Buy
Sell
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
  -0.50p -0.87% 57.00p 55.00p 59.00p 57.50p 56.50p 57.50p 127,682 15:41:14
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 33.9 -3.8 -8.8 - 33.58

Serabi Gold plc Audited Results For The Year Ended 31 December 2018

29/03/2019 7:00am

UK Regulatory (RNS & others)


 
TIDMSRB 
 
 
   For immediate release 
 
   29 March 2019 
 
   Serabi Gold plc 
 
   ("Serabi" or the "Company") 
 
   Audited Results for the year ended 31 December 2018 
 
   Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and 
development company, today releases its audited results for the year 
ended 31 December 2018. 
 
   Key Financial Information 
 
 
 
 
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND TWELVE 
 MONTHSING 31 DECEMBER 2018 
-------------------------------------------------------------------------------------- 
                 12 months to   3 months to      12 months to              3 months to 
                  31 Dec 2018    31 Dec 2018      31 Dec 2017              31 Dec 2017 
                      US$            US$              US$                          US$ 
---------------  -------------  ------------  -------------------  ------------------- 
Revenue            43,261,743    10,037,906      48,449,868           12,224,818 
Cost of Sales     (31,101,016)   (7,447,624)    (32,965,498)          (8,407,318) 
                 ------------   ----------- 
Gross Operating 
 Profit            12,160,727     2,590,282      15,484,370            3,817,500 
Administration 
 and share 
 based 
 payments          (5,867,918)   (1,792,903)     (5,711,046)          (1,734,751) 
                 ------------   -----------   -------------   ---  ------------- --- 
EBITDA              6,292,809       797,379       9,773,324            2,082,749 
Depreciation 
 and 
 amortisation 
 charges           (9,004,411)   (2,856,127)    (10,465,283)          (2,919,436) 
                 ------------   -----------   -------------   ---  ------------- --- 
Operating 
 (loss)/profit 
 before finance 
 and tax           (2,711,602)   (2,058,748)       (691,959)            (836,687) 
                 ------------   -----------   -------------   ---  ------------- --- 
 
Loss after tax     (5,754,541)   (3,023,431)     (2,397,903)          (1,627,274) 
                 ------------   -----------   -------------   ---  ------------- --- 
Earnings per 
ordinary share 
(basic)          (11.20 cents)  (5.13 cents)         (6.86 cents)         (4.60 cents) 
                 -------------  ------------  -------------------  ------------------- 
 
Average gold 
price received        US$1,258      US$1,213             US$1,244             US$1,265 
 
                                                            As at 
                                                      31 December                As at 
                                                             2018     31 December 2017 
---------------  -------------  ------------  -------------------  ------------------- 
Cash and cash 
 equivalents                                      9,216,048            4,093,866 
Net assets                                       69,110,287           60,770,712 
 
Cash Cost and 
All-In 
Sustaining Cost 
("AISC") 
--------------- 
                                                     12 months to         12 months to 
                                                 31 December 2018     31 December 2017 
---------------  -------------  ------------  -------------------  ------------------- 
Gold production 
 for cash cost 
 and AISC 
 purposes                                            37,108               37,004 
                                              -------------  ----  -------------  ---- 
 
Total Cash Cost                                            US$821               US$799 
 of production 
 (per ounce) 
                                              -------------------  ------------------- 
Total AISC of                                            US$1,093             US$1,071 
 production 
 (per ounce) 
                                              -------------------  ------------------- 
 
 
   Financial Highlights 
 
 
   -- Cash Cost for the year of US$821 per ounce. 
 
   -- All-In Sustaining Cost for the year of US$1,093 per ounce. 
 
   -- EBITDA of US$6.3 million 
 
   -- Post tax loss of US$5.75. million reflecting lower level of gold sales 
      realised during the period compared with 2017.  The sales shortfall 
      reflects the timing between production and sale recognition and will be 
      recorded in 2019. 
 
   -- Loss per share of 11.20 cents for 2018. 
 
   -- Cash holdings of US$9.2 million at 31 December 2018 (31 December 2017: 
      US$4.1 million), had increased to US$12.8 million by the end of January 
      2019. 
 
   -- Average gold price of US$1,258 received on gold sales in 2018. 
 
   -- Completion of share placings in second quarter 2018 raising more than 
      US$23.5 million for exploration and activity and ongoing development of 
      Coringa project. 
 
 
   2019 Guidance 
 
 
   -- 2019 production is forecast to be in the range of 40,000-44,000 ounces. 
 
 
   Operational Highlights 
 
 
   -- Annual gold production totalling 37,108 ounces is an improvement on 2017 
      production (2017: 37,004 ounces). 
 
   -- Fourth quarter gold production of 10,256 ounces of gold represents record 
      quarterly production for Serabi. 
 
   -- Mine production in 2018 totalling 162,722 tonnes at 7.29 g/t of gold, 
      with the highest level of mined tonnage for 2018 achieved in fourth 
      quarter with a total of 44,257 tonnes at 7.45 grams per tonne ("g/t") of 
      gold. 
 
