2007 Production, 2008 Outlook and New Exploration Discovery

Serabi Mining plc (AIM : SRB) announces that production for the fourth quarter of 2007 was 7,069 ounces (gold equivalent), making total production for the year of 33,963 ounces (gold equivalent). 

 

The Company also advises that it has recently commenced underground development of newly discovered mineralised structures located immediately east of the Palito Main Zone at its Palito gold mine.  At the same time, based on the success of an on-going drill campaign, it is developing on-lode exploration drives as part of the next stage of evaluation of these new structures.  Ore recovered from these drives may be processed during 2008.

 

 

 

 

Production for the fourth quarter was 7,069 gold equivalent ounces, resulting in total production for the year of 33,963 gold equivalent ounces.  Operating difficulties previously highlighted resulted in reduced head grades during 2007 and, as was anticipated, continued during the fourth quarter.  This problem is now being resolved through the introduction of mini-scoops for use in mining development, which is then expected to result in improved development grades.  Two of these machines are on order and are now scheduled to be released by the manufacturer in mid-February, following a delay in sourcing key components from a subcontractor.  This delay has had an effect on the timing of the introduction of the revised mining method.

 

Management currently forecasts that following the introduction of the revised mining methods, production for 2008 will rise to between 40,000 and 45,000 gold equivalent ounces.  Based on the delineation of known ore availability and current plant capacity, this level of production represents the optimum balance for profitability and achievement of sustainable production levels and cost optimisation.  

 

Meanwhile, a number of other opportunities at Palito are progressing that could impact positively on future production.  As the outcome from these projects is not yet available their potential has not been factored into the current production outlook. Serabi will release further details of fourth quarter production and the prospects for 2008 and beyond in its quarterly review which will be released on 25th January 2008.

 

 

 

Recent drill results have confirmed the presence of three new high-grade, narrow vein structures lying between 50 metres and 100 metres east of the PMZ.  These veins are located between the PMZ and the Chico da Santa area (the easternmost vein system identified at the Palito mine) and are currently the subject of a detailed evaluation programme.

 

 

The three interpreted vein structures moving eastwards from the PMZ named Cedro, Jatoba, and Munguba all contain significant high-grade drill results which can be accessed from existing mine levels.  Based on current results and interpretation, the most significant vein of the three is Jatoba, with a confirmed strike length of 300 metres and indications that this feature may extend a further 400 metres to the north.  By comparison, the main G3 vein of the PMZ currently being mined has a strike length of one kilometre.  The Jatoba vein also remains open along strike to the south and down dip. The other two veins, as currently defined by drilling, have strike lengths of between 150 metres and 200 metres and also remain open along strike and down dip.

 

 

Mining access to these structures commenced on the 1,178 level by way of a 44 metre cross-cut from the existing PMZ-G3 mining area and will intersect the Jatoba structure before the end of January. Similar development is also planned on the 1,192, 1,163 and 1,144 levels. 

 

 

Drilling from both surface and underground, combined with underground mapping, indicates that there is an increased density of mineralised structures at the 'contact zone' (also referred to as the central fault) between the Palito and Rio Novo granites which cross the central mining area.  The density of known mineralisation in the vicinity of the contact zone has already indicated typical vein spacing of some 30 metres.  The latest results suggest this trend may extend across the full extent of the contact zone, although individual vein strike lengths and depths will vary.  The contact zone has been traced over 700 metes to date.

 

 

Understanding of this control as an important influence on the deposition of mineralisation and vein density enables improved identification and prioritization of targets adjacent to existing mine infrastructure.  This in turn expedites the development of access and provides greater mining flexibility, with the objective of optimising production and grade of the existing operations.

 

 

Commenting on the announcement, Mike Hodgson, the Chief Executive of Serabi said:

 

"Production in 2007 has been disappointing, however, I am confident that following the implementation of a number of initiatives the outlook for 2008 will show significant improvement in performance as we focus on developing sustainable, profitable production and long term growth.  In 2008 we will have the benefit of working at least seven separate ore-bodies, a significant improvement on the three that were available during last year.  The ability to open up new areas for mining such as represented by these latest discoveries further provides us with greater production flexibility and should result in additional opportunities to optimise mining rates and grades. 

 

This exploration success also strengthens our belief that as we move away from the Palito Main Zone we will continue to discover additional, parallel mineralised vein structures that can form the basis for future production plans.  Whilst these are likely to vary in size, we expect that several of these structures will be of sufficient quantity and quality to be economically viable.  For the long term outlook, the substantial escalation in exploration activity that Serabi is currently undertaking at Palito is expected to position the Company well in order to realize fully the long term production potential of the region".

