the mine and in particular the
ability, unlike many mines, to generate cash flow from a very early stage of
mine development through the availability of existing plant at the site, the
Board has considered that the current activities represent development activity
rather than commercial production. At this stage, the operations have not
reached the targets set by the Board for commercial production and accordingly
all mine and plant costs have been capitalised as ongoing development costs. All
sales revenue to date has been set off against the development costs;

7.       In 2004, the Company generated gold sales from re-treatment of some old
tailings. As the reprocessing of this material was not part of the long-term
development of the mine this income and its associated costs has been taken
directly to the profit and loss account; and

8.       Revenues are recognised only at the time of sale. Any unsold production
and in particular concentrate is held as inventory and valued at production cost
until sold.



The report and financial statements for the period ended 30 September 2005 will
be posted to shareholders today.



This preliminary announcement does not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985. This preliminary statement,
which has been agreed with the auditors, was approved  by the Board on 30 March
2005.  It is not the company's statutory accounts, which will be sent to
shareholders shortly.



The auditors' reports on the full financial statements for the three months
ended 31 December 2005 and for the period from incorporation to 30 September
2005 have yet to be signed.  However, the auditors anticipate issuing
unqualified audit reports in due course.


Enquiries: 

Serabi Mining plc
Graham Roberts                                Tel: [phone]
Chairman                                      Mobile: [phone]


Clive Line                                    Tel: [phone]
Finance Director                              Mobile: [phone]


Chris Sattler                                 Tel: [phone]
Manager, Corporate Development                Mobile: [phone]

email: [e-mail]

web :  www.serabimining.com


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