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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Serabi Gold Plc | LSE:SRB | London | Ordinary Share | GB00BG5NDX91 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.00 | -2.99% | 65.00 | 64.00 | 66.00 | 67.00 | 65.00 | 67.00 | 253,535 | 15:05:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 58.71M | -983k | -0.0130 | -50.00 | 49.23M |
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For immediate release
30 March 2017
Serabi Gold plc
("Serabi" or the "Company")
Audited Results for the year ended 31 December 2016
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, today releases its audited results for the year
ended 31 December 2016.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND TWELVE
MONTHSING 31 DECEMBER 2016
3 months to 12 months to 3 months to 12 months to
31 Dec 2016 31 Dec 2016 31 Dec 2015(1) 31 Dec 2015(1)
US$ US$ US$ US$
Revenue 10,472,823 52,593,751 8,042,431 35,086,113
Cost of Sales (7,077,485) (32,906,426) (4,235,007) (23,585,063)
Depreciation and
amortisation
charges (1,832,637) (8,384,738) (2,236,959) (5,840,769)
Gross profit 1,562,701 11,302,587 1,570,465 5,660,281
(Loss) / profit
before tax (435,552) 1,870,179 285,221 476,294
Profit / (loss)
after tax 2,958,630 4,430,292 (239,811) (48,738)
Earnings /
(loss) per
ordinary share
(basic) 0.423 cents 0.659 cents (0.036 cents) (0.01 cents)
Average gold
price received US$1,207 US$1,245 US$1,105 US$1,151
As at As at
31 Dec 2016 31 Dec 2015
Cash and cash
equivalents 4,160,923 2,191,759
Net assets 63,378,973 46,783,645
Cash Cost and
All-In
Sustaining Cost
("AISC")
12 months to 12 months to
31 Dec 2016 31 Dec 2015(1)
Gold production
for cash cost
and AISC
purposes (3) 39,390 29,841(2)
Total Cash Cost US$770 US$677
of production
(per ounce)
Total AISC of US$965 US$892
production (per
ounce)
1. The Sao Chico Mine was only declared to be in Commercial Production with
effect from 1 January 2016 and all costs and revenues relating to this
mine were capitalised prior to this date. The Income Statements for 2015
therefore only reflect the revenues and costs arising from the gold
produced from the Palito Mine and the Cash Cost and AISC for the 2015
comparative period therefore also only reflect the activities from the
Palito Mine.
2. Excludes gold production of 2,788 ounces from the Sao Chico Mine which
was not in commercial production during 2015.
3. 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.
2016 Financial Highlights
-- Cash Cost for the year of US$770 per ounce.
-- All-In Sustaining Cost for the year of US$965 per ounce.
-- Gross profit from operations of US$11.30 million for 2016 which
represents an improvement of over 99 per cent compared to the same 12
month period of 2015.
-- Post tax profit of US$4.43 million compared with a loss of US$0.048
million for the same 12 month period of 2015.
-- Earnings per share of 0.66 cents for 2016.
-- Cash holdings of US$4.16 million at 31 December 2016 (31 December 2015 :
US$2.2 million)
-- Average gold price of US$1,245 received on gold sales in 2016.
-- Negligible borrowings with secured debt facilities outstanding at 31
December of only US$1.37 million.
-- Borrowings of approximately US$8.50 million settled during the year.
-- Unit production costs per tonne reduced by 12.7 per cent in local
currency terms year on year.
2017 Guidance
-- Forecast gold production for 2017 expected to be approximately 40,000
ounces.
-- Cost guidance for 2017 of an All-In Sustaining Cost of US$950 to US$975
per ounce.
Post Year End Highlights
-- Approximately 6,600 ounces of gold produced during the first two months
of 2017.
2016 Operational Highlights
-- Record annual production of 39,390 ounces of gold, exceeding guidance and
representing a 21 per cent improvement compared with the 2015 calendar
year.
-- Plant capacity increased with installation of third ball mill. Average
milled tonnage now approximately 500 tonnes per day ("tpd").
