We would love to hear your thoughts about our site and services, please take our survey here.
Serabi closed at $1.44 on TSX yesterday equivalent to 84p a share. Up c. 33% on the day. Low volume but 150% higher than the daily average seen there. It will be interesting to see if it holds but it's a sizeable difference right now.
Perhaps they get how good yesterday's update was more than UK investors currently do.
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.
If SDX do have the rig then as a frame of reference they took 24 days to drill KSIRI-21 which had a depth of 1,955 metres.
Today's spud is for a well that is said to be 1,450 metres deep. On a like for like basis that would be around 18 days give or take.
Sound Energy presentation from 14th Feb (4mins 30s) stated that they were expecting the Star Valley 101 rig (which since yesterday I have seen in the 29th Jan update was contracted by CHAR for their wells) "towards the end of March."
They are using it for chrome pipe installations on two existing discoveries that are being prepared for production. So not a drill. Exact timings is anyone's guess but indicates shorter timeframes. The wording of the CHAR tweet today strongly indicates that Sound already have the rig. Otherwise, they couldn't say they were next in the rig schedule. So depending on how long Sound have had it or needs it the rig mobilisation could come any day from here.
https://x.com/BigBiteNow/status/1775428781853069360?s=20
That is one solution onsolidground but is that your guesswork or is it more informed?
In very simple terms Chariot is planning 2 wells. One is ready to be drilled and the other is not far behind. Comparable drills by SDX in Morroco indicate that each one would take roughly 28 days from spud + transport and set-up time. So if CHAR are to employ said rig 101 then it likely would mean up to c. 2.5 months of continuous work. That takes them beyond the current Predator contract extension period.
I do also note that Predator has yet to announce regulatory approval for MOU-5.
Finally, CHAR said this in their 7th March on-shore webinar,
"Drilling to commence shortly."
So it looks like there is a plan in place.
Hi Bridgedogg1,
If indeed CHAR is/was planning to use that Star Valley rig then it's worth noting that the predator RNS on the extension of the rig's contract came out on the same day as CHAR updated on the EIA. In that update CHAR stated,
"We are on track for commencement of operations around the end of Q1 2024."
The Predator negotiations will have commenced sometime before the actual agreement was finalised wth Star Valley. Meaning Star Valley would surely have kept CHAR informed as to the possibility that said rig might not be available. Leading to alternative options being sought. This is further supported by the Predator Oil RNS of 12th Jan in which they state,
"Well planning for discretionary high impact Jurassic well commenced for April/May drilling." This being the play that rig 101 was subsequently contracted for and was announced on 5th Feb.
Whilst we cannot discount poor planning or poor communication the percentages say Star Valley and likely CHAR (if that rig is indeed relevant) both knew of Predator's plans before CHAR released that 5th Feb RNS. So the fact they still stated around the end of Q1 indicates strongly that they have a plan which doe not involve that rig.
I have done some digging around the Morrocan market. Star Valley count it as one of two main international markets but doesn't declare how many of their fleet are based there. Other firms may well exist also.
I just heard the news about PdUB and so felt compelled to add my condolences to the many positive messages I am reading here today. It feels appropriate that they are shared on this BB the place where PdUB fought another relentless and unforgiving battle despite his ongoing health issues.
Such moments really should place all of what we debate and chastise each other for into true perspective.
Health, family, and love are often proclaimed as being the most important things in the world but this investing game can also make us forget ourselves and our true reasons for being. But such sad news helps demonstrate that when they are lost the anger and hate that I have seen play out at times here carries no real meaning whatsoever. But the dignity and respect with which Pdub answered time and time again does. That sticks in the mind and has an old poster like me returning to show my respect for an approach and a man that is worthy of the time.
RIP PDUB. I never agreed with all your thoughts on BMN but as far as I am concerned you were the BMN BB and one way or another it is going to be a much emptier place without you.
Here's the latest presentation dated November 2023. So it is current meaning the CAPEX stated is still applicable.
https://serabigold.wpenginepowered.com/wp-content/uploads/2023/11/Serabi-Gold-Corporate-Presentation-Nov-2023vFinal.pdf
@Taser,
Here are the two most recent interviews with Serabi's management. One was a Crux interview with the CEO on 10th October and the other with the CFO on 4th December. Either you haven't listened to them or not heard what was said.
