4th Oct 2006 07:00
Serabi Mining plc04 October 2006 SERABI MINING plc ("Serabi" or "the Company")ANNOUNCES COMMERCIAL PRODUCTION AT PALITO Serabi (AIM:SRB), the gold mining and exploration Company focused on the Tapajosgeological region on northern Brazil, announces that its Palito Mine hasachieved operating targets laid down prior to the Company's listing with itsadvisors and auditors and, with effect from 1 October 2006, the mine has movedfrom a development phase of operations into commercial production. Having completed an extensive investment programme over the past two years as aprivate and now public Company in the underground mine, the process plant,equipment and mine site infrastructure, the Board considers that the operationhas now reached a point of sustainable and commercially viable production. Upuntil now capital and production costs and revenues generated, have beencapitalized as development costs of the mine. As a consequence of this changefrom development phase to commercial production, all future revenues andoperating costs at Palito will be recorded through the company's profit and lossaccount, following standard industry practices. Reflecting these operating improvements, in recent months the mine has achievedcash operating costs, as previously defined by The Gold Institute, of US$300 perounce, down from US$480 per ounce at the start of 2006. With continuinginvestment plans and productivity improvements to be completed before the end ofthe year, the Company is targeting to achieve a cash operating cost betweenUS$200 and US$225 per ounce at the beginning of 2007. Commenting on the announcement, Graham Roberts, the Chairman of Serabi said: "This represents an important and pivotal moment for the Palito operation and Serabi. Whilst in production since the time of the Company's listing, we have been operating in very much a development phase until a number of key investments had been completed, in particular: the decline which gives us long term access to deeper ore, commissioning of underground mining equipment to facilitate the transition to long-hole stoping, and also within the processing plant, where we are increasing capacity and reliability. We have now implemented what we consider to be the optimal mining and process routes at Palito to achieve an annual production level of at least 50,000 ounces, which we are targeting for 2007. We expect additional financial benefits and a positive impact on unit operating costs as we move towards this level of production during the fourth quarter. At this time we are now routinely achieving mine output of more than 400 tonnes per day and plant recoveries of 90% and above. The planned introduction of an additional mill and an upgrade circuit, will provide further capacity to treat even higher volumes from the Palito mine and potentially other satellite deposits in the future After achieving commercial production at Palito, the mine is now cash flow positive and provides a strong operating and financial foundation for the Company's continuing developments in Brazil." Enquiries Serabi Mining plc Numis Securities LimitedGraham Roberts Tel: 020 7220 9550 John Harrison Tel: 020 7776 1500Chairman James Black Tel: 020 7776 1500 Clive Line Tel: 020 7220 9553 Parkgreen CommunicationsFinance Director Mobile: 07710 151 692 Simon Robinson Tel: 020 7493 3713 E-mail: [email protected] Ana Ribeiro Tel: 020 7493 3713Website: www.serabimining.com [email protected] NOTES TO EDITORSGeneral Background Notes Since listing on the AIM market of the London Stock Exchange last year the workprogramme initially focussed on expanding the resource base at the Company'smining operation at Palito, successfully achieving a 74% increase on the globalresource at December 31 2005 to 825,900 ounces gold equivalent (see PressRelease, 14 February 2006). In the meantime, management has been active puttingin place the facilities to undertake an aggressive exploration and evaluationprogramme across the Company's extensive regional project portfolio, whichexceeds 100,000 hectares. By the end of the first quarter 2006 the Company hadincreased it's surface diamond drilling capacity and improved the associatedgeological and laboratory facilities, in anticipation of an expansion ofexploration activities which is now taking place at a number of projects. As part of the expanding exploration effort, Serabi took delivery of two newsurface diamond core drilling rigs earlier this year. As a result the companynow owns and operates four rigs, which are currently deployed at Palito, Jardimdo Ouro, the Sucuba project and the Pombo project. Additional crews have beenrecruited and trained to increase rig utilisation. In addition, extensivegeological and geochemical work is underway at a number of locations. Groundmagnetics and radiometric surveys will also be utilised in the future to improvedrill targets. The Tapajos is a major, under-explored mineral province that extends over anarea about the size of Belgium. Artisanal miners ("garimpeiros") are thought tohave extracted up to 30 million ounces of gold from mostly alluvial and surfaceweathered bedrock deposits since the 1970's. The company is currentlyestablishing production at its 100% owned underground Palito Gold Mine. Serabiintends to expand resources organically through its existing project portfolioacross the region. Serabi's portfolio of exploration properties includes a number of relativelyadvanced projects in the Jardim do Ouro ("Garden of Gold") district around thePalito Gold Mine and other projects elsewhere in the Tapajos region, which areat an earlier stage of assessment. Serabi has access to an extensive explorationdatabase from Rio Tinto plc ("Rio Tinto") which covers much of the Tapajosregion. This data continues to be assessed and could form the basis of furtheracquisitions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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