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Serabi swings to quarterly profit, new cash to fuel 'significant acceleration"
Brazilian focused mining and development company Serabi Gold swung to a profit in its the first quarter of its trading year, upped its gold production estimates for the full year and is soon to be swimming in cash.
Serabi turned in a profit of $339,866 for the three months leading to 31 March, a turnaround from the loss of $33,941 recorded for the same period a year earlier, thanks to a 4.96% bump in revenue to $13.8m as the average gold price increased to $1,319 from the $1,204 seen a year ago.
The AIM-quoted group recorded a first quarter production of 9,188 ounces of gold from the 43,145 tonnes processed through its plant at an average grade of 7.04 grams per tonne, meaning that Serabi's management now expects gold production for 2018 to "exceed that of 2017" and be "up to 40,000 ounces".
Cash and equivalents moved ahead 63% to $6.69m by the end of March and after receiving $15m on 12 April from a share subscription by Greenstone Resources, Serabi then paid $5m as a second instalment for the purchase of Chapleau Resource and the Coringa project. The AIM- and TSX-listed company will take its bank balance to roughly $23m by the end of Tuesday with a $9m share placing at 3.6p.
Mike Hodgson, chief executive of Serabi, said, "This first quarter of 2018 has been extremely exciting for the company and represents a step change in its growth and development."
"Gold production was in line with both guidance and our internal plans and, after allowing for capital expenditure and mine development costs, the gold production operations generated approximately $1.7m after tax in cash flow which has been used to fund the exploration programmes and the working capital requirements of the newly acquired Coringa project."
He said the rest of the year "promises to be very interesting", with an exploration campaign from the Palito and Sao Chico projects.
"The new funds that have been raised will allow significant acceleration of our organic growth plans and outstanding capital programmes whilst continuing the progress at Coringa, where completing the first stages of the initial permitting remains the immediate objective. We have made the first significant steps to realising our ambition to establish ourselves as a significant gold producer in Brazil with a target of an annualised production rate of 100,000 ounces within the next two years."
As of 0920 BST, Serabi shares had risen 12.03% to 3.86p.