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“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 plc
Michael Hodgson        t +44 (0)20 7246 6830
Chief Executive        m +44 (0)7799 473621

Clive Line        t +44 (0)20 7246 6830
Finance Director        m +44 (0)7710 151692

e contact@serabigold.com

www.serabigold.com

BEAUMONT CORNISH Limited
Nominated Adviser & Financial Adviser
Roland Cornish / Michael Cornish        t +44 (0)20 7628 3396

PEEL HUNT LLP
Joint UK Broker
Ross Allister                t +44 (0)20 7418 9000

TAMESIS PARTNERS LLP
Joint UK Broker
Charlie Bendon/ Richard Greenfield        t +44 (0)20 3882 2868

CAMARCO
Financial PR
Gordon 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 statements
Certain 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 Statement
The 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 Income
For the six month period ended 30 June 2023

(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

.
Statements of Changes in Shareholders’ Equity
For the six month period ended 30 June 2023

(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 Statement
For the three month period ended 30 June 2023

Notes

1. 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

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 concern


At 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

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

(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.

Attachment

• Q2 2023 Financial Report