London South East | The UK's favourite investor portal.

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

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.

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.

3/3

In addition, the license approval at Coringa is for a full mine. One that Serabi has no plans to build yet. Nor ever needs to. There are no tailings and limited infrastructure on site because all ore is planned to be trucked to Palito. So limited environmental hazard and limited water usage. But the project also sits outside of the maximum distance deemed required for an indigenous study anyway. Hence it always had the full support of the licensing authorities who actually stood with Serabi in court defending against any judgment calling for the study that has now been carried out and supported by the very communities that the court feels it needs to protect. This is why the key moment in all of this Coringa saga is not the license itself but the cancellation of the court judgment. A judgement that simply said that a community engagement had to take place. Not a change to the mining method or mine plan but an engagement.

I recognise that this is Brazil. Curve balls can still come. But the "encouragement" that Serabi has been receiving must also include the public prosecutor who brought this action and the federal court and they both approved the teibal communities agreement.

From 31st July 2023 RNS,

"The agreement has been presented and received approval of the Public Prosecutor’s Office and the Federal Court.

When considered with a level head there really isn't much standing in the way of this license being issued and Serabi "hope to see further progress on the licencing front before the end of the year and be in a position to start the civil works and acquisition of the crushing plant early in 2024."

But of course, nothing is nailed on 10% until it is achieved.

My point is though that Serabi with an extended mine life and new optionality at Palito doesn't need Coringa to deliver profits that can dwarf its current share price. That reserve upgrade removed their biggest production headache of the last 3 years. But their history and current market off-risk mentality has led to it being either ignored or misunderstood. That move secures further cash generation and further options in what is a very large land package.

Nor do they even need Vale to be successful either. Just deliver the signs that a couple of high-grade gold deposits are out there and it's game on. But if they are then that's another potential big-ticket item that can land at any time.

Serabi has clearly come through the worst of it and set itself up as a strong recovery play which allows me to show more understanding towards current management because I recognise that it hasn't been an easy ride for a great many junior BODs these last 3 years or so and if nothing else Serabi has emerged unscathed and in a low-risk position to finally deliver what I thought I was buying back in 2018.

2/3

Furthermore, yesterday's reserves and so mine life extension update return optionality to Palito.

At 67,000 oz as of 31st Dec 2021 and nearly two years of usage since that simply didn't exist. At 206,000 oz it does and suddenly Serabi has options to not only expand production at Palito itself (40koz per annum would still mean 5 years of mine life) but also drive more ore sorter use there. Since its construction in 2020, the ore sorter at Palito has had limited useful use. A lack of wider development drilling will do that.

Serabi only trucks ore from Coringa because it is financially beneficial and was necessary to remain cash flow positive. The trial license limits them to 50,000 tons per annum. Hence why we have seen so few ozs actually delivered. But this update now demonstrates that Palito can expand (if necessary) on its own. Hence why the RNS said,

"Mineral Reserves at Palito are equivalent to over six years of operations at current production levels."

But those current production levels include Coringa's 6,000-8,000 oz contribution. At Palito actual c. 27,000 oz it would be 7.6 times. That's a supportive clue for what I am demonstrating here because what it means is that Serabi doesn't need Coringa in order to deliver what or indeed more than it is right now. Plus, the average grades are up by 11% too. meaning more higher grade areas have been added and can be focused on the front end. But also compounding the argument that Serabi no longer needs Coringa in order to carry on delivering $1m in free cash flow per month.

The market in its ignorance has taken the reserves update for what it is. be it that it has ignored the value these reserves add. Why?

Because it is only focused on Coringa due to a lazy fixation that a Serabi without Coringa represents more risk when that is no longer the case.

That makes Coringa a free shot for (committed) investors at this share price level and arguably even higher.

But having studied Serabi for so long I also know how the CFO operates and he is not one to part with cash too easily. So the commitment to pay $1m for an ore sorter that could not be employed if the license does not materialise was noteworthy.

Then I place that against the indigenous communities' agreement. The Company's words around how key such an agreement is in Brazil. "The encouragement we are receiving from all stakeholders in support of the project."

Finished off by the public recognition received in Brazil for their community relations "securing 73% of more than 5,000 votes that were cast and beating the private Brazilian mining group Bemisa who secured 20.5% of the votes."

In terms of countering that previous bad press and easing concerns over the true nature and success of their negotiations with the tribal communities, such recognition really couldn't have landed at a better time.

1/3

My two pennies worth if I may.

Having been invested in Serabi on and off for the last 5 years I have witnessed much disappointment and my doubt remains that Mike Hodgson is the right man to lead this company.

But I do recognise the challenges they have had to face since the outbreak of COVID and I acknowledge how well they have steered the company through that period with limited dilution. I also recognise where they find themselves now and it is a very good place.

During the last 3 years, Serabi has had to deal with legal challenges to Coringa and some fairly hefty mud-slinging both in Brazil and the UK press. Poor grades at Sao Chico and a lack of optionality at Palito. Driven by the significant effects of being a camp-based mine operating under stringent Brazilian COVID regulations. This meant more costs and fewer options for mining.

Next came inflation and so pressures on their AISC costs which due to their underground mining methodology and camp-based setup have always been on the high side anyway. But it is the combination of the loss of optionality and delay to Coringa that really hurt them the most.

To overcome this Serabi found a solution whereby they could truck high-grade material from Coringa to Palito (thanks to Brazilian fuel price fixing and a slowing mining industry. meaning more truck availability) to top up the reduced production (due in part to the loss of Sao Chico but mainly the lack of optionality at Palito) enough to ensure that they could remain profitable.