   -- 168,253 tonnes processed through the plant in 2018 for the combined 
      mining operations, with an average grade of 7.06 g/t of gold. 
 
   -- 45,548 tonnes of run of mine ("ROM") ore processed through the plant from 
      the combined Palito and Sao Chico orebodies during the fourth quarter 
      with an average grade of 7.39 g/t of gold, representing the highest 
      quarterly throughput for the year. 
 
   -- 10,371 metres of horizontal mine development completed in the year, with 
      2,460 metres of horizontal development completed during the fourth 
      quarter. 
 
 
   -- Successful factory testing of ore sorter completed in December 2018 and 
      the unit is now in transit to site with commissioning planned for the 
      second half of the year. 
 
 
   Exploration and Development Highlights 
 
 
   -- A series of discrete "apparent conductivity" anomalies have been 
      delineated by the analysis of the airborne magnetic and electromagnetic 
      ("VTEM") survey flown during the third quarter of 2018.  These anomalies 
      are indicative of probable sulphide bodies which the Company hopes will 
      be gold bearing. 
 
   -- Identification of the "Cinderella" anomaly, a chargeability and 
      conductive high extending over seven kilometres, which is coincident with 
      a strong magnetic anomaly defined by the airborne VTEM survey -- 
      Cinderella is the most significant of a number of anomalies around Sao 
      Chico identified by an Induced Polarisation (IP) terrestrial geophysics 
      programme completed at Sao Chico in the fourth quarter. 
 
   -- Environmental Impact Assessment ("EIA") for the Coringa project approved 
      by State Environmental Agency ("SEMAS") and public hearings now being 
      planned. 
 
   -- Mineral Resources for the Coringa project increased to 514,000 ounces 
      representing a 37% increase over the previously disclosed estimation (as 
      of May 3, 2017), following completion of a surface drilling programme of 
      approximately 7,000 metres. 
 
   -- Completion of a 4,343 line kilometre airborne HeliTEM Electro-magnetic 
      ("EM") and Magnetic survey. 
 
   -- Completion of 80 line kilometres of a terrestrial Induced Polarisation 
      ("IP") geophysical survey. 
 
   -- 4,237 metres of surface exploration drilling completed over the Sao Chico 
      deposit, successfully intersecting the strike extension of the Sao Chico 
      orebody up to 500 metres west of the current mine limit. 
 
   -- 1,520 metres of surface drilling at the Palito deposit, targeting the 
      north extension of the main G3 vein, with the most significant 
      intersection recording 19 g/t of gold over a width of 0.55 metres. 
 
   -- Drilling at Palito confirms northerly and southerly extensions of the key 
      Pipocas and G3 veins and southerly extensions in the Chico da Santa area. 
 
 
   Key Objectives for 2019 
 
   --Building an increase in mineral resources and setting the platform for 
future production growth in 2020. 
 
   --Continue the permitting process for Coringa to allow construction to 
commence during the fourth quarter of 2019. 
 
   --Continue, and accelerate, the current drilling programme at Palito to 
test the strike extension of orebodies beyond the current resource 
limits. 
 
   --Commence a similar drill and surface geophysics campaign at Sao Chico 
to test the five kilometre trend that hosts the Sao Chico deposit as 
well as multiple historic artisanal mines along its length. 
 
   --Optimise mine planning and development plans for the Coringa project 
to improve the economics and the projected life. 
 
   --Continue to evaluate M&A opportunities in the region and across 
Brazil. 
 
   Mike Hodgson, CEO of Serabi commented, 
 
   "2018 has been a very satisfying year operationally and with a strong 
first half of the year, and a record fourth quarter, the Company 
exceeded 2017 production and this momentum has been maintained into the 
first months of 2019.  Both orebodies have performed well and mine 
production has continued to exceed plant capacity.  During 2018 we began 
a process to improve the plant's production capabilities, firstly by 
commissioning a 'scrubbing system' to independently feed stockpiled gold 
bearing (3g/t Au) flotation tailings to supplement that daily production 
of mined ore.  The processing of this material will contribute to an 
improved level of gold production for this year and our guidance is for 
40,000-44,000 ounces for 2019.  We are also anticipating the 
commissioning of an ore sorter during the second part of the year.  The 
ore sorter will help screen out some waste that despite our very 
selective mining methodology, inevitably still enters the mill feed and 
consumes precious plant capacity and we can increase mining rates to 
take advantage of this capacity.  Whilst we are not forecasting 
production benefits from the ore sorter in 2019, we are planning for its 
impact to be significant in 2020. 
 
   "The last 12 months have also yielded some exciting exploration news, 
with results, particularly around Sao Chico, being better than expected. 
The surface and ground geophysics results around Sao Chico are the best 
we have seen on our exploration tenements and I am excited by the 
significant growth potential that we continue to identify.  At our 
Coringa project we are maintaining progress in advancing the permitting 
of this project and have recently announced an increase in the mineral 
resources of 37 per cent.  We are now working on a Preliminary Economic 
Assessment the initial results of which are expected to be available 
before the end of the second quarter. 
 
