Audited Results for the year ended 31 December 2023

Serabi Gold plc (AIM:SRB,TSX:SBI), the Brazilian-focused gold mining and development company, today releases its audited results for the year ended 31 December 2023.

HIGHLIGHTS

Revenue of US$63.7 million (2022: US$58.7 million) reflecting higher production year on year as well as positive movement in the average gold price of achieved, (2023: US$1,945; 2022: US$1,785).

Gold production for the full year of 2023 of 33,153 ounces (2022: 31,819 ounces).

EBITDA for the year of US$13.78 million (2022: US$8.78 million), a 57% improvement year on year.

Post tax profit for the year of US$6.58 million, (2022: Post tax loss of US$1.0 million).

Cash held at 31 December 2022 of US$11.6 million (31 December 2022: US$7.2 million).

Profit per share of 8.68 cents compared with a loss per share of 1.30 cents for the 2022 calendar year.

Net cash inflow from operations for the year of US$7.7 million (after mine development expenditure of US$4.4 million); (2022 net cash outflow from operations of US$1.7 after accounting for mine development of US$3.6 million).

Cash Costs for the full year of US$1,300 per ounce (2022: US$1,322) and AISC for the full year of US$1,635 per ounce (2022: US$1,615).

Robust first quarter of 2024 with 9,007 ounces of gold production. Production guidance of between 38,000 and 40,000 ounces of gold for the 2024 calendar year.

Use the following link to access the 2023 Serabi Gold Annual Report - https://bit.ly/3wcNqqe

Key Financial Information

SUMMARY FINANCIAL STATISTICS FOR THE THREE AND TWELVE MONTHS ENDING 31 DECEMBER 2023

Clive Line, CFO of Serabi commented,

“Twelve months ago, I reported that 2022 had been planned as a year of investment as the Group commenced the development of Coringa, which will drive production growth over the next couple of years. The reward for that investment has been manifesting itself through the year. Production from Coringa was over 8,800 ounces and we anticipate a further significant uplift during 2024 as we target 38,000 to 40,000 ounces, with that increase expected to be primarily attributable to Coringa. Whilst overall gold production improved by four per cent, sales revenue was up by almost nine per cent as we benefited from continued improvement in the gold price. At the same time we were able to maintain operating costs at a very similar level to the previous year and as a result Operating Profit is up by US$5.3 million, a 241 per cent increase, with EBITDA of US$13.7 million being up by US$4.9 million, a 57 per cent improvement year on year.

“More importantly despite continued development of Coringa, cash has also improved with net cash up by US$4.75 million. Cash generated from operations and after capitalised mine development expenditure was US$7.7 million, a significant improvement on the net outflow of US$1.7 million of 2022.

“In my 2022 overview I indicated that we would only be able to secure the necessary longer term funding for Coringa once adequate progress had been made on the licencing situation. Roll forward 12 months to today, and with the continued support from existing lenders and the cash flow we expect to generate given current market conditions, we are confident that we can continue the planned development of Coringa without any financing related delays. The ore sorter has been purchased and cleared customs in Brazil in early April. The area for its installation has been cleared and the civil works for installation are already underway.

“2024 will nonetheless be another year of investment. In addition to the purchase and installation of the crushing and ore-sorting plant, we are undertaking an underground drilling campaign on the Serra orebody at Coringa. This will allow the Group to issue a new Technical Report with updated mineral reserves and resources for the Coringa project later this year. We are specifically drilling the down dip extension of the Serra orebody. These investments will be key to the Group positioning itself to deliver its continued growth plans for 2025 which in turn can be expected to provide the opportunity to reduce unit production costs. One of our largest cost items is power and in particular the cost of diesel for generators to run the Palito Complex and the process plant. In the latter part of 2023, we have been increasingly reliant on these generators due to fluctuations in the voltage of the power delivered by the grid, particularly during the wet season. We are working with the local transmission company, and anticipate that later in 2024 we will have a more reliable and higher capacity transmission line connected to the Palito Complex. This should in turn reduce our need for diesel sourced power, providing both costs savings and improving our environmental credentials as the grid power will come from renewable sources.”

STATEMENT FROM THE CHAIR OF SERABI

Dear Shareholders

Following a year in which the Company achieved some key milestones, I am pleased to report that 2024 is already well on track to build on these, create a solid platform from which to execute its production growth and move Serabi into the next phase of its development. At Coringa we have engaged with all stakeholders culminating in the renewal of the trial mining licence for three years, whilst the recent reserve and resource estimation at Palito has significantly increased the reserves compared with prior estimates and resulted in a global mineral inventory for the Group of over one million ounces.

