Serabi Gold plc
Annual Report
2023
COMPANY NUMBER – 5131528
We are Serabi Gold plc:
A leading developer of gold
production in Brazil
Our vision is to become the premier gold growth company in Brazil by
working in partnership with our stakeholders through responsible
stewardship whilst employing best ESG practices.
Our strategy is to double production to 60koz pa Au by end 2025 and become a 100-
200koz pa Au producer within 3-5 years by:
leveraging our extensive exploration portfolio
capitalising on management’s proven track record of successfully developing and
operating mines in Brazil
engaging in strategic M&A
In the near term, implementing our strategy will significantly increase production and
improve profitability, whilst advancing multiple development opportunities. This
growth will:
reward shareholders
develop our employees and reward their performance
enhance the local economy and enrich community life
1
KEY FIGURES
Revenue
$60.44 million (up 10%)
Cash Flow from Operations
$11.7 million (up by US$9.8m)
Gold Production
33,153 ounces (up 4%)
Average Grade processed
6.35 g/t (up 3%)
Cash Held at 31 December 2023
$11.6 million (up by $4.4m)
Bank Borrowings at 31 December 2023
$5.0 million (unchanged)
Cash Costs per Ounce
$1,300
AISC per Ounce
$1,635
Contents
Inside this report
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Key Figures and Contents
Chair’s Statement
Chief Executive Officer’s Review
2
4
6
Chair’s Introduction
52
Independent Auditor’s Report
Corporate Governance Report
53
Group Statement of Comprehensive
Income
Audit and Risk Commi@ee Report
63 Group Balance Sheet
Mineral Reserves and Resources
12 Remuneration Commi@ee Report
67 Company Balance Sheet
Strategy and Business Model
14
Sustainability Commi@ee Report
80
Stakeholder Engagement
17 Directors’ Report
82
Section 172 Statement
Chief Financial Officer‘s Review
Going Concern and Longer-Term
Prospects
Risks and Controls
Environmental and Social
Non-Financial and Sustainability
Information Statement
20
22
26
28
37
43
2
88
94
95
96
97
98
99
100
143
Group Statement of Changes in
Equity
Company Statement of Changes in
Equity
Group and Company Cash Flow
Statements
Notes to the Financial Statements
Glossary
Corporate Information and Advisers
146
Strategic Report
Strategic Report
Contents
Chair’s Statement
4
6
Chief Executive Officer’s Review
12 Mineral Reserves and Resources
14 Strategy and Business Model
17 Stakeholder Engagement
20 Section 172 Statement
22 Chief Financial Officer‘s Review
26 Going Concern and Longer-Term Prospects
28 Risks and Controls
37 Environmental and Social
43
Non-Financial and Sustainability
Information Statement
3
Strategic Report
Chair’s Statement
Dear Shareholders
Following a year in which the Company achieved some
key milestones, I am pleased to report that 2024 is already
well on track to build on these, create a solid platform from
which to execute its production growth and move Serabi
into the next phase of its development. At Coringa we
have engaged with all stakeholders culminating in the
renewal of the trial mining licence for three years, whilst
the recent reserve and resource estimation at Palito has
significantly increased the reserves compared with prior
estimates and resulted in a global mineral inventory for
the Group of over one million ounces.
The outlook for continued strength in the gold price remains
positive and with the exception of a short period at the end
of the third quarter of last year, the price has remained
almost consistently above US$1,900 per ounce and for the
year to date above US$2,000 per ounce.
The change in government in Brazil at the start of 2023 has
not brought significant change to the regulations or financial
treatment of the mining sector and whilst the outlook for the
country as a whole is relatively good, as a company that
incurs much of its costs locally, our planning and budgeting
4
processes have been helped by the exchange rate remaining
fairly stable over the last 12 months.
In this industry, scale is important. Your Board keenly
recognises this and Serabi’s production growth over last few
years belies an exciting growth story. We have not sat still.
We have been building the team, strengthening the board,
focussing on our relationships with local indigenous groups,
improving our internal processes and governance, putting
in place the building blocks for the Coringa growth story
and looking to leverage our geological endowment for the
benefit of shareholders. I believe we are now reaping the
benefits of all this hard work. But we continue to look to
grow further in a financially prudent manner. Our vision is
to become the premier, Brazil focussed, gold growth
company generating superior returns to our investors. In
parallel with organic opportunities, we continue to explore
appropriate corporate opportunities to accelerate our
objective of transitioning to a 200,000 ounce per year
producer over the next few years. In turn we expect that
building such a business will increase the capital markets
relevance of Serabi, increase daily trading volumes amongst
our shareholders, and attract institutional funds for long
term investment. Your Board considers that reaching this
level of critical mass, will open up our investor base, create
greater demand for our shares and result in an upward re-
rating of our market value. For this reason, and having
strengthened the balance sheet and operations in the last
couple of years, selective M&A activity will be required, in
our view.
Our executive management is operationally focussed and
experienced at identifying and implementing innovative
solutions. Our focus remains Brazil where we have a long
and successful track record but we must remain open to
looking at other jurisdictions offering a stable legislative
environment in which to develop mining opportunities.
Whilst we feel that the best use of surplus cash in the short-
term would be to help drive growth, this assumes suitable
opportunities are available. We will always be evaluating
investment opportunities and risk against other options that
can generate rewards for our shareholders including the
opportunity to return funds potentially through dividends
or share buyback arrangements.