-- Total tonnage mined of approximately 159,000 tonnes, a 17 per cent
increase compared with the preceding year.
-- Total tonnage processed of approximately 159,000 tonnes, representing a
22 per cent improvement compared with 2015.
-- Milled ore grades of 8.11 grammes per tonne ("g/t") of gold.
-- New exploration licences at Sao Chico have been acquired immediately to
the east and west of the Sao Chico Mine deposit, offering excellent
opportunity to expand the deposit, with exploration already underway.
-- Ground induced polarisation ("IP") survey undertaken at Sao Chico has
identified some excellent targets within 500 metres of the current
operation.
-- The Company has three additional gold discoveries within three kilometres
of the Palito deposit providing further potential for near term resource
and production growth.
-- At Sao Chico the main ramp has now been deepened to the 71mRL, some 170
vertical metres below surface.
-- Two new sectors brought into development at Palito, being Senna to the
west and Chico da Santa to the east.
-- In the Palito Main Zone, the main ramp has now reached the -50mRL, where
the G3 vein has been intersected and is ready to be developed.
Fourth quarter 2016 Operational Highlights
-- Gold production of 9,413 ounces for the fourth quarter of 2016 (Q3 2016 -
10,233 ounces).
-- Mine ore production totalled 44,579 tonnes for the fourth quarter (Q3
2016 - 43,133 tonnes):
34,611 tonnes at a grade of 7.38 g/t of gold from Palito.
9,968 tonnes at a grade of 14.38 g/t of gold from Sao Chico.
-- 40,485 tonnes of ore processed through the plant during the quarter for
the combined mining operations, at a combined grade of 7.60 g/t of gold.
-- 2,624 metres of horizontal mine development completed in the quarter with
1,928 metres completed at Palito and 696 metres at Sao Chico.
-- During the quarter, the installation of a new carbon regeneration kiln
was completed, this is now effectively regenerating 'fouled' carbon and
early results suggest significant improvement in gold recoveries.
-- At Palito the development of the Senna vein is continuing, with sublevels
being developed on 250mRL, 237mRL, 225mRL, 210mRL and ramping down to the
180mRL.
-- During the fourth quarter, a total of 2,814 metres of underground diamond
drilling was completed across both sites. At Sao Chico, a combination of
exploration and evaluation drilling totalling 1,267 metres was completed,
mostly drilling the inferred resource blocks below the 86mRL. At Palito,
a total of 1,547 metres of mostly exploration drilling was completed,
principally drilling the inferred resource blocks on the Senna vein below
the 200mRL.
-- At the year end, the combined surface stockpiles at Palito and Sao Chico
totalled 21,000 tonnes of ore with an average grade of 4.0 g/t of gold.
Mike Hodgson, CEO of Serabi commented,
"2016 has been an excellent year for the Company. As announced on 23
January 2017 we produced 39,390 ounces of gold for the year, exceeding
our production guidance. The financial results that we have released
today reflect the strong operational performance with a gross operating
profit reported of over US$10.6 million. With the cash generated we
have been able to settle approximately US$8.50 million of debt that the
Company had outstanding at the end of 2015 and significantly strengthen
the balance sheet.
"We continue to look for efficiencies and improvements and it is
pleasing to report that our unit production costs per tonne have
decreased year on year by almost 13 per cent when looked at in local
currency terms. Our results have been unavoidably impacted by the 20
per cent strengthening of the Brazilian Real over the past 12 months and,
whilst many of the forecasts that we read indicate a weakening of the
currency during 2017, we work on the principal of focussing on the items
that we can control and therefore our simple objective is to reduce our
costs to the lowest levels possible.
