Unaudited interim results for the three-month period ended 31 March 2024
Q1 2024: gold production 9,007 oz, EBITDA $4.7m up 103% YoY, profit $3.6m, cash $11.1m
| 3 months to 31 Mar 2024 | Now | Year before | Change |
|---|---|---|---|
| Revenue | £16.0m | £11.1m | +44.4% |
| Operating profit | £2.9m | £1.2m | +136.6% |
| Profit before tax | £2.9m | £1.2m | +139.8% |
| Net income | £2.9m | £1.2m | +137.5% |
| Cash from operations | £1.5m | £2.5m | −39.9% |
| Net cash / (debt) | £4.3m | £4.2m | +2.3% |
| Cash | £8.8m | £11.2m | −22.1% |
Figures as reported, converted to £ where needed – see all financials.
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Serabi (AIM:SRB, TSX:SBI, OTCQX:SRBIF), the Brazilian focused gold mining and development company, is pleased to release its unaudited results for the three-month period ended 31 March 2024.
A copy of the full interim statements together with commentary can be accessed on the Company’s website using the following link: https://bit.ly/3KlLKOH
“This has been a rewarding quarter of financial performance” said Clive Line, Serabi’s CFO. “EBITDA of $4.7 million is a 103% improvement compared with the first quarter of 2023, but also a 37 per cent improvement on the last quarter of 2023. The cash position remained steady, reflecting the continued investment in development and ramp up of Coringa and on-going mine development at Palito.
“Following the renewal in January 2024 of the trial mining licence at Coringa for a further 3 year period, we have been growing the workforce, started the underground drill programme targeted to grow the Serra mineral resource through drilling the down plunge extensions of the current ore body, and accelerated the mine development programme. Mine development costs of $1.6 million represent an additional $1.2 million cost compared to the first quarter of 2023, adding approximately $130 per ounce to the AISC for the quarter but this up-front investment is necessary to deliver the longer term production growth and in turn, reduce the long-term AISC. We need to incur the costs associated with the build of the Coringa crushing and ore sorting plant for the first 9 months of 2024, without seeing the benefit of materially improved grades from ore-sorting and significantly reduced trucking and process costs until Q4 2024 and throughout 2025. Mining rates continue to increase, the 56,296 tonnes of ore mined in the first quarter was a 35% increase compared with the same period of 2023, and a 14% increase compared with the last quarter of 2023.”
Financial Highlights (all currency amounts are expressed in US Dollars unless otherwise stated)
Gold production for the first quarter of 2024 of 9,007 ounces, (Q1-2023: 8,055 ounces).
Cash held at 31 March 2024 of $11.1 million (31 December 2023: $11.6 million including US$0.6 million relating to the exploration alliance with Vale).
EBITDA for the three-month period of $4.7 million (Q1-2023: $2.3 million).
Post-tax profit for the three-month period of $3.6 million (Q1-2023: $1.5 million),
Profit per share of 4.80 cents (Q1-2023: 1.94 cents).
Net cash inflow from operations for the three-month period (after mine development expenditure of $1.6 million) of $0.3 million (Q1-2023: $2.7 million outflow after mine development expenditure of $0.4 million).
Average gold price of $2,081 per ounce received on gold sales during the three-month period (Q1-2023: $1,892).
Cash Cost for the quarter of $1,461 per ounce (Q1-2023: $1,281 per ounce).
All-In Sustaining Cost for the three- month period to March 2024 of $1,859 per ounce (Q1-2023: $1,516 per ounce).
Overview of the financial results
Reported revenues and costs reflect the ounces sold in each period and as a result total costs for the three-month period are significantly higher than for the corresponding period of 2023. In the first quarter of 2024, the Group has reported revenue and operating costs related to the sale of 9,290 ounces in the period (9,007 ounces produced). This compares to sales reported of only 6,616 ounces in the first quarter of 2023.