In their latest presentation, Serabi stated $10m is required to build out Coringa to 60koz. The majority of this cost will be development mining which is currently limited to 50,000 tons per annum under the trial license.
Two pieces of plant are required. An ore sorter and a crusher. The ore sorter is on order and will cost c. $1m of that total CAPEX spend. The development drilling doesn't happen overnight. It takes months and so Serabi will be generating more cash flows as it is carried out. As things stand today Serabi has c. $15m cash on hand including a $5m debt line that hasn't been used yet.
If you listen to the 4th Dec interviews it is made clear that this debt line can be rolled over if necessary added to but that the majority of the work will be paid for out of cashflow. But it really doesn't take a genius to work out that the current debt line when added to current cash + what will be generated in 2024 will easily cover this first Coringa stage.
The ore sorter is due to be delivered in "early 2024" and installed by Q3. However, the increased development drilling can begin immediately after the LI is received. This means Serabi can almost immediately increase ore trucking from Coringa whilst also building up a significant stockpile for the ore sorter when it is commissioned.
This why the latest quarterly production is most important because previous quarters are now historic, and the monies from strong gold prices already showing on the balance sheet. Q4 is running at a gold price average of c. $1,960 meaning even with 13-month wage payments and ore sorter costs (which can be deducted from the n$10m CAPEX) the cash YE balance should improve.
What that does is build in more protection for Serabi should gold prices pull back in the early part of 2024 as the licensing process is concluded. After that Serabi has the cash and resources available to it to immediately start improving production (so lower overall AISC) countering the market risk on gold prices (if indeed that happens. Not a given) and so de-risking the investment further.
Yes, the license still needs to be achieved and these things are never 100% certain but listen to the interviews and review my thread on the history of it (also below). The information available says Serabi have satisfied the issues that prevented the LI from being issued. So it is fair to believe it will come.
https://www.brrmedia.co.uk/broadcasts/6568aa51ce0b93fc46d833f6/serabi-gold-quarterly-results/
https://www.youtube.com/watch?v=MwCjxQ9dPq8
https://x.com/BigBiteNow/status/1734158653370822787?s=20
Tha should read $200k and not $299k. Fat fingers.
2/2
As for "they are scrapping to achieve the lower end of a production guidance that was seen as low when set" where is the evidence of this and why does it matter at this stage?
Q3 production was 8,738 oz which sets an annual run rate of c. 35,000 oz which is the top end of guidance and production has improved each quarter this year and Serabi have packed away a very solid cash pile vs. themarket cap. That is what matters now and moving forward.
As for next year's targets, they will depend on the timing of the ore sorter installation and ramp up which currently is indicated as being "early Q3." But post-license and delivery of ore sorter to site the 60Koz target is very much on and the market will begin pricing it in.
1/2
Hi Taser,
With all due respect, you are demonstrating that you are behind the times with several of those comments so I won't go there on indigenous support, raising funds or indeed the time lag comments because it's a waste of time.
The license that is awaited is the LI which allows for the installation of the plant and the expansion of mine development. That is all that is required to execute the ore sorter install and path to 60koz. That is my initial goal and I feel confident that a handsome return can be achieved based on that alone. But if you would like to expand on your 2nd license out of 3 point then I would gladly listen.
In terms of the embezzlement of funds issue this really shouldn't be raised without including proper context. The embezzlement was carried out by two senior Brazilian-based managers and amounted to c. $299k. Those managers were sacked and a court case is still ongoing in which Serabi is looking for the monies taken to be returned.
At the time I was critical of management's processes to allow this to happen but they have since been tightened up.
I quoted the 2019 figures of 10,000 oz as an example of what Palito has achieved in the past. Yes a percentage came from Sao Chico which is now no longer in production but the processing was 100% Palito. What Sao Chico did do was offer higher grade ore than Palito at the time. But if you read all my comments you will see that I mention the resource expansion at Palito which offers not only a far more expanded mine life but also a 11% improvement in average grades to 7.78 g/t. See below extract from 21st Nov RNS.
"Proven and Probable Reserves totalling 206,400 ounces (824,800 tonnes @ 7.78 g/t Au), a threefold increase on the previously disclosed total of 67,344 ounces as at 31 December 2021.The average grade of 7.78 g/t Au, is an improvement of 11% over the mean grade of the December 2021 estimation."
