Unaudited financial results for the 9 months en...
SERABI MINING plc ("Serabi" or "the Company")
Release of Unaudited Financial Results for the 9 months to 30 September 2010
The Board of Serabi announces the unaudited financial results for the Company
for the nine months to 30 September 2010. Â As announced on 2 December 2010, the
Company is taking the steps required to apply to list the Ordinary Shares on a
Canadian stock exchange in early 2011. Â As part of this process the Company will
be required to include in its prospectus the financial results of the nine month
period ended on 30 September 2010 and on an on-going basis, and if its listing
application is successful, will be required to report its financial results on a
quarterly basis as part of its on-going reporting obligations under Canadian
requirements.
The Company is focussed on its exploration strategy at the Palito Mine and the
surrounding Jardim do Ouro district and commenced in December 2010, a 7,500
metre discovery drilling programme on nine targets located in close proximity to
the Palito Mine. It has also approved a helicopter borne electro-magnetic survey
covering an 8,000 hectare area to the south and north east of the Palito Mine to
identify other potentially mineralised areas within the wider region that it
hopes will create additional targets for further evaluation.
Discussion of Results
An operating loss for the nine-month period ended September 30, 2010 of US$3.84
million (2009: US$7.41million) is reported, including non-cash elements of
US$1.7 million (2009: US$6.27 million), being primarily depreciation charges.
The cash expended on operations of the Company during this nine month period, as
shown in the cash flow statements, was approximately US$2.9 million (2009:
US$285,000).
The suspension of mining operations at the Palito Mine, following the issuance
of a suspension notice by IBAMA in June 2010, contributed to a gross loss for
the nine month period of US$733,581 compared to a gross profit of US$224,875 for
the nine-month period ended September 30, 2009. Â While the suspension notice was
lifted on September 23, 2010, it is not foreseen that there will be any
immediate resumption of mining activities which was in any event limited to the
processing of oxide ore mined from small scale surface mining activities.
 Personnel and equipment resources have been transferred to exploration
activities and, in the future, oxide ore processing will only be undertaken on a
campaign basis, with the plant being run when adequate stocks of ore are
available. Â It has become increasingly difficult to identify further adequate
surface resources at this time to justify a continuous oxide mining operation at
the Palito Mine.
For the 3 month period to September 30, 2010 the operating loss was US$1.58
million (2009: US$2.98 million). Â The level of the loss for the quarter reflects
the fact that there was negligible revenue US$22,909 (2009: US$1.19 million)
following the suspension of all mining activities.
The higher than normal level of administrative expenses for the quarter of
US$561,015 (2009: US$192,978) reflects the recording of settlements of past
labour claims in Brazil that have been made in 2010. Overall however the
administration costs for the 9 month period of US$1.40 million are comparable
with the costs for same period in 2009 of US$1.37 million.
During the quarter the Company sold surplus equipment but realised a book loss
on the sale of US$111,106 (2009: profit of US$33,422).
Over the nine month period ended September 30, 2010, a total US$1.4 million
(2009: US$379,000) was capitalised as exploration costs with the major activity
being the undertaking of a ground-based induced polarisation survey during the
first six months of the year. This work has been supplemented by geochemical
sampling over some of the anomalies that are the subject of the 7,500 meter
drilling programme that commenced in December 2010 and preparatory work in
anticipation of this drill programme.
The Brazilian Real, has remained relatively stable during the period and having
started the 2010 at a rate of BrR$1.7412 to the US$ it closed at BrR$1.6942, an
appreciation of 2.7%. As the majority of the assets and liabilities of the group
excluding cash are historically denominated in Brazilian Real, movements in the
exchange rate do impact on the value of the group and any appreciation of the
Real has a beneficial impact on the net assets of the Company.