Whilst the Company has continued to benefit from the improvement in the gold price, the movement to current levels only started during March and will be reflected in the second quarter. The Brazilian Real has in recent weeks followed the trend of other currencies and weakened against the US Dollar but until April its relative strength had offset some of the upside of the US Dollar gold price. Having traded generally between 4.90 and 5.00 to the US Dollar in the first quarter, since mid-April it has generally been above 5.10, which would be beneficial for our US Dollar reported costs should this trend continue. The average rate for the first three months of 2024 was 4.95, being five per cent stronger that the same period in 2023. This has impacted on the US Dollar reported costs for the first quarter of 2024. It has also meant that the gold price in Brazilian Reais, which drives the margin that can be generated, is only 2% higher than the average price achieved in the same period of 2023.
During the quarter the Group also completed and drew down a new US$5 million loan with Itau Bank in Brazil. This new arrangement has an interest coupon of 8.47 per cent and is repayable as a bullet payment on 6 January 2025. This replaced a similar loan arranged with Santander Bank in Brazil that was repaid in the quarter
The ore sorter for Coringa, having cleared Brazilian customs on 10 April 2024, has now been delivered to site. The ground works required for installing the crushing plant and the related infrastructure for the ore sorter are progressing well with the intention that the plant can be operational for the fourth quarter of this year, processing some of the lower grade material that has been stockpiled at Coringa and boosting gold production in that last three-month period.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE-MONTHS ENDING 31 MARCH 2024
| 3 months to 31 March 2024 $ (unaudited) | 3 months to 31 March 2023 $ (unaudited) | ||
|---|---|---|---|
| Revenue | 20,246,400 | 13,437,369 | |
| Cost of sales | (13,556,599) | (9,767,003) | |
| Gross operating profit | 6,689,801 | 3,670,366 | |
| Administration and share based payments | (1,984,990) | (1,354,575) | |
| EBITDA | 4,704,811 | 2,315,791 | |
| Depreciation and amortisation charges | (1,046,561) | (834,514) | |
| Operating profit before finance and tax | 3,658,250 | 1,481,277 | |
| Profit after tax | 3,637,563 | 1,467,479 | |
| Earnings per ordinary share (basic) | 4.80c | 1.94c | |
| Average gold price received ($/oz) | $2,081 | $1,892 | |
| As at 31 March 2024 $ (unaudited) | As at 31 December 2023 $ (audited) | ||
| Cash and cash equivalents | 11,056,317 | 11,552,031 | |
| Net funds (after finance debt obligations) | 5,366,512 | 5,148,947 | |
| Net assets | 94,702,567 | 92,792,049 | |
| Cash Cost and All-In Sustaining Cost (“AISC”) | |||
| 3 months to 31 March 2024 | 3 months to 31 March 2023 | 12 months to 31 December 2023 | |
| Gold production for cash cost and AISC purposes (ounces) | 9,007 | 8,005 | 33,152 |
| Total Cash Cost of production (per ounce) | $1,461 | $1,281 | $1,300 |
| Total AISC of production (per ounce) | $1,859 | $1,516 | $1,635 |
Notice
See www.serabigold.com for more information and follow us on twitter @Serabi_Gold
The following information, comprising, the Income Statement, the Group Balance Sheet, Group Statement of Changes in Shareholders’ Equity, and Group Cash Flow, is extracted from the unaudited interim financial statements for the three months to 31 March 2024.
Statement of Comprehensive Income
For the three-month period ended 31 March 2024.
