Interim Results for the six months ended 30 Jun...

PRESS RELEASE - 22nd September 2009

SERABI MINING plc ("Serabi" or "the Company")

Announcement of Interim Financial Results for the 6 months to 30 June
2009


Highlights

*           Production for the first six months of the year was 3,775
  ounces

*           Operating profit of US$539,000

*           Results impacted by strong gold price and relative
  weakness of the Brazilian Real

*           Drill programme underway to identify additional oxide ore
  sources

The continuing  modest  success of  the  oxide mining  operations  at
Palito has made a  valuable contribution to  the Company's cash  flow
this year, potentially  allowing us the  opportunity to benefit  from
the improved  markets and  investor  sentiment, compared  with  those
prevailing in the earlier part of this year.  The oxide ores had  not
previously formed a significant part  of our production strategy  for
Palito because of processing issues when being treated together  with
the sulphide ore.   For this reason  we had never  focused before  on
establishing significant  oxide resources;  what resources  had  been
identified were  an incidental  consequence of  exploration  targeted
towards the underlying sulphide mineral deposits.

Production for the first six months of the year was 3,775 ounces with
an average head  grade of 3.42  g/t gold.  Whilst  this represents  a
high grade for an  open pit operation, the  nature of the ore  bodies
means that ore volumes are limited and thus by necessity each pit  is
fairly  small.   From  this  production  we  have  recorded  a  small
operating profit for the six months  ended 30 June 2009 of  $539,000,
although  after   taking   account  of   administration   costs   and
depreciation charges  the Group  recorded an  overall loss  of  $2.02
million (before impairment charges), compared with $3.33 million  for
the corresponding period of 2008.

We have benefited during the period from a strong gold price and  the
relative weakness  of the  Brazilian Real.   The gold  price for  the
first six months averaged US$915 per  ounce and traded in a range  of
US$813 to US$990, whilst the  average exchange rate of the  Brazilian
Real to the  US Dollar was  2.208.  However, the  Brazilian Real  has
been strengthening throughout  this year as  inward flows of  foreign
money have  helped rebuild  the country's  currency reserves.   These
inward flows are a mixture of direct infrastructure and manufacturing
investments driven by  a renewed confidence  in the long-term  global
economic recovery, the expectation that the stronger emerging  market
economies will again drive demand, institutional investment into  the
recovering stock  market,   equity  issues by  the largest  Brazilian
corporations  and  finally  the  restoration  of  the  "carry  trade"
attracted by the high prevailing interest rates available in Brazil.
At the end  of June  2009 the  exchange rate  stood at  1.95 and  has
appreciated further over the last  two months, at times appearing  to
test but not break  the 1.80 barrier.  The  gold price has  meanwhile
showed signs  of further  strengthening  and has  traded in  a  range
between US$908 and US$1004 per ounce.  These conditions clearly  have
an effect  on the  on-going  profitability of  the operation  and  we
continue to  seek ways  of reducing  the cost  base to  mitigate  any
potential adverse effects of currency fluctuations.

Administration charges for  the period include  a one-off charge  for
employment  terminations  of   personnel  in   Brazil  amounting   of
$189,000.  Combined with cost reduction initiatives that are  already
in hand, we would expect to  see a reduction in administration  costs
for the  remainder  of the  year.   Additionally the  Directors  have
agreed to defer a proportion of salary payments in order to  conserve
cash.  Administration costs  include an amount  of $126,000 that  has
been  accrued  but  not  paid  in  respect  of  remuneration  of  the
Directors.  The half year depreciation expense on plant and equipment
includes some  one-off  charges  totaling  $215,000;  we  would  also
therefore expect charges for the remainder of the year to be  reduced
accordingly.  No amortisation expense has been made in respect of the
carrying cost of the Palito underground mine itself on the basis that
during the period there has  been no exploitation of the  underground
reserves  and  resources  which  underpin  this  asset  value.   When
production is recommenced from underground operations the Group  will
again amortise this cost over the remaining anticipated useful life.

