LONDON (Alliance News) - Serabi Gold PLC Chief Executive Mike Hodgson Thursday said the Sao Chico prospect is developing well and toward the same stage as the Palito mine in Brazil, which has continued to have "excellent" production results.
Speaking ahead of the company's annual general meeting on Thursday, Hodgson said production at the Palito mine in northern Brazil has continued with "excellent results", and said the mine is "following the trends" in the second quarter of 2015 from the previous two quarters.
In the first quarter to the end of March, Serabi said gold production from Palito and Sao Chico reached 7,759 ounces, with 3,005 ounces produced in March, which was the highest monthly production level so far. Serabi is aiming to produce 35,000 ounces in total during 2015.
"The Palito mine is operating in line with our expectations if not slightly exceeding them at times and is now into a steady regime of development and ore production," said Chief Executive Mike Hodgson.
"For the last few months ore production from the mine has been consistently above forecast levels, resulting in ore stockpiles being run down at a slower rate than planned, although this does allow us increased flexibility in the longer term," he added.
The nearby Sao Chico prospect continues to be explored, with over 3,000 metres of diamond drilling completed. Hodgson said he was "hopeful" the drilling programme would be completed during July to secure a new resource update before the end of September.
Development mining has also ramped up at Sao Chico, and Serabi said the processing of higher grade ore from the prospect is expected to boost gold production in the second half of 2015.
"Palito entered commercial production in July 2014, and we hope to have Sao Chico in a similar position in the coming months. The transformation of Sao Chico from an exploration project into a mining operation in a relative short space of time demonstrates the positive relationships and support that we receive from the Brazilian regulatory authorities," said Hodgson.
Hodgson added the downturn in equity markets has put the company in a "strong position" and the weakening Brazilian real allows lower labour costs. However, the company said costs for power and fuel have been steadily rising.
Serabi shares were down 5.0% to 4.75 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Serabi (SRB)