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Serabi Gold plc (SRB)


Wednesday 14 August, 2019

Serabi Gold plc

Unaudited Interim Financial Results for the three and six month periods to 30 June 2019 and Management’s Discussion and Analysis

Unaudited Interim Financial Results for the three and six month periods to 30 June 2019 and Management’s Discussion and Analysis

For immediate release

            14 August 2019

Serabi Gold plc
(“Serabi” or the “Company”)
Unaudited Interim Financial Results for the three and six month periods to 30 June 2019 and Management’s Discussion and Analysis

Serabi Gold (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development company, today releases its unaudited interim financial results for the three and six month periods ending 30 June 2019 and at the same time has published its Management’s Discussion and Analysis for the same period.


  • EBITDA for the second quarter of U$3.3 million up 23% on the same quarter in 2018.
  • EBITDA for the year to date of US$7.6 million up 35% on the same period in 2018.
  • Profit before tax of US$3.4 million for the year to date with earnings per share of 2.92 cents.
  • Cash holdings at the end of June 2019 of US$12.4 million an increase of US$3.1 million since the end of 2018.
  • AISC for the year to date of US$1,085 per ounce with a Cash Cost of US$860 per ounce.
  • Operational cash flow for the second quarter of US$3.0 million (US$2.3 million after mine development costs), compared with US$1.4 million (US$0.3 million after mine development costs) for the same period in 2018.
  • Operational cash flow for the year to date of US$9.4 million (US$7.9 million after mine development costs), compared with US$4.5 million (US$2.5 million after mine development costs) for the same period in 2018.
  • Higher level of capital expenditure for the second quarter reflects US$0.8 million for the ore sorter.

Key Financial Information

 6 months to
30 June 2019
3 months to
30 June 2019
6 months to
30 June 2018
3 months to
30 June 2018
Cost of sales(19,164,989)(7,803,002)(17,272,887)(7,783,786)
Gross operating profit10,420,7504,656,6978,427,7474,089,997
Administration and share based payments(2,803,500)(1,378,996)(2,780,485)(1,422,883)
Depreciation and amortisation charges(4,250,501)(1,960,956)(4,490,900)(2,498,047)
Operating profit / (loss) before finance and tax3,366,7491,316,7451,156,362169,067
Profit / (loss) after tax1,719,640169,678(482,634)(493,420)
Earnings per ordinary share (basic)2.92c0.29c(1.10c)(0.94c)
Average gold price receivedUS$1,287US$1,292US$1,309US$1,296
   As at
30 June
As at
31 December 2018
Cash and cash equivalents  12,366,6839,216,048
Net assets  71,452,74869,110,287
Cash Cost and All-In Sustaining Cost (“AISC”)    
  6 months to 30 June 20196 months to
30 June 2018
12 months to
31 Dec 2018
Gold production for cash cost and AISC purposes 19,691 ozs18,751 ozs37,108 ozs
Total Cash Cost of production (per ounce) US$860US$861US$821
Total AISC of production (per ounce) US$1,085US$1,121US$1,093


  • Second quarter gold production of 9,527 ounces of gold, resulting in total production for the year to date of approximately 19,700 ounces, a five per cent improvement over the same period in 2018.
  • Total ore mined for the quarter of 44,784 tonnes at 6.72 grams per tonne (“g/t”) of gold. 
  • 43,711 tonnes of run of mine (“ROM”) ore were processed through the plant from the combined Palito and Sao Chico orebodies, with an average grade of 6.72 g/t of gold.    
  • 2,419 metres of horizontal development completed during the quarter, a 30% increase on our Q1 figure
  • Commencement of Company’s Preliminary Economic Assessment (PEA) on the Coringa Gold Project, following last quarter’s updated mineral resource estimate.  Results of the study are expected before the end of August 2019.
  • The Company maintains its 2019 production guidance of 40,000 - 44,000 ounces representing a significant improvement on 2018 production of 37,108 ounces.

