TIDMSRB
Unaudited interim results for the three and six month periods
ended 30 June 2023
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, today releases its unaudited results for the
three and six month periods ended 30 June 2023.
A copy of the full interim statements together with commentary
can be accessed on the Company's website using the following link:
https://bit.ly/4
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7VVUAg
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Financial Highlights
-- Gold production for the second quarter of 8,518 ounces (2022: 8418
ounces) for total production for the year to date of 16,524 ounces (2022:
15,480 ounces).
-- Cash held at 30 June 2023 of US$13.3 million (31 December 2022: US$7.2
million).
-- EBITDA for the six-month period of US$6.6 million (2022: US$5.2 million).
-- Post tax profit for the six month period of US$5.0 million (2022: US$2.1
million),
-- Profit per share of 6.58 cents compared with a profit per share of 2.74
cents for the same six month period of 2022.
-- Net cash inflow from operations for the six-month period (after mine
development expenditure of US$1.3 million) of US$7.8 million (2022:
US$1.5 million outflow).
-- Average gold price of US$1,940 per ounce received on gold sales during
the six month period (2022: US$1,869).
-- Cash Cost for the six-month period to 30 June 2023 of US$1,258 per ounce
(six months 2022 : US$1,415 per ounce) representing an 11% improvement
compared to the same period of 2022.
-- All-In Sustaining Cost for the three-month period to 20 June 2023 of
US$1,519 per ounce (six months 2022 : US$1,716 per ounce) represents a
11.5% improvement compared to the same period of 2022.
Key Financial Information
SUMMARY FINANCIAL STATISTICS
------------------------------------------------------------------------------
6 months to 6 months to 3 months to 3 months to
30 June 2023 30 June 2022 30 June 2023 30 June 2022
US$ US$ US$ US$
(unaudited) (unaudited) (unaudited) (unaudited)
------------------ ------------- ------------- ------------- -------------
Revenue 30,523,582 31,200,863 17,086,213 18,315,843
Cost of sales (21,064,434) (23,268,585) (11,297,431) (13,995,113)
Gross operating
profit 9,459,148 7,932,278 5,788,782 4,320,730
Administration and
share based
payments (2,838,267) (2,766,776) (1,483,692) (1,207,634)
EBITDA 6,620,881 5,165,502 4,305,090 3,113,096
Depreciation and
amortisation
charges (2,025,037) (2,923,245) (1,190,523) (1,751,357)
Operating profit
before finance
and tax 4,595,844 2,242,257 3,114,567 1,361,739
Profit after tax 4,979,891 2,072,939 3,512,412 343,336
Earnings per 6.58c 2.74c 4.64c 0.45c
ordinary share
(basic)
Average gold price US$1,940 US$1,845 US$1,980 US$1,846
received
(US$/oz)
------------- ------------- ------------- -------------
As at
30 June As at
2023 31 December 2022
US$ US$
(unaudited) (audited)
-------------------------- ------------ -----------------
Cash and cash equivalents 13,285,448 7,196,313
Net assets 91,291,971 81,523,603
Cash Cost and All-In
Sustaining Cost
("AISC")
--------------------
6 months to 6 months to 30 June 12 months to 31
30 June 2022 December 2022
2023
-------------------- ----------- ------------------- --------------------
Gold production for 16,524 ozs 15,480 ozs 31,819 ozs
cash cost and AISC
purposes
----------- ------------------- --------------------
Total Cash Cost of US$1,258 US$1,415 US$1,322
production (per
ounce)
----------- ------------------- --------------------
Total AISC of US$1,519 US$1,716 US$1,615
production (per
ounce)
----------- ------------------- --------------------
"The last 12 months since my appointment has been an exciting
period in the development of the Company", said Michael Lynch-Bell
, Chairman. "Operationally and financially it is pleasing to see
the Company in such a strong position after a very encouraging
quarter during which we have consistently improved our net cash
position and the Company remaining on track to meet our full year
guidance of 33,500 to 35,000 ounces.
"We still have challenges ahead as we continue to grow the
production base with the development of Coringa, but having spent
time with UK and Brazilian management, I am confident the solutions
being pursued will overcome these.