"2017 will, from an operational perspective, be a period of
consolidation. Both the Palito and Sao Chico Mines are now in a
reasonably steady state and at the current time we are forecasting
production of 40,000 ounces for the year, similar to the output for
2016. Whilst opportunities may present themselves that could create
gold production improvements at both Palito and Sao Chico, significant
future production growth is most likely to come from establishing new
mineable ore-bodies. I am hopeful that during 2017 we can re-invest
surplus cash into exploration programmes that will generate these
additional ore-bodies. With four discoveries already made at Palito and
the Currutela discovery certainly looking as if it is a strike extension
of the Palito deposit I am very confident that the probability of
successfully increasing our production over the next 12 to 18 months is
high.
"In addition, the Sao Chico Mine sits within what is a larger regional
shear structure and having secured the exploration licences to the east
and west and with numerous historic gold occurrences in the area, it
seems likely that future exploration programmes will identify additional
mineable resources within the vicinity of the existing Sao Chico
deposit. Whilst the exploration here is less developed and, unlike
Palito we have no existing drilled discoveries, considering the
geological setting, we are of the view that the Sao Chico Mine, whilst
smaller today than Palito, has the scope to expand significantly and
ultimately host a larger mineral resource than Palito. Whilst the
ground geophysics programme that we started at the end of 2016 had to be
suspended due to an early onset of the wet season, the initial results
were very encouraging and identified a number of significant anomalies
that appear larger that Sao Chico itself. We want to restart and
complete the programme as soon as conditions permit and, if successful,
will look to follow this up with some initial surface drilling.
"When I look back to 12 months ago my priorities were to ensure that we
met our production guidance and paid down our debt. I am pleased that
we exceeded our initial guidance by 6.5 per cent and settled almost 75
per cent of our debt. For this next 12 months we will focus on
identifying and developing the future production growth for the Group.
Our target is to expand annualised production by the end of 2018 to
60,000 to 70,000 ounces and for a similar level of increase within a
further two years. I strongly believe that we can achieve this from the
opportunities that we have in our current tenements and I hope that
before the end of this year I can present hard evidence that this growth
plan is well underway to being realised."
Chairman's Statement
Serabi has successfully delivered another year of production growth,
with gold production for 2016 representing a 21 per cent year on year
improvement and a very satisfying 6.5 per cent improvement over the
initial production guidance provided by management. With the Palito and
Sao Chico Mines now operating at planned levels and 40,000 ounces of
gold production is forecast for 2017. Therefore, our focus is now, very
much, on evaluation of the existing discoveries and other exciting
exploration opportunities that exist around both mines and successful
development of these will bring a further opportunity to increase
production and a significant step change in the Group's evolution.
Serabi's Board continues to see growth as the key to the long term
success for the Company, although it will remain focused on maximising
cash generation and it is not lost on the Board that small producers
such as Serabi can generate greater levels of operational cash flow than
larger producers by being focused on establishing high quality
operations. Ultimately there should always be increased economies
associated with scale. To maximise the Group's leverage in the short
term on its existing skill, knowledge and contact base, Serabi remains
very much a Brazilian focused producer and developer. We have
established a loyal and experienced management team that has been
together for several years. The extensive collective operational
experience that they have has been a key factor in the ability to bring
two mines into production, on budget and within a short time frame, and
will be key to the Group's future growth.
The sentiment within the mining sector feels more positive than 12
months ago and it is evident to me that the larger mining groups having
been focused on cost reduction for the past few years and getting their
houses in order, are once again putting investment into their own
exploration and have a renewed appetite for looking to the junior sector
for opportunities to support their own growth. This, in turn, brings
renewed investor interest and support for the sector to boost growth and
new developments. After the last few difficult years it is a welcome
indicator for renewed optimism.
However, as the last 12 months have shown, the world is an unpredictable
place. Commodity price volatility is not a friend to the resource
sector and for good reason can stimulate a cautionary approach. Your
Board will therefore be judicious in its own strategy for growth as it
seeks to maximise the value that it can achieve from each dollar spent.