Financial Condition
On September 30, 2010, the Company's total assets amounted to US$51,251,902,
which compares to US$49,238,168 recorded at December 31, 2009 and US$46,227,376
at September 30, 2009. Total assets are mostly comprised of property plant and
equipment which as at September 30, 2010 totalled US$34,280,250 (US$35,327,788
at December 31, 2009), and deferred exploration and development costs which as
at September 30, 2010 totalled US$8,558,842 (US$6,880,038 at December
31, 2009), of which US$ 7,079,782 relates to capitalised exploration
expenditures at, or in close proximity to, Palito.
The Company's total assets also included cash holdings of US$5,247,991
(US$4,081,882 at December 31, 2009).
The Company's total liabilities at September 30, 2010 of US$5,586,202 (December
31, 2009 US$6,033,451) included accounts payable to suppliers and other accrued
liabilities of US$3,935,912 (December 31, 2009 US$4,361,854). Â The total
liabilities include the fair value of US$245,477 including accrued interest
(December 31, 2009 $216,898) attributable to the UK£300,000 loan from a related
party, Greenwood Investments Limited which has a repayment date of 31 October
2014 subject to the right of Greenwood at any time, on one or more occasions, on
or before the repayment date, to convert any of the outstanding amounts owed by
the company to Ordinary Shares at a price of 15 pence per Ordinary Share. Â It
also includes the amount of US$1,383,056 (December 31, 2009 US$1,374,200) in
respect of provisions including US$1,055,00 (December 31, 2009 US$1,055,000) for
the cost of remediation of the current Palito Mine site.
Liquidity and Capital Resources
During the calendar year ended December 31, 2009, the Company was primarily
reliant upon its existing cash holdings to finance its activities during the
year and realised additional cash resources through the sale of certain plant
and equipment.
Revenue from gold production for the year ended December 31, 2009 was US$5.5
million but resulted in an overall gross loss for the year of US$242,198.
 Overall the Company's operating activities absorbed US$1.5 million, and the
Company settled obligations under finances leases totalling US$1.18 million and
realised proceeds of US$1.22 million through the sale of certain plant and
equipment.
In the last quarter of 2009, the Company raised net proceeds of US$4.1 million
through the issue of new Ordinary Shares and a further US$477,780 through a
£300,000 convertible loan stock facility which was drawn down on December
14, 2009.
The Company has been generating limited revenue from mining operations and in
order to fund its exploration work during the period ended on September
30, 2010, the Company was dependent upon utilising its existing cash resources
and raising financing through the issuance of shares. In June 2010 the Company
raised £3,600,000 though a private placement of 120 million Ordinary Shares at a
price of £0.03 per share to Eldorado Gold Corporation.  On December 2, 2010, the
Company announced the placement of Special Warrants raising gross proceeds of
$5,538,500 and following the passing of a resolution by Shareholders for a
consolidation of the Ordinary Shares on the basis of one New Ordinary Share for
every ten Existing Ordinary Shares, the net proceeds of the issue of Special
Warrants were released to the Company on 23 December 2010.
While the Company has been able to fund its past activities from a combination
of revenue generated from gold sales and the issue of new equity, the future
funding requirements are expected to be generated from the issue of further
equity, although the board of directors intends to evaluate alternative
opportunities for funding the on-going exploration activities of the Company
including entering into joint venture arrangements and the use of development
grants and loans.