For the three months ended 31 March
| 2024 | 2023 | ||
|---|---|---|---|
| (expressed in US$) | Notes | (unaudited) | (unaudited) |
| CONTINUING OPERATIONS | |||
| Revenue (from continuing operations) | 20,246,400 | 13,437,369 | |
| Cost of sales | (13,556,599) | (9,397,003) | |
| Stock impairment provision | — | (370,000) | |
| Depreciation and amortisation charges | (1,046,561) | (834,514) | |
| Total cost of sales | (14,603,160) | (10,601,517) | |
| Gross profit | 5,643,240 | 2,835,852 | |
| Administration expenses | (1,942,740) | (1,450,168) | |
| Share-based payments | (53,883) | (48,067) | |
| Gain on disposal of fixed assets | 11,633 | 143,660 | |
| Operating profit | 3,658,250 | 1,481,277 | |
| Other income – exploration receipts | 2 | 339,854 | — |
| Other expenses – exploration expenses | 2 | (312,518) | — |
| Foreign exchange (loss)/gain | (34,566) | 82,611 | |
| Finance expense | 3 | (174,605) | (161,170) |
| Finance income | 3 | 141,555 | 42,819 |
| Profit before taxation | 3,617,970 | 1,445,537 | |
| Income and other taxes | 4 | 19,593 | 21,942 |
| Profit after taxation (1) | 3,637,563 | 1,467,479 | |
| Other comprehensive income (net of tax) | |||
| Exchange differences on translating foreign operations | (1,780,928) | 994,247 | |
| Total comprehensive profit for the period (1) | 1,856,635 | 2,461,726 | |
| Profit per ordinary share (basic) | 5 | 4.80c | 1.94c |
| Profit per ordinary share (diluted) | 5 | 4.80c | 1.80c |
| Balance Sheet as at 31 March 2024 | |||
| (expressed in US$) | As at 31 March 2024 (unaudited) | As at 31 March 2023 (unaudited) | As at 31 December 2023 (audited) |
| Non-current assets | |||
| Deferred exploration costs | 20,075,458 | 19,280,937 | 20,499,257 |
| Property, plant and equipment | 52,662,606 | 49,522,379 | 53,340,903 |
| Right of use assets | 5,006,117 | 5,386,091 | 5,316,330 |
| Taxes receivable | 3,734,309 | 3,719,376 | 4,653,063 |
| Deferred taxation | 1,736,077 | 1,638,907 | 1,791,983 |
| Total non-current assets | 83,214,567 | 79,547,690 | 85,601,536 |
| Current assets | |||
| Inventories | 13,999,674 | 8,973,919 | 12,797,951 |
| Trade and other receivables | 4,024,896 | 3,109,923 | 2,858,072 |
| Prepayments and accrued income | 3,181,024 | 1,704,596 | 2,320,256 |
| Derivative financial assets | – | – | 115,840 |
| Cash and cash equivalents | 11,056,317 | 13,920,999 | 11,552,031 |
| Total current assets | 32,261,911 | 27,709,437 | 29,644,150 |
| Current liabilities | |||
| Trade and other payables | 7,808,639 | 5,017,471 | 8,626,292 |
| Interest bearing liabilities | 5,689,805 | 11,442,130 | 6,403,084 |
| Accruals | 401,939 | 533,573 | 649,225 |
| Total current liabilities | 13,900,383 | 16,993,174 | 15,678,601 |
| Net current assets | 18,361,528 | 10,716,263 | 13,965,549 |
| Total assets less current liabilities | 101,576,095 | 90,263,953 | 99,567,085 |
| Non-current liabilities | |||
| Trade and other payables | 4,249,115 | 4,188,728 | 3,960,920 |
| Provisions | 2,568,287 | 1,230,667 | 2,663,892 |
| Deferred tax liability | — | 250,274 | — |
| Interest bearing liabilities | 56,126 | 561,428 | 150,224 |
| Total non-current liabilities | 6,873,528 | 6,231,097 | 6,775,036 |
| Net assets | 94,702,567 | 84,032,856 | 92,792,049 |
| Equity | |||
| Share capital | 11,213,618 | 11,213,618 | 11,213,618 |
| Share premium reserve | 36,158,068 | 36,158,068 | 36,158,068 |
| Option reserve | 229,456 | 1,372,625 | 175,573 |
| Other reserves | 16,708,285 | 14,812,078 | 15,960,006 |
| Translation reserve | (63,561,669) | (65,282,524) | (61,780,741) |
| Retained surplus | 92,954,809 | 85,758,991 | 91,065,525 |
| Equity shareholders’ funds | 94,702,567 | 84,032,856 | 92,792,049 |
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 2023 prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 will be filed with the Registrar of Companies before 30 June 2024. 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.