An effect  of the  appreciation of  the Brazilian  Real has  been  to
increase the carrying value of all assets that are owned by our  100%
owned Brazilian  subsidiary  company, Serabi  Mineracao  Ltda,  which
maintains its accounting records  in Real.  This  has resulted in  an
increase in the  carrying value  of Property Plant  and Equipment  of
US$5.4 million compared with the value as at 31 December 2008.   This
increase in carrying value has impacted on the impairment review that
the Directors are  required to  undertake.  The uplift  in value  has
resulted in the  carrying value of  the Palito mine  and its  related
infrastructure, being greater than the estimated net present value of
the projected cash flows that could be derived.  Further  information
regarding the  impairment review  is  set out  in  the notes  to  the
Interim financial statements, but it has necessitated that the  Group
record an impairment provision of  US$2.4 million for the six  months
ended 30 June  2009, in  order to reduce  the carrying  value to  the
Director's estimate of the  value in use of  Palito which at 30  June
2009 was estimated as $34.4 million.

As was noted at the time of this year's Annual General Meeting on  18
August and in  our June  2009 Investor Update,  heavy seasonal  rains
earlier this  year  precluded  us  from  undertaking  any  systematic
exploration of the oxide potential  and, for this reason,  production
has so  far  only been  derived  from  the limited  number  of  known
occurrences previously outlined.  However,  a drill programme is  now
underway that we hope will  lead to the identification of  additional
oxide ore  feed and  thus  establish a  longer  term source  of  gold
production.  Test work is  also underway to  assess the viability  of
reprocessing  Palito's  tailings   as  a  further   source  of   gold
production.

We consider there are now two paths  that can be pursued in order  to
generate returns  for shareholders.   Either a  transaction could  be
undertaken that would  result in  value being  generated through  the
disposal of the projects in Brazil  or we attract new funding  either
directly or through the  introduction of a  joint venture partner  in
order to advance identified projects and thus enhance the  underlying
value of those  assets.  As  noted in our  investor newsletters,  the
production level that we  are likely to be  able to sustain from  the
oxide gold sources and the resulting cash flow this will generate, is
unlikely to  be adequate  to allow  the Company  to grow  and so  new
capital is needed for this purpose.

Since the AGM on,  when we detailed the  strategic options that  were
being pursued, we have continued to progress all avenues but at  this
stage are  not  in a  position  to  provide any  further  updates  to
shareholders.  The month of August is traditionally a quiet month for
any corporate activity and this year the holiday effect would  appear
to have  been exaggerated  by the  general malaise  of the  markets.
However, we would hope that before the next Quarterly Investor Update
(due for release at the end of October) we might be in a position  to
provide some positive  news on  the corporate front,  in addition  to
some initial results from the oxide exploration drilling that is  now
underway.

Our operational focus for the rest of the year will be to continue to
optimise the current oxide mining operations, adding additional oxide
resources and in  so doing extending  the life of  this activity  and
giving  the  Group  the  opportunity  to  asses  the  potential   for
sustainable increases  in production.   Meanwhile, if  successful  in
identifying a joint  venture partner or  raising capital as  outlined
above, the resulting funds would be directed towards further detailed
evaluation of the 18  priority targets that  have been identified  in
close proximity  to  Palito, with  the  objective of  establishing  a
larger reserve  and  resource base  that  could support  an  expanded
underground mining operation in the future.

The first six months of 2009  have been difficult but as the  results
demonstrate, one that has been  better than might have been  expected
at the start of the year.  The remaining six months of the year  will
continue to be  challenging but we  have entered the  period with  an
improved level of optimism and a wider range of options than  existed
in  January.   There  remains  considerable   work  to  be  done   in
re-building value  for shareholders  and the  Group is  reliant on  a
small group  of individuals  who have  demonstrated their  continuing
belief in  the long-term  potential of  the Group's  assets and  have
already shown  a  substantial  commitment  to  the  Company.   Whilst
Serabi's future and growth is dependent on a number of factors, their
continuing involvement will  be a significant  factor in the  Group's
on-going development and  we hope  that their  dedication and  belief
will ultimately  be  realised,  concurrent  with  the  generation  of
significant improvements in shareholder value.