SERABI MINING PLC
Report and consolidated financial statements for the 9 month period ended 30
September 2010, and the six month period ended 30 June 2010
Consolidated Statements of Comprehensive Income
------------------------------------------------------------
  For the For the For the For the For the
  Nine months Three year nine months Three
months months
  ended ended ended ended ended
  30 30 31 December 30 30
September September September September
  2010 2010 2009 2009 2009
(expressed in Notes (unaudited) (unaudited) (audited) (unaudited) (unaudited)
US$)
--------------------------------------------------------------------------------
CONTINUING
OPERATIONS
Revenue  1,171,908 22,909 5,512,804 4,792,920 1,191,571
Operating  (1,905,489) (411,103) (5,755,002) (4,568,045) (1,506,070)
expenses
--------------------------------------------------------------------------------
Gross  (733,581) (388,194) (242,198) 224,875 (314,499)
profit/(loss)
Administration  (1,403,406) (561,015) (1,851,937) (1,371,913) (192,978)
expenses
Option costs  (75,307) (25,103) (147,038) (60,174) (20,013)
Write-off of  - - (495,138) (476,967) (476,967)
past
exploration
costs
Increase in  - - (346,000) (346,000) (346,000)
rehabilitation
provision
Loss on asset  (115,800) (111,106) (181,237) (176,219) 33,442
disposals
Impairment 11 - - (4,343,048) (3,582,333) (1,159,596)
Depreciation  (1,514,897) (497,439) (2,157,026) (1,625,894) (499,788)
of plant and
equipment
--------------------------------------------------------------------------------
Operating loss  (3,842,991) (1,582,857) (9,763,622) (7,414,625) (2,976,399)
Foreign  (31,481) 241,092 (14,533) 166,815 73,060
exchange
(loss)/gain
Finance costs  (121,595) (61,016) (215,916) (191,822) (32,886)
Investment  21,794 16,691 3,569 1,748 267
income
--------------------------------------------------------------------------------
Loss before  (3,974,273) (1,386,090) (9,990,502) (7,437,884) (2,935,958)
taxation
Income tax  - - - - -
expense
--------------------------------------------------------------------------------
Loss for the  (3,974,273) (1,386,090) (9,990,502) (7,437,884) (2,935,958)
period from
continuing
operations (1)
(2)
--------------------------------------------------------------------------------
Other
comprehensive
income (net of
tax)
Exchange  955,544 2,193,512 10,072,895 9,374,318 3,254,662
differences on
translating
foreign
operations
--------------------------------------------------------------------------------
Total  (3,018,729) 807,422 82,393 1,936,434 318,704
comprehensive
(loss)/income
for the period
(2)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Loss per 4 (1.06c) (0.31c) (6.16c) (5.31c) (2.10c)
ordinary share
(basic and
diluted) (1)
--------------------------------------------------------------------------------
 (1) All revenue and expenses arise from continuing operations.
(2) The Group has no non-controlling interests and all income / (losses) are
attributable to the equity holders of the Parent Company.
SERABI MINING PLC
Consolidated Balance Sheets
---------------------------------------
  As at As at As at
  30 September 31 December 30 September
  2010 2009 2009
(expressed in US$) Notes (unaudited) (audited) (unaudited)
--------------------------------------------------------------------------------
Non-current assets
Development and deferred 5 8,558,842 6,880,038 6,478,501
exploration costs
Property, plant and equipment 6 34,280,250 35,327,788 35,922,960
--------------------------------------------------------------------------------
Total non-current assets  42,839,092 42,207,826 42,401,461
--------------------------------------------------------------------------------
Current assets
Inventories 7 1,352,402 1,259,764 1,094,059
Trade and other receivables  251,122 275,538 328,187
Prepayments and accrued income  1,561,295 1,413,158 1,487,400
Cash at bank and cash equivalents 8 5,247,991 4,081,882 916,269
--------------------------------------------------------------------------------
Total current assets  8,412,810 7,030,342 3,825,915
--------------------------------------------------------------------------------
Current liabilities
Trade and other payables  3,387,529 4,170,712 4,073,090
Accruals  182,091 122,269 311,775
Interest bearing liabilities  - 80,499 122,957
--------------------------------------------------------------------------------
Total current liabilities  3,569,620 4,373,480 4,507,822
--------------------------------------------------------------------------------
Net current assets  4,843,190 2,656,862 (681,907)
--------------------------------------------------------------------------------