The point is that Palito has more optionality for expanded mining and milling but also that its average grade now sits above the level achieved in 2019 when Palito was producing 10,000 0z. This does not mean it will but then my post wasn't attempting to say it would. What I was doing was answering an earlier post that stated that Serabi was only a 6,000 oz per quarter without Coringa. The above progress supports an argument that this is not the case be it that Serabi would need to adjust mine development etc if for some reason the Coringa LI does not come through.
Morning Usernamedbut1 (I love writing these names),
I wrote about this elsewhere recently.
Firstly, it's been a tough and negative 18 months in the small-caps markets and it has taken its toll not just on people's energy, and risk appetite but also their mentality towards stocks. I solemnly believe many don't even appreciate how their attitude has been changed by wider sentiment because it's been gradual. This has not been helped by the fact that good news is often sold into whilst perceived bad news is used as an excuse to hammer down share prices well beyond any level of impact said news should have.
Some investors have cottoned onto this and are riding the negative sentiment and indeed feeding into it for their perceived personal gains. That sort of set-up means that investors have become disproportionately nervous about progress milestones. Be it doubt over them being achieved or the level of success that comes when they arrive. It can and has led to significant moves in some stocks that have done nothing more than deliver on what they said they would.
In a calmer more stable market investors would be pricing in much more potential. Serabi is no different. All the evidence points towards the license being received but the market won't price it in because it's not certain and is important enough to create a short-term negative reaction if it doesn't arrive. This means that once it does land it could well deliver a substantial re-rate which I believe has been boosted by the commitment to buying and shipping the ore sorter before the license award. This has saved them several months and created an opportunity to produce a much stronger H2 2024 than previously planned. The market should open its eyes to this and indeed the full resource at Coringa once the license lands.
So long as the license decision remains outstanding Serabi can continue to mine 50,000 tons which improves their cash balance and counter any fall if for some reason the license does not come.
In addition, the Coringa underground mine has been under development for over 2 years now. For c. 20 months of that Serabi has been trucking the highest-grade material over to Palito for processing. That lends itself to there already being a healthy stockpile of lower grade ore at Coringa ready to be ore sorted and boost supply to Palito. Also, with the ore sorter being set to go into production in early Q3 2024 Serabi has a good 6 months to expand development at Coringa and create more optionality there also. With the focus being on hitting the highest grade areas to ensure maximum head grades for Palito. Hence H2 2024 is set to be much stronger and when the license comes the market will begin to price that low risk outcome in.
This is the Serabi CFO last week acting as I know him well. Cautious and always keen to dampen down too much enthusiasm by pointing out Q4 additional costs and challenges.
So it is telling that he talks up the ore sorter and cash to push Coringa on without feeling any need to caveat the license.
https://x.com/brr_mediauk/status/1731618033469132846?s=46&t=6uXiPPBc0pslakpmlxiTnQ
Palito performance is clearly improving. Quarterly production there is up from 5,775 oz in Q1 to +7,000 oz in Q3. This is because the head grade is rising reaching 6.69 g/t in the quarter.
It’s worth noting that Palito achieved over 10,000 oz back in 3rd quarter 2019 at grades of 7.14 g/t.
Having finally achieved a significant uplift in the resource at Palito optionality there has now improved + they have plenty of cash to drive the drill bit there if Coringa proves a stumbling block. It would likely take a few months to create enough material but they also have the ore sorted now which they didn’t have in 2019.
So it’s simply not fair to take their performance at Palito the last two years and assume that is what it will always be without Coringa. Coringa is about choice. About ore supply. It somehow being unavailable doesn’t decide Serabi’s fate. It merely means that the development spend has to be applied elsewhere. Palito now at c. 7.8g/t average resource is a good resource it’s just that it’s not as good as Coringa.
Be careful setting a deadline that doesn't exist.
"Over the next 180 days the Parties will complete all remaining aspects of the consultation process in compliance with Convention No 169 of the International Labour Organisation."
Completion of the consultation process allows for the court's decision on the suspension of future licenses to be rescinded. That then allows the ANM to decide upon the install license. There is no deadline for issuing the license within 180 days.
Read the history behind this that I provided earlier. A clear understanding of it removes nearly all the doubt around its success. I word it this way because nothing is ever a given.