Palito - operating results(1)

                                           2009   2009   2009   2008
                                    UNIT     Q1     Q2    YTD    YTD
Milled - total                    tonnes 17,580 19,151 36,731 66,506
          - daily average                   197    210    203    365
Head-grade(2)             grammes/ tonne   3.78   3.09   3.42   4.82
Recovery                               %   92.3   94.7   93.6   89.0
Gold(3)                           ounces  1,973  1,802  3,775 10,738

(1) Provisional.
(2) Ore feed to the process plant.
(3) For 2008 includes copper and silver credits.



Graham Roberts                  Mike Hodgson
Chairman                              Chief Executive
21 September 2009



Enquiries


Serabi Mining plc
Graham Roberts                  Tel: [phone]
Chairman                        Mobile: [phone]

Clive Line                      Tel: [phone]
Finance Director                Mobile: [phone]

Email: [e-mail]
Website:  www.serabimining.com

Beaumont Cornish Limited
Nominated Adviser and Broker
Roland Cornish                  Tel: [phone]
Michael Cornish                 Tel: [phone]





STATEMENT OF COMPREHENSIVE INCOME
                                                Group
                                     For the     For the      For the
                                  six months  six months         year
                                       ended       ended        ended
                                     30 June     30 June  31 December
                                        2009        2008         2008
(expressed in US$)         Notes (unaudited) (unaudited)    (audited)
CONTINUING OPERATIONS
Revenue                            3,601,349   9,887,239   16,523,577
Operating expenses               (3,061,975) (9,499,132) (16,964,067)
Gross profit/(loss)                  539,375     388,107    (440,490)
Administration expenses          (1,178,935) (1,635,070)  (3,740,134)
Share-based payments                (40,161)    (89,926)    (123,498)
Write-off of past                          -   (502,591)  (1,174,269)
exploration costs
Loss on sale of fixed              (209,661)           -            -
assets
Depreciation of plant and        (1,126,106)   (983,785)  (2,132,633)
equipment
Depreciation of mine asset                 -   (502,069)    (997,473)
Provision for impairment       8 (2,422,737)           -            -
Operating loss                   (4,438,226) (3,325,334)  (8,596,693)
Foreign exchange gain                 93,755   1,732,583  (1,629,138)
Finance costs                      (158,936)   (385,365)  (1,219,107)
Investment income                      1,481     366,874      471,283
Loss before taxation             (4,501,926) (1,611,242) (10,973,655)
Income tax expense                         -           -            -
Loss for the period from         (4,501,926) (1,611,242) (10,973,655)
continuing operations (1)
(2)

Other comprehensive income
(net of tax)
Exchange differences on            6,119,656   2,033,961 (11,303,603)
translating foreign
operations
Total comprehensive                1,617,730     422,719 (22,277,258)
income/(loss) for the
period (2)

Loss per ordinary share              (3.21c)     (1.29c)      (7.83c)
(basic and diluted) (1)

(1) All revenue and expenses arise from continuing operations.
(2) The Group has no minority interests and all income/(losses) are
attributable to the equity holders of the Parent
Company.