We will insist that management continue to follow its tested risk
reducing formula and systematic approach to exploration activity. We
continue to be very excited about the prospects that we have in our own
tenements and whilst we insist on a pragmatic and risk reduction
approach, we are also aware that we need to build value quickly and make
the most of the Group's current position and strength. This needs to be
balanced with the concurrent need to continue to improve the Group's
working capital position and improve its resilience to short term market
movements that can negatively impact on cash flow and margin.
We started the first phase of an increased exploration effort during the
second half of 2016 with some initial geophysics programmes around the
Palito and Sao Chico Mines. The results at Palito from the down the
hole electromagnetic ("EM") programmes have helped us better understand
the size and location of existing discoveries and will help us plan the
next phase of evaluating these. At Sao Chico the work was suspended
because of weather conditions but the initial signs have been very
encouraging and continue to support management's belief that the current
Sao Chico Mine is just a small part of a much larger regional feature
and structure. In this respect the successful acquisition of the
exploration rights, during 2016, over exploration tenements surrounding
the current Sao Chico operations was very important. The weather in the
early part of the year can limit the efficiency and nature of
exploration programmes, but management is actively planning the next
stages of work and considering the optimum solutions that will ensure
the Group can properly finance these.
Management continue to actively assess other opportunities in Brazil and
our track record of moving exploration projects into production makes
Serabi an attractive partner for companies with less operational
experience. However, it remains difficult to find the blend of project
and price that makes an acquisition compelling and, whilst we recognise
that Serabi needs to grow and make a step change that will be reflected
in its valuation, the Board will only pursue opportunities that will
bring strong, long term returns to our existing shareholders.
The next 12 months will continue to bring challenges but also, I am sure,
rewards. I am optimistic about the outlook for gold and believe that we
have now positioned Serabi to benefit from and grow on the back of it.
We have built a strong platform for our longer term growth and will do
all that we can to realise this growth quickly and efficiently.
On behalf of the Board of Directors I would like to extend my
appreciation to the employees and management of Serabi for a job well
done during the past year. Their hard work and determination to succeed
means your Company is well positioned to reap the benefits of the higher
gold price environment we expect during 2017 and beyond. Finally, thank
you to our shareholders, large and small, for your patience during the
last few years. I continue to believe the future is extremely bright
for Serabi.
T. Sean Harvey - Chairman
Serabi's Directors Report and Financial Statements for the year ended 31
December 2016 together the Chairman's Statement and the Management
Discussion and Analysis, are available from the Company's website -
www.serabigold.com and will be posted on SEDAR at www.sedar.com.
This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014.
Enquiries:
Serabi Gold plc
Michael Hodgson Tel: +44 (0)20 7246 6830
Chief Executive Mobile: +44 (0)7799 473621
Clive Line Tel: +44 (0)20 7246 6830
Finance Director Mobile: +44 (0)7710 151692
Email: contact@serabigold.com
Website: www.serabigold.com
Beaumont Cornish Limited
Nominated Adviser and Financial Adviser
Roland Cornish Tel: +44 (0)20 7628 3396
Michael Cornish Tel: +44 (0)20 7628 3396
Peel Hunt LLP
UK Broker
Matthew Armitt Tel: +44 (0)20 7418 9000
Ross Allister Tel: +44 (0)20 7418 9000
Blytheweigh
Public Relations
Tim Blythe Tel: +44 (0)20 7138 3204
Camilla Horsfall Tel: +44 (0)20 7138 3224
Copies of this announcement are available from the Company's website at
www.serabigold.com.
Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this
announcement.
The following information, comprising, the Income Statement, the Group
Balance Sheet, Group Statement of Changes in Shareholders' Equity, and
Group Cash Flow, is extracted from these financial statements.
The Company will, in compliance with Canadian regulatory requirements,
post its Management Discussion and Analysis for the year ended 31
December 2016 and its Annual Information Form on SEDAR at www.sedar.com.
These documents will also available from the Company's website -
www.serabigold.com.