The exploration alliance with Vale, during 2023 provided a
source of exploration funding that allowed us to advance
our gold exploration opportunities whilst also giving the
Group the opportunity to progress an opportunity for
copper exploration that the Group would not otherwise
have progressed. The results from the Phase 1 programme,
whilst giving us greater technical understanding of the
Matilda prospect, allowed us to advance other gold targets,
we can now advance further as well as generating other
potential copper porphyry targets. Whilst Vale have now
decided to not progress to Phase 2 we do have other parties
interested to pick up their position, giving the Group the
Whilst the Board works closely with management to drive
operational improvements we are also very focussed on
ensuring that this is done with safety as a priority. It is
pleasing to report that I have seen, during my own visits to
site, the quality and professionalism of our staff and their
desire to put health and safety very much in the forefront of
thinking.
interaction with
During the year, we have undertaken a full review of our
governance processes, updated the Terms of Reference for
the Board and its sub-committees and established new
Sustainability and M&A Committees, to help streamline the
decision making processes. With an ever-increasing level of
oversight by regulators and other governmental and non-
governmental bodies, the manner in which companies
operate, particularly those involved in natural resources, is
under growing scrutiny.
Serabi prides itself on its
neighbouring
constructive
communities, engaging in an open dialogue through
multiple meetings each month and supporting community
programmes including infrastructure, health and education.
I was very pleased when, in October 2023, our efforts were
recognised at the gold symposium hosted by the Associação
Brasileira de Empresas de Pesquisa Mineral e Mineração
(“ABPM”) when Serabi overwhelmingly won the category
for Community Relations securing 73% of more than 5,000
votes that were cast. Whilst visiting the operations earlier in
the year, I was privileged to meet the team responsible and
witness the excellent work they do and their levels of
commitment.
the
My first 21 months as Chair have been very exciting and
rewarding. We have challenges ahead, but I am very
encouraged with what I have seen and the shared vision of
the Board and management for developing the Company.
The next six months, as we continue the development of the
Coringa project, will be pivotal for us and will provide the
base for continued production growth in 2025 and 2026. I
hope that I will be able to report further positive progress at
the Annual General Meeting to be held in June and over the
rest of the year.
Strategic Report
Chair’s Statement
potential for continued exposure to copper exploration but
allowing management to focus on the Group’s core gold
activities.
As part of our efforts to widen the shareholder base of
Serabi, in February 2024, Serabi was approved to have a
quotation of its shares on the OTCQX in the United States
which we hope will enhance the visibility, liquidity and
accessibility of the Company to U.S. investors. We see this
as a cost-effective option for expanding the shareholder base
without increasing the regulatory burden. In the near term,
we view attracting new investors as a key component to
maintaining and growing value for existing shareholders
and we will be stepping up our efforts over the next 12
months to grow our presence among the investment
communities in North America. As part of this programme,
we completely revamped our corporate website. I encourage
investors to acquaint themselves with our vision, strategy
and the latest updates on our operations and exploration
opportunities. Our management will be attending a number
of investor events and conferences over the next 12 months,
details of which will be listed on the website, and investors
are encouraged to use these opportunities where possible to
meet with management.
Since being appointed as Chair for Serabi in August 2022, I
have sought to strengthen the role of the Board, continue to
challenge management and in the light of increased
regulation and accountability, reacted to the need to
strengthen the overall corporate governance processes. In
January last year, we welcomed Carolina Margozzini to the
Board of Directors who was also appointed as a member of
the Remuneration Committee. This was followed, in May
2023, by the appointment of Deborah Gudgeon, a very
experienced, non-executive director working with a number
of natural resources companies. Deborah has also taken on
the role a Chair of the Audit and Risk Committee. We also
appointed, in August 2023, Kerin Williams to take on the
role of Company Secretary, relieving our CFO of this
responsibility which, had over recent years, become
increasingly time consuming.
Michael D Lynch-Bell
Chair
26 April 2024
5
Strategic Report
Chief Executive Officer’s Review
2023 saw Serabi achieve some key milestones in its plans
for near term growth. In November 2023 the Group issued
a new 43-101 compliant mineral reserve and resource
estimate for the Palito Complex which resulted in a
threefold increase in Mineral Reserves.
The new
estimation of 206,400 ounces is sufficient to provide six
more years of production at current rates with a further
Mineral Resource of 171,000 ounces in the Measured and
Indicated category to follow. This bodes well for the
continued longevity of the Palito operation and, with an
ongoing exploration programme, we are confident of
continuing to not only replenish but also grow the mineral
resources for this project.
The key to the near term growth of Serabi is Coringa and we
secured, in December 2023, a three year extension to our
current trial mining licence (“GUIA”). With this new GUIA
we are moving ahead with the installation of a crushing and
ore sorting plant. With excess processing capacity at the
Palito operation the cost benefit of trucking relatively small
volumes of high grade ore (estimated at 10g/t and higher
the
post ore-sorting)
headaches,
in
constructing and commissioning a dedicated process plant
at Coringa. Nonetheless, we are still actively progressing
financial expense and
for processing
far outweighs
involved
time
the full permitting for Coringa and the issue of the
Installation Licence.
Operations Overview
We made a steady improvement in 2023 with a four percent
increase in gold production year on year with Coringa
starting to make a real impact as we focused efforts on
developing the mine and establishing the platform for
further expansion of this operation during 2024 and 2025.
We are projecting a significant increase in gold production
for 2024, to between 38,000 and 40,000 ounces, which will be
the result of further production growth at Coringa.
The mining crews that are working at Coringa have been
redeployed from Sao Chico which we placed on suspension
at the end of the first quarter of 2023, and Coringa’s
production has, for the time being, replaced what was
generated from the Sao Chico operation in 2022. Output
from Palito continues to remain steady and in the near term
I continue to believe that this mine will be a consistent
provider of 20,000 to 25,000 ounces of gold production year
on year.