Total assets less current  47,682,282 44,864,688 41,719,554
liabilities
--------------------------------------------------------------------------------
Non-current liabilities
Trade and other payables  388,049 68,873 90,827
Provisions  1,383,057 1,374,200 1,367,577
Interest bearing liabilities  245,477 216,898 -
--------------------------------------------------------------------------------
Total non-current liabilities  2,016,583 1,659,971 1,458,404
--------------------------------------------------------------------------------
Net assets  45,665,699 43,204,717 40,261,150
--------------------------------------------------------------------------------
Equity
Share capital 10 27,752,834 26,848,814 25,285,679
Share premium  40,754,032 36,268,991 33,402,649
Option reserve  1,614,094 1,523,444 3,121,269
Other reserves  260,882 260,882 -
Translation reserve  3,224,701 2,269,157 1,570,580
Accumulated loss  (27,940,844) (23,966,571) (23,119,027)
--------------------------------------------------------------------------------
Equity shareholders' funds  45,665,699 43,204,717 40,261,150
--------------------------------------------------------------------------------
The interim financial information has not been audited and does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. Whilst
the financial information included in this announcement has been compiled in
accordance with International Financial Reporting Standards ("IFRS") this
announcement itself does not contain sufficient financial information to comply
with IFRS. Â The Group statutory accounts for the year ended 31 December 2009,
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. Â The auditors' report did not contain a
statement under Section 498 (2) or 498 (3) of the Companies Act 2006.
SERABI MINING PLC
Consolidated Statements of Changes in Shareholders' Equity
---------------------------------------------------------------------------------------------
(expressed in Share Share Share Other Translation Accumulated
US$) option
(unaudited) capital premium reserve reserves reserve loss Total
equity
---------------------------------------------------------------------------------------------
Equity
shareholders' -
funds at 31 25,285,679 33,402,649 3,061,095 (7,803,738) (15,681,143) 38,264,542
December 2008
---------------------------------------------------------------------------------------------
Foreign
currency - - -
adjustments - 9,374,318 - 9,374,318
Loss for the - - - - - (7,437,884) (7,437,884)
period
---------------------------------------------------------------------------------------------
Total
comprehensive
income  for - - - - 9,374,318 1,936,434
the period (7,437,884)
Share option - - 60,174 - - - 60,174
expense
---------------------------------------------------------------------------------------------
Equity
shareholders'
funds at 30 25,285,679 33,402,649 3,121,269 - 1,570,580 (23,119,027) 40,261,150
September
2009
---------------------------------------------------------------------------------------------
Foreign
currency - - - - 698,577 - 698,577
adjustments
Loss for the - - - - - (2,552,618) (2,552,618)
period
---------------------------------------------------------------------------------------------
Total
comprehensive - - 698,577 (2,552,618) (1,854,041)
income for - -
the period
Issue of new
ordinary 1,563,135 3,129,079 - - - - 4,692,214
shares
Share issue - (262,737) - - - - (262,737)
costs
Equity
portion of - - - 260,882 - - 260,882
convertible
loan stock
Cancellation
of share - - (1,705,074) - - 1,705,074 -
options
Share option - - 107,249 - - - 107,249
expense
---------------------------------------------------------------------------------------------
Equity
shareholders' 26,848,814 36,268,991 1,523,444 260,882 2,269,157 (23,966,571) 43,204,717
funds at 31
December 2009
---------------------------------------------------------------------------------------------
Foreign
currency - - - - 955,544 - 955,544
adjustments
Loss for the - - - - - (3,974,273) (3,974,273)
period
---------------------------------------------------------------------------------------------
Total
comprehensive - - 955,544 (3,974,273) (3,018,729)
income for - -
the period
Issue of new
ordinary 904,020 4,520,100 - - - - 5,424,120
shares
Share issue - (35,059) - - - - (35,059)
costs
Share option - - 90,650 - - - 90,650
expense
---------------------------------------------------------------------------------------------
Equity
shareholders'
funds at 30 27,752,834 40,754,032 1,614,094 260,882 3,224,701 (27,940,844) 45,665,699
September
2010
---------------------------------------------------------------------------------------------
SERABI MINING PLC
Consolidated Cash Flow Statements