Statements of Changes in Shareholders’ Equity
For the three-month period ended 31 March 2024
(expressed in US$)
| (unaudited) | Share capital | Share premium | Share option reserve | Other reserves (1) | Translation reserve | Retained Earnings | Total equity |
|---|---|---|---|---|---|---|---|
| Equity shareholders’ funds at 31 December 2022 | 11,213,618 | 36,158,068 | 1,324,558 | 14,459,255 | (66,276,771) | 84,644,335 | 81,523,063 |
| Foreign currency adjustments | — | — | — | — | 994,247 | — | 994,247 |
| Profit for the period | — | — | — | — | — | 1,467,479 | 1,467,479 |
| Total comprehensive income for the period | — | — | — | — | 994,247 | 1,467,479 | 2,461,726 |
| Transfer to taxation reserve | — | — | — | 352,823 | — | (352,823) | — |
| Share option expense | — | — | 48,067 | — | — | — | 48,067 |
| Equity shareholders’ funds at 31 March 2023 | 11,213,618 | 36,158,068 | 1,372,625 | 14,812,078 | (65,282,524) | 85,758,991 | 84,032,856 |
| Foreign currency adjustments | — | — | — | — | 3,501,783 | – | 3,501,783 |
| Profit for the period | — | — | — | — | – | 5,108,133 | 5,108,133 |
| Total comprehensive income for the period | — | — | — | — | 3,501,783 | 5,108,133 | 8,609,916 |
| Transfer to taxation reserve | — | — | — | 1,147,928 | — | (1,147,928) | — |
| Share based incentives lapsed in period | — | — | (1,346,329) | — | — | 1,346,329 | — |
| Share based incentive expense | — | — | 149,277 | — | — | — | 149,277 |
| Equity shareholders’ funds at 31 December 2023 | 11,213,618 | 36,158,068 | 175,573 | 15,960,006 | (61,780,741) | 91,065,525 | 92,792,049 |
| Foreign currency adjustments | — | — | — | — | (1,780,928) | — | (1,780,928) |
| Profit for the period | — | — | — | — | — | 3,637,563 | 3,637,563 |
| Total comprehensive income for the period | — | — | — | — | (1,780,928) | 3,637,563 | 1,856,635 |
| Transfer to taxation reserve | — | — | — | 748,279 | — | (748,279) | — |
| Share option expense | — | — | 53,883 | — | — | — | 53,883 |
| Equity shareholders’ funds at 31 March 2024 | 11,213,618 | 36,158,068 | 229,456 | 16,708,285 | (63,561,669) | 93,954,809 | 94,702,567 |
- Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$16,346,824 (31 December 2023: merger reserve of US$361,461 and a taxation reserve of US$15,598,545).
Condensed Consolidated Cash Flow Statement
For the three-month period ended 31 March 2024
For the three months ended 31 March
| 2024 | 2023 | |
|---|---|---|
| (expressed in US$) | (unaudited) | (unaudited) |
| Operating activities | ||
| Post tax profit for period | 3,637,563 | 1,467,479 |
| Depreciation – plant, equipment and mining properties | 1,046,561 | 834,514 |
| Stock provision | — | 370,000 |
| Net financial income/(expense) | 67,616 | 35,740 |
| (Gain)/loss on asset disposals | (11,633) | (143,660) |
| Provision for taxation | (19,593) | (21,942) |
| Share-based payments | 53,883 | 48,067 |
| Taxation Paid | (15,354) | (286,737) |
| Interest Paid | (392,268) | (26,410) |
| Foreign exchange loss | 67,747 | (90,421) |
| Changes in working capital | ||
| Increase in inventories | (1,255,285) | (349,744) |
| (Increase)/decrease in receivables, prepayments and accrued income | (757,942) | 1,881,445 |
| Decrease in payables, accruals and provisions | (520,854) | (686,484) |
| Net cash inflow from operations | 1,900,441 | 3,031,847 |
| Investing activities | ||
| Purchase of property, plant and equipment and assets in construction | (438,985) | (741,907) |
| Mine development expenditure | (1,589,627) | (372,400) |
| Geological exploration expenditure | (149,584) | (206,546) |
| Proceeds from sale of assets | 11,908 | 158,471 |
| Interest received | 134,723 | 42,819 |
| Net cash outflow on investing activities | (2,031,565) | (1,119,563) |
| Financing activities | ||
| Receipt of short-term loan | 5,000,000 | 5,000,000 |
| Repayment of short-term loan | (5,000,000) | — |
| Payment of finance lease liabilities | (255,245) | (303,141) |
| Net cash outflow from financing activities | (255,245) | 4,696,859 |
| Net increase / (decrease) in cash and cash equivalents | (386,369) | 6,609,143 |
| Cash and cash equivalents at beginning of period | 11,552,031 | 7,196,313 |
| Exchange difference on cash | (109,345) | 115,543 |
| Cash and cash equivalents at end of period | 11,056,317 | 13,920,999 |
Notes
Basis of preparation
Basis of preparation
These interim condensed consolidated financial statements are for the three-month period ended 31 March 2024. Comparative information has been provided for the unaudited three-month period ended 31 March 2023 and, where applicable, the audited twelve-month period from 1 January 2023 to 31 December 2023. 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 2023 annual report.