CONSOLIDATED BALANCE SHEET
                                                Group
                                       As at       As at        As at
                                     30 June     30 June  31 December
                                        2009        2008         2008
(expressed in US$)        Notes  (unaudited) (unaudited)    (audited)
Non-current assets
Goodwill                                   -   1,752,516    1,752,516
Development and deferred      3    6,225,795   6,461,865    5,351,921
exploration costs
Property, plant and           4   34,445,949  43,348,962   31,620,364
equipment
Total non-current assets          40.671,744  51,563,343   38,724,801
Current assets
Inventories                   5    1,005,956   3,844,888      931,413
Trade and other                      264,388   1,169,402      992,698
receivables
Prepayments and accrued            1,089,099   3,229,146    1,401,627
income
Cash at bank and in hand      6    1,370,442   9,681,080    1,538,956
Total current assets               3,729,885  17,924,516    4,864,694
Current liabilities
Trade and other payables           3,254,544   5,427,102    3,197,543
Accruals                             205,627      18,789      136,762
Interest bearing                     150,200   1,493,372    1,046,936
liabilities
Total current liabilities          3,610,371   6,939,263    4,381,241
Net current assets                   119,514  10,985,253      483,453
Total assets less current         40,791,258  62,548,596   39,208,254
liabilities
Non-current liabilities
Trade and other payables              84,037       4,733       25,467
Provisions                           784,788     845,427      735,905
Interest bearing                           -     771,859      182,340
liabilities
Total non-current                    868,825   1,622,019      943,712
liabilities
Net assets                        39,922,433  60,926,577   38,264,542

Equity
Called up share capital       7   25,285,679  25,285,679   25,285,679
Share premium reserve             33,402,649  33,402,649   33,402,649
Option reserve                     3,101,256   3,023,153    3,061,095
Translation reserve              (1,684,082)   5,533,826  (7,803,738)
Profit and loss account         (20,183,069) (6,318,730) (15,681,143)
Equity shareholders'              39,922,433  60,926,577   38,264,542
funds

The interim financial information has not been audited and does not
constitute statutory accounts within the meaning of Section 435 of
the Companies Act 2006. The Group statutory accounts for the year
ended 31 December 2008, prepared under IFRS as adopted in the EU,
have been filed with the Registrar of Companies. The auditors' report
on these accounts was unqualified but did contain an Emphasis of
Matter with respect the ability of the Company and the Group to
continue as a going concern.  The auditors' report did not contain a
statement under Section 498 (2) or 498 (3) of the Companies Act 2006


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(expressed in      Share      Share     Share  Translation   Profit and
US$)                                   option
(unaudited)      capital    premium   reserve      Reserve loss account Total equity
Equity        25,285,679 33,402,649 2,923,543    3,499,865  (4,707,488)   60,404,248
shareholders'
funds at 31
December 2007
Foreign                -          -         -    2,033,961            -    2,033,961
currency
adjustments
Loss for the           -          -         -            -  (1,611,242)  (1,611,242)
period
Total                  -          -         -    2,033,961  (1,611,242)      422,719
comprehensive
income  for
the period
Share option           -          -    99,610            -            -       99,610
expense
Equity        25,285,679 33,402,649 3,023,153    5,533,826  (6,318,730)   60,926,577
shareholders'
funds at 30
June 2008
Foreign                -          -         - (13,337,564)            - (13,337,564)
currency
adjustments
Loss for the           -          -         -            -  (9,362,413)  (9,326,413)
period
Total                  -          -         - (13,337,564)  (9,362,413) (22,699,977)
comprehensive
income for
the period
Share option           -          -    37,942            -            -       37,942
expense
Equity        25,285,679 33,402,649 3,061,095  (7,803,738) (15,681,143)   38,264,542
shareholders'
funds at 31
December 2008
Foreign                -          -         -    6,119,656            -    6,119,656
currency
adjustments
Loss for the           -          -         -            -  (4,501,926)  (4,501,926)
period
Total                  -          -         -    6,119,656  (4,501,926)    1,617,730
comprehensive
income for
the period
Share option           -          -    40,161            -            -       40,161
expense
Equity        25,285,679 33,402,649 3,101,256  (1,684,082) (20,183,069)   39,922,433
shareholders'
funds at 30
June 2009