Key Operational Information

  Qtr 1Qtr 2TotalQtr 1Qtr 2Qtr 3Qtr 4Total
Gold production (1) (2)Ounces10,1649,52719,6919,1889,5638,10110,25637,108
Mined ore – TotalTonnes42,60944,78487,39339,66936,07142,72544,257162,722
 Gold grade (g/t)7.476.727.087.498.126.237.457.29
Milled oreTonnes43,45143,71187,16243,14538,15541,40545,548168,253
 Gold grade (g/t)7.696.727.217.047.716.117.397.06
Horizontal development – TotalMetres1,8682,4194,2872,3532,7442,8142,46010,371
  1. Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate and gold doré that is delivered to the refineries.
  2. Gold production totals for 2019 include treatment of 10,892 tonnes of flotation tails at a grade of 4.38 g/t (2018 full year: 16,466 tonnes at 3.71g/t)
  3. The table may not sum due to rounding.

Copies of the Financial Statements and the MD&A can be accessed from the Company’s website using the following links

Mike Hodgson, CEO of Serabi commented:

“This second quarter has again been very pleasing from an operational perspective.  As we reported in our second quarter operational update on 22 July, we were very close to achieving our third successive quarter of producing more than 10,000 ounces. The financial performance for this second quarter represents a significant improvement the same quarter in 2018 when gold production levels were very similar and notwithstanding that in the same quarter in 2018, the average gold price that we achieved was in fact slightly higher that we received in the second quarter of 2019.

“Cash generated during the second quarter from the operations, after allowing for on-going mine development costs, was US$2.3 million which was US$2.0 million more than for the same quarter in 2018.  Whilst below the level achieved during the first quarter of 2019, it should be remembered that during the first two months of 2019 the cash position received a significant boost through the sales generated from the inventory held at the end of December 2018. The Group’s cash holdings have nonetheless increased slightly compared to the position at the end of March 2019, which is after the purchase in the period of US$1.1 million of plant and equipment, including US$800,000 relating to the final purchase payment for the ore-sorter and the importation taxes that were levied in Brazil.

“With the slightly lower level of production during this second quarter, compared to the first quarter of 2019, our AISC has crept up slightly but still represents an improvement compared with 2018 and, with the recent improvements in the gold price, the Board expects to continue to enjoy a good operating margin for the rest of the year.  Compared with the same period in 2018 total operating costs for the quarter of US$7.8 million are comparable with the same quarter in 2018, but the margin improvement has been driven by the increased level of sales made during the quarter which at 9,667 ounces were eight per cent higher that the same period in 2018.

“This gold price improvement has however impacted on the financial expenses for the period.  The implied value of gold call options that the Company granted to its secured lender in July 2017 has increased and resulted in a revaluation charge of US$427,000 for the six months to 30 June 2019.  In all other respects our cost profile quarter on quarter is remaining fairly steady.

“We announced earlier this month the expected timetable for our consultants to complete their work on the Preliminary Economic Assessment on Coringa (“PEA”).  As we had previously advised, in the wake of the concerns regarding mine tailings dams we have taken the decision to switch to a dry stacking solution and dispense with a conventional tailings dam.  Our consultants Global Resource Engineering (“GRE”) have assisted with the test-work, design, equipment specifications and location of the dry stacked tailings solution and the revisions necessary in the process design flow sheet. This has impacted on the ability to progress the PEA at the pace that we had previously hoped, but in all other respects the Coringa project continues to be advancing and steady progress is being made in securing the permits and licences that will put us in a position to commence the project development.

“Our current operations continue to perform well and July was another very good month of production keeping us on track to meet our annual production guidance.”

