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The stock, up 37% in the year to date, advanced a further 5.5p to 64p. Peel Hunt reckons there is further to go for the share price as it set an 80p target and reiterated its 'buy' advice.
"We are now beginning to see the fruits of Serabi’s development work at Coringa, with the new GUIA trial mining licence providing the comfort of three more years of operation on site," said the broker in a note to clients.
"We believe the market continues to underestimate Serabi’s value proposition, especially the increase in mine life and the efficiency impact of the new ore sorter at Coringa."
The Shanta acquirers were very clever to get the ball rolling through 2023 and pouncing in December before the really big moves in gold were seen and looking back you can start to see that Eric took his foot off the gas from about the summer onwards, presumedly because he was incentivised to keep attention off Shanta.
If the same had been attempted at Serabi then i'm sure they'd have got a sale away at around 60p but now the gold bull run is well and truly happening by the time something similar is worked the Serabi share price will probably already be close to a pound and a premium on that would be needed - whatever happens SHs will gain by holding at these levels.
Pedro I have been invested here since early 2013 and never out.
Obviously i have brought and sold some at times but im massively invested here and elsewhere .
Having fingers in many pies is a good thing and i sleep incredibly well at night.
In my time investing i have seen so much and as i stated before and im fully behind it and say again when it comes to money ZERO loyalty.
The cash in bank and rising production allied with a rampant gold price,must be more reassurance for you to sleep at night,surely?
SilverSlippy. If you feel like that it must be difficult to sleep at night whatever share you hold. Management here actively supporting the share price by actions in the business and in the media.What more reassurance can you get? Totally the opposite of SHG,would you not say?
I'd like to agree but when it comes to money there is zero loyalty.
If management were planning a buyout they would not have interviews with financial journalistic promoting the company would they?…SHG did the opposite they played down everything to share holders,so SRB are playing a straight game and management should be applauded,in my opinion.SRB definitely not the shysters at SHG!
"to potentially bring forward plans " - SHG had plans and with years of hard work they successfully carried them out - but the long-term shareholders didn't get their just rewards. Buyers stepped in and snatched the company away from them.
Please bear in mind austrochris that in today's Crux interview the CEO indicated that they were looking to potentially bring forward plans for a ball mill installation at Palito. Currently scheduled for 2027 (which was news to me).
This could potentially increase production to 70 Koz in 2026 rather than the current 60 Koz. This still needs to be proven but high gold prices drive better options for producers who are in the expansion phase.
That aside today's update majorly de-risks the plans associated with getting to 60 Koz with a strong belief from management that close to 50 Koz will be hit in 2025.
Cash levels are proving strong enough to feed both the expansion at Coringa and exploration at Sao Domingos where in 2021 Serabi returned 7.15 metres at 258.24 g/t. It was one of the top 10 gold intercepts for a TSX-listed company that year. Since then exploration has gone dead because Serabi had no spare funds. So the fact they are returning there whilst also building out Coringa is significant. It says cash flows are strong. What it also indicates is that exploration news will ramp up which could be a strong additional SP driver.
The ore sorter clearing customs quickly should also not be overlooked. Brazil can be difficult on this front. It means the build-out at Coringa now sits entirely with Serabi. Hence why the end of Q3 is being earmarked for ramp-up.
So funding and equipment both de-risked.
Coringa mine development is next. Strong progress on that front means more confidence in forward production plans = more confidence in guidance for both 2024 and 2025.
USD/BRL is also favourable driving down costs and raising margins at just the right time.
Then think about just how large a stockpile of material must already be sitting at Coringa following 2 years of selective grade transport to Palito due to the 50,000-ton trial license transportation limit.
£44m enterprise value for a company with little or no debt that currently requires no further debt to reach 60,000 oz production and post today's update is much closer to achieving its initial growth goals than the valuation currently allows for. If they push to 70 Koz all the better, If they hit big on exploration it's a bonus. As is the signing up a large gold producer as partner to reall push exploration but it may end up being the beginning of the end. be it the SP should have a good run before it comes.
Strong hold for me this one.
"I sold for a very quick and healthy profit" - very nice for you, but I was in it for years. I stuck by it waiting for the good times to arrive. Then just as all the years of building a great company was about to pay off and the shareholders should have got their just rewards, it was snatched away, so your post carries a lesson Pedro - don't show loyalty, when you see a decent gain, grab the money and run and look for your next investment.
"Value is value" - true, and the buyers of SHG got a company worth at least 20p a share for less than 15p. What is 5p times the millions of shares? They took millions of pounds of our money.
"this is in the middle of a big rerate" - SHG was due for a rerate after the new mine came into production. The share price failed to reflect the true value of that, so the buyers got it on the cheap - which was, of course why they wanted it.
"the longer this share price goes up the bigger the price needed for a buyout would have to be" - I hope it does go up, but until it does, SRB could be taken as SHG was, and Amara and TSG. Yes, we should get more than today's price, but buyers want to pay less than the real value. UK fund managers under-value gold miners. Look at what happened to Kirkland Lake Gold when it was listed in London - no interest, day after day, week after week of no trades. The volume was so low that it de-listed from London and just stuck to its Toronto listing.
After that, the share price went up by 50 times - and the London fund managers couldn't see the value T0ssers.
Also,it must be pointed out that this is in the middle of a big rerate and the longer this share price goes up the bigger the price needed for a buyout would have to be.
I was in SHG and the price although not good was a big improvement on the beaten down SHG share price at the time,so I sold for a very quick and healthy profit. Investors at this depressed price could get a big return so nothing to worry about. Value is value and this is value.As ViciousHippo rightly points out the absurdity of this valuation is astounding and must surely be eventually picked up by investors looking for an absolutely undervalued proposition.
ViciousHippo - " If you bought the whole business for £44m" - yes, it would be a bargain, and that's what the buyers of SHG thought. Like all the PIs in SHG, I felt robbed by the takeover. I live in fear of it happening with SRB.
60 000 ounces / year - first stage for serabi next two years . Brazilian Real down 7 % in April / Us Dollar . Ore sorter in Q4 . Great future !
Being in this share since 2013 I feel we are worth something like 90p to £1.30 / share.
Anyone thinking different and explanation of why you feel that way.
One things for sure we are looking solid.
An interview with Mike Hodgson, CEO by Crux Investor can be accessed using the following link –
https://youtu.be/8ez5vVY2Fz0
An interview with Mike Hodgson, CEO by BRR Media can be accessed using the following link - https://www.brrmedia.co.uk/broadcasts-embed/661d1cd8591bc168ede76734/serabi-gold/?popup=true
ViciousHippo. Spot on with your last post. It is very unusual,especially considering the big cash in bank.
My calculations suggest profit with gold at $2300 to be £23m per year. Market cap is £44m = 2 years of profit. If you bought the whole business for £44m, invested nothing more and just run it off based on the existing licenses alone, you could most likely get something north of £70m of profits over 3-4 years. That's £25m straight in your pocket close to guaranteed for doing nothing. That is a very unusual situation.
A gradual rise will do for me,but a big rise must be due,on fundamentals of cash in bank,cash generation,rising gold price and increasing production,surely.
This share has already had a good rerate this year. IMO maybe 70p was a jump too far. Consolidation needed.
Gold price just about to break the $2400 level this morning. All increases hitting the bottom line. Looking good for a big rerate from here.
Thanks Hippo. Time will tell but Serabi seems to be in the sweet spot at the moment.
£1850 for 2023. I cannot remember where that came from, I think it is in one of their statements. Or I made a conservative guess.