The outlook for continued strength in the gold price remains positive and with the exception of a short period at the end of the third quarter of last year, the price has remained almost consistently above US$1,900 per ounce and for the year to date above US$2,000 per ounce.

The change in government in Brazil at the start of 2023 has not brought significant change to the regulations or financial treatment of the mining sector and whilst the outlook for the country as a whole is relatively good, as a company that incurs much of its costs locally, our planning and budgeting processes have been helped by the exchange rate remaining fairly stable over the last 12 months.

In this industry, scale is important. Your Board keenly recognises this and Serabi’s production growth over last few years belies an exciting growth story. We have not sat still. We have been building the team, strengthening the board, focussing on our relationships with local indigenous groups, improving our internal processes and governance, putting in place the building blocks for the Coringa growth story and looking to leverage our geological endowment for the benefit of shareholders. I believe we are now reaping the benefits of all this hard work. But we continue to look to grow further in a financially prudent manner. Our vision is to become the premier, Brazil focussed, gold growth company generating superior returns to our investors. In parallel with organic opportunities, we continue to explore appropriate corporate opportunities to accelerate our objective of transitioning to a 200,000 ounce per year producer over the next few years. In turn we expect that building such a business will increase the capital markets relevance of Serabi, increase daily trading volumes amongst our shareholders, and attract institutional funds for long term investment. Your Board considers that reaching this level of critical mass, will open up our investor base, create greater demand for our shares and result in an upward re-rating of our market value. For this reason, and having strengthened the balance sheet and operations in the last couple of years, selective M&A activity will be required, in our view.

Our executive management is operationally focussed and experienced at identifying and implementing innovative solutions. Our focus remains Brazil where we have a long and successful track record but we must remain open to looking at other jurisdictions offering a stable legislative environment in which to develop mining opportunities.

Whilst we feel that the best use of surplus cash in the short-term would be to help drive growth, this assumes suitable opportunities are available. We will always be evaluating investment opportunities and risk against other options that can generate rewards for our shareholders including the opportunity to return funds potentially through dividends or share buyback arrangements.

The exploration alliance with Vale, during 2023 provided a source of exploration funding that allowed us to advance our gold exploration opportunities whilst also giving the Group the opportunity to progress an opportunity for copper exploration that the Group would not otherwise have progressed. The results from the Phase 1 programme, whilst giving us greater technical understanding of the Matilda prospect, allowed us to advance other gold targets, we can now advance further as well as generating other potential copper porphyry targets. Whilst Vale have now decided to not progress to Phase 2 we do have other parties interested to pick up their position, giving the Group the potential for continued exposure to copper exploration but allowing management to focus on the Group’s core gold activities.

As part of our efforts to widen the shareholder base of Serabi, in February 2024, Serabi was approved to have a quotation of its shares on the OTCQX in the United States which we hope will enhance the visibility, liquidity and accessibility of the Company to U.S. investors. We see this as a cost-effective option for expanding the shareholder base without increasing the regulatory burden. In the near term, we view attracting new investors as a key component to maintaining and growing value for existing shareholders and we will be stepping up our efforts over the next 12 months to grow our presence among the investment communities in North America. As part of this programme, we completely revamped our corporate website. I encourage investors to acquaint themselves with our vision, strategy and the latest updates on our operations and exploration opportunities. Our management will be attending a number of investor events and conferences over the next 12 months, details of which will be listed on the website, and investors are encouraged to use these opportunities where possible to meet with management.

Since being appointed as Chair for Serabi in August 2022, I have sought to strengthen the role of the Board, continue to challenge management and in the light of increased regulation and accountability, reacted to the need to strengthen the overall corporate governance processes. In January last year, we welcomed Carolina Margozzini to the Board of Directors who was also appointed as a member of the Remuneration Committee. This was followed, in May 2023, by the appointment of Deborah Gudgeon, a very experienced, non-executive director working with a number of natural resources companies. Deborah has also taken on the role a Chair of the Audit and Risk Committee. We also appointed, in August 2023, Kerin Williams to take on the role of Company Secretary, relieving our CFO of this responsibility which, had over recent years, become increasingly time consuming.

Whilst the Board works closely with management to drive operational improvements we are also very focussed on ensuring that this is done with safety as a priority. It is pleasing to report that I have seen, during my own visits to site, the quality and professionalism of our staff and their desire to put health and safety very much in the forefront of thinking.