   "Looking at our year end and the fourth quarter financial performance, 
whilst gold production achieved in the fourth quarter of 10,256 ounces 
was a record quarterly level, a significant portion of the sales have 
only been recognised during the first quarter of 2019.  Gold sales 
recognised in the fourth quarter were only for 8,043 ounces which has 
affected the revenue achieved in the fourth quarter and therefore 
profitability.  The unsold production comprising copper/gold concentrate 
and gold bullion was held as inventory at the end of the year and the 
value of inventory has increased from US$2.3 million at the end of 
September 2018 to US$3.8 million at the end of December 2018 reflecting 
this higher level of unsold production. 
 
   "This production has now been sold and proceeds received which have 
helped to improve the cash position of the company and by the end of 
February 2019 the Group's cash holdings had increased by approximately 
US$3 million to over US$12.1 million. 
 
   "As we approach the end of the first quarter of 2019, I am pleased to 
confirm that we have enjoyed an excellent start to the year.  Gold 
production will again be in excess of 10,000 ounces for the quarter 
whilst sales realised will total over 12,000 ounces." 
 
   "Our cash costs and AISC had seen a modest increase year on year and I 
am very hopeful that, with the increased production that we expect to 
generate in 2019, we will see a reduction in these as we spread our cost 
base over a larger level of gold production.  We did experience some 
exceptional expenditure during the year particularly in undertaking work 
to bring our tailings ponds into conformity with updated legislative 
requirements and introduced following the events at Mariana in 2015 and 
we do have a fully compliant and licenced tailings facility. I do not 
expect a similar level of expenditure, which was in excess of US$1 
million, being required in 2019, notwithstanding that recent events at 
Brumadinho. 
 
   "We have, however, taken the decision to amend the Environmental Impact 
Assessment for the Coringa project to incorporate filtration and dry 
stacking of mine tailings, and therefore dispense with the requirement 
for a tailings dam.  Whilst this EIA, which was inherited having already 
been submitted by the previous operator, has now been approved by the 
State Environmental Agency, we feel that, for a new mining project, such 
a variation will eliminate a significant perceived area of risk and thus 
simplify the permitting and financing process.  Successful studies into 
the viability of using a filtration plant and stacking of the dried mine 
tails were completed during 2018 so the work to complete the variation 
submission is already well advanced. 
 
   Chairman's Statement 
 
   The past 12 months have seen the start of what, I hope, will be a 
sustained period of growth for the Company.  The acquisition of the 
Coringa project at the end of 2017 provided the initial impetus and 
following the successful equity financings completed in the second 
quarter of 2018, the Company has been able to undertake an aggressive 
and highly encouraging exploration programme over the past nine months. 
The highlights of this exploration work, to date, have been the 
identification of significant new growth potential in and around the Sao 
Chico deposit and a significant enhancement of the geological resource 
at Coringa with an overall increase of 37 per cent in the total Measured, 
Indicated and Inferred Resources.  These are certainly encouraging signs 
that the Company's near term objectives, of being a 100,000 ounce per 
annum producer with a global gold resource of more than two million 
ounces, are well within reach. 
 
   The current mining and processing operations of the Palito Complex 
continued to perform well during the year and overall production of 
37,108 ounces represented an improvement on 2017 levels.  For 2019, the 
Company's production guidance is between 40,000 and 44,000 ounces with 
the improvements expected to be generated from improved control of 
mining dilution, resulting in improved head-grades, the increased 
processing rates of stockpiled material, particularly the historic 
flotation tailings. In the second half of the year, the Company also 
plans to be commissioning of an ore-sorter which is expected to liberate 
processing capacity within the current plant and have a significant 
production impact for 2020. 
 
   The real step change in production will begin during 2020 with the 
development of the Coringa gold project located approximately 200 
kilometres to the south of the Palito Complex.  During the year the 
Company has made steady progress with the permitting and licensing of 
this project with trial mining licences being issued in May 2018 and at 
the end of the year the approval of the state environmental authority 
("SEMAS") of the Environmental Impact Assessment ("EIA") that had been 
submitted to them at the end of 2017.  This approval has allowed the 
process of arranging the required public hearings to begin, and if there 
is a positive outcome from thes, this will clear the way for the award 
by SEMAS of the first, and generally the most contentious licencing 
stage, the Preliminary Licence ("Licencia Previa" or "LP").  This will 
allow the Company to engage consultants to prepare and present the 
technical submissions to support the application for the Installation 
Licence which is required before construction can commence. 
 
   In the meantime, the Company has been undertaking further exploration 
around the Coringa project and a diamond drilling campaign completed in 
February 2019 has contributed to a 37 per cent increase in the global 
gold resource of the project.  This is extremely encouraging and may, 
potentially, extend the life of mine significantly beyond the initial 
five years projected by the feasibility study published Anfield Gold, 
the previous owners, in September 2017. 
 