Coringa
Coringa has been a far better performer than we had
anticipated and to date has not produced any unexpected
surprises. The favourable rock conditions mean the deposit
is well suited to selective underground open stoping. The
most encouraging aspect has been the much better level of
payability that we have experienced, compared to our
forecasts. For each 100 metres of horizontal development
we complete, we find approximately 80 percent to be viable.
This translates into more ounces per vertical metre of
development and in the long term will help drive down unit
production costs.
Without the ore sorter in place currently, we are selectively
mining our development to minimise dilution. This is
known as spilt blasting. It does nevertheless slow down
development rates. Once the ore sorter is operational I
would hope that we can increase the rate of advance,
opening up stoping blocks at a faster rate and in this way
increase gold production. The ore sorter will remove waste
dilution very effectively and once commissioned will allow
the requirement for split blasting to reduce, accelerating
development rates in the process.
At the start of 2024 we have moved an underground drilling
rig to Coringa with the intention of growing the mineral
resource inventory of the Serra orebody. All exploration
drilling to date has been undertaken at surface and with the
latest level in development being at 225mRL, the mining
6
Strategic Report
Chief Executive Officer’s Review
operations are now approximately 100 vertical metres below
surface. This provides an excellent opportunity to evaluate
the continuation of the orebody at depth, replenishing the
mineral inventory and extending the mine life, as well as to
infill areas where a lack of historic drilling has created
information gaps. These may be easy win opportunities
given what we have already learned about the orebody.
the
confirmed
As previously reported, during 2023, we have advanced the
licencing process at Coringa. In July 2023, the Company
reported that it had concluded an agreement with the two
associations representing the interests of the various
indigenous tribes considered to be within the area of
influence of the project (“Indigenous Agreement”). The
Indigenous Agreement
indigenous
communities long term support for the Coringa project, and
imposed certain obligations on both sides including the
completion of an indigenous impact study (“ECI”) by the
Group. The ECI report was provided in draft to the
indigenous agencies in December 2023 and on 19 December
2023, a further agreement with all stakeholders including
the office of the Public Prosecutor, the neighbouring farming
community of the Terra Nossa settlement, and various
government agencies was signed and ratified in court. This
enabled the National Mining Agency and the state
environmental agency (“SEMAS”) to renew the existing trial
mining licence (“GUIA”) for the project in January 2024.
The indigenous consultation process for the award of the
Installation Licence at Coringa continues.. The
full
comments received on the initial draft ECI report have been
considered by the consultants undertaking the study and
the ECI report updated accordingly. The Group has now
engaged with the government agency for the indigenous
population (“FUNAI”) to review the final ECI report and
complete the indigenous consultation process . This is
required before SEMAS can award the LI.
Serabi prides itself on its constructive interaction with the
neighbouring communities and supporting community
programmes including infrastructure, health and education
It requires the same standards be adopted by the consultants
that it uses.
I continue to have very high hopes for Coringa. The
tenements that make up the project are considered to have
produced over 300,000 ounces of gold from historic artisanal
activity. Assuming this was from only the top 20 to 30
metres of saprolite, it would not be unreasonable to expect
ten times this amount in the underlying hard rock.
The exploration work undertaken to date also indicates
further potential along an overall eight kilometre strike,
primarily to the north, much of which has was has not been
exposed by artisanal workings. There are also multiple
areas that have seen past artisanal mining but remain
undrilled Added to this are of a number of parallel
7
mineralised zones and evidence of a continuation of the
same mineralised zones for several kilometres to the south.
There is therefore excellent potential to grow the resource
over the coming years and as with Palito establish a
profitable long term mining operation. Whilst in the near
term it makes commercial sense to truck ore from Coringa
for processing at Palito, there will be a point at which the
justify the
production opportunities at Coringa may
construction of a dedicated gold plant.
Palito
I have always maintained since I first visited the site, that
Palito will be one of those deposits that just keeps on giving.
The new mineral resource and reserve estimate of a total
mineral inventory in excess of 500,000 ounces, should give
shareholders significant encouragement regarding the
longevity of the operation. Spread now over 54 mineralised
structures of which 43 were included in the resource
estimation, the ore body has seen significant lateral
expansion over recent years. This has allowed us to make
optimum use of
the main ramp and other mine
infrastructure and defer vertical development. As we have
developed the crosscuts to parallel vein structures these
have also generally intersected other smaller structures not
identified from drilling.
There remains significant opportunity for further resource
growth along strike as well. Past exploration activity
identified the Curutella prospect, approximately four
kilometres to the southeast, which appears to be an
extension of the current Palito vein swarm. Our focus over
the last 18 months has been to secure the near term future of
Palito and repair the effects of pandemic years when
reduction in activity and labour took its toll on resource
growth and reserve replenishment. With these matters now
resolved we are seeing Palito return to the production levels
we had pre-pandemic and more.
For the last couple of years the Chico da Santa area to the
northeast, and the Ipe and Mogno veins which form part of
this sector, has provided the majority of the ore mined at
Palito. It has been supplemented by ore mined from the
Senna Zone to the far south west and the intermediate area
of Palito West and the Pipocas vein which forms part of this
sector. During 2023, exploration work undertaken from
within the mine has highlighted the extension of the G3
vein, located in the Main Zone sector both to the north and
south.
Historically this has hosted zones of wider
mineralisation than the veins being mined at Ipe and Mogno
and I anticipate that with development of the G3 North area
being well underway, this sector will be a significant ore
source over the next two years.
