Investor Update Q2 June 2006

Serabi Mining plc 20 July 2006 SERABI MINING QUARTERLY INVESTOR UPDATE Serabi Mining plc advises that it has today despatched to shareholders its investor newsletter for the Second Quarter of 2006. The Company has highlighted in its newsletter the following matters. The full text version of the quarterly update is available form Serabi's offices or from the Company's website www.serabimining.com • For the second consecutive quarter, Palito Gold Mine has posted record production levels. Q2 output of 9,815 oz gold equivalent was an increase of 24% on the previous period • Production has now risen almost uninterrupted since the start of 2005 • Higher underground mining output at Palito successfully established following the introduction of new equipment and revised mining methods • New initiatives underway to reduce costs and improve operating efficiencies • Important optimisation & expansion alternatives under review for Palito Gold Mine • Regional exploration gathers pace Palito - Operating Results (1) 2006 2006 2005 2006 Q1 Q2 YTD YTD Mined (per day) t 31,555 34,055 21,442 65,610 (351) (374) (118) (362) Milled (per day) t 25,514 29,851 22,228 55,365 (283) (328) (123) (306) Head Grade g/t 9.3 9.7 8.9 9.5 Recovery % 91.9 91.3 86.7 91.6 Gold oz 7,017 8,527 5,504 15,544 Copper t 98.0 107.1 60.6 205.1 Gold Equivalent (2) oz 7,927 9,815 6,009 17,742 PALITO MINE Mining Introduction of trackless mining at the end of first quarter of 2006 continued to impact favourably on results during the second quarter, with a 7% increase in daily tonnage mined. Looked at over the first half of the year the impact is even more striking, up by over 200% compared with last year. Although impressive, we were again frustrated by delays to delivery of some of the new equipment which hampered mining rates at the beginning of the quarter. However, this has now been resolved and total daily mining rates are now routinely exceeding 400 tonnes. From here on, development and production will increasingly move from the Palito Hill shrinkage mining stopes, to the long-hole trackless mining accessed from the Palito decline, completed at the end of the previous quarter. Mining from the decline is initially focused directly beneath known and already mined, high-grade areas on the upper levels. Notwithstanding, the need to sustain future ore mining rates of 400 tonnes will require higher development rates for a while, inevitably placing some pressure on run-of-mine grades in the short-term. However, wherever possible this will be supplemented from high-grade underground sections, which we are now able to better locate following the introduction of underground drilling. Plant In conjunction with increased mining rates, the process plant throughput also increased by some 16% compared with the first quarter. During much of March and April production throughput was affected by an above average number of electricity outages, caused mainly by an unusual number of lightning strikes in the area at the end of a protracted wet season. As a result the electricity company will now introduce equipment that should substantially eliminate such interruptions next season. Although peak daily throughput of up to 400 tonnes has recently been achieved, the need for critical maintenance and long, often unpredictable lead times for essential parts, also impacted on the overall capacity during the quarter. As a result, investigations are now at an advanced stage to introduce a new, larger mill of at least 600 tonnes daily throughput, with the existing smaller mills being transferred to a new upgrade circuit. As well as providing back-up to the main mill, such a configuration would enable sustainable levels of much higher throughput and improve reliability. Such an investment would also provide scope for possible expansion and improvement in the economics through the processing of lower-grade ore that is expected to be mined from time-to-time. Milling & Beneficiation After investigation of a number of separate process issues, consideration is now being given to the introduction of a large new mill and a beneficiation / upgrade circuit at Palito. This change may be required in order to deal with the anticipated increased proportion of lower-grade ore which is often associated the high-grade ore shoots (see Press Release, February 14), combined with the increased mining development and dilution that will arise from the introduction of trackless mining and preparation of long-hole stopes. In addition, beneficiation testwork is now at an advanced stage and shows that the combination of screening and possibly spirals, could significantly enhance the lower-grade ore. If successful this relatively low-cost operation would result in such ore being 'converted' to a lower tonnage with higher grade, for subsequent processing through the primary process circuit. Open Pit Study A feature of the 2005 year-end resource review of the Palito Main Zone was an increase in the number of high-grade mineralised veins identified, from 20 to 54 and a commensurate 50% increase in gold per vertical metre (see March Quarterly Update); the mineralised ore zone remains open in all directions. It is particularly noteworthy that a high density of these veins is located along the south-east section of the ore zone, close to the surface. Such a distribution provides possible scope for open pit mining, thereby achieving a higher production rate, higher resource to reserve conversion, superior cash-flows and a lower risk profile than a stand-alone underground operation in the same area; underground mining of this mineralisation would ultimately be resumed at deeper mining levels beneath the projected pit base. If further scoping studies prove positive, additional close space drilling will be required in order to test the distribution and continuity of the mineralisation for a possible open pit operation. EXPLORATION PROGRAMME We intend soon to report on the results from the company's exploration programme. Following the deployment of two new surface core drill rigs earlier in the year, work is gathering pace, with some 4,500 metres completed to-date at Jardim do Ouro and elsewhere in the Tapajos region on four separate targets. In addition, extensive geochemistry has recently been completed across the Jardim do Ouro district adjacent to the Palito mine and at the nearby Rio Nova South project. GENERAL The first half of 2006 has proved to be very successful, with year-to-date production rising to 17,742 oz gold equivalent from 6,009 oz a year ago, a 74% increase of the Palito resource and regional exploration underway. We expect the second half of the year will see further developments on all these fronts, as well as new opportunities emerging from the studies currently underway. Enquires: Serabi Mining plc Graham Roberts Tel: 020 7220 9550 Chairman Mobile: 07768 902475 Clive Line Tel: 020 7220 9553 Finance Director Mobile: 07710 151 692 E-Mail: contact@serabimining.com Website: www.serabimining.com This information is provided by RNS The company news service from the London Stock Exchange

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