CONSOLIDATED STATEMENT OF CASH FLOWS
                                                Group
                                     For the     For the      For the
                                  six months  six months         Year
                                       ended       ended        Ended
                                     30 June     30 June  31 December
                                        2009        2008         2008
(expressed in US$)               (unaudited) (unaudited)    (audited)
Operating activities
Operating loss                   (4,438,226) (3,325,334)  (8,596,693)
Depreciation - plant, equipment    1,126,106   1,485,854    3,130,106
and mining properties
Impairment provision               2,422,737           -            -
Loss on sale of plant and            209,661           -            -
equipment
Option costs                          40,161      89,926      123,498
Write-off of past exploration              -     502,591    1,174,269
costs
Interest paid                      (158,936)   (385,365)  (1,219,107)
Foreign exchange                    (90,224)     366,215  (1,496,018)
Changes in working capital
   Decrease/(increase) in            104,715   (151,299)    2,024,099
   inventories
   Decrease/(increase) in          1,290,312    (32,621)    1,049,230
   receivables, prepayments and
   accrued income
   (Decrease)/increase in          (394,453)     597,677        3,019
   payables, accruals and
   provisions
Net cash inflow/(outflow) from       111,853   (852,366)  (3,807,597)
operating activities

Investing activities
Proceeds of sale of fixed assets     903,017           -       23,393
Purchase of property, plant and     (59,780) (3,669,452)  (5,608,449)
equipment
Exploration and development        (139,037) (3,875,826)  (5,248,892)
expenditure
Interest received                      1,481     366,874      471,283
Net cash inflow/(outflow) from       705,681 (7,178,404) (10,362,665)
investing activities

Financing activities
Capital element of finance lease (1,057,638)   (725,808)  (1,402,482)
payments
Net cash outflow from financing  (1,057,638)   (725,808)  (1,402,482)
activities

Net decrease in cash and cash      (240,104) (8,756,578) (15,572,744)
equivalents
Cash and cash equivalents at       1,538,956  18,529,795   18,529,795
beginning of period
Exchange difference on cash           71,590    (92,137)  (1,418,095)
Cash and cash equivalents at end   1,370,442   9,681,080    1,538,956
of period




Notes to the Interim Financial Statements

1. Basis of preparation
These interim accounts are for the six month period ended 30 June
2009. Comparative information has been provided for the unaudited six
month period ended 30 June 2008 and the audited twelve month period
from 1 January to 31 December 2008.

The accounts for the period have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting"
and with the policies which the Group will adopt for its annual
accounts notably:

*           The financial statements are presented in US Dollars.
  They are prepared on the historical cost basis or the fair value
  basis where the fair valuing of relevant assets and liabilities has
  been applied.
*           The financial statements have been prepared in accordance
  with International Financial Reporting Standards in force at the
  reporting date and their interpretations issued by the
  International Accounting Standards Board and adopted for use within
  the European Union (IFRS), and those parts of the Companies Act
  1985 applicable to companies reporting under IFRS.
*           The adoption of new accounting standards that are in
  effect for the calendar year ending 31 December 2009 notably , IAS1
  (revised) "Presentation of financial statements". IFRS8 "Operating
  Segments" and IAS23 "Borrowing costs"

