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: [phone]
Chairman                            Mobile: [phone]

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

E-Mail:                             [e-mail]

Website:                            www.serabimining.com


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