"Since my appointment we have strengthened the Board with the
appointment of Deborah Gudgeon who is also Chair of the Audit and
Risk Committee and in January we also welcomed Carolina Margozzini
to the Board as the representative for Fratelli Investments
Limited, one of our two major shareholders. I am pleased to be part
of such a diverse board that is working together to bring increased
value to all Serabi's stakeholders.
"We also signed an exciting copper exploration joint venture,
with Vale SA, the Brazilian mining major and drilling and other
exploration activity commenced immediately. Serabi's projects are
located in a relatively under-explored part of Brazil and the
involvement of Vale is, I believe, a further endorsement of the
mineral potential of the Tapajos region.
"We look forward to continued growth and development, and my
objective is to ensure that we achieve this in a manner that is
sustainable and in keeping with our core values, of developing gold
mining opportunities that are efficient, cost effective and
operated in a manner that brings economic, social and
infrastructure benefits to all our stakeholders, including the
local region and its communities."
Overview of the financial results
An improved level of gold production in the second quarter of
the year of 8,518 ounces, a 6% increase on the first quarter, has
resulted in total production for the year to date of 16,524 ounces
representing a 7% increase over the same period in 2022 (2022:
15,480 ounces). With continued growth anticipated for the second
half of 2023, Serabi remains on track to meet its full year
guidance of 33,500 to 35,000 ounces.
The cash balance at the end of June 2023 had increased to
US$13.3 million (Dec 2022: US$7.2 million). This does include
approximately US$0.94 million of funds held for the Vale
Exploration Alliance but nonetheless the net cash attributable to
the Group has increased by US$5.1 million during the first six
months of the year.
Cash cost for the year to date is US$1,258 per ounce which
represents a small decrease compared to the first quarter of 2023
when reported cash costs were US$1,281 per ounce and a significant
reduction compared to the same six month period of 2022 when a cash
cost of US$1,415 was reported. AISC for the year to date is
US$1,519 per ounce, which is in line with the AISC of US$1,516 per
ounce reported in the first quarter of 2023. The current AISC
compares very favourably with the same six month period of 2022
when an AISC of US$1,716 was reported, particularly given the
levels of mine development incurred in the period, particularly at
Coringa, creating the opportunity for longer term production
growth. Capitalised mine development costs were US$1.0 million
higher in the last three month period compared with the first three
months of 2023.
Gold sales for the quarter were 8,475 ounces, with inventory
levels remaining steady following the increase in gold inventory
experienced in the first quarter following the commissioning of new
tanks in the leaching circuit. Consistent with the results for the
first quarter of 2023, amortisation costs are lower in this quarter
than previously, a consequence of the reduced activity at Sao Chico
and therefore minimal amortisation costs associated with this
project. In addition, because Coringa is only in a trial mining
phase and has not attained commercial production, the project costs
are not currently subject to amortisation charges. In accordance
with accounting regulations the gold sales and related operating
costs of Coringa are being reflected in the Group's income
statement.
On 10 May 2023, the Company announced that it had entered into
an exploration alliance with Vale SA focused on the Matilda
prospect and other large regional targets in the Tapajos region of
Para, Brazil. The current exploration activity under this alliance
is being funded in its entirety by Vale up to an initial US$5
million for the Phase 1 activities. However, Serabi is the operator
and undertaking the activity either directly or using contractors
where appropriate. Vale provides funding in advance to Serabi and
at the end of the quarter, Serabi held US$0.94 million of cash that
will be used to meet the accrued and future costs of the alliance
exploration activity. The exploration costs being incurred under
the alliance are not being capitalised but are being expensed
through the Income Statement as they are incurred. Similarly, the
funds being received from Vale are also being reported through the
Income Statement as other income.
During May, the Group settled a US$5.0 million export linked
loan facility that had been advanced by Itau Bank BBA. The Group
still has a further US$5.0 million export linked facility advanced
by Santander Bank in Brazil which is due to be repaid in February
2024 and carries a fixed interest rate of 7.97%.
To achieve production guidance for the rest of the year and in
anticipation of increasing mine output from Coringa in 2024,
the
production plan anticipates further mine development activities. At Coringa we intersected the veins on the next level at 260mRL shortly before the end of August and this will present further development and production options. At Palito we are developing the G3 structure which in the past was a backbone of production. Re-establishing G3 as an additional production area is planned to provide further flexibility within the Palto orebody. Nonetheless, I would hope that we can maintain a broadly similar cost base for the remaining six months and continue to benefit from the continued strength of the gold price."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018.