Since then gold prices have acted favourably boosting their cash generation such that the CEO is above ground once more, back on the front foot because the business is generating $1m of free cash flow per month.

What that has done is heavily reduce fears around working capital such that they have committed to spend c. $1m on a new ore sorter for Coringa even before the license has been received. Which by the way is a big tell.

Serabi's cash generation is so healthy that they could if they wish cancel their $5m (unused) banking facility. Becoming effectively debt-free and so ready for a new debt deal that can complete the initial Coringa build-out ($10m) and accelerate wider exploration. It is that wider land package that initially attracted me to Serabi and Vale is currently busy paying for the initial exploration that will open up the best option for Serabi to start spending its money on in 2024.

2/2

Having now reached the inflexion point where non-dilutive debt can be obtained to add further growth (36,000tpa and beyond) that result stands out. There are not many junior miners who can add that sort of capacity (and iron out on-site problems. Think weather) + add such late-stage projects for such limited dilution. Especially in a deteriorating capital market environment like the one we have seen these last 12-18 months.

That sort of drive and commitment to protect and nourish my shareholding (even if it's ultimately for themselves) has me willing to keep an open mind on the relationships required to achieve it. After all the cost of the plant provided by Poddars-backed Indian suppliers is a fraction of what Chinese companies would want to be paid. Delivered in a fraction of the time because these projects (that they hold shares in) are most important and not simply sitting in a line.

Having been in junior mining investment for over 13 years I have seen many examples of Chinese support and what they get in the end is almost always far more than the Poddars-backed companies are taking here. That same tech has been confirmed as being suitable for Montepuez which means CAPEX and time savings on an even grander scale. With that comes the risk of things being done the Poddar way but I take great heart in the fact that these projects have been explored (JORC resource) and planned far better than Madagascar.

But again I can also be forgiving here because I recognise just how small and clearly hard-working the leadership team of TGR has been these last few years. hence why admin costs are so tight for what is a large capacity miner. Moving forward I would be pushing for a larger executive team which should now come as cash flows grow. Having a small team has led to mistakes. It has cost time and output but I get why it was done. So I remain forgiving so long as we now see the production and plans for 2024/25 begin to flow through.

I could add more but I will stop there.

This bear market has twisted the minds of many investors without them even realising it. The majority have turned to criticism and forgotten just how tough it is for management teams. Some know it but it suits their agenda.

These businesses aren't run on paper. They exist in the real world and it's really tough out there right now. They've dealt with COVID, then war, then inflation and now a market downturn. Many must be absolutely shattered. It is important to recognise that and also the changes that such conditions bring upon ourselves.

In such an environment cheap MC companies with proven solid records in deal-making, cost control and funding are high up on my list. Throw in low-cost capacity expansions and major late-stage project ownership in critical minerals + India and it's all the better. That doesn't mean a free pass. But such advantages easily trump the negatives as things stand.

1/2

A common theme of 2023 has been the highlighting of everything that is bad about a company and its management whilst treating everything that is good as purely the status quo. Barely worthy of mention or employment as a countermeasure.

I am aware of the mutually beneficial relationships the Poddars hold with their Indian entities and suppliers but also recognise the benefits which in my view heavily outweigh my concerns.

Despite the regulatory support for graphite and pending battery-led demand a period of difficulty lies immediately before most miners and industry players. But it is important to appreciate that recessions never strike everyone at the same time. They affect different industries and markets at different times. India is one of the most buoyant markets out there right now and could even become the next China. Hence German manufacturing companies are focusing heavily on it. GDP growth there is forecast to be +6% in both 2023 and 2024.

So right now at this particular time, it is highly beneficial to TGR and their shareholders to have such strong Indian market connections and sales. These next 6-12 months or so are about maintaining profitability whilst growing output, lowering costs and delivering the path to Montepuez. That in turn delivers the necessary non-dilutive debt to continue the growth path in Madagascar. Those accomplishments will (in time) reward shareholders handsomely and the connection to the Indian market may just turn out to be the key ingredient.

https://www.reuters.com/world/india/imf-raises-indias-fy24-gdp-growth-forecast-63-report-2023-10-10/#:~:text=%22Growth%20in%20India%20is%20projected,June%2C%22%20the%20IMF%20said.

Another point I would add is that TGR directors should be maximising shareholders' returns through maximum pricing. So yes such relationships at an appropriate time should be challenged and answers received.

But I am also not niave. Firstly, Madagascar is relatively low-grade. gas only just delivered +97% purity batches. is building new relationships for the expanded production. That all leads to a discount on prices. Does it cover all the gap on what is perceived to be market prices vs. achieved? No. But it shouldn't be ignored either.

Montepuez at +8% TGC is when things start to get really interesting and it is on the horizon.

Secondly, I would be more inclined to challenge the supplier relationships if as a shareholder I wasn't being looked after dilution-wise. I wrote a thread on Twitter demonstrating that TGR has added just 51% more shares since listing. In return, investors have received a 900% uplift in production capacity and the acquisition of two fully studied and permitted high-grade projects. One of which has had c. $30m spent on it to date.

Latest Share Chat

Member Info for BigBiteNow

Followers

Following

Posts (Last 30 Days)

Posts (All Time)

Last Post

Member Since

Share Chat Post Distribution (Last 30 Days)

Activity Log (Last 30 Days)