Ore Reserve and Mineral Resource Update

 

Serabi Mining plc ("Serabi" or the "Company") announces an update of mineral resources at its 100% owned Palito gold mine in Para state, northern Brazil and, for the first time, reports an ore reserve for the mine. 

 

          Mineral resource of 0.67 million total contained gold equivalent ounces established at the Palito gold mine

          Based on 25 mineralised structures, the resource definition has expanded to encompass three new mineralised areas discovered during the past year

          Ongoing exploration demonstrates possible further significant extension of a number of the mineralised veins, which also remain open

          Contained within the resource estimate, a total proved and probable ore reserve of 187,538 ounces gold equivalent established   

          Mineral resource and ore reserve reported in this release have been reviewed and verified by the mining consultancy group NCL Brasil Ltda

 

 

The total mineral resource at the Palito mining operation, including all categories as at 31st March 2008, has been estimated at 0.67 million ounces of gold equivalent, assuming a 1.0 g/t cut-off.  These resources are based on extensive surface and underground drilling combined with sampling results from underground development.  Within the 0.67 million ounces of mineral resources, 224,300 ounces of gold equivalent occur in the higher confidence Measured and Indicated categories, with the balance in the Inferred resource category.   

 

Details of the resource estimation as at 31st March 2008, are tabled below with mining depletion up to 31st March 2008 taken into account.  

 

Table 1: Serabi Mining plc Mineral Resource Statement (1) (2) (3) (5), as at 31 March 2008

Mineral Resource	tonnage	Gold g/t	Copper %	Contained Gold Ounces	Contained Gold Equivalent Ounces (4)
Measured Resources
Palito Main Zone (PMZ)	97,448	9.51	0.26	29,793	32,045
Palito West (PW)	-	-	-	-	-
Chico da Santa (CS)	-	-	-	-	-
Ruari Ridge (RR)	-	-	-	-	-
Total Measured Resources	97,448	9.51	0.26	29,793	32,045
Indicated Resources
Palito Main Zone (PMZ)	593,175	7.15	0.23	136,417	148,546
Palito West (PW)	46,844	13.16	0.26	19,825	20,902
Chico da Santa (CS)	78,987	5.91	0.23	15,011	16,681
Ruari's Ridge (RR)	34,740	4.85	0.22	5,420	6,100
Total Indicated Resources	753,745	7.29	0.23	176,673	192,228
TOTAL Measured + Indicated	851,193	7.54	0.23	206,466	224,272
Inferred Resources
Palito Main Zone (PMZ)	821,405	6.04	0.18	159,614	172,927
Palito West (PW)	200,256	8.22	0.23	52,934	57,140
Chico da Santa (CS)	434,664	6.01	0.23	84,036	93,100
Ruari's Ridge (RR)	631,417	4.74	0.43	96,232	120,789
Total Inferred Resources	2,087,741	5.85	0.27	392,817	443,956

 

(1) Mineral resources are reported at a cut-off grade of 1.0 g/t

(2) The Mineral Resources as set out in the table above have been estimated by Rodrigo Mello, from NCL, who is a competent person under the JORC Code for mineral deposits such as Palito.  The Mineral Resources are classified as Measured, Indicated and Inferred, in compliance with the JORC Code

(3) Numbers may not add up due to rounding

(4) Equivalent gold is calculated using an average long-term gold price of US$700 per ounce, a long-term copper price of US$2.75 per pound, average metallurgical recovery of 90.3% for gold and 93.9% for copper

(5) It should be noted that the definition of the Inferred mineral resource category typically has lower certainty as to resource existence and economic viability.

 

The mineral resource estimate outlined is based on a total of 25 different veins of a minimum 70cm width, located within the larger mineralised sections of the Palito Main Zone (PMZ), the Palito West zone (PW), Chico da Santa area (CS) and the Ruari's Ridge zone (RR).  Each vein has been interpreted and modelled in 3D using Gemcom modelling software.  Samples contained within, and representative of these modelled ore envelopes have been selected and variography performed.  Following this, the ordinary kriging algorithm was used to interpolate gold and copper block models.  Tonnage and grade have then been estimated from the modelled ore envelopes and the grade block models.

 

The grade block models for the different orebodies were validated by NCL and Serabi staff, who concluded that these models were consistent with the original geological data available.