--------------------------------------
 For the For the For the
 nine months Year nine months
 ended Ended ended
 30 September 31 December 30 September
 2010 2009 2009
(expressed in US$) (unaudited) (audited) (unaudited)
--------------------------------------------------------------------------------
Operating activities
Operating loss (3,842,991) (9,763,622) (7,414,625)
Depreciation - plant, equipment and mining 1,514,897 2,157,026 1,625,894
properties
Impairment charges - 4,343,048 3,582,333
Increase in rehabilitation provision - 346,000 346,000
Loss on sale of assets 115,800 181,237 176,219
Option costs 75,307 167,423 60,174
Share based payment expense - 334,987 -
Write-off of past exploration costs - 495,138 476,967
Interest paid (93,016) (215,916) (191,822)
Foreign exchange loss (53,045) (650,272) (770,105)
Changes in working capital
 (Increase) / decrease in inventories (54,618) 452 118,806
 (Increase) / decrease in receivables, (73,268) 1,179,755 1,039,725
prepayments and accrued income
 (Decrease) / increase in payables, (496,467) (96,684) 665,091
accruals and provisions
--------------------------------------------------------------------------------
Net cash flow from operations (2,907,401) (1,521,428) (285,343)
--------------------------------------------------------------------------------
Investing activities
Proceeds from sale of fixed assets 246,745 1,220,691 1,169,502
Purchase of property, plant and equipment - (74,578) (71,450)
Exploration and development expenditure (1,420,722) (620,490) (378,998)
Interest received 21,794 3,569 1,748
--------------------------------------------------------------------------------
Net cash inflow/(outflow) on investing (1,152,183) 529,192 720,802
activities
--------------------------------------------------------------------------------
Financing activities
Issue of ordinary share capital 5,424,120 4,266,740 -
Capital element of finance lease payments (78,327) (1,178,381) (1,134,575)
Issue of convertible loan stock - 477,780 -
Payment of share issue costs (35,059) (172,250) -
--------------------------------------------------------------------------------
Net cash inflow/(outflow) from financing 5,310,734 3,393,889 (1,134,575)
activities
--------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash 1,251,150 2,401,653 (699,116)
equivalents
Cash and cash equivalents at beginning of 4,081,882 1,538,956 1,538,956
period
Exchange difference on cash (85,041) 141,273 76,429
--------------------------------------------------------------------------------
Cash and cash equivalents at end of period 5,247,991 4,081,882 916,269
--------------------------------------------------------------------------------
SERABI MINING PLC
Report and consolidated financial statements for the 9 month period ended 30
September 2010
Notes to the Consolidated Financial Statements
1. Basis of preparation
These interim accounts are for the nine month period ended 30 September 2010.
Comparative information has been provided for the unaudited nine month period
ended 30 September 2009 and the audited twelve month period from 1 January to
31 December 2009. Â A statement of comprehensive income is also included in
respect of the three month period ended 30 September 2010 and comparative
information has been provided for the three month period ended 30 September
2009.
The accounts for the period have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" and the accounting policies
are consistent with those of the annual financial statements for the year ended
31 December 2009 and those envisaged for the financial statements for the year
ended 31 December 2010:
* 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 2006 applicable to companies reporting under IFRS.
* The Company has not adopted any standards or interpretation in advance of
the required implementation dates. Â It is not anticipated that the adoption
in the future of the new or revised standards or interpretations that have
been issued by the International Accounting Standards Board will have a
material impact on the Group's earnings or shareholders' funds.
(i) Â Going Concern and availability of project finance
In common with many companies in the exploration and development stages, the
Company raises its finance for exploration and development programmes in
discrete tranches. The directors have prepared cash flow projections for the
period to June 2012 which indicates that existing funds will be sufficient to
fund the group and its commitments for the foreseeable future. The directors
have therefore concluded that it is appropriate to prepare the condensed
financial statements on a going concern basis.