Strategic Report
Chief Executive Officer’s Review
Sao Chico
Sao Chico is currently on care and maintenance. We remain
open to restarting operations but with the current process
plant fully utilised treating higher margin ore from Coringa
and Palito the Sao Chico ore is of lowest priority. Despite
extensive test work, the Sao Chico ore seems to not be
amenable and therefore will always be the lowest grade ore
and currently the last ore source that we will want to
process.
SUMMARY PRODUCTION STATISTICS FOR 2023 AND 2022
Q1
Q2
Q3
Q4
Full
Year
Q1
Q2
Q3
Q4
Full
Year
2023
2023
2023
2023
2023
2022
2022
2022
2022
2022
Group
Gold production (1)(2)
Ounces
8,005
8,518
8,738
7,891
33,153
7,062
8,418
8,542
7,798
31,819
Mined ore
Tonnes
41,546
41,022
44,744
49,541
176,853
40,606
44,008
46,863
42,264
173,741
Gold grade (g/t)
6.49
6.94
6.64
5.22
6.28
5.95
6.26
6.22
6.01
6.14
Milled ore
Tonnes
39,004
41,116
43,092
48,988
172,200
41,357
43,488
44,867
42,692
172,404
Gold grade (g/t)
6.75
6.84
6.72
5.31
6.35
5.72
6.43
6.34
6.05
6.14
Palito Complex
Gold production (1)(2)
Ounces
5,776
6,332
7,025
5,197
24,330
7,062
8,418
7,972
7,355
30,807
Mined ore
Tonnes
31,705
31,652
35,219
35,497
134,073
40,606
44,008
43,180
38,293
163,506
Gold grade (g/t)
6.14
6.68
6.81
4.78
6.08
5.84
6.26
6.28
6.20
6.15
Milled ore
Tonnes
31,273
31,901
34,515
35,625
133,314
41,357
43,488
42,257
39,573
165,502
Gold grade (g/t)
6.14
6.63
6.81
4.88
6.09
5.72
6.43
6.30
6.17
6.14
Horizontal
development
Coringa
Metres
2,011
2,469
2,325
2,327
9,132
2,938
3,353
2,458
2,245
10,994
Gold production (1)(2) Ounces
2,229
2,186
1,713
2,694
8,822
570
443
1,013
Mined ore
Tonnes
9,841
9,370
9,525
14,044
42,780
3,683
3,971
7,654
Gold grade (g/t)
7.63
7.83
5.99
6.33
6.88
5.46
4.15
4.78
Milled ore
Tonnes
7,731
9,215
8,577
13,363
38,886
2,610
3,119
5,729
Gold grade (g/t)
9.22
7.59
6.37
6.45
7.25
7.00
4.58
5.68
Horizontal
development
Metres
453
508
598
807
2,356
212
302
632
645
1,791
8
Strategic Report
Chief Executive Officer’s Review
Exploration
The exploration team was extremely busy during 2023 and are to be commended on the levels of work that they were able to
execute during the year. As shareholders are aware, much of the funding for the 2023 exploration programme came from the
exploration alliance with the Base Metals division of Vale who contributed almost US$5 million for the Phase 1 programme which
was completed by the end of January 2024.
The focus of the Phase 1 work programme was initial
diamond drill testing of the Matilda porphyry Cu/Au target
and other targets in particular Cinderella, Ganso, Calico and
Forquilha which are located within Serabi’s Palito Complex
tenement holdings. Other activities within the exploration
programme,
and
geochemistry, were undertaken to help identify new targets
and generate sufficient data to allow the Company to submit
reports to the ANM allowing for further renewal of the
licenses over the ground that is considered to be most
prospective.
geophysics
including
ground
A total of 13,902 metres was drilled across a total of 53 drill
holes with the programme being completed in January 2024.
This was supplemented by ground geophysics with 24
kilometres of Induced Polarisation (“IP”) studies completed,
6,772 soil samples taken and a significant augur drilling
programme over a number of targets testing the shallower
saprolite horizons prior to undertaken deeper diamond
drilling programmes.
9
The overall results were very encouraging with the work at
Matilda indicating the potential for a commercial copper
porphyry discovery whilst new copper rich targets were
also identified at Ganso, and Isla.
Whilst Vale have withdrawn from the alliance and will not
be progressing with Phase 2, we have been approached by
other parties interested to take over the financing of the
exploration for copper mineralisation.
On the gold exploration, results continue to be very
encouraging, particularly at the Calico and Calico North
prospects, and bode well for identifying satellite orebodies
in close proximity to the Palito process plant. These should
allow us to generate further organic production growth in
the coming years.
Strategic Report
Chief Executive Officer’s Review
Matilda
7,598 metres were drilled over the Matilda copper porphyry
targets where 24 kilometres of ground IP survey was also
completed. An initial internal conceptual resource potential
was calculated of between 21Mt @ 0.40% Cu up to 81Mt @
0.28% Cu. However it should be noted that the potential
volume and grade is conceptual in nature as insufficient
exploration has been completed to define a mineral resource
and it is uncertain if a mineral resource estimate will be
delineated. Nonetheless we consider that the results clearly
show the potential for the Matilda project to host economical
values of copper.
Barbara
Located four kilometres to the west of Matilda, 5 diamond
drillholes totalling 802 metres were drilled. Along with a
further 63 auger drillholes for a total of 165m drilled
targeting shallow alluvial gold. The drilling intercepted
narrow quartz-sulphide veins with
sericite-chlorite
alteration selvages hosted within granodiorite.