Annual Report
The Annual Report has been published by the Company on its website at
www.serabigold.com and printed copies are expected to be available by 15
May 2017. Additional copies will be available to the public, free of
charge, from the Company's offices at 2(nd) floor, 30 - 32 Ludgate Hill,
London, EC4M 7DR and will be available to download from the Company's
website at www.serabigold.com.
The data included in the selected annual information table below is
taken from the Company's annual audited financial statements for the
year ended 31 December 2016, which were prepared in accordance with
International Financial Reporting Standards in force at the reporting
date and their interpretations issued by the International Accounting
Standards Board ("IASB") and adopted for use within the European Union
(IFRS) and with IFRS and their interpretations issued by the IASB.
There are no material differences on application to the Group. The
consolidated financial statements have also been prepared in accordance
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The audited financial statements for the year ended 31 December 2016
will be presented to shareholders for adoption at the Company's next
Annual General Meeting and filed with the Registrar of Companies.
Statement of Comprehensive Income
For the year ended 31 December 2016
Group
For the year For the year
ended 31 ended 31
December December
2016 2015
Notes US$ US$
CONTINUING OPERATIONS
Revenue 52,593,751 35,086,113
Cost of sales (32,906,426) (23,585,063)
Depreciation and amortisation charges (8,384,738) (5,840,769)
Gross profit 11,302,587 5,660,281
Administration expenses (4,962,524) (4,379,770)
Share-based payments (350,899) (404,075)
Gain on disposal of fixed asset 34,742 -
Operating profit 6,023,906 876,436
Foreign exchange loss (236,619) (71,280)
Finance expense 4 (3,917,681) (1,533,008)
Income on financial instruments - 1,203,023
Finance income 4 573 1,123
Profit before taxation 1,870,179 476,294
Income tax benefit / (expense) 2,560,113 (525,032)
Profit / (loss) for the period from continuing
operations(1) 4,430,292 (48,738)
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit
or loss
Exchange differences on translating foreign operations 8,618,687 (20,490,243)
Total comprehensive profit / (loss) for the period(1) 13,048,980 (20,538,981)
Profit / (loss) per ordinary share (basic) 5 0.66c (0.01c)
Profit / (loss) per ordinary share (diluted) 5 0.61c (0.01c)
(1) The Group has no non-controlling interests and all losses
are attributable to the equity holders of the parent company
Balance Sheet as at 31 December 2016
Group
2016 2015
US$ US$
Non-current assets
Development and deferred exploration costs 9,990,789 8,679,246
Property, plant and equipment 45,396,140 40,150,484
Deferred taxation 3,253,630 -
Total non-current assets 58,640,559 48,829,730
Current assets
Inventories 8,110,373 6,908,790
Trade and other receivables 1,233,049 6,133,284
Prepayments 3,696,550 2,429,506
Cash and cash equivalents 4,160,923 2,191,759
Total current assets 17,200,895 17,663,339
Current liabilities
Trade and other payables 4,722,139 4,212,803
Interest-bearing liabilities 2,964,057 11,385,155
Accruals 635,446 226,197
Total current liabilities 8,321,642 15,824,155
Net current assets 8,879,253 1,839,184
Total assets less current liabilities 67,519,812 50,668,914
Non-current liabilities
Trade and other payables 2,211,078 1,857,914
Provisions 1,851,963 1,898,714
Interest-bearing liabilities 77,798 128,641
Total non-current liabilities 4,140,839 3,885,269
Net assets 63,378,973 46,783,645
Equity
Share capital 5,540,960 5,263,182
Share premium reserve 1,722,222 -
Option reserve 1,338,652 2,747,415
Other reserves 3,051,862 450,262
Translation reserve (30,607,848) (39,226,535)
Retained surplus 82,333,125 77,549,321
Equity shareholders' funds attributable to owners
of the parent 63,378,973 46,783,645
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2016
Share Share Share option Other Translation (Accumulated losses)
Group capital premium reserve reserves reserve / retained surplus Total equity