However further funds will be required in order to successfully develop any
successful exploration targets and bring the Palito mine back into operation.
Whilst the directors are confident that they are taking all the necessary steps
to ensure that the funding will be available, there can be no certainty that
this will be the case. Were the funding not to become available in an
appropriate timescale the directors would need to consider alternative
strategies and an impairment review would be required in respect of the
capitalised expenditure on the Palito project. No adjustments to asset carrying
values that may be necessary should the company be unsuccessful have been
recognised in the financial statements.
 (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) Â Inventories
Inventories  - are valued at the lower of cost and net realisable value.
(iv) Property, plant and equipment
Property, plant and equipment are depreciated over their useful lives.
(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. Â As the underground mine is currently on care and
maintenance and there is no depletion of the reserves and resources attributable
to the mine, no amortization charge has been recorded in the period.
(vi) Revenue
Revenue represents amounts receivable in respect of sales of gold and by-
products. Revenue represents only sales for which contracts have been agreed and
for which the product has been delivered to the purchaser in the manner set out
in the contract. Revenue is stated net of any applicable sales taxes. Any unsold
production and in particular concentrate is held as inventory and valued at
production cost until sold.
2. Segment Reporting
The Group currently operates with one business segment being mineral exploration
and development and one geographical segment being Brazil.
3. 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.
4. Earnings per share
The calculation of the basic loss per share of 1.06 cents per share (31 December
2009: loss of 6.16 cents; 30 September 2009: loss of 5.31 cents) is based on the
loss attributable to ordinary shareholders of $3,974,273 (31 December  2009:
loss of US$9,990,502; 30 September 2009: loss of US$7,437,884) and on the
weighted average number of ordinary shares in issue during the period of
374,773,562 ordinary shares (31 December 2009: 162,309,378; 30 September
2009: 140,139,065).
5. Exploration and development costs
 30 September 31 December 30 September
 2010 2009 2009
 (unaudited) (audited) (unaudited)
-------------------------------------------------------------------------------
Cost
Opening balance 6,880,038 5,351,921 5,351,921
Exploration and development expenditure 1,436,066 640,875 378,998
Write-off of past exploration costs - (495,138) (476,967)
Exchange 242,738 1,570,728 1,412,897
Transfer to property, plant and equipment - (188,348) (188,348)
-------------------------------------------------------------------------------
Balance at end of period 8,558,842 6,880,038 6,478,501
-------------------------------------------------------------------------------
In drawing up the results to 30 September 2009, the directors have reviewed the
timing of the impairment charges made during the year ended 31 December 2009 and
determined that a charge of approximately US$475,000 should be recorded in the
period ended 30 June 2009. Originally this write down was recorded in the 6
month period ended 31 December 2009.
6. Property, plant and equipment
 30 September 31 December 30 September
 2010 2009 2009
 (unaudited) (audited) (unaudited)
-----------------------------------------------------------------------------
Cost
Balance at beginning of period 48,566,891 38,295,092 38,295,092
Additions - 283,578 280,450
Transfer from intangible assets - 188,348 188,348
Exchange 1,179,687 11,564,549 10,607,880
Disposals (543,000) (1,764,676) (1,710,203)
-----------------------------------------------------------------------------
Balance at end of period 49,203,578 48,566,891 47,661,567
-----------------------------------------------------------------------------
Accumulated depreciation
Balance at beginning of period 13,239,103 6,674,728 6,674,728
Charge for period 1,514,898 2,157,026 1,625,894
Impairment charge - 2,590,532 1,829,817
Exchange 349,783 2,380,893 2,165,535
Eliminated on sale of asset (180,456) (564,076) (557,367)
-----------------------------------------------------------------------------
Balance at end of period 14,923,328 13,239,103 11,738,607
-----------------------------------------------------------------------------
Net book value at end of period 34,280,250 35,327,788 35,922,960
-----------------------------------------------------------------------------
7. Inventories
 30 September 31 December 30 September
 2010 2009 2009
 (unaudited) (audited) (unaudited)
---------------------------------------------------------
Consumables 1,352,402 1,259,764 1,094,059
---------------------------------------------------------
Inventories 1,352,402 1,259,764 1,094,059
---------------------------------------------------------
8. Cash and cash equivalents
 30 September 31 December 30 September
 2010 2009 2009
 (unaudited) (audited) (unaudited)
-----------------------------------------------------------------------
Cash at bank and in hand 5,247,991 4,081,882 916,269
-----------------------------------------------------------------------
Cash and cash equivalents 5,247,991 4,081,882 916,269
-----------------------------------------------------------------------
9. Maturity profile of financial liabilities and commitments
The following table sets of the maturity profile of the financial liabilities as
at 30 September 2010 and commitments under operating leases.