Calico/Forquilha
exhibits
geochemical
geological
Forquilha
characteristics consistent with the upper part of a low
sulphidation epithermal system. Being located 3km to the
east of Calico, along a major WNW-ENE structure it is
possibly part of the same system.
and
Calico North
Work during the year was restricted to augur drilling and a
further 358 soil samples collected on a 400m x 50m grid.
Results indicate a new gold in soil anomaly over a 5km x
2km zone. The anomalies trend NW-SE and are located
within a NE-SW
that potentially hosts
mineralisation from Palito to Calico, a distance of
corridor
approximately seven kilometres. These gold anomalies may
represent intermediate-sulphidation veins as seen at Palito
and overall the results indicate a large system with potential
for epithermal mineralisation and porphyry mineralisation
at depth.
Being located in such close proximity make these areas very
interesting opportunities for satellite resources that could
provide an ore feed for the current process plant.
Ganso
1,167 metres of diamond drilling was completed at Ganso
across six holes with a further 852 soil samples collected on
a grid of 100 metres x 400 metres to complete geochemical
coverage of tenement. Two diamond drill holes covering 588
metres were completed at the newly discovered Isla target
and a further two drillholes over 377 metres at the newly
discovered Maria Loura target.
Four diamond drillholes totalling 801 metres were drilled,
targeting
the silica-cap and coincident geochemical
anomaly, and the north-eastern geochemical anomaly. This
was supplemented by 31 auger drillholes (total 86metres)
targeting alluvial gold. Although work was limited, the
overall geology intercepted is consistent with a caldera or
dome-diatreme
for
epithermal-style mineralisation, and porphyry potential at
depth. The volcanic sequence intercepted indicates a
shallow level of preservation, important for the preservation
of potential porphyry systems.
environment – with potential
10
Soil sampling and follow up mapping at the Cinderella East
and Leticia targets identified a new 2km x 1km WNW
trending multi-element anomaly (Mo-Pb-Te-S + Bi-Sb-Ag)
with similar characteristics to the Ganso high sulphidation
epithermal target. Mapping also identified crystal tuffs with
quartz-alunite-haematite alteration
the
advanced argillic alteration at Ganso) and the anomaly is
also associated with demagnetised zones and potassium
radiometric anomaly as seen at Ganso. We have interpreted
the anomaly to be a lithocap setting with potential for high-
(the same as
sulphidation epithermal mineralisation, and porphyry at
depth. At the Leticia target, located three kilometres to the
south, a further 2.5km x 0.5km WNW trending >10ppb Au
in soil anomaly with grades in excess of 10ppb was also
identified.
Strategic Report
Chief Executive Officer’s Review
While there were no significant assay results from the
drilling (anomalous Au values up to 0.48 g/t), advanced
argillic alteration was identified and is significant in that this
is the first such occurrence in the Serabi land package. This
for both high
alteration
sulphidation epithermal mineralisation and porphyry
mineralisation at depth.
indicates high potential
Re-interpretation of the existing soil geochemical data has
also outlined a 2km x 1km area of anomalies with Mo-Sb-
Pb-Ba and As-Mo-Sb geochemical associations, typical of
high level epithermal systems.
The discovery of advanced argillic alteration indicates that
there is potential for a complete epithermal-porphyry
system to be preserved in its entirety, which is a key concern
in rocks of this age. The results have made the Ganso target
a high priority for future copper exploration.
Isla
An initial soil sampling programme identified a WNW
trending three kilometre x 0.5 kilometre soil anomaly
grading more than 300ppm Cu. This soil anomaly is
coincident with a high magnetic feature and EM conductor
anomalies. Two initial drillholes were then completed
returning long intervals of anomalous copper with grades of
up to 800ppm in the drill core.
Cinderella, Leticia, Annie and Clair
Located in fairly close proximity to each other, work
completed included 1,449 metres of diamond drilling over
eight holes, a further 144 augur holes across Cinderella and
Leticia and the collection of 1,365 soil samples.
Michael Hodgson
Chief Executive
26 April 2024
11
Strategic Report
Mineral Reserves and Resources
The Group completes in-house mineral resource and reserve estimates on a regular basis and discloses mineral reserves and
resources using the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum, and in accordance with
NI 43-101. The scientific and technical information pertaining to the Palito, São Chico and Coringa gold deposits has been
reviewed and approved by Michael Hodgson BSc, MSc FIMMM, the CEO of Serabi, who is a qualified person under National
Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and who has acted as the qualified person under
the AIM Rules (“Qualified Person”). The Qualified Person has verified the information disclosed herein, including the sampling,
preparation, security and analytical procedures underlying the information or opinions contained in this announcement in
accordance with standards appropriate to their qualifications.
Whilst the Group takes all reasonable care in the preparation and verification of the mineral reserve and resource figures, the
figures are estimates based in part on forward-looking information.
Estimates are based on management’s knowledge, mining experience, analysis of drilling results, the quality of available data and
management’s best judgement. They are, however, imprecise by nature, may change over time, and include many variables and
assumptions including geological interpretation, commodity prices and currency exchange rates, recovery rates, and operating
and capital costs.
There is no assurance that the indicated levels of metal will be produced, and the Group may have to re-estimate the mineral
reserves based on actual production experience. Changes in the metal price, production costs or recovery rates could make it
unprofitable to operate or develop a particular deposit for a period of time.
