Serabi Gold starts mining development at Coringa

Brazil-focussed mining and development company Serabi Gold announced the start-up of mining development at its wholly-owned gold project at Coringa on Monday, 200 kilometres south of its current gold operation at Palito.

The AIM-traded firm said Coringa represented a “strategically important asset” that would, on reaching full production, double the group’s gold production.

It said the development of the mine portal began in late July, to reach the Serra zone - one of the three main zones at Coringa - with blasting into hard rock now “well underway”.

The company said it expected to intersect the Serra orebody in mid-October, with the board describing the development of Coringa as a “significant milestone” for Serabi, with “favourable” economics.

Its 2019 preliminary economic assessment highlighted a low initial capital of $25m, average annual production of 38,000 ounces for the first five full years of production of the nine year mine life at an average grade of 8.34 grams of gold per tonne, and an all-in sustaining cost of $852 per ounce.

Serabi said 400 metres of ore development was planned to further support the geological resource, which to date was based on drill holes and surface artisanal mining.

Exposure of the orebody through development could identify potential mining and processing improvements to the project and future operation, the firm said, adding that the project’s economics were currently based on selective mining.

The company said it currently used a “more mechanised” long-hole open stoping at the Sao Chico deposit, and was having “good success” with that method on the more regular veins at Palito.

There was thus “strong potential” that the method could be effectively deployed at Coringa.

The use of ore sorting technology at Palito, meanwhile, had also been “very successful”, with the Coringa drill core suggesting the presence of the same strong contrast between ore and waste rock.

Serabi said it planned to take development ore from Coringa to Palito and run tests to assess the applicability of that technology.

“This is a very important milestone for the company in achieving our mid-term objective of becoming a 100,000-ounce gold producer,” said chief executive officer Mike Hodgson.

“We acquired Coringa in December 2017, and since that time we have built on the bankable feasibility study undertaken by Equinox in 2017, with an enlarged mineral resource supporting a new preliminary economic assessment in 2019, as well as receiving the preliminary licence in October 2020.

“With permits in place to commence the mining operation, I am delighted to see mine development underway, and look forward to intersecting the first ore zone early next quarter and we anticipate that the improved understanding arising from this underground ore development will deliver further economic benefits to the project.”

Hodgson said all studies to-date had considered the “tried and tested” selective mining approach that had been largely used at Palito, adding that over the past six months the firm had trialled “very controlled” long-hole open-stoping in certain areas of the Palito mine, combined with cable bolting, describing the results as “excellent”.

“If we can extend this to Coringa, it could have major benefits, reducing costs and bringing production efficiencies.

“Coringa has all the indications that it will be like Palito and ore sorting could be a real possibility.”

The fact the company has its own sorter at Palito meant it could undertake its own test work and find the “optimal” settings and processing criteria, Mike Hodgson added.

“Ore sorting has significant benefits as it means rejecting waste before the plant, resulting in a higher grade lower volume feed to the plant, and, as Coringa will have filtration and dry stacking of tailings instead of a tailings dam, reduced levels of tailings.”

At 0839 BST, shares in Serabi Gold were down 0.62% at 64.1p.