Resource Update

14 Feb 2006 08:00

Serabi Mining plc14 February 2006 SERABI MINING PLC REPORTS 74% INCREASE IN GLOBAL RESOURCES TO 825,900 OUNCESGOLD EQUIVALENT • Total contained gold equivalent ounces at Palito increased by 74% to 825,900 ounces • Improved quality as Indicated Resources comprise 90% of total resources, up from 12% a year ago • Strike length and depth of mineralisation continue to increase and remain open in all directions • Improved mine economics as gold equivalent ounces per vertical metre increase by 50% • Low discovery cost of approximately US$4 per ounce Serabi Mining plc ("Serabi" or the "Company") reports the results of itsresource estimate review as at 31 December, 2005 for the Palito Main Zone.Resource modeling and grade estimation was recently completed to JORC (2004)guidelines by independent resource consultants Hellman & Schofield Pty Ltd. The Palito Main Zone resource has been estimated from 200 diamond drill holescompleted prior to the end of December 2005 (a total of 26,886 metres), as wellas from extensive channel sample data obtained from the underground workings.Full details of the drill results included in the resource estimation werereported in the Company's press releases dated 9 September, 2005 and 1 February,2006 and can be viewed at the Company's website www.serabimining.com. The resource estimate now extends to a maximum depth of 0 mRL, an increase ofapproximately 100 metres in depth compared to a year ago. In addition, thestrike length has increased from 900 metres to 1,050 metres. Due to thehigh-grade nature of the mineralisation, a top cut of 200 g/t gold and 10%copper was applied to the estimate. The resources at 0.0 g/t, 2.0 g/t and 5.0 g/t cut-off grades are reported belowand represent a 74%, 64% and 48% increase in contained gold equivalent ouncesover the December 2004 estimate, respectively: Table 1: Palito Main Zone Resources(1,2) (December 2005) Cut-off Category Tonnes Gold Grade Copper Grade Contained Au Contained Cu Contained AuEqGrade (g/t) (g/t) (%) (ozs) (tonnes) (ozs) 0.0 Indicated 3,857,000 5.27 0.25 653,100 9,560 739,200 Inferred 779,000 3.20 0.08 81,000 620 86,700 Total 4,636,000 4.93 0.22 734,100 10,180 825,900 2.0 Indicated 2,081,000 9.08 0.39 607,300 8,200 681,200 Inferred 187,000 12.00 0.16 72,300 290 74,900 Total 2,268,000 9.32 0.37 679,600 8,490 756,100 5.0 Indicated 1,089,000 14.41 0.59 504,700 6,400 562,400 Inferred 108,000 18.50 0.16 64,300 170 65,900 Total 1,197,000 14.79 0.55 569,000 6,570 628,300 (1) Gold equivalent ounces are based on US$550 per ounce gold and US$2.25 perpound copper; figures have been rounded (2) Resource has been depleted for mining activity from commencement, comprising81,053 tonnes for 21,843 ounces of gold and 693,600 pounds of copper With the significant amount of step-out drilling that took place along thePalito Main Zone during 2005, Serabi has continued to discover new, parallelorebodies. As a result, there are now a total of 54 individual veins which havebeen included in the resource, compared to 20 individual veins a year earlier.Taking into account relevant exploration expenditures, the revised globalresource estimate implies a discovery cost for 2005 of approximately US$4 perounce, which Serabi believes to be very competitive within the industry.Furthermore, as a result of the amount of infill drilling which was completed in2005, there has been a substantial improvement in the quality of the resources,with Indicated Resources now comprising 90% of the resource ounces (up from 12%a year ago). Importantly, the amount of gold equivalent ounces per vertical metre hasincreased substantially. Within the main section of the resource, between 150mRL and 240 mRL elevation, the number of gold equivalent ounces has increased50% over the December 2004 resource estimate to an average of 5,500 goldequivalent ounces per vertical metre over the strike length of the Palito MainZone. The potential economic impact of this increase is significant as more goldwill now be accessible from each level of mine development at the Palitooperation. While at a zero cut-off grade the overall grade of the resource has declined,this is a result of a combination of the inclusion of newly identified, butlower-grade mineralised zones and changes in core sampling procedures. Ratherthan sampling only the main, central area of mineralisation, the Company nowassays the entire mineralised and associated alteration zones, which ofteninclude lower-grade sections around the central higher-grade areas. This hasresulted in higher tonnage with a coincident reduction in grade. At the time of the Company's IPO in May 2005, initial production and mineplanning at Palito was based on a 5.0 g/t gold cut-off grade. This cut-off gradewas based on the projected cost profile for the relatively labour intensiveshrinkage stoping mining method. Following the introduction of mechanisedmining, longhole stoping and other cost and efficiency measures currentlyunderway, this cut-off grade should decline thus enabling a greater proportionof lower-grade material to be incorporated into the long-term mine plan. Commenting on the updated resource estimate, Graham Roberts, Chairman of Serabisaid, "This resource estimate illustrates the potential for the Palito Gold Mine togrow into a long-life, low cost gold producer in the Tapajos Region of Brazil.While we have now significantly extended the resource along strike and at depth,mineralisation continues to remain open in all directions. Furthermore,although the increase in the resource is impressive, the improvement in thequality of the resource is equally as important to the future economics of thePalito operation. Serabi will continue to test the extent of the deposit duringthe course of 2006 with the objective of further increasing total resourceounces. We also note that this resource estimate is based on the Palito Main Zone only,and does not take into consideration adjacent areas such as Palito West, Chicodo Santo and the newly discovered Bill's Pipe where drilling has alsoencountered high-grade gold-copper intersections. During the course of 2006, thecompany will work towards bringing these and other satellite orebodies withinthe Jardim do Ouro District into the resource base." Enquiries: Serabi Mining plc Graham Roberts Tel: 020 7220 9550Chairman Mobile: 07768 902 475 Clive Line Tel: 020 7220 9553Finance Director Mobile: 07710 151 692 Chris Sattler Tel: 020 7220 9552Investor Relation Mobile: 07717 748 275 E-mail: contact@serabimining.comWebsite: www.serabimining.com This information is provided by RNS The company news service from the London Stock Exchange