Condensed Consolidated Statements of Comprehensive Income

  For the three months ended
30 June
For the six months ended
30 June
(expressed in US$)Notes(unaudited)(unaudited)(unaudited)(unaudited)
Revenue 12,459,69911,873,78329,585,73925,700,634
Cost of sales (7,803,002)(7,983,786)(19,664,989)(17,472,887)
Release of inventory impairment provision 200,000500,000200,000
Depreciation and amortisation charges (1,960,956)(2,498,047)(4,250,501)(4,490,900)
Gross profit  2,695,7411,591,9506,170,2493,936,847
Administration expenses (1,415,133)(1,357,814)(2,798,964)(2,689,238)
Share-based payments (65,486)(78,278)(130,971)(155,571)
Gain on sales of assets disposal 101,62313,209126,43564,324
Operating profit 1,316,745169,0673,366,7491,156,362
Foreign exchange (loss) / gain (51,486)(498,543)(66,103)(555,633)
Finance expense2(849,336)(109,145)(1,123,599)(699,518)
Finance income2159,600161,81734
Profit / (loss) before taxation 575,523(438,621)2,338,864(98,755)
Income tax expense3(405,845)(54,799)(619,224)(383,879)
Profit / (loss) after taxation 169,678(493,420)1,719,640(482,634)
Other comprehensive income (net of tax)     
Items that may be reclassified subsequently to profit or loss   
Exchange differences on translating foreign operations 1,053,943(8,925,573)491,850(9,260,004)
Total comprehensive profit /(loss) for the period operations attributable to the owners of the parent 1,223,621(9,418,993)2,211,490(9,742,638)
Profit / (loss) per ordinary share (basic) (1)40.29c(0.94c)2.92c(1.10c)
Profit / (loss) per ordinary share (diluted) (1)40.28c(0.94c)2.85c(1.10c)

(1)           All revenue and expenses arise from continuing operations.

Condensed Consolidated Balance Sheets

   As atAs atAs at
   30 June 30 June31 December
(expressed in US$)  (unaudited)(unaudited)(audited)
Non-current assets     
Deferred exploration costs  29,591,75324,490,00127,707,795
Property, plant and equipment  41,228,33842,049,41742,342,102
Taxes receivable  1,556,1251,556,1291,555,170
Deferred taxation  2,008,7322,276,5882,162,180
Total non-current assets  74,384,94870,372,13573,767,247
Current assets     
Inventories  6,898,0335,827,7458,511,474
Trade and other receivables  1,291,5051,596,978758,209
Prepayments and accrued income  4,706,0183,398,2014,166,916
Cash and cash equivalents  12,366,68321,052,3259,216,048
Total current assets  25,262,23931,875,24922,652,647
Current liabilities     
Trade and other payables  7,389,8185,050,2326,273,321
Interest bearing liabilities  6,282,1845,774,1224,302,798
Acquisition payment outstanding  11,530,02710,997,757
Derivative financial liabilities  681,765346,992390,976
Accruals  335,142350,878372,327
Total current liabilities  26,059,33611,522,22422,337,179
Net current assets  (797,097)20,353,025315,468
Total assets less current liabilities  73,587,85190,725,16074,082,715
Non-current liabilities     
Trade and other payables  562,6272,233,353955,521
Provisions  1,572,4761,857,5641,543,811
Acquisition payment outstanding  10,481,843
Interest bearing liabilities  1,686,7042,473,096
Total non-current liabilities  2,135,10316,259,4644,972,428
Net assets  71,452,74874,465,69669,110,287
Share capital  8,882,8038,863,7558,882,803
Share premium reserve  21,752,43021,681,47821,752,430
Option reserve  1,106,0171,189,3181,363,367
Other reserves  5,590,1905,066,7964,763,819
Translation reserve  (40,315,273)(40,459,572)(40,807,123)
Retained surplus  74,436,58178,123,92173,154,991
Equity shareholders’ funds  71,452,74874,465,69669,110,287