Accounting standards, amendments and interpretations effective in 2024
The following Accounting Standards have not yet been ratified in UK law but are expected to be ratified during 2024. The Group expects to make appropriate compliant disclosures in its Annual Report for the year needed 31 December 2024.
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2 Climate-related Disclosures
Management do not consider that the following other amendments to existing standards are applicable to the current operations of the Group or will have any material impact o the financial statements
Lease Liability in a Sale and Leaseback (amendments to IFRS 16)
Supplier Finance Arrangements (amendments to IAS 7 and IFRS 17))
Going concern
At 31 March 2024 the Group held cash of US$11.1 million which represents a decrease of US$0.5 million compared to 31 December 2023. A further US$1.1 million was received after the quarter end relating to a delayed shipment of copper/gold concentrate.
On 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Itau Bank in Brazil. The loan is repayable as a bullet payment on 6 January 2025 and carries an interest coupon of 8.47 per cent. The proceeds raised from the loan are being used for working capital and secure adequate liquidity to repay a similar arrangement which was repaid on 22 February 2023.
- Other Income and Expenses
- Finance expense and income
| 3 months ended 31 March 2024 (unaudited) | 3 months ended 31 March 2023 (unaudited) | |
|---|---|---|
| US$ | US$ | |
| Interest expense on secured loan | (141,647) | (111,710) |
| Interest expense on finance leases | (14,036) | (32,625) |
| Interest expense on short term trade loan | (18,922) | (16,835) |
| Total finance expense | (174,605) | (161,170) |
| Interest income | 134,723 | 42,819 |
| Gain on revaluation of hedging derivatives | 6,832 | — |
| Total finance income | 141,555 | 42,819 |
| Net finance (expense) | (33,050) | (118,351) |
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 three-month period to 31 March 2023 reflecting the stronger Brazilian Real exchange rate at the end of the period and resulting in deferred tax income of US$674,185 (three months to 31 March 2023 – charge of US$287,667).
The Group has also incurred a tax charge in Brazil for the three-month period of US$654,592 (three months to 31 March 2023 tax charge - US$265,725).
Earnings per Share
| 3 months ended 31 March 2024 (unaudited) | 3 months ended 31 March 2023 (unaudited) | |
|---|---|---|
| Profit attributable to ordinary shareholders (US$) | 3,637,563 | 1,467,479 |
| Weighted average ordinary shares in issue | 75,734,551 | 75,734,551 |
| Basic profit per share (US cents) | 4.80c | 1.94 |
| Diluted ordinary shares in issue (1) | 75,734,551 | 81,488,078 |
| Diluted profit per share (US cents) | 4.80c | 1.80 |
- At 31 March 2024 there were 2,814,541 conditional share awards in issue (31 March 2023 - 864,500). These are subject to performance conditions which may or not be fulfilled in full or in part. These CSAs have not been included in the calculation of the diluted earnings per share. At 31 March 2023 there were also 1,750,000 options and 4,003,527 unexercised warrants in issue.
- Post balance sheet events
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