The most recent estimate for the Palito Complex, incorporating the Palito and Sao Chico gold deposits, was completed by NCL
Ingeniería y Construcción SpA of Santiago de Chile (“NCL”) in compliance with Canadian National Instrument 43-101, with an
effective date of 31 July 2023 and is summarised below. The mineral resource and reserve estimates for the Palito Mine considers
all available core drilling, underground chip sampling and other geological sampling by Serabi generated during the period mid-
2002 to July 2023. For the São Chico Mine, the mineral resource and reserve estimates, also prepared by NCL, considers core
drilling chip sampling and other sampling by Serabi and previous operators during the period September 2011 to July 2023.
Whilst the Serra orebody which form part of the Coringa mineral complex is in a trial mining phase of operation there has been
no additional exploration work undertaken on the Coringa orebodies since June 2019, the effective date of the last mineral resource
estimation. The Group plans to undertake underground exploration drilling in the Serra orebody during the first half of 2024 to
replenish the mined resources extracted since June 2021, when mining operation commenced, and evaluate potential strike and
depth extensions of the orebody. The most recent estimate for the Coringa gold project, was completed by Global Resource
Engineering, of Denver, Colorado in compliance with Canadian National Instrument 43-101 with an effective date of 31 August
2019.
Mineral Reserve Estimates
Table 1 - Total Mineral Reserves Statement for the Palito Complex (Palito and Sao Chico Mines), Para, Brazil (effective 31 July
2023)
Palito
Sao Chico
Combined
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Reserves
Proven
Probable
Total Proven and
Probable
Notes to Table 1
567.8
196.8
8.08
6.83
147.5
43.2
46.1
14.1
8.20
7.68
764.6
7.76
190.8
60.2
8.08
12.2
3.5
15.6
614.0
210.8
8.09
6.89
159.7
46.7
824.8
7.78
206.4
(1) Mineral Reserves have been rounded to reflect the relative accuracy of the estimates. Proven Mineral Reserves are reported within the Measured
classification domain, and Probable Mineral Reserves are reported within the Indicated classification domain.
(2) Proven and Probable Mineral Reserves are inclusive of external mining dilution and mining loss and are reported at a COG of 4.0 g/t gold
assuming an underground shrinkage mining scenario, a gold price of US$1,800/oz, a 5.0:1 Brazilian Real to U.S. Dollar exchange rate, and
metallurgical recoveries of 93.2% for Palito and 93.8% for São Chico.
12
Strategic Report
Mineral Reserves and Resources
(3) Serabi is the operator and owns 100% of the Palito Complex such that gross and net attributable mineral reserves are the same.
(4) The mineral reserve estimate was prepared by the NCL in accordance with the standard of CIM and NI 43-101, with an effective date of July 31
2023, and audited and approved by Mr. Carlos Guzmán of NCL, who is a Qualified Person under NI 43-101.
Mineral Resource Estimates
Table 2 - Total Mineral Resources Statement for the Palito Complex (Palito and Sao Chico Mines), Para, Brazil (effective 31 July
2023)
Palito
Sao Chico
Combined
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Tonnes
(000’s)
Grade
(g/t Au)
Contained
ounces
(000’s oz)
Resources
Measured Resources
772.3
11.03
273.8
122.5
Indicated Resources
243.0
8.39
65.6
28.5
8.10
7.07
Measured &
Indicated Resources
1,015.3
10.40
339.3
150.9
7.91
Inferred Resources
674.2
7.02
152.2
8.2
7.84
31.9
6.5
38.4
1.7
894.8
10.63
305.7
271.5
8.26
72.1
1166.3
10.08
377.8
682.4
7.01
153.9
Notes to Table 2:
(1) Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. Mineral Resources are reported inclusive of Mineral
Reserves. All figures are rounded to reflect the relative accuracy of the estimates. Mineral Resources are reported within classification domains
inclusive of in-situ dilution at a cut-off grade of 3.32/t gold assuming an underground extraction scenario, a gold price of US$1,950/troy oz, an
operating cost of $198/t, and metallurgical recovery of 95%.
(2) Serabi is the operator and owns 100% of the Palito Complex such that gross and net attributable mineral resources are the same. The mineral resource
estimate was prepared by NCL Consultoria en Ingenieria en Minas in accordance with the standard of CIM and Canadian National Instrument 43-
101, with an effective date of 31 July 2023 by Mr Nicolas Fuster, who is a Qualified Person under the Canadian National Instrument 43-101.
(3) A three dimensional block model was used for Resources estimates.
Table 3 - Mineral Resources Statement, Coringa Gold Project, Para State, Brazil, as of 31 August 2019.
The current Mineral Resource estimates for the Coringa Mine (Table 3) are based on data as at 30 June 2019.
Classification
Indicated Resources
Inferred Resources
Quantity
Grade
Contained Metal
000’t
735
1,645
Gold
g/t
8.24
6.54
Gold
000'oz
195
346
During 2022, Serabi mined 7,654 tonnes of mineral resources at an average grade of 4.78g/t from the Coringa orebody and a further 42,780
tonnes of mineral resources at an average grade of 6.88g/t during 2023.
Notes to Table 5:
(1) Mineral Resources have been rounded. Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. Mineral Resources
are reported inclusive of Mineral Reserves. All figures are rounded to reflect the relative accuracy of the estimates. Underground Mineral Resources
are reported within classification domains inclusive of in-situ dilution at a cut-off grade of 2.0g/t gold assuming an underground extraction scenario,
a gold price of US$1,500/troy oz, an operating cost of $100/t, and metallurgical recovery of 95%.
