LONDON (Alliance News) - Serabi Gold PLC Thursday reported a large quarter-on-quarter rise in production as it continues to process its stockpiled ore from 2014, but said it will need to increase its processing capacity if it is to ever get through its inventory.
The Brazilian gold miner said production rose 10% quarter-on-quarter to 9,078 ounces of gold in the third quarter of 2015 from 7,878 ounces in the second quarter, representing a record for the company.
The company achieved the 10% rise after it processed run of mine ore that was previously stockpiled from the Palito mine and 1,200 ounces of surface stockpiles from Sao Chico. It still has around 42,000 tonnes of flotation tails to process, which will continue "when possible" as its plant capacity is limited.
"One thing that has become clear over the past few months is that the operation will require increased milling capacity. Since the commencement of production, we have never been able to run down our ROM stockpiles, albeit that they are of relatively low grade," it said.
A third ball mill identical to the two mills already operating, has been purchased in Brazil and will be operational early in the second quarter of 2016.
Serabi reiterated its target to produce 28,000 to 29,000 ounces of gold from its main producing Palito mine. Sao Chico has only just started producing and will contribute an additional 6,000 to 7,000 ounces of gold before the end of the year, giving Serabi a total full-year guidance of 34,000 to 36,000 ounces of gold.
Alongside that guidance, Serabi plans to have average all-in-sustaining cash costs of USD900 to USD950 per ounce for the full year. To put that into context, spot gold was trading at around USD1,159 per ounce on Thursday morning.
"For the third consecutive quarter this year we have been able to demonstrate steady growth in gold production, in what has been a tough nine months for gold producers. With Palito in a steady state of production, over the next months I expect that we will see increasing levels of gold production from Sao Chico," said the company.
Serabi shares were up 0.3% to 3.51 pence per share on Thursday morning, having initially spiked by 11%.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Serabi (SRB)