(i)  Going Concern
In respect of the financial statements of the Company and the Group
for the year ended 31 December 2008 and which were approved by the
Board on 25 June 2009, the Directors, following a review of the
Company's financial position and its budgets and plans, concluded
that sufficient financial resources would be available to meet the
Company's current and foreseeable working capital requirements, this
being a period of not less than twelve months from the date of
approval of those financial statements. On this basis, they
considered it appropriate to prepare those financial statements on
the going concern basis.   The Directors consider that it remains
appropriate to prepare the financial statements for the period ended
30 June 2009 on the same going concern basis.  However, they would
anticipate that the Company will, prior to the end of a twelve month
period ending in September 2010, need to receive additional funds to
supplement its current cash holdings.   The level of such fund
raising, if any, will also be dependent of the on-going results of
the current gold mining operations in Brazil and the potential for
these to generate any cash surpluses that can be remitted to the
Company to meet its on-going working capital requirements.   The
Company has received expressions of interest regarding the
exploration and mining assets of the Group and in the event that the
Company undertakes a sale of whole or part of the interests of its
operating subsidiary this may result in an injection of liquid or
tradeable assets which may significantly enhance the liquidity of the
Company.  Otherwise additional funding is likely to be achieved
through the issue of new equity.
The Group as a whole has limited cash resources and, whilst its gold
mining operations in Brazil have been cash generative during 2009,
any disruption or significant decline in the current levels of
operation could have a significant effect on the Group's liquidity.
The viability of the Group's operations in Brazil is dependent upon
the ability to continue to manage the accrued liabilities of the
subsidiary entity, to identify additional sources of ore to maintain
production and any operational difficulties not adversely affecting
short-term cash flow or requiring an injection of capital that is
beyond the limited capability of the Company to provide. The
Directors are currently seeking and have held discussions regarding
terms relating to new sources of finance that would provide the Group
with a stronger financial base but there can be no guarantee that
such funding will be forthcoming.
The use of any funds raised will be dependent on the levels of
funding that are available and the Directors will determine the
strategy of the Group accordingly. In the meantime the Group will
continue to seek to conduct its operations in a manner that will
allow it to continue to at least cover the cost base of its operating
subsidiary, will dispose of assets if such action is necessary and
continue to exercise tight control over its available working
capital. In the event that it is necessary to dispose of assets to
support the activities of the Group it is possible that such
disposals may be undertaken at values below current carrying values.
Ultimately if it is not possible to raise additional funds from any
source and the Company cannot afford to provide funds to its
operating subsidiary, it may become necessary to place the Group's
Brazilian subsidiary into administration, in order that the Company
can continue as a going concern.

(ii)  Impairment
The Directors have undertaken a review of the carrying value of the
mining and exploration assets of the Group and considered the
implications of the operational difficulties experienced and the
current operational status of Palito. Following this review they have
assessed the value of the existing assets on the basis of value in
use involving a future recommencement of underground mining
operations which is dependent on the ability of the Group to raise
future finance and to operate the mine in line with the mine plan
that forms the basis of the value in use calculation. The carrying
values of assets have not been adjusted to reflect a failure to raise
sufficient funds, only maintaining the current levels of operation or
that if a sale transaction were undertaken the proceeds may not
realise the value as stated in the accounts.

(iii)  Inventories
Inventories  - are valued at the lower of cost and net realisable
value.

(iv)          Property, plant and equipment
Property, plant and equipment is depreciated over its useful life.

(v)  Mining property
The Group commenced commercial production at the Palito mine
effective 1 October 2006. Prior to this date all revenues and
operating costs were capitalised as part of the development costs of
the mine. Effective from 1 October 2006 the accumulated development
costs of the mine were re-classified as Mining Property costs and
such cost is being amortised over the anticipated life of the mine on
a unit of production basis.

(vi) Revenue
Revenues are recognised only at the time of sale. Any unsold
production and in particular concentrate is held as inventory and
valued at production cost until sold.

2. Taxation
Taxation represents a provision for corporate taxes due on taxable
profits arising in Brazil. No deferred tax asset arising from carried
forward losses incurred outside of Brazil has been recognised in the
financial statements because of uncertainty as to the time period
over which this asset may be recovered.

