Palito update - IBAMA suspension notice

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

                    Palito update - IBAMA suspension notice

The  Board of Serabi Mining plc,  the AIM-traded gold exploration and production
company,  announces  that  following  a  visit  from  a  representative of IBAMA
(Instituto  Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis), the
Federal  Environmental Agency, Serabi Mineracao  Ltda ("SM Ltda"), the Company's
wholly-owned  subsidiary and operator of the Palito  Mine has been held by IBAMA
to be in non-compliance with two of the terms of its Operating Licence.  The two
alleged breaches are that as part of the conditions of the Operating Licence, SM
Ltda had not submitted within the required time-frame, a Cadastro Ambiente Rural
(CAR) and a monitoring programme of flora and fauna.

Accordingly,  IBAMA has issued a suspension notice on Serabi's mining activities
at  Palito. As  a result  of the  suspension notice,  SM Ltda  has suspended the
limited   open  pit  mining  activities  of  the  surface  oxides.   The  Palito
underground  mine  remains  on  care  and  maintenance.  All employees have been
retained  and planning for the Company's exploration programme is unaffected for
the time being.

IBAMA  has  also  assessed  a  fine  of Brazilian Reais 3,597.300 (approximately
US$2million)  against Serabi  Mineracao Ltda  ("SM Ltda"),  the Company's wholly
owned  subsidiary.    There  has  been  no  criticism  of  Serabi's  operational
practices  and  the  Company  has  been  advised  that the penalties imposed are
disproportionate to the alleged breaches and the past environmental record of SM
Ltda.

The  Company will  this week  lodge an  appeal with  the higher  bodies of IBAMA
against  both  judgments  and  is  confident  that the suspension notice will be
lifted  soon  and  if  any  fine  is  ultimately  considered due it will be at a
significantly  lower level, reflecting  the circumstances and  the nature of the
alleged  breach of the Operating Licence.   SM Ltda has already made appropriate
representation  to the State  office of IBAMA  in Belem, to  senior officials of
SEMA and to the Secretary of Mines. The Directors are confident that this appeal
will be successful.

SM  Ltda has  in accordance  with Brazilian  regulations been  dealing with SEMA
(Secretaria  de Estado de Meio Ambiente)  the Environmental Agency for the State
of  Pará who have responsibility for the  issue of the Operating Licences (which
govern  environmental  responsibilities)  and  setting the conditions associated
with  these.  SEMA had  not previously notified  SM Ltda of  any breaches of its
licence  and  verbally  agreed  to  extend  the  deadlines for submission of the
required documentation in relation to the CAR and the flora and fauna monitoring
programme of flora.  IBAMA as the Federal Agency devolves responsibility to SEMA
but maintains over-riding control of environmental matters.

Mike Hodgson, Chief Executive of Serabi, commented: "The Directors of Serabi and
our  Brazilian legal  advisers are  confident that  this matter will be resolved
quickly  and  satisfactorily  and  initially,  we  are  focusing  on  having the
suspension  notice  lifted  at  the  earliest  possible opportunity.  A decision
regarding  any fine is however likely to take longer to bring to a conclusion  I
would  stress that the order has been  issued in regard to administrative issues
and not as a result of Serabi's  operating practices and further that we have in
accordance  with  Brazilian  regulation  been  dealing  with  SEMA who have been
satisfied  with  our  environmental  practice  and  the  timescales that we have
established with them for compliance with the terms of our Operating Licence."


Enquiries:

Serabi Mining plc

Clive Line                                                 Tel: [phone]

Finance Director                                           Mobile: [phone]



Email: [e-mail]
<mailto:[e-mail]>

Website:  www.serabimining.com
<

http://www.serabimining.com/>



Beaumont Cornish Limited
Nominated Adviser and Broker

Roland Cornish                                             Tel: [phone]

Michael Cornish                                            Tel: [phone]



Farm Street Communications
Public Relations

Simon Robinson                                             Mobile: [phone]
[e-mail]                         Tel: [phone]
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