 Due October Due October
Total at 30 Due by 30  2011 to  2013  to Due after
September September  September  September September
2010 2011 2013 2015 2015
 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------------------------
Balance sheet
liabilities
Trade and 3,775,578 3,387,529 283,815 104,234 -
other
payables
Accruals 182,091 182,091 - - -
Interest 245,477 - - 245,477 -
bearing
liabilities
Provisions 1,383,057 - - 328,057 1,055,000
--------------------------------------------------------------------------------
Total balance 5,586,203 3,569,620 283,815 677,768 1,055,000
sheet
liabilities
--------------------------------------------------------------------------------
Other
commitments
Operating 233,529 113,262 120,657 - -
leases
--------------------------------------------------------------------------------
10. Share capital
 30 30 31 December 31 December 30 30 September
September September September
 2010 2010 2009 2009 2009 2009
 (unaudited) (unaudited) (audited) (audited) (unaudited) (unaudited)
Ordinary Number $ Number $ Number $
Shares
----------------------------------------------------------------------------------
Opening 327,740,595 2,827,419 140,139,065 25,285,679 140,139,065 25,285,679
balance
Sub- - - - (24,021,395) - (24,021,395)
division
of
shares
Issue of 120,000,000 904,020 187,601,530 1,563,135 - -
shares
for cash
----------------------------------------------------------------------------------
Balance 447,740,595 3,731,439 327,740,595 2,827,419 140,139,065 1,264,284
at end
of
period
----------------------------------------------------------------------------------
 30 30 31 December 31 30 30
September September December September September
 2010 2010 2009 2009 2009 2009
 (unaudited) (unaudited) (audited) (audited) (unaudited) (unaudited)
Deferred Number $ Number $ Number $
Shares
--------------------------------------------------------------------------------
Opening 140,139,065 24,021,395 - - - -
balance
Sub- - - 140,139,065 24,021,395 140,139,065 24,021,395
division
of shares
--------------------------------------------------------------------------------
Balance 140,139,065 24,021,395 140,139,065 24,021,395 140,139,065 24,021,395
at end of
period
--------------------------------------------------------------------------------
The following share issues of Ordinary Shares have occurred during the period:
16th June 2010Â Â Â Â Placing of 120,000,000 Ordinary shares at a price of 3.0
pence each
The deferred shares carry no voting or dividend rights or any right to
participate in the profits or assets of the Company and all the deferred shares
may be purchased by the Company, in accordance with the Companies Act 2006, at
any time for no consideration. In the event of a return of capital, after the
holders of the Ordinary shares have received in aggregate the amount paid up
thereon plus £100 per ordinary share, there shall be distributed amongst the
holders of deferred shares an amount equal to the nominal value of the deferred
shares and thereafter any further surplus shall be distributed amongst the
holders of ordinary shares.
On 21 December 2010, the shareholders approved the consolidation of the Ordinary
Shares in issue on the basis of one new Ordinary Share for every 10 Existing
Ordinary Shares. Â As a result of this consolidation the number of shares that
would have been in issue at the end of the period would be 44,774,059.