 

The PMZ resource mostly consists of eight vein structures .  Two of the eight vein structures, the G3 and G2 veins, make up the bulk of the resource. These two veins have to date formed the majority of the 95,000 ounces gold equivalent mine production at Palito since the beginning of 2005.  Significantly there is good evidence that both mineralised features remain open to the south and at depth. It should be noted that since the March 31st disclosure date further drilling of the PMZ as well as the other zones has been completed, though we await further assays.  To date, over 2,350 drill-hole samples and 750 underground channel samples are outstanding.  However, preliminary visual interpretation of the drill core indicates the potential for the PMZ to continue at least a further 300 metres to the south, and is still open at depth.   

 

Palito West consists of six veins which also remain open to the north and south.  As with the PMZ, we await assay confirmation of more recent drilling but visual interpretation of  recent drill core indicates a potential strike extension of at least 200 metres to the north on two of the six veins since this estimation was carried out.

 

The Chico da Santa area to the east of the PMZ consists of five mineralised vein-type orebodies, and all remain open to the north, south and at depth.  Finally the Ruari's Ridge zone comprises of seven mineralised vein structures extending over a strike length of up to 900 metres and with gold and copper grades down to 300 metres depth. 

 

 

 

Within the total mineral resource estimate, NCL Brasil Ltda has estimated an ore reserve of 187,500 ounces gold equivalent, comprising of 732,500 tonnes @ 7.34 g/t gold and 0.22% copper.  It should be noted that these reserves are derived from the Measured and Indicated resource categories within the Total Mineral Resource of 0.67 million ounces tabulated above, and are NOT additional. 

 

In reporting an ore reserve at Palito for the first time, it is important to note the parameters adopted at the base of the table. 

 

 

 Table 2: Serabi Mining plc Ore Reserve Statement (1) (2) (3) (5) as at 31 March 2008

Ore Reserve	tonnage	Gold (g/t Au)	Copper (% Cu)	Contained Gold Ounces	Contained Gold Equivalent Ounces (4)
Proved Reserves
Palito Main Zone (PMZ)	56,464	9.06	0.29	16,456	17,910
Palito West (PW)	-	-	-	-	-
Chico da Santa (CS)	-	-	-	-	-
Ruari's Ridge (RR)	-	-	-	-	-
Total Proved Reserves	56,464	9.06	0.29	16,456	17,910
Probable Reserves
Palito Main Zone (PMZ)	547,535	6.92	0.22	121,904	132,614
Palito West (PW)	54,642	10.85	0.2	19,063	20,063
Chico da Santa (CS)	55,485	6.52	0.23	11,639	12,786
Ruari's Ridge (RR)	18,365	6.39	0.24	3,773	4,166
Total Probable Reserves	676,028	7.19	0.22	156,379	169,628
TOTAL Proved + Probable	732,492	7.34	0.22	172,836	187,538

 

(1) Ore reserves are reported at a cut-off grade of 4.7 g/t.  2007 and 2008 year to date costs have been assumed.  An exchange rate of US$1 = R$1.90 has been considered over the reserve life

(2) Minimum mining widths of 1.2m have been assumed

(3) The Ore Reserves as set out in the table above have been estimated by Carlos Guzmán, from NCL, who is a competent person under the JORC Code.  The Ore Reserves are classified as Proved and Probable, in compliance with the JORC Code

(4) Equivalent gold is calculated using an average long-term gold price of US$700 per ounce, a long-term copper price of US$2.75 per pound, average metallurgical recovery of 90.3% for gold and 93.9% for copper

(5) Numbers may not add up due to rounding

 

Commenting on the resource and reserve update Mike Hodgson, Chief Executive Officer of Serabi Mining plc said:

 

 

 

 

 

The information contained within this press release has been reviewed and verified by Mr Rodrigo Melo for the resource estimate and by Carlos Guzmán for the reserve estimate, both of NCL Brasil Ltd.

 

Both meet the requirements as the Qualified Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006.  Mr Melo is a Bachelor of Geology for the University of Minas Gerais, Brazil (1985).  He is a member of the Australasian Institute of Mining and Metallurgy (membership number 209332) and a registered Geologist with the Regional Council of Engineering.  He has worked as a geologist and project manager in the minerals industry for 22 years.  Mr Guzmán is a Mining Engineer for the Universidad de Chile, Santiago, Chile (1995).  He is a member of the Australasian Institute of Mining and Metallurgy (membership number 220036). He has worked as a mining engineer for 13 years.

 

NCL is a consulting company formed in Santiago, Chile in 1985. Its main objective is to provide focused advice and solutions for mining companies requiring specialised services mainly in the fields of ore resources estimation, mine design and planning (for open pit and underground methods), mine equipment selection, optimisation of mining operations and mining cost estimation. In 2001, NCL formed NCL Brazil Ltda, a company established in Belo Horizonte, Brazil.

 

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