Serabi Gold (LSE:SRB) - Double Production with Innovative Low-Capex Coringa Growth Plan

Company Interviews

Interview with Michael Hodgson, CEO of Serabi Gold PLC

Our previous interview: https://www.cruxinvestor.com/posts/serabi-gold-lse-srb-advancing-brazilian-gold-assets-towards-60000-ounce-potential-5221

Recording date: 16th May 2024

Serabi Gold is positioned to deliver significant production growth over the next two to three years while minimizing capital requirements by utilizing an innovative development approach at its Coringa project in Brazil. In a recent interview, CEO Mike Hodgson outlined the company's plan to leverage ore sorting technology to produce a high-grade concentrate at Coringa which can then be trucked to Serabi's existing Palito processing plant. This approach eliminates the need to construct a new plant at Coringa, greatly reducing capex and accelerating the timeline to production.

The ore sorting and trucking strategy is expected to yield a step-change in production, nearly doubling output from 38,000 ounces this year to 60,000 ounces within the next 2-3 years. Importantly, this growth will be entirely funded by internal cash flow. As Hodgson stated, "We're not looking for money. We can fund it ourselves - we're just better utilizing the Palito plant. That's the beauty of it - it's a really cheap, capital-light way of literally nearly doubling our production."

Several key catalysts are on the horizon as Serabi moves to implement the Coringa plan. A new preliminary economic assessment (PEA) is underway incorporating the ore sorting and trucking scenario, with results expected in July or August. Additionally, the ore sorter has already been shipped, the crushing plant for Coringa is being renovated, and civil works are underway. Hodgson expects the ore sorter to be commissioned and operational by the end of September, setting the stage for a significant grade and production increase beginning in Q4 2024.

Beyond the near-term growth from Coringa, Serabi sees substantial exploration potential at both Coringa and its Palito mine. The company is investing $2 million in brownfields exploration this year, funded by operating cash flow, with the goal of expanding resources. Coringa, which currently hosts 500,000 ounces of gold, is seen as particularly prospective. "Coringa is a completely undrilled deposit," noted Hodgson. "The resource can be doubled. When you double that resource, you can increase the production rate even more."

Longer-term, Serabi has outlined a pathway to grow production organically to the 100,000 ounce per year level through a combination of resource expansion and incremental plant optimizations. With multiple production growth drivers and a proven management team at the helm, Serabi appears well-positioned to deliver shareholder value in a rising gold price environment. As Hodgson summarized, "When people see the PEA coming in, they see that ore sorter working, they see Q4 and what it's really doing to the grades...We are going to go from our current plan this year of 38,000 ounces to 60,000 ounces in the next 2.5 years."

For investors, Serabi offers a compelling mix of near-term catalysts, fully-funded organic growth, and significant exploration upside. With a market capitalization of just £55 million, the company's shares appear attractively valued relative to the growth potential. As the Coringa development plan advances and the company continues to derisk and expand its production profile, Serabi has the potential to re-rate significantly higher.

View Serabi Gold's company profile: https://www.cruxinvestor.com/companies/serabi-gold

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