The person who arranged for the release of this announcement on
behalf of the Company was Clive Line, Director.
Enquiries
SERABI GOLD plc
Michael Hodgson t +44 (0)20 7246 6830
Chief Executive m +44 (0)7799 473621
Clive Line t +44 (0)20 7246 6830
Finance Director m +44 (0)7710 151692
e contact@serabigold.com
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www.serabigold.com
BEAUMONT CORNISH Limited
Nominated Adviser & Financial Adviser
Roland Cornish / Michael Cornish t +44 (0)20 7628 3396
PEEL HUNT LLP
Joint UK Broker
Ross Allister t +44 (0)20 7418 9000
TAMESIS PARTNERS LLP
Joint UK Broker
Charlie Bendon/ Richard Greenfield t +44 (0)20 3882 2868
CAMARCO
Financial PR
Gordon Poole / Emily Hall t +44 (0)20 3757 4980
Copies of this announcement are available from the Company's
website at www.serabigold.com.
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.
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 35 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, recognizing 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.
Neither the Toronto Stock Exchange, nor any other securities
regulatory authority, has approved or disapproved of the contents
of this news release.
See
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www.serabigold.com for more information and follow us on twitter
@Serabi_Gold
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 the unaudited
interim financial statements for the six months to 30 June
2023.
Statement of Comprehensive Income
For the six month period ended 30 June 2023
For the six months ended For the three months ended
30 June 30 June
2023 2022 2023 2022
(expressed in
US$) Notes (unaudited) (unaudited) (unaudited) (unaudited)
--------------- ----- ------------ ------------ ------------- -------------
CONTINUING
OPERATIONS
Revenue 30,523,582 31,200,863 17,086,213 18,315,843
Cost of sales (20,694,434) (23,268,585) (11,297,431) (13,995,113)
Stock
impairment
provision (370,000) -- -- --
Depreciation
and
amortisation
charges (2,025,037) (2,923,245) (1,190,523) (1,751,357)
--------------- ----- ------------ ------------ ------------- -------------
Total cost of
sales (23,089,471) (26,191,830) (12,487,954) (15,746,470)
Gross profit 7,434,111 5,009,033 4,598,259 2,569,373
Administration
expenses (2,899,894) (2,596,017) (1,449,726) (1,150,064)
Share-based
payments (85,866) (213,922) (37,799) (101,797)
Gain on asset
disposals 147,493 43,163 3,833 44,227
--------------- ----- ------------ ------------ ------------- -------------
Operating
profit 4,595,844 2,242,257 3,114,567 1,361,739
Other income --
exploration
receipts 2 1,050,535 -- 1,050,535 --
Other expenses
-- exploration
expenses 2 (1,019,911) -- (1,019,911) --
Foreign
exchange gain
/ (loss) 100,066 139,105 17,455 (37,481)
Finance expense 3 (434,748) (66,525) (273,578) (64,686)
Finance income 3 819,669 152,624 776,850 47,844
--------------- ----- ------------ ------------ ------------- -------------
Profit before
taxation 5,111,455 2,467,461 3,665,918 1,307,416
Income tax
expense 4 (131,564) (394,522) (153,506) (964,080)
--------------- ----- ------------ ------------ ------------- -------------
Profit after
taxation 4,979,891 2,072,939 3,512,412 343,336
--------------- ----- ------------ ------------ ------------- -------------
Other
comprehensive
income (net of
tax)
Exchange
differences on
translating
foreign
operations 4,703,151 1,986,773 3,708,904 (6,872,683)
--------------- ----- ------------ ------------ ------------- -------------
Total
comprehensive
profit /
(loss) for the
period(1) 9,683,042 4,059,712 7,221,316 (6,529,347)
--------------- ----- ------------ ------------ ------------- -------------
Profit per 5 6.58c 2.74c 4.64c 0.45c
ordinary share
(basic)
--------------- ----- ------------ ------------ ------------- -------------
Profit per 5 6.58c 2.68c 4.64c 0.44c
ordinary share
(diluted)
--------------- ----- ------------ ------------ ------------- -------------
(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 30 June 2023
As at As at
(expressed in As at 30 June 2022 31 December 2022
US$) Notes 30 June 2023 (unaudited) (unaudited) (audited)
-------------- ----- ------------------------- ------------- -----------------
Non-current
assets
Deferred
exploration
costs 7 20,367,929 39,608,630 18,621,180
Property,
plant and
equipment 8 51,678,058 28,254,138 48,482,519
Right of use
assets 9 5,537,628 4,801,117 5,374,042
Taxes
receivable 4,026,439 961,290 3,446,032
Deferred
taxation 1,792,206 685,650 1,545,684
-------------- ----- ------------------------- ------------- -----------------
Total
non-current
assets 83,402,260 74,310,825 77,469,457
-------------- ----- ------------------------- ------------- -----------------
Current assets
Inventories 10 9,881,514 7,724,300 8,706,351