The interim financial information has not been audited and does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Whilst the financial information included in this announcement has been compiled in accordance with International Financial Reporting Standards (“IFRS”) this announcement itself does not contain sufficient financial information to comply with IFRS.  The Group statutory accounts for the year ended 31 December 2018 prepared under IFRS as adopted in the EU and with IFRS and their interpretations adopted by the International Accounting Standards Board have been filed with the Registrar of Companies following their adoption by shareholders at the 2019 Annual General Meeting. The auditor’s report on these accounts was unqualified.  The auditor’s report did not contain a statement under Section 498 (2) or 498 (3) of the Companies Act 2006.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(expressed in US$)       
Share option reserveOther reserves (1)Translation reserveRetained EarningsTotal equity
Equity shareholders’ funds at 31 December 20175,540,9601,722,2221,425,0244,015,369(31,199,568)79,266,70560,770,712
Foreign currency adjustments(9,260,004)(9,260,004)
Profit for the period(482,634)(482,634)
Total comprehensive income for the period(9,260,004)(482,634)(9,742,638)
 Transfer to taxation reserve1,051,427(1,051,427)
 Shares issued in period3,322,79519,959,25623,282,051
Share options lapsed in period(391,277)391,277
Share option expense155,571155,571
Equity shareholders’ funds at 30 June 20188,863,75521,681,4781,189,3185,066,796(40,459,572)78,123,92174,465,696
Foreign currency adjustments(347,551)(347,551)
Loss for the period(4,968,930)(4,968,930)
Total comprehensive income for the period(347,551)(4,968,930)(5,316,481)
 Transfer to taxation reserve(302,977) (302,977)
 Shares issued in period19,04870,95290,000
Share option expense174,049174,049
Equity shareholders’ funds at 31 December 20188,882,80321,752,4301,363,3674,763,819(40,807,123)73,154,99169,110,287
Foreign currency adjustments491,850491,850
Profit for the period1,719,6401,719,640
Total comprehensive income for the period491,8501,719,6402,211,490
 Transfer to taxation reserve826,371(826,371)
Share options lapsed in period(388,321)388,321
Share option expense130,971130,971
Equity shareholders’ funds at 30 June 20198,882,80321,752,4301,106,0175,590,190(40,315,273)74,436,58171,452,748
  1. Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$5,228,729 (31 December 2018: merger reserve of US$361,461 and a taxation reserve of US$4,402,358).

Condensed Consolidated Cash Flow Statements

 For the three months
30 June
For the six months
30 June
(expressed in US$)(unaudited)(unaudited)(unaudited)(unaudited)
Operating activities    
Post tax (loss) / profit for period169,678(493,420)1,719,640(482,634)
Depreciation – plant, equipment and mining properties1,960,9562,498,0474,250,5014,490,900
Net financial expense741,222607,6881,027,8851,165,117
Provision for impairment of inventory(200,000)(500,000)(200,000)
Provision for taxation405,84554,799619,224383,879
Share-based payments65,48678,278130,971245,571
Foreign exchange (loss) / gain(404,652)222,774(382,801)154,350
Changes in working capital    
 (Increase)/decrease in inventories(572,470)(619,967)2,165,340117,146
 (Increase) in receivables, prepayments and accrued income(376,417)(1,003,947)(1,113,022)(1,503,295)
 Increase/(decrease) in payables, accruals and provisions979,894242,9331,518,388113,080
Net cash inflow from operations2,969,5421,387,1859,436,1264,484,114
Investing activities    
Acquisition payments(120,988)(4,740,928)(1,156,075)(4,740,928)
Capitalised mine development costs(654,253)(1,064,966)(1,492,563)(2,030,489)
Purchase of property, plant and equipment and projects in construction(1,071,564)(892,233)(1,461,292)(1,317,926)
Geological exploration expenditure(208,062)(1,443,384)(796,524)(2,011,802)
Pre-operational project costs(403,580)(496,049)(843,522)(1,289,479)
Proceeds from sale of assets118,03913,209153,08164,324
Interest received2,21734
Net cash outflow on investing activities(2,340,408)(8,624,351)(5,594,678)(11,326,266)
Financing activities    
Issue of ordinary share capital23,807,34623,807,346
Costs associated with issue of share capital(566,518)(566,518)
Drawdown secured loan3,000,000
Repayment of secured loan(195,043)(666,667)(195,043)(1,000,000)
Payment of finance lease liabilities(81,573)(143,063)(267,178)(426,210)
Interest paid and other finance costs(151,137)(234,166)(303,933)(386,587)
Net cash (outflow) / inflow from financing activities(427,753)22,196,932(766,154)24,428,031
Net increase / (decrease) in cash and cash equivalents201,38114,959,7663,075,29417,585,879
Cash and cash equivalents at beginning of period12,133,7126,695,5269,216,0484,093,866
Exchange difference on cash31,590(602,967)75,341(627,420)
Cash and cash equivalents at end of period12,366,68321,052,32512,366,68321,052,325


1. Basis of preparation
These interim condensed consolidated financial statements are for the three and six month period ended 30 June 2019. Comparative information has been provided for the unaudited three and six month period ended 30 June 2018 and, where applicable, the audited twelve month period from 1 January 2018 to 31 December 2018. These condensed consolidated financial statements do not include all the disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2018 annual report.
The condensed consolidated financial statements for the periods have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” and the accounting policies are consistent with those of the annual financial statements for the year ended 31 December 2018 and those envisaged for the financial statements for the year ending 31 December 2019.

