Last checked at 
(Alliance News) - Serabi Gold PLC said Monday that diamond drilling at the Sao Chico orebody in its Palito project in Brazil "significantly" extended the resource beyond the current mine limits.
Shares in the Brazil-focused gold explorer and developer were 15% higher in London on Monday at 79.01 pence each.
Serabi began a 9,600 metre step out diamond drill programme in the fourth quarter of 2019, testing the east and west continuity of the Sao Chico orebody. The miner said the completed drilling indicates a payable strike continuity of mineralisation for 200 metres to both the east and west of current mining limits.
Chief Executive Mike Hodgson said: "This is clearly excellent news for the company. We are embarking on an aggressive surface and underground drilling programme mostly focusing in and around the Sao Chico orebody to assess its long-term potential. We have always seen the strong potential in and around Sao Chico and exploration success here is key to our next expansion plans should they be justified."
Serabi said key intercepts to the west include 21.03 grammes per tonne and 15.39 tonnes per gramme. To the east, intercepts include 16.61 grammes per tonne and 27.35 grammes per tonne.
"Our initial plan is to drill over an area, beyond the current mine workings, of up to 300 metres to the east, 500 metres to the west, and approximately 250 metres at depth," Hodgson continued.
He added: "The company has completed approximately 20% of the planned programmes, which are expected to be concluded by the end of June. Our objective is that the drill programme will provide enough new information to allow us to commission the preparation of an updated geological resource and mineral reserve for the Sao Chico orebody during the third quarter of 2020."
Serabi also noted underground drilling has confirmed the extension of the orebody for a further 100 metres below the current pit.
Hodgson said: "The recent start-up of the reverse circulation drilling into the large terrestrial geophysical anomalies just two kilometres to the west of the Sao Chico orebody is also very exciting. These anomalies, which we originally confirmed in November 2018, are quite spectacular when compared to the equivalent geophysical anomaly that overlies the Sao Chico orebody, which has produced approximately 75,000 ounces of gold to date."
Looking ahead, Serabi is guiding for gold production in 2020 to be between 45,000 ounces and 46,000 ounces.
"In the near term, operations have continued to perform well over the last quarter of 2019, and I was at site in December for the initial testing of our ore sorter. Further calibration work will be undertaken this quarter with the manufacturer at site this month. With the ore sorter being tested during this first quarter, we expect the first quarter's gold production to be at similar levels to 2019, with the enhanced production impact being realised from the second quarter onwards," Hodgson added.
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