   The Company has also enjoyed significant exploration success with the 
regional and near mine programmes carried out during 2018.  Most 
significant of these was the airborne magnetic and electromagnetic 
("VTEM") survey flown in July 2018.  This had been long awaited and, by 
complementing similar surveys undertaken in 2008 and 2011, it now means 
the entire 43,000 hectare tenement, that comprises the Palito Complex, 
has been covered by airborne VTEM.  The survey results have highlighted 
the presence of numerous pronounced magnetic anomalies, most notably a 
major east-west lineament crossing the entire tenement.  This feature is 
extremely interesting and there are a significant number of 
electromagnetic anomalies lying on the flanks of this magnetic high. 
The survey also identified an extremely interesting electromagnetic 
("EM") anomaly trending north-south and located to the south east and 
east of the Sao Chico tenement. The Company's current ground geophysics 
and drill programmes have not extended out this far and this is 
therefore untested ground.  As a completely new find and considering 
that it extends for more than 10 kilometres, is a very exciting 
development. 
 
   However, the area of our near term focus will be what has been 
christened the Cinderella zone, a north east to south west trending 
feature extending over seven kilometres and traversing the south east 
corner of the Sao Chico mining tenement. This has developed into a very 
compelling exploration target, and our exploration team has worked 
quickly to develop, and have already begun, geochemical survey 
programmes that will allow us to evaluate further the potential of this 
zone.  It is made more interesting by the current and historical 
artisanal mining activity around the areas that drain from the anomaly. 
As the old adage goes, the best place to find gold is next to an old 
gold mine. 
 
   We were all deeply saddened by the recent and tragic events at 
Brumadinho in Minas Gerais state in Brazil. This has created significant 
concern in Brazil over the safety of tailings dams generally.  The Group 
had already undertaken studies for using a filtration plant that would 
produce dry tailings which could be stacked, and negating the need for a 
tailings dam.  The Group is currently amending the Environmental Impact 
Study for Coringa to incorporate a filtration plant, removing the need 
for a wet tailings facility which the Group sees as a major factor in 
minimising permitting delays and concerns.  I would also like to give 
reassurance to our stakeholders regarding the tailings management 
facility at Palito.  Serabi's operations are all about quality not 
quantity, therefore we mine and process almost insignificant volumes of 
rock relative to industrial mineral, iron ore and bauxite operations 
such as Brumadinho.  New legislation had already been introduced 
following the dam failure at Mariana, also in Minas Gerais, in 2015 and 
the Company undertook significant civil works during 2018 to add further 
strengthening to out tailings ponds and the annual audit of our tailings 
facilities, undertaken late last year by an accredited Brazilian 
geotechnical engineering expert, confirmed our tailings management 
facility to be in good order, and it remains fully licenced and 
certified. 
 
   Whilst the outlook for the Company is extremely exciting it must not be 
forgotten that its fortunes are very closely linked to the gold price 
and also, in our case, the Brazilian Real/ US Dollar exchange rate. 
Jair Bolsonaro, the new president of Brazil, only took power on 1 
January 2019, and it will take some time to see the reaction, both 
domestically and internationally, to some of the policy changes and 
initiatives that he is seeking to introduce.  After many years of 
control by the Workers Party, the switch to a pro-business, 
right-leaning president wanting to re-invigorate the economy, reduce 
government bureaucracy and maximise the economic benefits of the 
country's vast natural resources, including the expansion of its 
hydro-electric capability are all encouraging signs that should promote 
new investment and reduce perceived risk.  However, the task that lays 
ahead of him is not easy and it can be expected that it will take time 
for his reforms to be agreed by the government and implemented.  In the 
long term it might be expected that renewed economic success for Brazil 
will lead to a strengthening of the currency but we feel that it will be 
some time before this materialises. 
 
   Gold prices have averaged approximately US$1,250 and US$1,260 in 2017 
and 2018 respectively although across these two years there has been 
some significant volatility with 2018 seeing a high point of more than 
US$1,350 and a low below US$1,200. Increasing tensions in US politics, 
questions over the strength of the global economy and the expectation 
that the US Federal Reserve will hold off on the previously expected 
interest rates rises for 2019, have in recent months contributed to 
attracting investors back to gold as they show signs of anxiety about 
the state of the world.  Stock markets remain somewhat fragile and in 
January 2018, Goldman Sachs raised its gold forecast and now expects a 
gold price of $1,425 over the next year.  Against this backdrop, it 
seems a very opportune time to be looking to develop and bring on stream 
production growth. 
 
   Nevertheless, the Serabi Board will continue to be prudent in its growth 
strategy as we seek to maximise the value that we can achieve from each 
dollar invested.  We remain a small producer for now and will insist 
that management continues to follow its proven formula and systematic 
approach to exploration activity.  We feel we have excellent potential 
in our tenements, at Palito, Sao Chico and Coringa, so anything outside 
these areas has to offer a significant value upside to be included in 
our growth strategy.  Growth will always need 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 remain open to looking at further acquisitions that we consider can 
bring synergies and reduce the Company's overall unit costs and whilst 
Brazil remains our immediate focus, we are aware of opportunities 
outside of Brazil that could represent an excellent fit for Serabi, 
through increased levels of gold production and having the potential for 
further long term growth.  Recent combinations of some of the larger 
gold mining groups, may lead to a reduction in the levels of funding 
available to junior miners from senior miners compared with recent 
years.  With reduced levels of activity from US, Canadian and European 
brokerage houses, the reduced numbers of specialist mining funds, 
dwindling interest from generalist investment funds and retail investors 
this funding from major mining groups has been a significant source of 
finance for juniors whilst the majors have used the juniors to undertake 
a significant element of greenfield exploration on their behalf. 
Serabi's Board is of the view that this further reduction in the 
availability of capital will create opportunities that can be accretive 
and that Serabi, with its existing cash flow and supportive shareholder 
base, will be well positioned to take advantage of. 
 
