Last checked at 
LONDON (Alliance News) - Serabi Gold PLC shares were trading higher on Wednesday morning after the company said it has continued to build on its strong finish to last year after reporting a rise in production in the first quarter of 2016, prompting the miner to reiterate its full year guidance.
Serabi shares were trading up 8.6% to 4.61 pence per share on Wednesday morning.
Serabi produces gold from its flagship Palito mine in Brazil and kick-started commercial production from its nearby Sao Chico deposit at the start of this year, allowing the company to report a 23% year-on-year rise in production in the first quarter of 2016.
Serabi produced 9,771 ounces of gold in the period compared to the 7,924 ounces produced in the first quarter of 2015.
That production was derived from 26,752 tonnes of ore taken from Palito at a grade of 11.84 grammes of gold per tonne and 10,794 tonnes of ore from Sao Chico graded at 9.0 grammes of gold per tonne of ore. Some production also came from the flotation tailings.
"The first quarter of 2016 has been very satisfying, building on the company's strong finish to 2015," said Chief Executive Mike Hodgson. "The first quarter, which coincides with the height of the rainy season, was always going to be our most challenging as we did not have the benefit of the plant expansion."
"Nonetheless we have got very close to breaking the 10,000 ounce per quarter threshold which is an excellent result and comfortably in-line with our guidance of 37,000 ounces for the year as a whole," he added.
Although Serabi's official guidance for the year stands at 37,000 ounces of gold, Hodgson recently told Alliance News this could be as high as 40,000 ounces. On Wednesday, Serabi said full year production will be comprised of 28,000 ounces from Palito and 9,000 ounces from Sao Chico.
Serabi also reiterated its all-in sustaining cash cost guidance for the full year at USD840 to USD870 per ounce - providing a healthy margin at current prices with spot gold trading at USD1,247 per ounce on Wednesday morning.
Serabi previously published plans to expand the processing plant at Palito to allow the miner to process its significant stockpile of ore that has accumulated on site, as production was running ahead of the plant's capacity beforehand.
The plant expansion should be completed by the start of May, as originally planned, and that will allow the capacity to increase to over 500.0 tonnes of ore per day from the current capacity of 380.0 to 400.0 tonnes per day.
Serabi currently has 17,000 tonnes of ore stockpiled in Brazil with an average grade of 5.3 grammes of gold per tonne, which will be processed once the plant expansion has been completed. In addition, Serabi has a further 31,000 tonnes of flotation tailings graded at 2.5 grammes of gold per tonne.
"This will be in excess of mine production levels, allowing the stockpiles to be depleted and, importantly for the longer term, also creating surplus capacity to catch up any lost production caused by unplanned stoppages," said Hodgson.
The chief executive also highlighted that the average grade of around 10.0 grammes of gold per tonne of ore processed in the first quarter has been broadly flat for around the last two years, demonstrating the company's selective mining approach that allows it to retain high grade production.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
