Serabi Cultivates Brazilian "Garden of Gold"
By Andrew K. Burger
15 Apr 2007 at 11:52 AM GMT-04:00
resourceinvestor.com
DAMMAM, Saudi Arabia (ResourceInvestor.com) -- Serabi Mining plc [AIM:SRB] announced that its Palito Mine in the Tapajos region of north-central Brazil yielded some 39,197 ounces of gold equivalent in 2006, a year-over-year increase of 127%. Word of recent production figures and other details were released by the company April 11 as management announced preliminary and unaudited results for 2006.
The company made some significant strides during fiscal 2006 though it reported a net loss of US$ 2.2 million, or US$0.0204 per share. Operations at Palito turned in a US$ 2.4 million profit during the fourth quarter and management has pegged the Palito West site as its first satellite ore source. The company also reported encouraging results as it continues to explore the surrounding area, known as “Jardim de Ouro” or Garden of Gold.
“For Serabi 2006 marked the end of the beginning, with profitable production established, new operational developments taking place and exploration set to expand,” Chairman Graham Roberts said in a statement accompanying the release of the company’s preliminary fiscal 2006 results.
Producing & Exploring
Ramping up production at the Palito mine and expanding its resource base in the Jardim de Ouro district, as well as more broadly in Brazil, continue to be Serabi’s two driving objectives.
The start of commercial production at Palito was announced on October 1, 2006. The 11,687 ounces gold equivalent produced at the main Palito mine during the fourth quarter set a record and was produced at a cash operating cost of US$252 per ounce, figures the company intends to improve upon during 2007.
Toward that end, management has been investing in Palito’s plant, equipment and infrastructure, including mine development. This was reflected in Palito’s full year gold equivalent production increase of 127%, as well as its average fourth quarter cash cost of US$ 252 per equivalent ounce, or US$ 328 per ounce gold.
Expanding Serabi’s resource base is management’s second linchpin.
“Further expansion of the Company is, we believe, fundamental to obtaining more widespread recognition in the market of the company’s already considerable achievements,” Graham stated.
“Serabi remains one of only a few producers in the London AIM mining sector, and despite major operational achievements and a robust gold price, up 50% since the Company listed in 2005, there is limited evidence of an upward re-rating of the shares to reflect this.”
2006 Results
Two points should be noted when considering Serabi’s preliminary results for 2006, Roberts noted in his Chairman’s statement. “Firstly, that the revenue and costs reported are only for the three months since the declaration of commercial production, whilst other expenses are for the full twelve-month period. We would therefore expect to see substantial improvement in 2008 over the 2007 figures.”
“Secondly, the comparative 2005 period was only for a three-month period. Overall these results and other operational and exploration developments position the Company well for 2007, with targeted production of approximately 50,000 ounces gold equivalent and cash costs of below US$ 250 per ounce.”
Palito Main Zone: Long-Hole Stopes & Exploration
Stepping up its mine development investment at Palito will eventually provide more working areas and thereby enable the company to achieve an improved mix of ore produced from mine stopes and further mine development, according to management.
A transition to mechanized underground mining required that employees spent much of the last nine months of 2006 focused on this goal, which will prepare the company to being long-hole stope production.
“This will continue into 2007 and will initially impact on mining grades, before the full benefit of production from stoping becomes apparent later in the year, and through 2008,” Roberts reported with the release of Serabi’s preliminary 2006 results.
In addition to positive production results at Palito’s Main Zone, Serabi has discovered new mineralization between its G2S and G3S lodes, as well as intersection of a high-grade zone southwest of the Main Zone’s G1S lode.
At the former, approximately 15 metres apart, underground drill hole PUD-185 intersected 1.29 metres at 250.2g/t Au and PUD-177 intersected 1.57 metres at 43.32g/t Au. At the latter, PUD-182 intersected two adjacent high grade zones including 0.94 metres at 22.86g/t Au and 0.51g/t at 17.10g/t Au, management reported.
Surface & Shallow Work
Serabi management has noted a strong correlation between positive drill results and prior surface geophysical surveys conducted to identify the massive sulphide mineralization typical of the gold-copper ore deposits found in the Palito Main Zone.
Aiming to optimise costs and returns, management deferred further deep drilling during the latter part of 2006 and instead expanded its geophysical surface surveying in order to more precisely define target areas and maximise the value of additional deep drilling.
“We expect a resumption of deep drilling following an assessment of these results during the second quarter 2007. Meanwhile, exploration and resource drilling will be confined to shallower targets as part of the ongoing drill programme for mine planning and scheduling,” Roberts stated.
Palito West
Serabi has also continued exploring the area surrounding the Palito prospect in the Tapajos region. Company geologists intersected a potential new zone of high-grade mineralization to the east of its previous exploration focus during drilling at Palito West. Management has decided that this will become Palito’s first satellite ore source.
Located some 200 metres southwest of the Palito prospect, Serabi has been conducting ongoing exploration drilling at Palito West. Most recently, management reported that intersections in drill holes PDD-270, 273 and 281 have defined a new, higher grade zone to the east of those previously defined.
Drill hole PDD-270 intersected high grade mineralization of 0.62 metre at 2.28 g/t Au from 122.88 metres, 0.71 metres at 1.55 g/t Au from 196.79 metres and 0.66 metres at 13.62 g/t Au from 207.51 metres. PDD-273 intersected 0.43 metres at 5.47 g/t Au from 97.84 metres and 0.62 metres at 2.53 g/t Au from 154.24 metres.
PDD-281 intersected 1.00 metres at 13.94 g/t Au from 23.54 metres while PDD-284 intersected 0.62m at 2.04 g/t Au from 44.0 metres, 0.94 metres at 10.76 g/t Au from 83.5 metres.
Management said that Palito West will become Serabi’s first satellite ore production site.
“An 'on-lode' shaft sinking operation has commenced and will be followed by orebody development. Although this is situated close to the current underground mining operation, it represents a first step to realising the wider potential of the Jardim do Ouro district,” Roberts stated. |