US$ US$ US$ US$ US$ US$ US$
Equity
shareholders'
funds at 31
December
2014 61,668,212 67,656,848 2,400,080 450,262 (18,736,292) (46,520,559) 66,918,551
Foreign
currency
adjustments - - - - (20,490,243) - (20, 490,243)
Loss for year - - - - - (48,738) (48,738)
Total
comprehensive
loss for the
year - - - - (20,490,243) (48,738) (20,538,981)
Cancellation
of share
premium (67,656,848) - - - 67,656,848 -
Cancellation
of deferred
shares (56,405,030) - - - - 56,405,030 -
Share options
lapsed in
period - - (56,740) - - 56,740 -
Share option
expense - - 404,075 - - - 404,075
Equity
shareholders'
funds at 31
December
2015 5,263,182 - 2,747,415 450,262 (39,226,535) 77,549,321 46,783,645
Foreign
currency
adjustments - - - - 8,618,687 - 8,618,687
Profit for
year 4,430,292 4,430,292
Total
comprehensive
income for
the year - - - - 8,618,687 4,430,292 13,048,979
Transfer to
taxation
reserve - - - 2,690,401 - (2,690,401) -
Shares issued
in period 277,778 1,722,222 - - - - 2,000,000
Release of
fair value
provision on
convertible
loan - - - - - 1,195,450 1,195,450
Warrants
lapsed - - - (88,801) - 88,801 -
Share options
lapsed in
period - - (1,759,662) - - 1,759,662 -
Share option
expense 350,899 350,899
Equity
shareholders'
funds at 31
December
2016 5,540,960 1,722,222 1,338,652 3,051,862 (30,607,848) 82,333,125 63,378,973
Other reserves comprises a merger reserve of US$361,461 and a taxation
reserve of US$2,690,401 (2015: merger reserve of US$361,461 and warrant
reserve of US$88,801).
Cash Flow Statements
For the year ended 31 December 2016
Group
For the For the
year ended year ended
31 December 31 December
2016 2015
US$ US$
Cash outflows from operating activities
Operating profit / (loss) 4,430,292 (48,738)
Net financial expense 4,153,727 400,142
Depreciation - plant, equipment and mining properties 8,384,738 5,840,769
Taxation (benefit) / expense (2,560,113) 525,032
Share-based payments 350,899 404,075
Interest paid (2,049,900) (1,006,508)
Foreign exchange (1,045,460) (1,482,239)
Finance charges (37,500) (171,500)
Changes in working capital
Decrease / (increase) in inventories 153,314 (1,617,365)
Decrease / (increase) in receivables, prepayments
and accrued income 4,177,110 (272,978)
Increase / (decrease) in payables, accruals and
provisions 195,845 1,831,710
Net cash flow from operations 16,152,952 4,402,400
Investing activities
Sales revenues - capitalised - 3,337,071
Capitalised pre-operating costs - (5,422,606)
Purchase of property, plant, equipment and projects
in construction (3,042,043) (2,985,139)
Mine development expenditure (2,366,486) (1,539,729)
Geological exploration expenditure (525,444) -
Proceeds from sale of assets 34,742 -
Interest received and other finance income 573 675,643
Net cash outflow on investing activities (5,898,658) (5,934,760)
Financing activities
Convertible loan received and subsequent conversion
to ordinary shares 2,000,000 -
Repayment of short term secured loan (3,111,111) (4,000,000)
Receipt from repayment of intercompany loan - -
Payment of finance lease liabilities (755,858) (757,596)
Receipts for short term trade finance 15,146,817 21,787,907
Repayment of short term trade finance (21,384,139) (22,899,024)
Net cash (outflow) / inflow from financing activities (8,104,291) (5,868,713)
Net increase / (decrease) in cash and cash equivalents 2,150,003 (7,401,073)
Cash and cash equivalents at beginning of period 2,191,759 9,813,602
Exchange difference on cash (180,839) (220,770)
Cash and cash equivalents at end of period 4,160,923 2,191,759
Notes
1. General Information
The financial information set out above for the years ended 31 December
2016 and 31 December 2015 does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006, but is derived from
those accounts. 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. A copy of
the statutory accounts for 2015 has been delivered to the Registrar of
Companies and those for 2016 will be submitted for approval by
shareholders at the Annual General Meeting. The full audited financial
statements for the years end 31 December 2016 and 31 December 2015 do
comply with IFRS.
