Commercial Production

Serabi Mining plc
04 October 2006

SERABI MINING plc ('Serabi' or 'the Company')
ANNOUNCES COMMERCIAL PRODUCTION AT PALITO


Serabi (AIM:SRB), the gold mining and exploration Company focused on the Tapajos
geological region on northern Brazil, announces that its Palito Mine has
achieved operating targets laid down prior to the Company's listing with its
advisors and auditors and, with effect from 1 October 2006, the mine has moved
from a development phase of operations into commercial production.


Having completed an extensive investment programme over the past two years as a
private and now public Company in the underground mine, the process plant,
equipment and mine site infrastructure, the Board considers that the operation
has now reached a point of sustainable and commercially viable production. Up
until now capital and production costs and revenues generated, have been
capitalized as development costs of the mine. As a consequence of this change
from development phase to commercial production, all future revenues and
operating costs at Palito will be recorded through the company's profit and loss
account, following standard industry practices.


Reflecting these operating improvements, in recent months the mine has achieved
cash operating costs, as previously defined by The Gold Institute, of US$300 per
ounce, down from US$480 per ounce at the start of 2006. With continuing
investment plans and productivity improvements to be completed before the end of
the year, the Company is targeting to achieve a cash operating cost between
US$200 and US$225 per ounce at the beginning of 2007.



Commenting on the announcement, Graham Roberts, the Chairman of Serabi said:


 'This represents an important and pivotal moment for the Palito operation and
 Serabi. Whilst in production since the time of the Company's listing, we have
 been operating in very much a development phase until a number of key 
 investments had been completed, in particular: the decline which gives us long
 term access to deeper ore, commissioning of underground mining equipment to
 facilitate the transition to long-hole stoping, and also within the processing
 plant, where we are increasing capacity and reliability.

 We have now implemented what we consider to be the optimal mining and process
 routes at Palito to achieve an annual production level of at least 50,000
 ounces, which we are targeting for 2007. We expect additional financial 
 benefits and a positive impact on unit operating costs as we move towards this 
 level of production during the fourth quarter.

 At this time we are now routinely achieving mine output of more than 400 tonnes
 per day and plant recoveries of 90% and above. The planned introduction of an
 additional mill and an upgrade circuit, will provide further capacity to treat
 even higher volumes from the Palito mine and potentially other satellite
 deposits in the future

 After achieving commercial production at Palito, the mine is now cash flow
 positive and provides a strong operating and financial foundation for the 
 Company's continuing developments in Brazil.'



Enquiries

Serabi Mining plc                             Numis Securities Limited
Graham Roberts     Tel: [phone]         John Harrison   Tel: [phone]
Chairman                                      James Black     Tel: [phone]


Clive Line         Tel: [phone]         Parkgreen Communications
Finance Director   Mobile: [phone]      Simon Robinson  Tel: [phone]


E-mail:            [e-mail]   Ana Ribeiro     Tel: [phone]
Website:           www.serabimining.com           [e-mail]




NOTES TO EDITORS
General Background Notes

Since listing on the AIM market of the London Stock Exchange last year the work
programme initially focussed on expanding the resource base at the Company's
mining operation at Palito, successfully achieving a 74% increase on the global
resource at December 31 2005 to 825,900 ounces gold equivalent (see Press
Release, 14 February 2006). In the meantime, management has been active putting
in place the facilities to undertake an aggressive exploration and evaluation
programme across the Company's extensive regional project portfolio, which
exceeds 100,000 hectares. By the end of the first quarter 2006 the Company had
increased it's surface diamond drilling capacity and improved the associated
geological and laboratory facilities, in anticipation of an expansion of
exploration activities which is now taking place at a number of projects.

As part of the expanding exploration effort, Serabi took delivery of two new
surface diamond core drilling rigs earlier this year. As a result the company
now owns and operates four rigs, which are currently deployed at Palito, Jardim
do Ouro, the Sucuba project and the Pombo project. Additional crews have been
recruited and trained to increase rig utilisation. In addition, extensive
geological and geochemical work is underway at a number of locations. Ground
magnetics and radiometric surveys will also be utilised in the future to improve
drill targets.

The Tapajos is a major, under-explored mineral province that extends over an
area about the size of Belgium. Artisanal miners ('garimpeiros') are thought to
have extracted up to 30 million ounces of gold from mostly alluvial and surface
weathered bedrock deposits since the 1970's. The company is currently
establishing production at its 100% owned underground Palito Gold Mine. Serabi
intends to expand resources organically through its existing project portfolio
across the region.

Serabi's portfolio of exploration properties includes a number of relatively
advanced projects in the Jardim do Ouro ('Garden of Gold') district around the
Palito Gold Mine and other projects elsewhere in the Tapajos region, which are
at an earlier stage of assessment. Serabi has access to an extensive exploration
database from Rio Tinto plc ('Rio Tinto') which covers much of the Tapajos
region. This data continues to be assessed and could form the basis of further
acquisitions.






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