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Message: A bit of history from 2007
GARDEN OF GOLD, BRAZIL
Serabi Mining; expansion on the horizon
High-grade gold operation looking for healthy expansion in the Garden of Gold, an old garimpeiro region of Brazil.
Author: Rhona O'Connell
Posted: Friday , 15 Jun 2007
LONDON -
The old garimpeiros workings in Brazil were famously productive, with output reaching towards 80 tonnes per annum in the 1980s. Funnily enough, not all of this production was declared to the authorities - and analysts smelt a rat when we noticed that neighbouring Uruguay was regularly declaring gold exports, despite having no formal production! Now Serabi Mining is operating on one of these areas on a highly prospective land-holding and is looking for sizeable expansion.
Serabi Mining plc listed on AIM in May 2005 (ticker symbol SRB, market capitalisation £51 million or US$101 million) and is involved in the evaluation, exploration, development and mining of gold deposits in Brazil. The primary operation is the Palito Gold mine, owned as to 100% and located in the Tapajos region of northern Brazil. Serabi has a strong land position in the region, amounting to 273,000 hectares and encompassing a number of promising exploration projects throughout the Tapajos region and the company intends to use Palito as the springboard for the accelerated development of further mines in the region, which is known as the Jardim do Ouro (or "Garden of gold") and which is thought to have produced over 900 tonnes of gold in the past from alluvial and artisanal operations.
The company also has access to an extensive exploration database and 50 kilometres of diamond drill core that was undertaken by Rio Tinto throughout the region. The corporate intent is to become a mid-tier gold producer, with annual production in excess of 200,000 ounces; to have cash operating costs in the lower quartile of the world's producers; and to ensure longer-term growth of quality resources necessary to support the two former objectives.
As part of this programme Serabi has just entered into a conditional placement of £12.5 million (US$25 million) via an underwritten placing of approximately 29 million new ordinary shares at 43 pence each (the stock last traded at 46 pence). The placing is conditional upon shareholder approval at an Extraordinary General Meeting on 11th July.
Palito is a high-grade, narrow-vein gold-copper ore body, which is open in all directions and which is the only hard rock mine established to date in the region. The vein structures run north-west - south-east and are steeply dipping, averaging over one metre in width and very high gold grades are common. There are also some ore shoots with bonanza grades associated with sub-massive, high-grade, copper-gold sulphide blowouts. The current resource has been established over at least 1,050 metres of stories and to at least 200 metres in depth.
Recent exploration results are yielding strong indications of the presence of multiple satellite ore-bodies, notably at Ruari's Ridge and Chico de Santo. The proposed placing will be used in part to escalate detailed evaluation and potential development of these two projects, leading to expansion of production at Palito. Production reached a sustainable commercial level in October and production for 2007 is targeted at 50,000 gold equivalent ounces, at a total cash cost of US$200-225 per ounce.
Production in 2006 was 39,197 ounces of gold equivalent with cash operating costs of $252/oune in the December quarter. The fourth quarter operating profit was US$2.41 million. Grid electricity has now been introduced to the operation, which will substantially reduce energy costs. Total resources at Palito now stand at 82,900 ounce equivalent and average ore grades are being mined at between 9.2 and 9.7 grammes/tonne with gold recovery consistently in excess of 90%. Trackless mining was introduced in February 2006, while there is also limited ore production from long-hole stoping, which commenced in the fou

Oct 17, 2013 06:00AM
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