   The next 12 months will undoubtedly be a very interesting chapter in the 
Company's history.  By this time next year, I very much hope that I will 
be discussing progress on the construction and development of Coringa 
ahead of a first gold pour later in 2020, the Company will have 
delineated the nature and level of production expansion within the 
Palito Complex, and Serabi being well on the way to realising its target 
of annualised production of 100,000 ounces. 
 
   We are fortunate as a Company to have a strong and supportive group of 
major shareholders who share the vision and strategy of the Board.  On 
behalf of the Board of Directors I would like to extend my appreciation 
to them for the continued support and confidence.  As a Board we are 
also indebted 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 2019 and beyond.  Finally, thank 
you to the rest of our shareholders, large and small, for your patience 
during the last few years.  I continue to believe the future is 
extremely bright for Serabi. 
 
   Mel Williams - Chairman 
 
   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 -- 
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.  The person who arranged the release of this 
statement on behalf of the Company was Clive Line, Director. 
 
   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 
Roland Cornish                 Tel: +44 (0)20 7628 3396 
Michael Cornish                Tel: +44 (0)20 7628 3396 
 
Peel Hunt LLP 
 UK Broker 
Ross Allister                  Tel: +44 (0)20 7418 8900 
James Bavister                 Tel: +44 (0)20 7418 8900 
 
 
 
   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 2018 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 2019.  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 2018, 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 2018 
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 2018 
 
 
 
 
                                                                            Group 
                                                               -------------------------------- 
                                                                For the year       For the year 
                                                                  ended 31             ended 31 
                                                                December 2018     December 2017 
                                                        Notes        US$                    US$ 
------------------------------------------------------  -----  ---------------  --------------- 
CONTINUING OPERATIONS 
Revenue                                                         43,261,743       48,449,868 
Cost of sales                                                  (31,501,016)     (32,015,498) 
Release of/(provision for) impairment of inventory                 400,000         (950,000) 
Depreciation and amortisation charges                           (9,281,387)     (10,465,283) 
------------------------------------------------------  -----  -----------      ----------- 
Total cost of sales                                            (40,382,403)     (43,430,781) 
Gross profit                                                     2,879,340        5,019,087 
Administration expenses                                         (5,538,298)      (5,500,275) 
Share-based payments                                              (329,620)        (381,362) 
Gain on disposal of fixed asset                                    276,976          170,591 
------------------------------------------------------  -----  -----------      ----------- 
Operating loss                                                  (2,711,602)        (691,959) 
Foreign exchange loss                                             (594,596)        (214,488) 
Finance expense                                             4   (2,385,313)        (839,191) 
Finance income                                              4      861,430              135 
------------------------------------------------------  -----  -----------      ----------- 
Loss before taxation                                            (4,830,081)      (1,745,503) 
Income tax expense                                                (924,460)        (652,400) 
------------------------------------------------------  -----  -----------      ----------- 
Loss for the period from continuing operations(1)               (5,754,541)      (2,397,903) 
 
Other comprehensive income (net of tax) 
Items that may be reclassified subsequently to profit 
 or loss 
Exchange differences on translating foreign operations          (9,607,555)        (591,720) 
------------------------------------------------------  -----  -----------      ----------- 
Total comprehensive loss for the period(1)                     (15,362,096)      (2,989,623) 
Loss per ordinary share (basic) (1) (2)                     5         (11.20c)          (6.86c) 
Loss per ordinary share (diluted) (1) (2)                   5         (11.20c)          (6.86c) 
------------------------------------------------------  -----  ---------------  --------------- 
 
   (1)          The Group has no non-controlling interests and all losses 
are attributable to the equity holders of the parent company. 
 
   (2)           On 19 June 2018, the Group completed a capital 
reorganisation with every 20 existing shares being consolidated into one 
new share. The total number of existing ordinary shares in issue 
immediately prior to the capital reorganisation was 1,175,281,440. The 
total number of ordinary shares in issue following the capital 
reorganisation was 58,764,072.  For comparative purposes the weighted 
average ordinary shares in issue and the diluted ordinary shares in 
issue for the twelve-month period ended 31 December 2017, has been 
adjusted to reflect the share consolidation of 20 existing shares being 
consolidated into one new ordinary share. 
 