Trade and
other
receivables 2,533,055 4,952,331 5,291,924
Derivative
financial
assets 12 649,209 -- --
Prepayments
and accrued
income 1,375,685 3,883,897 1,572,149
Cash and cash
equivalents 13,285,448 9,819,882 7,196,313
-------------- ----- ------------------------- ------------- -----------------
Total current
assets 27,724,911 26,380,410 22,766,737
-------------- ----- ------------------------- ------------- -----------------
Current
liabilities
Trade and
other
payables 6,328,124 5,626,540 5,830,872
Interest
bearing
liabilities 11 6,430,023 5,726,808 6,111,126
Derivative
financial
liabilities 12 88,755 -- --
Accruals 1,094,621 399,970 461,857
------------------------- ------------- -----------------
Total current
liabilities 13,941,523 11,753,328 12,403,855
-------------- ----- ------------------------- ------------- -----------------
Net current
assets 13,783,388 14,627,092 10,362,882
-------------- ----- ------------------------- ------------- -----------------
Total assets
less current
liabilities 97,185,648 88,937,917 87,832,339
-------------- ----- ------------------------- ------------- -----------------
Non-current
liabilities
Trade and
other
payables 4,111,078 466,292 3,800,886
Interest
bearing
liabilities 11 469,910 1,152,087 837,293
Deferred tax
liability -- 381,483 480,922
Derivative
financial
liabilities 12 -- 12,871 --
Provisions 1,312,689 2,766,049 1,190,175
Total
non-current
liabilities 5,893,677 4,778,782 6,309,276
-------------- ----- ------------------------- ------------- -----------------
Net assets 91,291,971 84,159,135 81,523,063
-------------- ----- ------------------------- ------------- -----------------
Equity
Share capital 14 11,213,618 11,213,618 11,213,618
Share premium
reserve 36,158,068 36,158,068 36,158,068
Share
incentive
reserve 14 243,002 1,289,270 1,324,558
Other reserves 15,375,463 14,472,400 14,459,255
Translation
reserve (61,573,620) (66,661,397) (66,276,771)
Retained
surplus 89,875,440 87,687,176 84,644,335
-------------- ----- ------------------------- ------------- -----------------
Equity
shareholders'
funds 91,291,971 84,159,135 81,523,063
-------------- ----- ------------------------- ------------- -----------------
.
Statements of Changes in Shareholders' Equity
For the six month period ended 30 June 2023
(expressed in US$)
Share Other
Share Share incentive reserves Translation Retained Total
(unaudited) capital premium reserve (1) reserve Earnings equity
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Equity shareholders' funds at 31
December 2021 11,213,618 36,158,068 1,075,348 13,694,731 (68,648,170) 86,391,906 79,885,501
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Foreign currency adjustments -- -- -- -- 1,986,773 -- 1,986,773
Profit for the period -- -- -- -- -- 2,072,939 2,072,939
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Total comprehensive income for the
period -- -- -- -- 1,986,773 2,072,939 4,059,712
Transfer to taxation reserve -- -- -- 777,669 -- (777,669) --
Share incentives expense -- -- 213,922 -- -- -- 213,922
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Equity shareholders' funds at 30 June
2022 11,213,618 36,158,068 1,289,270 14,472,400 (66,661,397) 87,687,176 84,159,135
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Foreign currency adjustments -- -- -- -- 384,626 -- 384,626
Loss for the period -- -- -- -- -- (3,055,986) (3,055,986)
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Total comprehensive income for the
period -- -- -- -- 384,626 (3,055,986) (2,671,360)
Transfer to taxation reserve -- -- -- (13,145) -- 13,145 --
Share incentives expense -- -- 35,288 -- -- -- 35,288
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Equity shareholders' funds at 31
December 2022 11,213,618 36,158,068 1,324,558 14,459,255 (66,276,771) 84,644,335 81,523,063
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Foreign currency adjustments -- -- -- -- 4,703,151 -- 4,703,151
Profit for the period -- -- -- -- -- 4,979,891 4,979,891
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Total comprehensive income for the
period -- -- -- -- 4,703,151 4,979,891 9,683,042
Transfer to taxation reserve -- -- -- 916,208 -- (916,208) --
Share incentives expired -- -- (1,167,422) -- -- 1,167,422 --
Share incentives expense -- -- 85,866 -- -- -- 85,866
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
Equity shareholders' funds at 30 June
2023 11,213,618 36,158,068 243,002 15,375,463 (61,573,620) 89,875,440 91,929,971
-------------------------------------- ---------- ---------- ----------- ---------- ------------ ----------- -----------
(1) Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$15,014,002 (31 December 2022: merger reserve of US$361,461 and a taxation reserve of US$14,097,794).