In 2019 Serabi was entitled to believe that it would get its license because no indigenous communities lived within 10km of the project and that is the cut-off for producing an ECI. That ECI assesses the effects on those communities.
FUNAI the Brazilian government's indigenous representatives agreed to call for one because of the project's close proximity to the Curia River and a fear of contamination. With this came a call for the affected indigenous communities to be included in any agreements for the use of what is deemed their land. This is part of Brazil's desire to level things up for tribes who in the past have had their lands removed from them.
The ECI has been completed and seen by all parties. That says it has nothing of concern in it. Otherwise, Serabi wouldn't have purchased an ore sorter that will cost them c. $1m and is due to be delivered to the site early next year.
The agreement with the indigenous communities was the real stumbling block and that was sealed in late July. Now it is about completing the process (hopefully within the allotted time) so the court order can be rescinded and the license issued. Of course, it may already be done and that they are waiting for a court date. Who knows? The point is that the items holding up the license are clearly defined and have been executed by the company. So the chances of not receiving the license should now be very small indeed. However, because there is always a small chance no one can ever say it's 100% there. But it's as good a chance as the company has clearly been indicating for several months now.
Morning all,
I have pulled together a thread on the information available in the link below. It is a timeline of the events and actions that took place around the Coringa license up until 2020. The point at which the request for an ECI and full consultation with the local indigenous communities was agreed upon.
It pinpoints the two actions required to free up the issuing of the license and demonstrates why the actions communicated by Serabi to date satisfy them. Such that the license can be issued once the paperwork is completed.
https://ox.socioambiental.org/obra/mineracao-coringa-chapleau
https://x.com/BigBiteNow/status/1734158653370822787?s=20
I said on my Twitter feed the other day that the enlarged reserves now reported at Palito should allow Serabi to replace and even surpass any shortfall from the tonnage trucked from Coringa. It may even be more profitable now that the average grade is up 11%.
There are logistic issues to consider on-site but Palito is where the existing ore sorter is already. So it makes sense to mine more there. The existing Palito plant can do 60 koz. It needs no modifications to achieve this. What it simply needs is more ore feed and the ore sorter being employed properly. This wasn't possible for the last 2-3 years because Covid and a lack of cash killed off mine development. Cash is no longer a problem and having it opens up new opportunities.
So any nonsense around the Coringa license still being critical to Serabi's future completely misunderstands the progress that has been made inbetween. This is one of those unique situations where the SP is ignoring far too much progress but it's so clear that investors are blind to it because they think it must mean something is wrong. The seller is helping compound this. Let's see where we are by April.
I agree HarChris,
This persistent seller isn't going to be around forever and the more gold rises the harder it will be for the market to ignore the deep discount here.
As things stand there is a strong possibility that gold will break ATHs and push on to at least $2,300/oz in 2024. If Serabi finally obtains its license for Coringa and gets stuck into its ramp-up to 60,000 oz then a treble up in share price from these levels is the least we can expect next year. FOMO in gold stocks could even push it beyond that.
With an updated 6-year mine life resource at 35,000 oz, strong cash on hand and new discoveries being made with Vale the downside remains limited compared to the upside. If gold alone were to deliver something near $2,300/oz in 2024 then a good profit could be made from here. But I am here for that upside opportunity which is being created by Serabi's past failures and the doubt that a persistent seller amplifies in what is a nervous and fearful market.
Hi Mcsquares,
I appreciate your point. I do trade a portion of many of the investments I own but I always have a sizeable core holding that never moves. What I perhaps sometimes fail to do is explain that properly. Trading a portion of any investment as it ebbs and flows doesn't change its long-term prospects so long as progress remains intact. The vast majority of long-term investors do this even if they say they don't.
Additionally, the facts I have laid out below on TGR don't change just because I decide to trade a portion of my holding in what is a very volatile and unpredictable market. Nor does it remove my right to think and believe in the longer picture.
I like talking about my investments and my thought process. Pulling together such pieces for a public audience helps bring clarity and grounding to my decision process and enhances my confidence in buying and holding through all the negative noise. It is central to why I do it. Investors can take from it what they will and challenge my narrative as they see fit. It is there as an argument only based on what I believe are solid supportive developments that are dominant to the less factually but strongly felt negative sentiment.