2. Auditor's Opinion
The auditor has issued an unqualified opinion in respect of the
financial statements which does not contain any statements under the
Companies Act 2006, Section 498(2) or Section 498(3). The auditor has
raised an Emphasis of Matter in relation to going concern and the
availability of finance as follows:
"In forming our opinion, which is not modified, we have considered the
adequacy of the disclosures made in Note 1(a) to the financial
statements concerning the group's ability to continue as a going
concern.
Whilst the Group expects to have sufficient cash flow from its forecast
production to finance its on-going operational requirements, to repay
its secured loan facilities and to, at least in part, fund exploration
and development activity on its other gold properties, the Group remains
a small scale gold producer with limited cash resources. It is therefore
susceptible to any unplanned interruption or reduction in gold
production, unforeseen reductions in the gold price or appreciation of
the Brazilian currency all of which could adversely affect the level of
free cash flow that the Group can generate on a monthly basis. In the
event that the Group is unable to generate sufficient free cash flow to
meet its financial obligations as they fall due or to allow it to
finance exploration and development activity on its other gold
properties additional sources of finance may be required. The Group is
currently in negotiations to increase and extend its loan facilities,
but they have not been finalised.
These conditions indicate the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as a
going concern. The financial statements do not include the adjustments
that would result if the Company and the Group were unable to continue
as a going concern."
NB: The reference to note 1(a) in the above is a reference to the Basis
of preparation note contained within the financial statements from which
the extract reproduced below referring to Going Concern is taken.
3. Basis of Preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") in force at the
reporting date and their interpretations issued by the International
Accounting Standards Board ("IASB") as adopted for use within the
European Union and with IFRS and their interpretations issued by the
IASB. The consolidated financial statements have also been prepared in
accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
At the date of authorisation of the financial statements, the following
standards and relevant interpretations, which have not been applied in
these financial statements, were in issue but not yet effective (and
some of which were pending endorsement by the EU):
IAS 12 (amended) Recognition of Deferred Tax Asset for Unrealised Losses
IFRS 16 Leases
IAS 7 Disclosure Initiative
lFRIC 22 Foreign Currency Transactions and Advance Consideration
lFRS 9 Financial Instruments
lFRS 15 Revenue from Contracts
lFRS 2 (amended) Classification and Measurement of Share-based Payment
Transactions
lFRS 15 Clarification to IFRS 15 Revenue from Contracts with Customers
Annual improvements to IFRSs: 2014-2016 Cycle
The Group considers that the only standard that may have any impact is
IFRS 9. The new standard will replace existing accounting standards. It
is applicable to financial assets and liabilities and will introduce
changes to existing accounting concerning classification, measurement
and impairment (introducing an expected loss method). The Group
considers that whilst IFRS 15 and IFRS 16 may impact on the Group the
effect will not be significant. The operating leases held by the Company
are of low value and revenue contracts usually contain a single
performance criteria that is satisfied at a point in time. The Group
will adopt the above standards at the time stipulated by that standard.
The Group does not at this time anticipate voluntary early adoption of
any of the standards.
Going concern and availability of finance
On 1 February 2016, the Group announced that, with effect from 1 January
2016, the Sao Chico Mine had achieved Commercial Production. The Palito
Mine has been in Commercial Production since 1 July 2014.
The Directors anticipate the Group now has access to sufficient funding
for its immediate projected needs. The Group expects to have sufficient
cash flow from its forecast production to finance its on-going
operational requirements, to repay its secured loan facilities and to,
at least in part, fund exploration and development activity on its other
gold properties. The secured loan facility is repayable by 31 August
2017 and at 31 December 2016, the amount outstanding under this facility
was US$1.37 million (2015: US$4.0 million). The Group is currently in
negotiations to increase and extend the terms of its loan facilities.