Condensed Consolidated Cash Flow Statement
For the three month period ended 30 June 2023
For the six months For the three months
ended ended
30 June 30 June
2023 2022 2023 2022
(expressed in US$) (unaudited) (unaudited) (unaudited) (unaudited)
------------------------------------------------------ ----------- ----------- ----------- -----------
Operating activities
Post tax (loss) / profit for period 4,979,891 2,072,939 3,512,412 343,336
Depreciation -- plant, equipment and mining properties 2,025,037 2,923,245 1,190,523 1,751,357
Stock impairment provision 370,000 -- -- --
Net financial expense (484,987) (225,204) (520,727) 54,323
Provision for taxation 131,564 394,522 153,506 964,080
Gain / (loss) on disposals (147,493) (43,163) (3,833) (44,227)
Share-based payments 85,866 213,922 37,799 101,797
Taxation paid (395,890) (131,462) (109,153) (3,813)
Interest paid (385,814) (51,838) (359,404) (31,612)
Foreign exchange (loss) / gain (72,071) (211,323) 18,350 (71,395)
Changes in working capital
(Increase)/decrease in inventories (781) (394,806) 348,963 1,504,893
Decrease/(increase) in receivables, prepayments and
accrued income 2,765,042 (3,912,322) 883,597 (2,164,981)
(Decrease)/increase in payables, accruals and
provisions 247,961 (339,994) 934,445 (657,737)
----------------------------------------------------- ----------- ----------- -----------
Net cash inflow from operations 9,118,325 294,516 6,086,478 1,746,021
------------------------------------------------------ ----------- ----------- ----------- -----------
Investing activities
Purchase of property, plant and equipment and assets
in construction (980,086) (2,490,502) (238,179) (1,521,615)
Mine development expenditure (1,339,090) (1,849,462) (966,690) (783,577)
Geological exploration expenditure (357,424) (692,980) (357,424) (223,730)
Pre-operational project costs -- (2,266,252) 206,546 (1,124,670)
Proceeds from sale of assets 191,515 64,762 33,044 51,605
Interest Received 79,799 -- 36,980 --
Net cash outflow on investing activities (2,405,286) (7,234,434) (1,285,723) (3,601,987)
------------------------------------------------------ ----------- ----------- ----------- -----------
Financing activities
Receipt of short-term loan 5,000,000 4,923,586 -- 4,923,586
Repayment of short-term loan (5,096,397) -- (5,096,397) --
Payment of finance lease liabilities (610,982) (502,225) (307,841) (314,908)
Net cash (outflow)/inflow from financing activities (707,379) 4,421,361 (5,404,238) 4,608,678
------------------------------------------------------ ----------- ----------- ----------- -----------
Net increase/(decrease) in cash and cash equivalents 6,005,660 (2,518,557) (603,483) 2,752,712
Cash and cash equivalents at beginning of period 7,196,313 12,217,751 13,920,999 6,932,625
Exchange difference on cash 83,475 120,688 (32,068) 134,545
------------------------------------------------------ ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period 13,285,448 9,819,882 13,285,448 9,819,882
------------------------------------------------------ ----------- ----------- ----------- -----------
Notes
1. Basis of preparation
These interim condensed consolidated financial statements are
for the three and six month periods ended 30 June 2023. Comparative
information has been provided for the unaudited three and six month
periods ended 30 June 2022 and, where applicable, the audited
twelve month period from 1 January 2022 to 31 December 2022. These
condensed consolidated financial statements do not include all the
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the
2022 annual report.
