Serabi Gold shares rise on results from Sao Chico drilling

The AIM-traded firm said a 9,600 metre step-out surface diamond drill programme had started early in the fourth quarter to test the east and west continuity of the Sao Chico orebody.

In addition, an underground drilling services contractor was undertaking an 8,000 metre underground drilling programme to test the depth continuity.

It said the drilling completed to date indicated payable strike continuity of mineralisation for 200 metres to both the east and west of the current mining limits.

Key intercepts to the west include intersections grading 21.03 grams per tonne and 15.39 grams per tonne in holes 19-SCUD-219 and 248, respectively.

It added that key intercepts to the east included intersections of 16.61 grams per tonne and 27.35 grams per tonne in holes 19-SC-143 and 142, respectively.

The board said underground drilling also confirmed an extension of the current Sao Chico orebody for a further 100 metres below the lowest level of current development - level -48mRL - which was itself around 250 vertical metres below surface.

Key intercepts at depth included intersections of 34.42 grams per tonne and 114.49 grams per tonne from holes 19-SCUD-284 and 19-SCUD-274, respectively.

Drilling has also started on the geophysical anomalies that lay immediately to the west of the Sao Chico orebody.

A 6,000 metre reverse circulation drilling programme began in early December to test the anomalies first highlighted in an update on 28 November.

“This is clearly excellent news for the company,” said chief executive officer Mike Hodgson.

“We are embarking on an aggressive surface and underground drilling programme mostly focusing in and around the Sao Chico orebody to assess its long-term potential.

“We have always seen the strong potential in and around Sao Chico and exploration success here is key to our next expansion plans should they be justified.”

Hodgson said the early drill results immediately extending the resource beyond the current mining limits had returned some “excellent” intersections over minable widths in all directions.

He explained that the company’s initial plan was to drill over an area, beyond the current mine workings, of up to 300 metres to the east, 500 metres to the west, and approximately 250 metres at depth.

“The company has completed approximately 20% of the planned programmes, which are expected to be concluded by the end of June.

“Our objective is that the drill programme will provide enough new information to allow us to commission the preparation of an updated geological resource and mineral reserve for the Sao Chico orebody during the third quarter of 2020.

“The recent start-up of the reverse circulation drilling into the large terrestrial geophysical anomalies just two kilometres to the west of the Sao Chico orebody is also very exciting.”

The anomalies, which the firm originally confirmed in November 2018, were described by Hodgson as “quite spectacular” when compared to the equivalent geophysical anomaly that oberlay the Sao Chico orebody, which had produced around 75,000 ounces of gold to date.

“Strong exploration success here could lead to an expansion in production from the Sao Chico orebodies in the longer term.

“This programme should take approximately six months to complete although drilling will need to be suspended approximately every two months to allow for the processing of results.

“In the near term, operations have continued to perform well over the last quarter of 2019, and I was at site in December for the initial testing of our ore sorter.”

Further calibration work would be undertaken in the current quarter, Mike Hodgson explained, with the manufacturer at site this month.

“With the ore sorter being tested during this first quarter, we expect the first quarter’s gold production to be at similar levels to 2019, with the enhanced production impact being realised from the second quarter onwards.

“With this in mind, we anticipate 2020 production guidance of 45,000-46,000 ounces.

“To end, I am pleased to say that the fourth quarter’s production was strong and with final production statistics currently being reconciled, I anticipate providing the final quarter and the full year operational update very shortly.”

At 0956 GMT, shares in Serabi Gold were up 15.28% at 79.54p.