Accounting standards, amendments and interpretations effective in 2019
The Group has not adopted any standards or interpretations in advance of the required implementation dates.
As of 1 January 2019, IFRS “16 Leases”, became effective and requires lessees to recognise all lease assets and liabilities on the balance sheet for both finance leases and operating leases. The adoption of IFRS 16 has not had any significant impact on the Group’s financial statements as the operating leases held by the Group are of low value and the majority of the existing contracts either relate to service agreements or otherwise do not result in right of use assets or lease liabilities.

These financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

  1. Going concern

As at 30 June 2019 the Group had cash in hand of US$12.3 million and net assets of US$71.5 million.  The Directors have reviewed the forecast cash flow of the Group for the next 12 months.  Based on this forecast, which includes planned capital and exploration programmes, the Group may not be able to generate sufficient cash flows to settle, in full, the deferred consideration of US$12 million payable for the acquisition of Coringa which falls due in December 2019.

The Directors believe there is a reasonable prospect of the Group securing further funds as and when required in order that the Group can meet all liabilities including the deferred consideration payable for the acquisition of Coringa as and when they fall due in the next 12 months and have prepared the financial statements on a going concern basis.

As at the date of this report the outcome of raising further funds remains uncertain and this represents a material uncertainty surrounding going concern. If the Group fails to raise the necessary funds the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. The matters explained indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent’s ability to continue as a going concern. These financial statements do not show the adjustments to the assets and liabilities of the Group or the Parent company if this was to occur.

(ii)   Use of estimates and judgements
There have been no material revisions to the nature and amount of changes in estimates of amounts reported in the 2018 annual financial statements.

 (iii)  Impairment

At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered impairment. Prior to carrying out of impairment reviews, the significant cash generating units are assessed to determine whether they should be reviewed under the requirements of IFRS 6 - Exploration for and Evaluation of Mineral Resources or IAS 36 - Impairment of Assets. Such determination is by reference to the stage of development of the project and the level of reliability and surety of information used in calculating value in use or fair value less costs to sell. Impairment reviews performed under IFRS 6 are carried out on a project by project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise; typically when one of the following circumstances applies:

(i)            sufficient data exists that render the resource uneconomic and unlikely to be developed

(ii)           title to the asset is compromised

(iii)          budgeted or planned expenditure is not expected in the foreseeable future

(iv)          insufficient discovery of commercially viable resources leading to the discontinuation of activities

Impairment reviews performed under IAS 36 are carried out when there is an indication that the carrying value may be impaired. Such key indicators (though not exhaustive) to the industry include:

(i)            a significant deterioration in the spot price of gold

(ii)           a significant increase in production costs

(iii)          a significant revision to, and reduction in, the life of mine plan

If any indication of impairment exists, the recoverable amount of the asset is estimated, being the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Such impairment losses are recognised in profit or loss for the year.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss for the year.

2. Finance Costs

 3 months ended
30 June 2019
3 months ended
30 June 2018
6 months ended
30 June 2019
6 months
30 June 2018 (unaudited)
Interest expense on secured loan(150,956)(205,479)(300,540)(357,899)
Unwinding of discount on acquisition payment(270,750)(246,137)(532,271)(483,883)
Arrangement fee for secured loan(90,000)
Loss on revaluation of derivatives(427,630)(290,788)
Amortisation of fair value of derivatives(65,000)(130,000)
Gain on revaluation of derivatives407,471362,264
Interest income2,21734
Net finance expense(689,736)(109,145)(961,782)(699,484)

3. Taxation

The Group has recognised a deferred tax asset to the extent that the Group has reasonable certainty as to the level and timing of future profits that might be generated and against which the asset may be recovered.  The Group has released the amount of US$502,707 as a deferred tax charge during the six month period to 30 June 2019.

The Group has also incurred a tax charge in Brazil for the six month period of US$116,517. 