The condensed consolidated financial statements for the periods
have been prepared in accordance with International Accounting
Standard 34 "Interim Financial Reporting" and the accounting
policies are consistent with those of the annual financial
statements for the year ended 31 December 2022 and those envisaged
for the financial statements for the year ending 31 December
2023.
The Directors have reviewed the principal risks and
uncertainties facing the Group and have concluded that those facing
the Group for the remaining six months of the current financial
year are unchanged from the risks set out in the 2022 Annual Report
and Accounts. In reaching this conclusion, the Directors considered
changes in the internal and external environment during the
intervening period which could threaten the Group's business model,
future performance, liquidity, solvency or reputation. Details of
these principal risks and how they are being managed are set out on
pages 25 to 32 of the 2022 Annual Report and Accounts.
The interim financial information has not been audited and does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. 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. The Group statutory accounts for
the year ended 31 December 2022 prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 have been filed with the
Registrar of Companies. The auditor's report on these accounts was
unqualified. The auditor's report did not contain a statement under
Section 498 (2) or 498 (3) of the Companies Act 2006
Accounting standards, amendments and interpretations effective
in 2023
The Group has not adopted any standards or interpretations in
advance of the required implementation dates.
The following Accounting standards came into effect as of 1
January 2023
IFRS 17 Insurance Contracts, including Amendments 1 January 2023
to IFRS 17
Classification of Liabilities as Current or Non-current 1 January 2023
(Amendments to IAS 1) and Classification of Liabilities
as Current or Non-current -- Deferral of Effective
Date
There is no material impact on the financial statements from the
adoption of these new accounting standards or amendments to
accounting standards,
Certain new accounting standards and interpretations have been
published that are not mandatory for the current period and have
not been early adopted. These standards are not expected to have a
material impact on the Company's current or future reporting
periods.
These financial statements do not constitute statutory accounts
as defined in Section 434 of the Companies Act 2006.
(i) Going concern
At 30 June 2023 the Group held cash of US$13.29 million which
represents an increase of US$6.09 million compared to 31 December
2022. This increase includes the receipt of a US$5.0 million loan,
from Santander Bank in Brazil, on 22 February 2023. The proceeds
raised from the loan will be used for working capital and provided
the Group with adequate liquidity to repay a similar arrangement
which was repaid on 12 May 2023.
Management prepares, for Board review, regular updates of its
operational plans and cash flow forecasts based on their best
judgement of the expected operational performance of the Group and
using economic assumptions that the Directors consider are
reasonable in the current global economic climate. The most recent
plans assume that during 2023 the Group will continue gold
production from its Palito Complex operation as well as increase
production from the Coringa mine and will be able to increase gold
production to exceed the levels of 2022.
The Directors will, however, continue to limit the Group's
discretionary expenditures including the continued development of
Coringa which, on a longer term basis, may require additional
external sources of finance to be secured.
The Directors have concluded that, based on the current
operational projections, it remains appropriate to adopt the going
concern basis of accounting in the preparation of these interim
unaudited financial statements. The Directors acknowledge that the
Group remains subject to operational and economic risks and any
unplanned interruption or reduction in gold production or
unforeseen changes in economic assumptions may adversely affect the
level of free cash flow that the Group can generate on a monthly
basis and its ability to secure further finance as and when
required The Directors consider that the Group will be able to
secure the necessary external finance for the development of its
Coringa project but that the timing of this may be dependent on the
receipt of further permits and licences. The Directors believe that
all the necessary permits and licenses will be awarded when all
current information requests of the relevant authorities have been
met.
2. Other Income and Expenses
Under its copper exploration alliance with Vale announced on 10
May 2023, the related exploration activities being undertaken by
the Group under the management of a working committee (comprising
representatives from Vale and Serabi), are being funded in their
entirety by Vale up to a value of US$5 million during Phase 1 of
the programme. The Group at this time has no certainty that the
exploration for copper deposits will result in a project that is
commercially viable recognising that exploration and development of
copper deposits is not the core activity of the Group, there is a
significant cost involved in developing new copper deposits and it
is unlikely that without the financial support of Vale that the
Group would independently seek to develop a copper project in
preference to any of its existing gold projects and
discoveries.
