Capital Projects Update

Serabi Mining plc
22 June 2005


             Capital Projects Update: Initiatives Herald a New Era
             -----------------------------------------------------


•       Investments underpin operating benefits and company's growth potential

•       Palito set to benefit from the introduction of grid electricity

•       Significant mining efficiencies from new underground equipment

Following the successful completion of Serabi's public market listing on the
London AIM last month, management has moved quickly to review and implement a
number of its planned critical capital projects worth a total of US$ 1.5
million. These are expected to have a significant impact on production at the
Palito gold mine, in order that it can meet its forecast production rates and
the evaluation of other projects. Notable amongst these are:

•       Palito power line project

•       Underground mining and drilling equipment

•       Surface drilling rigs


Power line project

Currently the Palito mine relies completely on power from on-site diesel
generators. The company has for some time been in discussions with the local
power company CELPA, for the construction of a suitable external power line to
the operation. With the management having now obtained firm cost proposals and
undertaken a feasibility study, the Board of Serabi has now given its approval
to proceed with the project. Estimated to cost approximately US$ 580,000, the
project should take approximately four months to complete and will provide
significant costs savings; at the same time, the introduction of grid power will
also benefit local inhabitants in the area. Power costs on completion are
expected to be about R$0.14/Kwh, in line with the company's original estimates
of the long-term power costs for its operations. This compares with the current
costs using diesel generation of R$0.75/Kwh.

Underground equipment

During the initial start-up of the Palito operation, much of the mining has been
carried out manually, inevitably resulting in slower and less efficient
development of the mine. The mine is now about to take delivery of underground
shovels and other mining equipment that will have a marked impact on development
and mining rates, resulting in much higher production levels by year-end and
significant cost efficiencies. These planned improvements will enable mine
production rates to be brought in to line with a plant capacity upgrade to 300
tpd that is already underway.

Until now mine planning and development has been directed using the results from
surface drilling, combined with geological interpretation obtained from
underground development. The recent order of underground drill rigs at a cost of
US$ 110,000, which are expected to be on-site in about eight weeks, will enable
major improvements to this process through better geological understanding of
the ore body, thereby improving mining and grade control, as well as long-term
mine planning.

Surface drilling rigs

The company's two surface operated diamond drill rigs are currently fully
engaged in round-the-clock drilling of the Palito Main Zone ore body. This
programme has the principle objectives of,

(i)   increasing the size and quality of the current JORC resource to a depth of 
100m and over 900m strike length, with infill drilling and,

(ii)  expanding the strike and depth extension of the resource beyond the 
currently established JORC boundaries.

The drills are operated by Serabi teams, resulting in good quality control with
full drilling costs at least 40% less than available contract terms. Based on
this success and with a large number of advanced projects to assess within the
nearby Jardim do Ouro district, as well as across the Tapajos gold region, two
new drill rigs have been ordered at a total cost of US$ 430,000 and additional
drill teams are being trained. The introduction of this equipment later this
year will enable a significant escalation of the company's exploration and
evaluation programmes.

General

In addition to the above, a wide variety of other capital projects are now
underway in order to achieve: increased production, operating efficiencies,
improved safety, better operating and living conditions and upgraded systems.
The plant upgrade is already well advanced and includes the introduction of
additional mills, improved crushing and additional flotation cells and CIP
tanks. During this transitional period from development to production, Serabi is
also investing in other equipment and systems that will greatly improve the
operating conditions and efficiencies of the company.

The Chairman, Graham Roberts said:

'The availability of additional funds following the company's IPO in May, has
enabled Serabi to introduce a number of important initiatives that will have
substantial benefits for the Palito operation in the future, as well as
enhancing the evaluation of the company's other opportunities in the region;
these mark the beginning of a new era for the company. Our original assessment
of the Palito mine had not anticipated the introduction of the power line to
provide grid electricity. This is a particularly exciting project, not just
because of the cost and production benefits it will bring to Serabi, but also
because the introduction of grid power to the area will bring benefits to the
local community. Furthermore, it has the potential to significantly change
project economics in the future.'

Enquiries and further information, contact

Graham Roberts, Chairman     Tel: [phone]
                             Mobile: [phone]

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

Email                        contact@serabimining



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