4. Earnings per share

  3 months ended 30 June 2019
3 months ended 30 June 2018
6 months ended 30 June 2019
6 months ended 30 June 2018
Profit / (loss) attributable to ordinary shareholders (US$)169,678(493,420)1,719,640(482,634)
Weighted average ordinary shares in issue58,909,55152,529,47558,909,55143,821,118
Basic profit / (loss) per share (US cents)0.29c(0.94)2.92c(1.10)
Diluted ordinary shares in issue60,430,473(1)52,529,475(1)60,430,473(2)43,821,118(1)
Diluted profit / (loss) per share (US cents)0.28c(0.94c)2.85c(1.10c)
  1. As the effect of dilution is to reduce the loss per share, the diluted shares in issue are the same as the basic shares in issue and the diluted loss per share is considered to be the same as the basic loss per share.
  2. Based on 1,520,922 options vested and exercisable as at 30 June 2019.


Serabi Gold plc 
Michael HodgsonTel: +44 (0)20 7246 6830
Chief ExecutiveMobile: +44 (0)7799 473621
Clive LineTel: +44 (0)20 7246 6830
Finance DirectorMobile: +44 (0)7710 151692
Email: [email protected] 
Beaumont Cornish Limited
Nominated Adviser and Financial Adviser
Roland CornishTel: +44 (0)20 7628 3396
Michael CornishTel: +44 (0)20 7628 3396
Peel Hunt LLP
UK Broker
Ross AllisterTel: +44 (0)20 7418 9000
James BavisterTel: +44 (0)20 7418 9000

Copies of this announcement are available from the Company's website at

Neither the Toronto Stock Exchange, nor any other securities regulatory authority, has approved or disapproved of the contents of this announcement.

The Company will, in compliance with Canadian regulatory requirements, post the Unaudited Interim Financial Statements and the Management Discussion and Analysis for the three and six month periods ended 30 June 2019 on SEDAR at  These documents will also available from the Company’s website –

Serabi’s Directors Report and Financial Statements for the year ended 31 December 2018 together the Chairman’s Statement and the Management Discussion and Analysis, are available from the Company’s website – and on SEDAR at

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014. The person who arranged for the release of this announcement on behalf of the Company was Clive Line, Director.

The following is a glossary of technical terms:
“Au” means gold.
 “assay” in economic geology, means to analyse the proportions of metal in a rock or overburden sample; to test an ore or mineral for composition, purity, weight or other properties of commercial interest.
“development” - excavations used to establish access to the mineralised rock and other workings.
“doré – a semi-pure alloy of gold silver and other metals produced by the smelting process at a mine that will be subject to further refining.
“DNPM” is the Departamento Nacional de Produção Mineral.
“grade” is the concentration of mineral within the host rock typically quoted as grammes per tonne (g/t), parts per million (ppm) or parts per billion (ppb).
“g/t” means grammes per tonne.
“granodiorite” is an igneous intrusive rock similar to granite.
“igneous” is a rock that has solidified from molten material or magma.
“Intrusive” is a body of igneous rock that invades older rocks.
“on-lode development” - Development that is undertaken in and following the direction of the Vein.
 “mRL” – depth in metres measured relative to a fixed point – in the case of Palito and Sao Chico this is sea-level.  The mine entrance at Palito is at 250mRL.
“saprolite” is a weathered or decomposed clay-rich rock.
“stoping blocks” – a discrete area of mineralised rock established for planning and scheduling purposes that will be mined using one of the various stoping methods. 
“Vein” is a generic term to describe an occurrence of mineralised rock within an area of non-mineralised rock.

Qualified Persons Statement
The scientific and technical information contained within this announcement has been reviewed and approved by Michael Hodgson, a Director of the Company. Mr Hodgson is an Economic Geologist by training with over 26 years' experience in the mining industry. He holds a BSc (Hons) Geology, University of London, a MSc Mining Geology, University of Leicester and is a Fellow of the Institute of Materials, Minerals and Mining and a Chartered Engineer of the Engineering Council of UK, recognising him as both a Qualified Person for the purposes of Canadian National Instrument 43-101 and by the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009.

Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be, forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as ‘‘believe’’, ‘‘could’’, “should” ‘‘envisage’’, ‘‘estimate’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘will’’ or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re?ect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.


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