(2) Serabi is the operator and owns 100% of the Coringa gold project such that gross and net attributable mineral resources are the same. The mineral
resource estimate was prepared by Global Resource Engineering in accordance with the standard of CIM and Canadian National Instrument 43-101,
with an effective date of 31 August 2019 by Mr Kevin Gunesch and Dr Hamid Samari, who are both Qualified Persons under the Canadian National
Instrument 43-101.
13
Strategic Report
Strategy and Business Model
Serabi has been present in the Tapajos region of Brazil for over 20 years during which time
it has established a loyal and committed work force and developed strong relationships with
local communities and government agencies.
Management wants to build on this base to grow Serabi’s gold production and resource
inventory in a measured and sustainable manner, minimising financial, environmental and
social risk as much as possible.
LINK TO
PRINCIPAL
RISKS
2, 3, 5, 6, 7, 8, 9
1, 2, 5, 6
1, 2, 4, 5, 6
1, 4, 7, 8
STRATEGY
1.
Producing operations provide the foundation for longer term growth
Sustainable production
Over 10 years of continuous gold production from the Palito Complex
Near term production growth to over 60koz pa Au for 2026, will drive
Successful track record of resource replacement
an AISC reduction
Exploration
2.
Identify high-quality opportunities through exploration within the
Group’s highly prospective tenement holdings
Near mine exploration at Palito and Coringa to target 1Moz Au
resource at each project
84,000ha exploration tenements in highly prospective and under-
explored Tapajós gold district
Exploration partnerships are being pursued to provide exposure to
copper exploration and development in the Group’s tenements
Development
3.
Leverage off an experienced work force, strong community and
regional support to bring new opportunities into production
Seasoned, technically-focussed management team with deep
experience in Brazil
Well established relationships with local communities. Historic
expenditure on community support programmes of approximately $2
million since the beginning of 2017
Direct employment of approximately 700 people in an historically
poor region, with over 70% from within the State of Para
100% Brazilian in-country management
Corporate opportunities
4.
The São Chico and Coringa projects are a demonstration of Serabi’s
ability to acquire complimentary development projects offering
attractive financial returns and maintaining a focused gold production
company
Well-funded to pursue near-term growth opportunities
Net cash position (no long-term debt)
Robust cash flow generation expected
14
Strategic Report
Strategy and Business Model
Current focus on successful development of its Coringa project.
Gold production is already underway with run of mine ore (“ROM”) being transported to the process plant at Palito.
A crusher and ore sorting plant will be installed and operational for Q4 2024.
Continued production growth in 2025 and 2026.
Evaluate opportunities for organic growth
84,000ha exploration tenements in highly prospective and under-explored Tapajós gold district
Near mine exploration at Palito and Coringa to target 1Moz Au resource at each project
Modular plant expansion to accommodate increased mined volumes
Company owns mills to add up to an additional 750tpd of process capacity (more than doubling current throughput)
New satellite discoveries to provide increased ore feed for central plant
“Hub and spoke approach” minimises upfront capital requirements and reduces development risk
Growth opportunities from mine development and exploration activities
The Group’s successful initial development of the Serra orebody of the Coringa gold project, is the first stage of this new
mine which is projected to reach its full production potential over the coming years as production from the Serra ore
body increases and the Group develops the Mei, Mae de Leite and Galena sectors which form the rest of the project as it
has currently been identified.
Ore recovered from the Serra deposit is very amenable to ore-sorting.
15
Strategic Report
Strategy and Business Model
The ore sorting process reduces the mass of the run of mine (“ROM”) ore by between 45 per cent and 50 per cent.
increasing the grade in the process. The reduced mass reduces the capacity of the process plant that would otherwise
be required and the levels of mine tailings generated.
Ore recovered from Coringa will continue to be transported to the Palito Complex for processing.
Significantly reduces upfront project capital costs and eliminates the significant build, performance and cost over-run
risk involved with the construction of a full independent plant.
Enhanced cash flow anticipated from the increased production allows internal cash flow to fund further modular
expansion of the process plant.
Additional plant capacity can accommodate additional ore feed from new satellite opportunities including a potential
re-start of Sao Chico.
16
Strategic Report
Stakeholder Engagement
Meeting the needs of all stakeholders
The delivery of our strategy is reliant on the support and commitment of our stakeholders
Key Stakeholder Groups
EMPLOYEES
Why we engage
Serabi’s employees, their welfare
and working conditions are
fundamental to our business. To
drive the success of the business, we
need to have a motivated workforce.
Alignment with our staff on
working practices is fundamental to
providing good health and safety
practices and maintaining our
commitment to sustainable
development.
How we engage
Employees are encouraged, at all
levels, to provide feedback directly
to management and senior
management. There is an open
dialogue at all levels. There are
operational and safety briefings
before the start of each shift.
Employees are encouraged to report
unsafe acts and near accidents
openly and there is an anonymous
reporting channel also. The Group
provides welfare workshops to
assist and raise awareness of
physical and mental health issues
and communicates each week with
its employees on the Group’s
activities and industry related
matters.
SHAREHOLDERS
Why we engage
Having invested risk capital in the
business, we have a duty to engage
with our shareholders and keep
them informed of our strategic
plans and progress towards these.
Regular and open communication
encourages confidence and
continued long term support.
FINANCIERS
Why we engage
The Group considers that existing cash
flow from operations provides
enhanced opportunity to secure
attractive borrowing terms for working
capital or to fund capital programmes if
and when required Management
therefore engages regularly with banks,
credit funds, development financial
institutions, streaming and royalty
companies and off-take financiers.
