Incorporated in the UK, Serabi Gold plc is a gold production and development company focused on the Tapajos geological region of northern Brazil. The Tapajos, covering an area of about 100,000 square kilometres, is a major, under-explored mineral province from which artisanal miners (“garimpeiros”) are thought to have extracted up to 30 million ounces of gold from mostly alluvial and surface weathered bedrock deposits since the 1970’s which would make the region the world’s third largest placer gold producer.
Serabi’s origins in Brazil date back to 1999, and the original founders then had the objective to acquire, evaluate and mine hard rock gold deposits previously unknown or technically too difficult for the garimpeiros to exploit.
Having evaluated several opportunities, the company acquired the Palito Gold Mine in 2001. Preliminary underground mining and gold production commenced in late 2003 building up to peak production levels at the end of 2006. Achieving production of over 100,000 gold equivalent ounces between 2005 and 2008, the Palito Gold Mine remains the only hard rock gold mine to have been established in the region. The relatively small scale of operations and a lack of sufficient skilled underground mining expertise, however placed pressure on cash flow and working capital and at the end of 2008, underground mining operations were suspended and the mine was placed on care and maintenance.
The Palito Mine hosts an NI 43-101 compliant measured and indicated mineral resources of 224,272 ounces (gold equivalent) and inferred mineral resources of 443,965 ounces (gold equivalent).
In June 2012, the Company published an NI 43-101 compliant Preliminary Economic Assessment which demonstrated the viability of re-stating the Palito Gold Mine as a small high-grade selective mining operation producing circa 24,000 ounces per annum. The Company started mine development work in the fourth quarter of 2012 and with the completion of the initial stage of the gold process plant at the end of 2013, gold production commenced at the start of January 2014. The Company declared that Commercial Production at the Palito Gold Mine was achieved effective 1 July 2014.
The Palito gold processing plant has surplus capacity and the Company always intended to use Palito as a central processing facility and develop further satellite mining operations where ore would be trucked to the Palito site for processing. In July 2013, Serabi completed the acquisition of Kenai Resources Ltd and in so doing acquired the Sao Chico gold project a small but high grade deposit located within 30 kilometres of Palito. Sao Chico represents the first of these satellite projects. The first ore from the mine was produced during the first half of 2015 and Commercial Production declared as of 1 January 2016.
Serabi reported gold production during 2014, its start-up year, of 18,452 ounces and in 2015 increased this by 77% to almost 32,629 ounces. Gold production for 2016 is forecast to be 37,000 ounces.
Between 2009 and 2012 whilst the Palito Mine was on care and maintenance the Company focussed on the identification of additional resource potential prior to making any decision to re-commence mining operations. A drilling programme undertaken through 2011 identified three new discoveries within 3 kilometres of the Palito Gold Mine and its infrastructure. The Company considers that these discoveries are potentially of sufficient size and gold grade to be commercial discoveries and therefore warrant further evaluation. The free cash flow from production operations will be used to undertake further evaluation of these discoveries and fund further regional exploration.