 
 
   Balance Sheet as at 31 December 2018 
 
 
 
 
                                                                     Group 
                                                          ---------------------------- 
                                                             2018          2017 
                                                              US$                  US$ 
Non-current assets 
Deferred exploration costs                                 27,707,795    23,898,819 
Property, plant and equipment                              42,342,102    48,980,381 
Taxes receivable                                            1,555,170     1,474,062 
Deferred taxation                                           2,162,180     2,939,634 
--------------------------------------------------------  -----------   ----------- 
Total non-current assets                                   73,767,247    77,292,896 
--------------------------------------------------------  -----------   ----------- 
Current assets 
Inventories                                                 8,511,474     6,934,438 
Trade and other receivables                                   758,209     1,277,142 
Prepayments                                                 4,166,916     3,237,412 
Cash and cash equivalents                                   9,216,048     4,093,866 
--------------------------------------------------------  -----------   ----------- 
Total current assets                                       22,652,647    15,542,858 
--------------------------------------------------------  -----------   ----------- 
Current liabilities 
Trade and other payables                                    6,273,321     5,347,964 
Interest-bearing liabilities                                4,302,798     2,845,712 
Acquisition payment outstanding                            10,997,757     5,000,000 
Derivative financial liabilities                              390,976       709,255 
Accruals                                                      372,327       614,198 
--------------------------------------------------------  -----------   ----------- 
Total current liabilities                                  22,337,179    14,517,129 
--------------------------------------------------------  -----------   ----------- 
Net current assets                                            315,468     1,025,729 
--------------------------------------------------------  -----------   ----------- 
Total assets less current liabilities                      74,082,715    78,318,625 
--------------------------------------------------------  -----------   ----------- 
Non-current liabilities 
Trade and other payables                                      955,521     2,753,409 
Provisions                                                  1,543,811     2,047,131 
Acquisition payment outstanding                                    --     9,997,961 
Interest-bearing liabilities                                2,473,096     2,749,412 
--------------------------------------------------------  -----------   ----------- 
Total non-current liabilities                               4,972,428    17,547,913 
--------------------------------------------------------  -----------   ----------- 
Net assets                                                 69,110,287    60,770,712 
--------------------------------------------------------  -----------   ----------- 
 
 
Equity 
Share capital                                               8,882,803     5,540,960 
Share premium reserve                                      21,752,430     1,722,222 
Option reserve                                              1,363,367     1,425,024 
Other reserves                                              4,763,819     4,015,369 
Translation reserve                                       (40,807,123)  (31,199,568) 
Retained surplus                                           73,154,991    79,266,705 
--------------------------------------------------------  -----------   ----------- 
Equity shareholders' funds attributable to owners 
 of the parent                                             69,110,287    60,770,712 
--------------------------------------------------------  -----------   ----------- 
 
 
 
 
 
   Statements of Changes in Shareholders' Equity 
 
   For the year ended 31 December 2018 
 
 
 
 
                  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 
 2016           5,540,960   1,722,222   1,338,652      3,051,862  (30,607,848)     82,333,125            63,378,973 
--------------  ---------  ----------  ----------      ---------  -----------   -------------  -------  ----------- 
Foreign 
 currency 
 adjustments           --          --          --             --     (591,720)             --              (591,720) 
Loss for year          --          --          --             --           --      (2,397,903)           (2,397,903) 
Total 
 comprehensive 
 income for 
 the year              --          --          --             --     (591,720)     (2,397,903)           (2,989,623) 
Transfer to 
 taxation 
 reserve               --          --          --        963,507           --        (963,507)                   -- 
Share options 
 lapsed in 
 period                --          --    (294,990)            --           --         294,990                    -- 
Share option 
 expense               --          --     381,362             --           --              --               381,362 
--------------  ---------  ----------  ----------      ---------  -----------   -------------  -------  ----------- 
Equity 
 shareholders' 
 funds at 31 
 December 
 2017           5,540,960   1,722,222   1,425,024      4,015,369  (31,199,568)     79,266,705            60,770,712 
--------------  ---------  ----------  ----------      ---------  -----------   -------------  -------  ----------- 
Foreign 
 currency 
 adjustments           --          --          --             --   (9,607,555)             --            (9,607,555) 
Loss for year          --          --          --             --           --      (5,754,541)           (5,754,541) 
Total 
 comprehensive 
 income for 
 the year              --          --          --             --   (9,607,555)     (5,754,541)          (15,362,096) 
Transfer to 
 taxation 
 reserve               --          --          --        748,450           --        (748,450)                   -- 
Shares issued 
 in period      3,341,843  20,030,208          --             --           --              --            23,372,051 
Share options 
 lapsed in 
 period                --          --    (391,277)            --           --         391,277                    -- 
Share option 
 expense               --          --     329,620             --           --              --               329,620 
Equity 
 shareholders' 
 funds at 31 
 December 
 2018           8,882,803  21,752,430   1,363,367      4,763,819  (40,807,123)     73,154,991            69,110,287 
--------------  ---------  ----------  ----------      ---------  -----------   -------------  -------  ----------- 
 
 
   Other reserves comprise a merger reserve of US$361,461 and a taxation 
reserve of US$4,402,358 (2017: merger reserve of US$361,461 and taxation 
reserve of US$3,653,908). 
 