11. Impairment
Consistent with the review process performed as at 31 December 2009, the
Directors have undertaken an impairment review of the Group's exploration,
development and production assets.
The Directors note that the carrying value of the assets relating to the Palito
Mine have reduced compared with the value at 31 December 2009. Â This is as a
result of variation in exchange rates, depreciation charges made during the
period and asset disposals. Â At the same time the Net Present Value of the
Palito project has reduced in value compared with the calculation undertaken as
of 31 December 2009. Â Such reduction is due to the variations in the exchange
rates ruling at the end of the period and changes in assumptions. The resulting
Net Present Value still supports the carrying value of US$34.3 million and
therefore the Directors have not made any adjustment to the impairment provision
currently carried in the books of the group.
In deriving an estimate of the value in use in respect of the Palito mine the
Directors' have calculated a Net Present Value of the projected cash flow to be
derived from the exploitation of the previously declared reserves of 187,538
gold equivalent ounces as estimated at the end of March 2008. Â The key
assumptions underlying the Net Present Value are unchanged from those detailed
in the Annual Report 2009 save that commencement of operations has been set as
1 October 2013 (eighteen months later than previously), the exchange rate BrR$
to US$ has been set at 1.6942 (December 2009 - 1.7412), operating costs have
been increased by a factor of 15% to allow for inflationary effects and the long
term gold price has been set at US$1,000. Â The value in use of Palito taking
into account these parameters has been estimated at US$34.3 million (December
2009 - US$35.3 million)
12. Contingent Liability
In June 2010, the Company's wholly owned subsidiary Serabi Mineracao Limitada
("SML") was held to be in breach of certain conditions of its operating licence
by the Brazilian Federal Environmental Agency, IBAMA, as a result of which SML
was required to suspend activities at the Palito Mine and a fine was levied of
R$3,597,300 (approximately US$2.2 million). On 23 September 2010, the Company
announced that IBAMA had lifted the notice having acknowledged that the
conditions of the operating licence which had given rise to the original
suspension notice had been fulfilled. IBAMA has not yet made any formal decision
regarding the fine. The Directors understand that IBAMA is of the view that the
original proposed fine was unnecessarily severe relative to the alleged
breached. Whilst they are confident that the initial fine imposed will be waived
or significantly reduced, at this stage the Directors are not in a position to
estimate with any certainty what level of penalty, if any, may become due.
Accordingly no provision for any penalty has been accrued at this time.
13. Post Balance Sheet Event
On 3 December 2010 the Company announced that it had placed 10,070,000 Special
Warrants raising gross proceeds of C$5,538,500. The net proceeds raised from the
Offering are intended to be applied to Serabi's on-going exploration activities
at and around the Palito mine and in the evaluation of the wider 60,000 hectare
Jardim do Ouro tenement holding that surrounds the Palito Mine, and for general
corporate purposes. Following the approval of shareholders to a consolidation of
the shares on the basis of 1 New Ordinary Share for every 10 Existing Ordinary
Shares in a General Meeting held on 21 December 2010, the proceeds of the
Offering which had been held in escrow were released to the Company on 23
December 2010.
Enquiries:
Serabi Mining plc
Clive Line Tel: 020 7246 6830
Finance Director Mobile: 07710 151692
Email: contact@serabimining.com
Website: Â www.serabimining.com
Beaumont Cornish Limited
Nominated Adviser
Roland Cornish Tel: 020 7628 3396
Michael Cornish Tel: 020 7628 3396
Fraser Mackenzie Limited
Canadian Broker
JC St-Amour Tel: +1 416 955 4777
Hybridan LLP
UK Broker
Claire Noyce Tel: 020 7947 4350
Farm Street Communications
Public Relations
Simon Robinson 07593 340107
Copies of this release are available from the company's website
www.serabimining.com.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Serabi Mining plc via Thomson Reuters ONE
[HUG#1481258]