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/47VVUAg
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$1,716 per ounce) represents a 11.5% improvement
compared to the same period of 2022.
Key Financial Information
SUMMARY FINANCIAL STATISTICS |
|
6 months
to30 June
2023US$(unaudited) |
6 months to30 June 2022US$(unaudited) |
3 months to30
June
2023US$(unaudited) |
3 months to30 June 2022US$(unaudited) |
Revenue |
30,523,582 |
31,200,863 |
17,086,213 |
18,315,843 |
Cost of sales |
(21,064,434) |
(23,268,585) |
(11,297,431) |
(13,995,113) |
Gross operating profit |
9,459,148 |
7,932,278 |
5,788,782 |
4,320,730 |
Administration and share based payments |
(2,838,267) |
(2,766,776) |
(1,483,692) |
(1,207,634) |
EBITDA |
6,620,881 |
5,165,502 |
4,305,090 |
3,113,096 |
Depreciation and amortisation charges |
(2,025,037) |
(2,923,245) |
(1,190,523) |
(1,751,357) |
Operating profit before finance and tax |
4,595,844 |
2,242,257 |
3,114,567 |
1,361,739 |
|
|
|
|
|
Profit after tax |
4,979,891 |
2,072,939 |
3,512,412 |
343,336 |
Earnings per ordinary share (basic) |
6.58c |
2.74c |
4.64c |
0.45c |
|
|
|
|
|
Average gold price received (US$/oz) |
US$1,940 |
US$1,845 |
US$1,980 |
US$1,846 |
|
|
|
As at30
June2023US$(unaudited) |
As at31 December 2022US$(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
30 June
2023 |
6 months to 30 June 2022 |
12 months to 31 December 2022 |
Gold production for cash cost and AISC
purposes |
|
16,524 ozs |
15,480 ozs |
31,819 ozs |
|
|
|
|
|
Total Cash Cost of production (per ounce) |
|
US$1,258 |
US$1,415 |
US$1,322 |
Total AISC of production (per ounce) |
|
US$1,519 |
US$1,716 |
US$1,615 |
“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 plcMichael
Hodgson t
+44 (0)20 7246 6830Chief
Executive m
+44 (0)7799 473621
Clive
Line t
+44 (0)20 7246 6830Finance
Director m
+44 (0)7710 151692
e
contact@serabigold.com
www.serabigold.com
BEAUMONT CORNISH
LimitedNominated Adviser & Financial
AdviserRoland Cornish / Michael
Cornish t
+44 (0)20 7628 3396
PEEL HUNT LLPJoint UK
BrokerRoss
Allister t
+44 (0)20 7418 9000
TAMESIS PARTNERS LLPJoint
UK BrokerCharlie Bendon/ Richard
Greenfield t
+44 (0)20 3882 2868
CAMARCOFinancial PRGordon
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 statementsCertain statements in
this announcement are, or may be deemed to be, forward looking
statements. Forward looking statements are identified 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 reflect
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 StatementThe 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
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 IncomeFor the six
month period ended 30 June 2023
|
|
For the six months ended30 June |
For the three months ended30 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 ordinary share (basic) |
5 |
6.58c |
2.74c |
4.64c |
0.45c |
Profit per ordinary share (diluted) |
5 |
6.58c |
2.68c |
4.64c |
0.44c |
(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
(expressed in US$) |
Notes |
|
As at30 June 2023
(unaudited) |
As at30 June 2022(unaudited) |
As at31 December 2022(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’
EquityFor the six month period ended 30 June 2023
(expressed in US$) |
|
|
|
|
|
|
|
(unaudited) |
Share capital |
Sharepremium |
Share incentive reserve |
Other reserves (1) |
Translation reserve |
Retained Earnings |
Total 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$14,097,794).
Condensed Consolidated Cash Flow StatementFor
the three month period ended 30 June 2023
|
For the six months
ended30 June |
For the three months
ended30 June |
|
2023 |
2022 |
2023 |
2022 |
(expressed
in US$) |
(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
-
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 to IFRS 17 |
1 January 2023 |
Classification of Liabilities
as Current or Non-current (Amendments to IAS 1) and Classification
of Liabilities as Current or Non-current – Deferral of Effective
Date |
1 January 2023 |
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
concernAt 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$5 million during
Phase 1 of the programme. The Group at this time has no certainty
that the exploration for copper deposits will result in a project
that is commercially viable recognising that exploration and
development of copper deposits is not the core activity of the
Group, there is a significant cost involved in developing new
copper deposits and it is unlikely that without the financial
support of Vale that the Group would independently seek to develop
a copper project in preference to any of its existing gold projects
and discoveries.
As a result, it is recognising both the funding
received from Vale and the related exploration expenditures through
its income statement. As this is not the principal business
activity of the Group these receipts and expenditures are
classified as other income and other expenses.
3. Finance Costs
|
6 months ended30 June
2023(unaudited) |
6 months ended30 June 2022 (unaudited) |
3 months ended30 June 2023
2021(unaudited) |
3 months ended30 June 2022 (unaudited) |
|
US$ |
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$593,744).
5. Earnings per share
|
6 months ended 30 June
2023(unaudited) |
6 months ended 30 June 2022(unaudited) |
3 months ended 30 June
2023(unaudited) |
3 months ended 30 June 2022(unaudited) |
Profit attributable to ordinary shareholders (US$) |
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
profit per share (US cents) |
6.58c |
2.68c |
4.64c |
0.44c |
(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.
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