As a result, it is recognising both the funding received from
Vale and the related exploration expenditures through its income
statement. As this is not the principal business activity of the
Group these receipts and expenditures are classified as other
income and other expenses.
3. Finance Costs
6 months ended 3 months ended
30 June 2023 6 months ended 30 June 2023 2021 3 months ended
(unaudited) 30 June 2022 (unaudited) (unaudited) 30 June 2022 (unaudited)
US$ US$ US$ US$
Loss on
revaluations
of hedging
derivatives (88,755) -- (88,755) --
Interest
expense on
short term
loan (243,318) (53,859) (131,608) (53,859)
Interest
expense on
trade
finance (41,891) (12,666) (25,056) (10,827)
Interest
expense on
finance
leases (60,784) -- (28,159) --
Total
Financial
expense (434,748) (66,525) (273,578) (64,686)
Interest
Income 79,799 -- 36,980 --
Gain on
revaluation
of warrants -- 152,624 -- 47,844
Gain on
revaluation
of hedging
derivatives 570,863 -- 570,863 --
Realised gain
on hedging
derivatives 169,007 -- 169,007 --
-------------- ------------------------- ------------------ -------------------------
Total
Financial
expense 819,669 152,624 776,850 47,844
-------------- ------------------------- ------------------ -------------------------
Net finance
income /
(expense) 384,921 86,099 503,272 (16,842)
-------------- ------------------------- ------------------ -------------------------
4. Taxation
The Group has recognised a deferred tax asset to the extent that
the Group has reasonable certainty as to the level and timing of
future profits that might be generated and against which the asset
may be recovered. The deferred tax liability arising on unrealised
exchange gains has been eliminated in the six-month period to 30
June 2023 reflecting the stronger Brazilian Real exchange rate at
the end of the period and resulting in deferred tax income of
US$607,223 (six months to 30 June 2022 -- benefit of
US$199,222).
The Group has also incurred a tax charge in Brazil for the six
month period of US$738,787 (six months to 30 June 2022 -
US$593,744).
5. Earnings per share
6 months ended 30 June 2023 6 months ended 30 June 2022 3 months ended 30 June 2023 3 months ended 30 June 2022
(unaudited) (unaudited) (unaudited) (unaudited)
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Profit
attributable
to ordinary
shareholders
(US$) 4,979,891 2,072,939 3,512,412 343,336
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Weighted
average
ordinary
shares in
issue 75,734,551 75,734,551 75,734,551 75,734,551
Basic profit
per share (US
cents) 6.58c 2.74c 4.64c 0.45c
------------- --------------------------- --------------------------- --------------------------- ---------------------------
Diluted
ordinary
shares in
issue (1) 75,734,551 77,484,551 75,734,551 77,484,551
Diluted 6.58c 2.68c 4.64c 0.44c
profit per
share (US
cents)
------------- --------------------------- --------------------------- --------------------------- ---------------------------
(1) There were no share options outstanding at 30 June 2023 (30
June 2022: 1,750,000 options vested and exercisable as at 30 June
2022). At 30 June 2023 and 30 June 2022, there were 864,500
Conditional Share Awards in issue under the Serabi 2020 Restricted
Share Plan (the "2020 Plan") (see Note 13(c)). The underlying
shares to be issued pursuant to these Conditional Share Awards can
only be issued if certain performance conditions have been met and
at the end of the stipulated vesting period. Subsequent to the end
of the period the Company announced that 404,700 Conditional Share
Awards had lapsed as the performance conditions had not been
achieved. The vesting period for the remaining 459,800 Conditional
Share Awards has not yet been completed. Accordingly, none of the
Conditional Share Awards that may be issued in the future have been
included in the calculation of diluted earnings per share.
5. Post balance sheet events
Subsequent to the end of the period, 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.
Attachment
-- Q2 2023 Financial Report
https://ml-eu.globenewswire.com/Resource/Download/c6e29d29-5644-4f9c-9493-ba8c39f8c4a5
(END) Dow Jones Newswires
August 31, 2023 02:00 ET (06:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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