 

Recent results that have returned over 1g/m from these zones include:

 

 

 

Hole	East	North	Elevation	Dip/Az	From	To	Drill	Au	Cu	Zone
	(m)	(m)	(mRL)	(local)	(m)	(m)	Interval	(g/t)	(%)
PUD0246	10107.9	20332.63	1179.2	-15/57.3	53.56	54.06	0.50	3.09	0.11	Jatoba
					55.27	57.38	2.11	11.41	1.55	Jatoba
					91.00	91.62	0.62	2.20	1.10	Munguba
PUD0248	10107.1	20332.14	1178.8	-43.4/54.8	37.86	39.25	1.39	18.06	0.25	Cedro
					45.31	48.20	2.89	2.35	0.06	Cedro
					93.83	94.42	0.59	99.70	0.14	Jatoba
PUD0251	10107.5	20331.4	1179.4	-17.3/100.6	49.08	49.58	0.50	3.95	0.09	Jatoba
PUD0253	10107.3	20331.47	1178.8	-48.5/98.4	43.33	44.20	0.87	3.33	0.15	Cedro
					58.52	59.52	1.00	1.45	0.19	Cedro
					80.70	81.70	1.00	9.00	0.35	Jatoba
PUD0254	10107.3	20330.76	1179.3	-17.1/139.5	44.86	45.51	0.65	1.87	0.08	Cedro
					69.50	70.05	0.55	1.19	0.03	Jatoba
PUD0256	10107.3	20330.95	1178.8	-34.9/136.3	50.90	51.94	1.04	1.12	0.04	Cedro
					54.23	54.73	0.50	14.30	0.13	Cedro
					79.64	80.43	0.79	0.64	0.66	Jatoba
PDD0335*	10215.3	20180.05	1264.9	-41.1/273	103.73	104.7	0.97	5.92	0.60	Jatoba
					120.42	120.94	0.52	1.16	0.05	Cedro
PDD0341*	10275.6	20140.17	1253.2	-47.8/271	188.62	189.96	1.34	3.63	0.61	Jatoba
Including					189.42	189.96	0.54	6.7	0.68
PDD0351	10301.1	20199.13	1256.2	-57.4/272	247.49	248.33	0.84	2.01	0.13	Cedro
PDD0359	10250.8	20200.00	1267.5	-44.6/272	143.49	144.44	0.95	8.7	6.50	Jatoba
					157.87	158.74	0.87	2.62	0.16	Cedro
PDD0366	10229.4	20241.07	1274.3	-50.8/272	72.25	72.94	0.69	4.22	0.03	Munguba
					127.86	129.42	1.56	9.6	0.05	Jatoba
PDD0372	10296.9	20280.45	1269.7	-50.5/273	165.8	166.3	0.5	4.14	0.14	Munguba
					227.74	228.58	0.84	1.34	0.18	Jatoba
RCCS021	10184.7	20219.82	1263.8	-60/270	38.00	39.00	1.00	2.32	0.01	Munguba
		`			79.00	81.00	2.00	10.27	0.33	Jatoba
Intercepts calculated using a 0.5g/m Au lower cut, containing maximum internal waste of 1.2 downhole metres
All samples reported are from half core NQ or BW sized drill core and analysed by SGS Lakefield Geosol Laboratories of Brazil
(*) Previously reported

 

 

 

 

Graham Roberts       020 7936 9040                            

Chairman                   Mobile: 07768 902475

 

Mike Hodgson           020 7936 9040

CEO                          Mobile: 07799 473621

 

Clive Line                 020 7936 9040                            

Finance Director         Mobile: 07710 151692                 

 

Investor Relations

E-mail:                       contact@serabimining.com         

Website:                    www.serabimining.com

John Harrison         Tel: 020 7260 1000

James Black           Tel: 020 7260 1000                        

 

 

The Tapajos region of northern Brazil encompasses an area of approximately 100,000 km², primarily situated in south-west Para State.  It has a significant history of alluvial gold production with estimated gold production of some 30 million ounces having being recovered, primarily from artisanal workings.

 

Present in the Tapajos since 1999, Serabi has established the only 'hard rock' mine in the region to date at its Palito gold mine, which produced 39,197 ounces of gold equivalent in 2006 and achieved commercial production at Palito in October 2006

 

Serabi has a significant exploration programme focused on the Tapajos region, owns and operates four surface drilling rigs and has its own assay laboratory.