3. Exploration and development costs

                                            30 June  31 December
                                               2009         2008
                                        (unaudited)    (audited)
Cost
Opening balance                           5,351,921   13,254,658
Exploration and development expenditure     139,037    5,248,892
Write-off of past exploration costs               -  (1,174,269)
Exchange                                    923,185  (1,617,946)
Transfer to tangible assets               (188,348) (10,359,414)
Balance at end of period                  6,225,795    5,351,921


4. Property, plant and equipment

                                    30 June  31 December
                                       2009         2008
                                (unaudited)    (audited)
Cost
Balance at beginning of period   38,295,092   31.325,246
Additions                            59,780    7,063,637
Transfer from intangible assets     188,348   10,359,414
Exchange                          6,749,819 (10,341,944)
Disposals                       (1,524,285)      111,261
Balance at end of period         43,768,754   38,295,092

Depreciation
Balance at beginning of period    6,674,728    5,494,240
Charge for period                 1,157,265    3,130,106
Provision for impairment            670,221            -
Exchange                          1,339,822  (1,869,192)
Eliminated on sale of asset       (519,231)     (80,426)
Balance at end of period          9,322,805    6,674,728
Net book value at 30 June 2009   34,445,949   31,620,364



5. Inventories

                                 30 June     30 June 31 December
                                    2009        2008        2008
                             (unaudited) (unaudited)   (audited)
Bullion and work in progress           -   1,464,835     100,821
Consumables                    1,005,956   2,380,053     830,592
Inventories                    1,005,956   3,844,888     931,413


6. Cash and cash equivalents

                              30 June     30 June 31 December
                                 2009        2008        2008
                          (unaudited) (unaudited)   (audited)
Cash at bank and in hand    1,370,442   9,681,080   1,538,956
Bank overdraft                      -           -           -
Cash and cash equivalents   1,370,442   9,681,080   1,538,956


7. Share capital

                          30 June     30 June 31 December 31 December
                             2009        2009        2008        2008
                      (unaudited) (unaudited)   (audited)   (audited)
Called up capital          Number           $      Number           $
Balance at beginning  140,139,065  25,285,679 140,139,065  25,285,679
of period
Issue of shares for             -           -           -           -
cash
Exercise of options             -           -           -           -
Balance at end of     140,139,065  25,285,679 140,139,065  25,285,679
period


8. Impairment
Consistent with the review process performed as at 31 December 2008,
the Directors have undertaken an impairment review of the Group's
exploration, development and production assets.  The Directors note
that as a result of changing exchange rates between 31 December 2008
and 30 June 2009 the value of these assets in the accounts of the
Group has increased. The majority of the assets are held by and
recorded in the accounts of the Serabi Mineracao Limitada, the
Group's 100% owned Brazilian subsidiary,  the financial statements of
which are denominated in Brazilian Real.  Following this review and
making estimates of the value in use, the Directors have concluded
that as a result of the variation in exchange rates the carrying
value of the Palito mine property and its associated infrastructure
has increased to a level in excess of the valuation supported by the
value in use calculation.  As a result and in accordance with the
provisions of IAS 36 - Impairment of Assets, the Directors have
agreed to make an impairment charge of US$2,422,737 against the
carrying value of the assets of the Group relating to the Palito
mine.  No impairment charge has been made in respect of any of the
remainder of the Group's exploration and development projects.

In deriving an estimate of the value in use in respect of the Palito
mine the Directors' have calculated a Net Present Value of the
projected cash flow to be derived from the exploitation of the known
reserves of 187,538 gold equivalent ounces as estimated at the end of
March 2008.  The key assumptions underlying the Net Present Value are
unchanged from those detailed in the Annual Report 2008 save that
commencement of operations has been set as 1 July 2011 (six months
later than previously), the exchange rate BrR$ to US$ has been set at
1.9516 (previously 2.356) and the long term gold price set at US$800
(previously $750).  The value in use taking into account these
parameters of Palito has been estimated at US$34.4 million
(previously US$34.8 million)


Qualified Persons Statement
All technical information contained within this Interim Report has
been reviewed by and verified by Michael Hodgson as required by the
AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006.
 Michael Hodgson is an Economic Geologist by training with 20 years
experience in the mining industry.  He holds a BSc (Hons) Geology,
University of London, a MSc Mining Geology, University of Leicester
and is a Fellow of the Institute of Materials, Minerals and Mining
and a Chartered Engineer of the Engineering Council of the UK.

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