Serabi releases updated Coringa economic assessment

The AIM-traded firm said the updated PEA reflected its revised operating plan, leveraging the existing processing plant at its nearby Palito Complex, resulting in lower capital costs and reduced operational risks.

It said the Coringa project was expected to produce 28,000 ounces of gold in 2025, with average production rising to 36,000 ounces annually between 2026 and 2031.

The project had an estimated mine life of 11 years, extending until 2034, with total production forecast to reach 363,000 ounces of gold.

Serabi said the average life-of-mine (LOM) all-in sustaining cost (AISC) was projected to be $1,241 per ounce, inclusive of royalties and refining costs.

The updated mineral resource inventory included measured and indicated resources of 795,000 tonnes at 7.03 grams of gold per tonne, containing 179,000 ounces, and inferred resources of 1.45 million tonnes at 5.81 grams per tonne, containing 271,000 ounces.

Serabi said the mine plan was based on a combination of 145,000 ounces from measured and indicated resources and 241,000 ounces from inferred resources.

It said the updated PEA highlighted strong financial metrics under the base case scenario, including a post-tax net present value of $145m using a 10% discount rate, and average annual free cash flow of $19m.

Sustaining capital spend over the life of the mine was estimated at $87m, which the board said would be funded from the project’s cash flow.

The underground mining method planned was shrinkage stoping, with a cut-off grade of 3.16 grams of gold per tonne, and resource grades were enhanced through ore sorting, which raised the average grade from 5.38 grams per tonne to 8.5 grams per tonne.

“In phase one of our growth plan, Serabi is focused on developing and growing our business and building a strong gold production base in Brazil,” said chief executive officer Mike Hodgson.

“The publication of these very encouraging results of the updated PEA is a major milestone in achieving this objective.

“Since the original PEA prepared by Global Resource Engineering (GRE), effective 6 September 2019, was issued, a number of factors, including the reduction in trucking costs and the success with ore-sorting changed our view of the best way to maximise returns from Coringa.”

Hodgson said that while the company had communicated the perceived benefits to investors for some time, it historically had no independent study to support that.

“The updated PEA now addresses this - [it] has an NPV10% of $145m compared with the GRE PEA result of only $31m, indicating the improved economics of this revised strategy.”

Mike Hodgson said the total sustaining capital requirement for the development of the project in 2025, including further mine development, was estimated at $14m.

“This and all future sustaining and development capital projected in the updated PEA will be funded from the company’s operational cash flow.

“With Coringa located in close proximity to our existing Palito Complex and based on existing operational cost data at Coringa, we have provided NCL with actual cost information of the past few years.

“This entails that from a cost perspective, the data used in compiling the updated PEA is significantly more robust than might normally be the case with PEA studies.”

At 1125 BST, shares in Serabi Gold were up 4.74% at 76.46p.

Reporting by Josh White for Sharecast.com.