The Directors consider that the Group's operations are performing at the
levels that they anticipate but the Group remains a small scale gold
producer with limited cash resources to support any unplanned
interruption or reduction in gold production, unforeseen reductions in
the gold price or appreciation of the Brazilian currency, all of which
could adversely affect the level of free cash flow that the Group can
generate on a monthly basis. In the event that the Group is unable to
generate sufficient free cash flow to meet its financial obligations as
they fall due or to allow it to finance exploration and development
activity on its other gold properties, additional sources of finance may
be required. Should additional working capital be required the
Directors consider that further sources of finance could be secured
within the required timescale.
On this basis, the Directors have therefore concluded that it is
appropriate to prepare the financial statements on a going concern
basis. However, there is no certainty that such additional funds either
for working capital or for future development will be forthcoming and
these conditions indicate the existence of a material uncertainty which
may cast significant doubt over the Group's ability to continue as a
going concern and, therefore, that it may be unable to realise its
assets and discharge its liabilities in the normal course of business.
The financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
4. Finance Income and expense
Group
For the For the
year ended year ended
31 December 31 December
2016 2015
US$ US$
Interest on trade financing loan (256,898) (364,656)
Finance cost on secured loan facility (672,331) (526,500)
Interest payable on secured loan facility (281,333) (586,667)
Interest payable on finance leases (36,194) (32,388)
Interest payable on convertible loan (137,049) -
Fair value provision on convertible loan (1) (1,195,450) -
Expense from gold hedging activities (1,338,426) -
Other finance-related expenses - (22,797)
Interest payable (3,917,681) (1,533,008)
Release of fair value for call options granted - 196,330
Release of fair value for warrants issued (2) - 332,173
Income from gold hedging activities - 674,520
Gains on financial instruments - 1,203,023
Finance income on short-term deposits 573 1,123
Net finance expense (3,917,108) (328,862)
1. The fair value provision relates to the implied value of the equity
conversion right included as part of the loan terms. The value was
estimated at the date of drawdown and updated until the date of exercise
to reflect the price of the Group's ordinary shares and the remaining
period during which the conversion rights may be exercised.
2. The release of fair value for warrants issued in 2015 relates to
100,000,000 warrants to subscribe for new ordinary shares issued by the
Company on 3 March 2014. The Company accounted for the issue of these
warrants in accordance with IAS32 and recorded a liability of US$1.68
million at the date of issue. As at 31 December 2015 the fair value of
these warrants was assessed to be US$nil and the reduction in fair value
was recognised through the income statement. The warrants expired on 2
March 2016 with none having been exercised.
5. Earnings per Share
For the year
ended 31 For the year ended 31
December 2016 December 2015
Profit / (loss) attributable to ordinary shareholders
(US$) 4,430,292 (48,738)
Weighted average ordinary shares in issue 672,502,757 656,389,204
Basic profit/(loss) per share (US cents) 0.659 (0.01)
Diluted ordinary shares in issue 722,412,757 (1) 656,389,204
Diluted profit /(loss) per share (US cents) 0.613 (0.01)(2)
(1) Assumes exercise of all options and warrants outstanding
as of that date.
(2) As the effect of dilution is to reduce the loss per share,
the diluted loss per share is considered to be the same as the basic
loss per share.
6. Post balance sheet events
On 23 February, the Group extended the term for repayment of its secured
loan facility with Sprott to 31 August 2017. With this exception there
has been no item, transaction or event of a material or unusual nature
likely, in the opinion of the Directors of the Company, to affect
significantly the continuing operation of the entity, the results of
these operations, or the state of affairs of the entity in future
financial periods.
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 identified 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 reflect 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.
ENDS
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Serabi Gold plc via Globenewswire
http://www.serabigold.com
(END) Dow Jones Newswires
March 30, 2017 02:01 ET (06:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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