 
 
   Cash Flow Statement 
 
   For the year ended 31 December 2018 
 
 
 
 
                                                                       Group 
                                                       ---  ---------------------------- 
                                                              For the            For the 
                                                             year ended       year ended 
                                                             31 December     31 December 
                                                                2018                2017 
                                                                US$                  US$ 
----------------------------------------------------        ------------  -------------- 
Cash outflows from operating activities 
Operating profit / (loss)                                    (5,754,541)   (2,397,903) 
Net financial expense                                         1,938,479     1,053,544 
Depreciation -- plant, equipment and mining properties        9,281,387    10,465,283 
Inventory impairment expense                                   (400,000)      950,000 
Other provisions                                                     --       156,404 
Taxation (benefit) / expense                                    924,460       652,400 
Share-based payments                                            509,620       381,362 
Interest paid                                                  (770,100)     (747,072) 
Foreign exchange                                               (155,484)     (178,753) 
 
Changes in working capital 
(Increase) / decrease in inventories                         (2,520,338)     (287,898) 
(Increase) / decrease in receivables, prepayments 
 and accrued income                                          (1,425,384)   (1,968,858) 
Increase / (decrease) in payables, accruals and provisions      (20,870)      165,249 
Increase / (decrease) in short term intercompany 
payables                                                             --            -- 
----------------------------------------------------        -----------   ----------- 
Net cash flow from operations                                 1,607,229     8,243,758 
----------------------------------------------------------  -----------   ----------- 
 
Investing activities 
Acquisition payment for subsidiary net of cash acquired      (4,740,928)   (4,994,665) 
Purchase of property, plant, equipment and projects 
 in construction                                             (4,048,391)   (2,144,753) 
Mine development expenditure                                 (4,090,860)   (4,362,192) 
Geological exploration expenditure                           (4,610,450)       (2,487) 
Pre-operational project costs                                (2,274,133)           -- 
Proceeds from sale of assets                                    301,480       214,566 
Loans to subsidiaries                                                --            -- 
Interest received and other finance income                        4,780           135 
----------------------------------------------------------  -----------   ----------- 
Net cash outflow on investing activities                    (19,458,502)  (11,289,396) 
----------------------------------------------------------  -----------   ----------- 
 
Financing activities 
Issue of ordinary share capital                              23,807,346            -- 
Costs associated with issue of ordinary shares                 (615,295)           -- 
Draw-down of short term loan facility                         3,000,000     3,628,511 
Repayment of short term secured loan                         (1,939,394)           -- 
Receipt from repayment of intercompany loan                          --            -- 
Payment of finance lease liabilities                           (797,945)     (644,340) 
Net cash (outflow) / inflow from financing activities        23,454,712     2,984,171 
----------------------------------------------------------  -----------   ----------- 
 
Net (decrease) / increase in cash and cash equivalents        5,603,439       (61,467) 
Cash and cash equivalents at beginning of period              4,093,866     4,160,923 
Exchange difference on cash                                    (481,257)       (5,590) 
----------------------------------------------------------  -----------   ----------- 
Cash and cash equivalents at end of period                    9,216,048     4,093,866 
----------------------------------------------------------  -----------   ----------- 
 
 
   Notes 
 
   1.             General Information 
 
   The financial information set out above for the years ended 31 December 
2018 and 31 December 2017 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 2017 has been delivered to the Registrar of 
Companies and those for 2018 will be delivered to the Registrar of 
Companies following approval by shareholders at the Annual General 
Meeting. The full audited financial statements for the years end 31 
December 2018 and 31 December 2017 comply with IFRS. 
 
   2.             Auditor's Opinion 
 
   The auditor has issued an unqualified opinion in respect of the 
financial statements for both 2017 and 2018 which do not contain any 
statements under the Companies Act 2006, Section 498(2) or Section 
498(3).  The auditor's opinion in respect of the financial statements 
for 2018, does however contain an emphasis of matter regarding the Group 
and the Company's ability to continue as a going concern and 
specifically the Group and the Company's ability to ggenerate 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.  It is however emphasised that the auditor's opinion is 
not qualified in respect of this uncertainty. 
 
   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. 
 
   Accounting standards, amendments and interpretations effective in 2018 
 
   A number of new and amended standards and interpretations issued by IASB 
have become effective for the first time for financial periods beginning 
on (or after) 1 January 2018 and have been applied by the Group in these 
financial statements. None of these new and amended standards and 
interpretations had a significant effect on the Group because they are 
either not relevant to the Group's activities or require accounting 
which is consistent with the Group's current accounting policies. 
 
   The following new standards and interpretations have been adopted by the 
Group: 
 
 
   -- IFRS 15 has replaced IAS 18 Revenue and IAS 11 Construction Contracts as 
      well as various interpretations previously issued by the IFRS 
      Interpretations Committee. The Group's accounting policies have remained 
      unchanged from those previously disclosed in the 2017 annual financial 
      statements. Under IAS 18, the timing of revenue recognition from the sale 
      of goods was based primarily on the transfer of risks and rewards, 
      whereas IFRS 15 focuses instead on when control of those goods has 
      transferred to the customer. This different approach has not resulted in 
      a change of timing for revenue recognition for the Group. 
 