During the year, we have undertaken a full review of our governance processes, updated the Terms of Reference for the Board and its sub-committees and established new Sustainability and M&A Committees, to help streamline the decision making processes. With an ever-increasing level of oversight by regulators and other governmental and non-governmental bodies, the manner in which companies operate, particularly those involved in natural resources, is under growing scrutiny. Serabi prides itself on its constructive interaction with the neighbouring communities, engaging in an open dialogue through multiple meetings each month and supporting community programmes including infrastructure, health and education. I was very pleased when, in October 2023, our efforts were recognised at the gold symposium hosted by the Associação Brasileira de Empresas de Pesquisa Mineral e Mineração (“ABPM”) when Serabi overwhelmingly won the category for Community Relations securing 73% of more than 5,000 votes that were cast. Whilst visiting the operations earlier in the year, I was privileged to meet the team responsible and witness the excellent work they do and their levels of commitment.

My first 21 months as Chair have been very exciting and rewarding. We have challenges ahead, but I am very encouraged with what I have seen and the shared vision of the Board and management for developing the Company. The next six months, as we continue the development of the Coringa project, will be pivotal for us and will provide the base for continued production growth in 2025 and 2026. I hope that I will be able to report further positive progress at the Annual General Meeting to be held in June and over the rest of the year.

Michael D Lynch-Bell

Chair

Annual Report

See www.serabigold.com for more information and follow us on twitter @Serabi_Gold

Statement of Comprehensive Income

For the year ended 31 December 2023

Group

Other comprehensive income (net of tax)

Items that may be reclassified subsequently to profit or loss

.

Balance Sheet as at 31 December 2023

Group

Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$15,598,545 (2022: merger reserve of US$361,461 and taxation reserve of US$14,097,794).

Cash Flow Statement

For the twelve month period ended 31 December 2023

Group

Notes

• General Information
• Auditor’s Opinion
• Basis of Preparation

Accounting standards, amendments and interpretations effective in 2022

The following Accounting standards came into effect as of 1 January 2023

Going concern and availability of finance

The Directors have a reasonable expectation that, after taking into account reasonably possible changes in trading performance, and the current macroeconomic situation, the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Financial Statements. Further details are provided in Going Concern section of the Group Strategic Report on pages 26 and 27.

5 Other income and expense

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.

Finance expense and income

Group

Taxation

The Group has incurred a tax charge on profits in Brazil for the year to 31 December 2023 of US$2,199,658 (31 December 2022 - US$890,176)

The Group has also 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 Group has registered a net deferred tax credit of US$607,397 during the year to 31 December 2023 (31 December 2022 – credit of US$683,433).

Earnings per share

• At 31 December 2023 there were 2,075,400 conditional share awards in issue (31 December 2022 864,500). These are subject to performance conditions which may or not be fulfilled in full or in part. These CSA’s have not been included in the calculation of the diluted earnings per share.. At 31 December 2022: there were also 1,750,000 options and 4,003,527 unexercised warrants in issue.
• As the effect of dilution is to reduce the loss per share, the diluted loss per share is considered to be the same as the basic loss per share
• Post balance sheet events

On 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Itau Bank in Brazil. The loan is repayable as a bullet payment on 6 January 2025 and carries an interest coupon of 8.47 per cent. The proceeds raised from the loan are being used for working capital and secure adequate liquidity to repay a similar arrangement which was repaid on 22 February 2023.

Assay Results

Assay results reported within this release include those provided by the Company's own on-site laboratory facilities at Palito and have not yet been independently verified. Serabi closely monitors the performance of its own facility against results from independent laboratory analysis for quality control purpose. As a matter of normal practice, the Company sends duplicate samples derived from a variety of the Company's activities to accredited laboratory facilities for independent verification. Since mid-2019, over 10,000 exploration drill core samples have been assayed at both the Palito laboratory and certified external laboratory, in most cases the ALS laboratory in Belo Horizonte, Brazil. When comparing significant assays with grades exceeding 1 g/t gold, comparison between Palito versus external results record an average over-estimation by the Palito laboratory of 6.7% over this period. Based on the results of this work, the Company's management are satisfied that the Company's own facility shows sufficiently good correlation with independent laboratory facilities for exploration drill samples. The Company would expect that in the preparation of any future independent Reserve/Resource statement undertaken in compliance with a recognised standard, the independent authors of such a statement would not use Palito assay results without sufficient duplicates from an appropriately certificated laboratory.

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