   -- IFRS 9 has replaced IAS 39 Financial Instruments: Recognition and 
      Measurement. The Group's principal financial assets comprise long and 
      short-term loans, cash and short-term deposits, restricted cash as well 
      as trade and other receivables. All of these financial assets continue to 
      be classified and measured at amortised cost. The Group's principal 
      financial liabilities comprise trade and other payables, loans and 
      borrowings, convertible loans and finance leases and derivative gold call 
      options. With the exception of the gold call options, all of these 
      financial liabilities continue to be classified and measured at amortised 
      cost. The gold call options are classified and measured at fair value 
      through profit or loss. There are no material financial assets subject to 
      the expected credit loss model defined within IFRS 9, except for cash. 
      The level of credit risk that the Group is exposed to has not given rise 
      to material allowances within the expected credit loss model. 
 
 
   There are a number of standards, amendments to standards, and 
interpretations which have been issued by the IASB that are effective in 
future accounting periods and which have not been adopted early. None of 
these are expected to have a significant effect on the Group, in 
particular: 
 
 
   -- IFRS "16 Leases" (effective for periods beginning on or after 1 January 
      2019) requires lessees to recognise all lease assets and liabilities on 
      the balance sheet for both finance leases and operating leases. 
      Management have completed an assessment of existing operating contracts 
      and do not anticipate the adoption of IFRS 16 to have a 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. 
 
 
   Going concern and availability of finance 
 
   As at 31 December 2018 the Group had cash in hand of $9.2 million and 
net assets of $69.1 million.  The Directors have prepared a cash flow 
forecast for the period to 31 March 2020.  Based on this forecast, which 
includes planned capital and exploration programmes, the Group may not 
be able to not 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. 
 
   4.             Finance expense and income 
 
 
 
 
                                              For the          For the 
                                            year ended      year ended 
                                            31 December    31 December 
                                               2018         2017 
                                                US$                US$ 
---------------------------------------     -----------  ------------- 
Interest on trade financing loan                             -- 
Finance cost on secured loan facility         (180,000)    (189,255) 
Interest payable on secured loan facility     (685,517)    (314,732) 
Unwinding of discount on rehabilitation 
 provision                                                 (335,204) 
Interest payable on finance leases                  --           -- 
Unwinding of discount on acquisition 
 payment                                      (999,796)          -- 
Amortisation of fair value of derivative      (520,000)          -- 
Arrangement fee for secured loan                    --           -- 
---------------------------------------     ----------   ---------- 
Interest payable                            (2,385,313)    (839,191) 
------------------------------------------  ----------   ---------- 
Release of fair value for call options 
granted                                        318,279           -- 
Unwinding of discount on rehabilitation 
 provision                                     538,371 
Finance income on short term deposits            4,780          135 
------------------------------------------  ----------   ---------- 
Net finance expense                         (1,523,883)    (839,056) 
------------------------------------------  ----------   ---------- 
 
 
   5.             Earnings per Share 
 
 
 
 
                                                          For the year ended     For the year ended 
                                                           31 December 2018        31 December 2017 
------------------------------------------------------   --------------------  -------------------- 
(Loss) / profit attributable to ordinary shareholders 
 (US$)                                                      (5,754,541)           (2,397,903) 
-------------------------------------------------------  -------------   ----  ------------- ---- 
Weighted average ordinary shares in issue                   51,396,253                34,935,088(1) 
Basic (loss) / profit per share (US cents)                      (11.20)                (6.86) 
-------------------------------------------------------  -------------   ----  ------------- ---- 
Diluted ordinary shares in issue                            51,396,253                34,935,088(2) 
Diluted (loss) / profit per share (US cents)                    (11.20)                (6.86) 
-------------------------------------------------------  -------------   ----  ------------- ---- 
 
 
   1. On 19 June 2018, the Group completed a capital reorganisation with every 
      20 existing shares being consolidated into one new share.  For 
      comparative purpose the weighted average ordinary shares in issue and the 
      diluted ordinary shares in issue for the year ended 31 December 2017, has 
      been adjusted to reflect the share consolidation of 20 existing shares 
      being consolidated into one new share. 
 
   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 
 
   Subsequent to 31 December 2018, 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 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. 
 
   ENDS 
 
 
 
   Attachment 
 
 
   -- Serabi Gold plc 2018 annual results new release 
      https://ml-eu.globenewswire.com/Resource/Download/a205696b-fc0e-4ecf-8cc1-8ae27e4150eb 
 
 
 
 
 

(END) Dow Jones Newswires

March 29, 2019 03:00 ET (07:00 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

1 Year Serabi Gold Chart

1 Year Serabi Gold Chart

1 Month Serabi Gold Chart

1 Month Serabi Gold Chart
Your Recent History
LSE
SRB
Serabi Gol..
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20190619 05:17:15