How we engage
One-to-one meetings with the CEO, CFO
and/or VP
Investor Relations and
Business Development are undertaken
on a regular basis with a range of
potential debt and other
finance
providers for updates on the Group’s
activities and in particular its Coringa
project. These meeting keep providers of
of
financing
progress with all aspects of the Group’s
operations.
appraised
solutions
How we engage
Substantial shareholders:
Both Fratelli and Greenstone have
the right to appoint up to two
Directors under the terms of their
respective Relationship
Agreements with the Company.
Other substantial shareholders
have periodic meetings with the
Chair, CEO and CFO.
Prospective and existing investors:
The AGM and Annual and
Quarterly Reports.
Investor roadshows and
presentations.
One-on-one investor meetings
with the CEO and CFO.
Access to the Company’s brokers
and advisers.
Regular news and project
updates.
Social media accounts.
How the Board engaged
Executive Board members are
present in-country every month and
meeting with a variety of personnel
during this time, obtaining feedback
on new operational ideas and
concerns. Other Board members
undertake periodic site visits to
familiarise themselves with the
Group’s operations and directly
engage with management in Brazil
at these times.
How the Board engaged
The AGM and other general
meetings are key opportunities for
shareholders to meet, whether
virtually or in person, with
Executive and non-executive
Directors. In addition to investor
conferences, the executive
Directors provide regular
interviews to supplement
regulatory news announcements.
17
How the Board engaged
Direct engagement of the Board with
non-equity providers of finance has not
been necessary with no new significant
financing facility put in place.
Management provides regular feedback
to the Board on discussions.
Strategic Report
Stakeholder Engagement
GOVERNMENTAL AGENCIES
AND REGULATORS
Why we engage
Engagement with government
bodies and regulators helps preserve
our operational licences, provides a
forum for discussion of potential
regulatory change and encourages
support for new licence applications.
CONTRACTORS AND
SUPPLERS
Why we engage
We value the role our trusted
contractors and suppliers play in
delivering products and services
and supporting our teams. We
also need to ensure that our
suppliers adhere to our values of
ethics and sustainability whilst
seeking to promote and support
local enterprises wherever
practical.
LOCAL COMMUNITIES
Why we engage
Establishing and maintaining good
relations with the local community
throughout the development, operation
and, at some time in the future, the
ultimate closure of the Group’s mining
operations is vital for the Group’s social
licence to operate. Engagement helps
build trust and assist with better
decision making. Dissemination of
accurate information regarding both the
Group’s existing and future projects,
and the early and ongoing engagement
with community leaders, form a
cornerstone of the Group’s ESG policies.
More than 70% of the Group’s
workforce reside within the State of
Para and the Group sources many of its
support services from local businesses.
How we engage
How we engage
The Group has a dedicated
procurement department and a
formal process for adding new
suppliers on to its approved list.
Key supply contracts are only
awarded after a formal tender
process and the value and nature
of the tender will determine the
level of engagement of senior
management in that process.
The Group’s dedicated HSE department
have regular dialogue with community
leaders working with them to
understand ways in which the Group
can assist the communities to improve
quality of life and receive feedback on
concerns or issues. Specialist advisers
and consultants are used to conduct
independent assessment and reports for
government as well as liaising with the
appropriate government agencies in
particular those responsible for
indigenous communities The Group has
an active programme of communication
through social media channels to
maintain open communication, promote
its activities and inform communities of
any short-term matters that may affect
them as a result of the Group’s
operations.
How the Board engaged
Engagement with contractors and
suppliers is carried out by
members of the management team,
with feedback provided to the
Board.
How the Board engaged
Reports from the HSE department are
summarised and received by the Board
on a monthly basis and any significant
community plans approved by the
Board.
How we engage
Agencies and regulators are
encouraged and assisted with visits
and inspections of the Group’s
activities. Key management staff
hold regular meetings with relevant
officials and the Group provides
regular monitoring and other
reports as required.
How the Board engaged
In addition to assistance from the
executive Directors, one of the Non-
executive Directors, resident in
Brazil, is in regular dialogue with
representatives of government
bodies on behalf of the Group and
also assists with the development of
strategy and regulations for the
mining industry in Brazil. Together
they provide regular feedback to the
Board.
18
Strategic Report
Stakeholder Engagement
As noted in the Strategy and Business Model, the Group considers its employees, local communities, shareholders and
government agencies to be key stakeholders in the long-term success of the Group’s activities. In addition, the Group considers
that its potential financing partners and its contractors and suppliers will be significant stakeholders in the Group’s growth and
development. Whilst there any many potential customers in the form of refineries for the Group’s gold production these are less
critical to the Group’s strategy and are therefore not considered to be key stakeholders.
19
Strategic Report
Section 172 Statement (Companies Act 2006)
Statement by the Directors in performance of their statutory duties in accordance with s.172(1) Companies Act 2006
The Directors of Serabi consider, both individually and collectively, that they have acted in the way they consider, in good faith,
would be most likely to promote the success of the Group for the benefit of its members as a whole (having regard to
stakeholders and matters set out in section 172 (1) (a-f) of the Companies Act 2006) in the decisions taken during the year ended
31 December 2023.
Our stakeholders
The Directors endeavour to balance the needs and requirements of all stakeholders which, in addition to the Company’s
shareholders, include the Group’s employees, the communities in the areas where it operates, government agencies and the
Group’s suppliers and customers, all of whom have a vested interest in the long-term success of the Group. As all the activities of
the Group are currently undertaken in Brazil and managed by a single management team the Directors are not, at this time,
required to consider any potentially competing interests of different members of the Group.
Our engagement
The Board and each Director acknowledge that the success of Company’s and Group’s strategy is dependent on the support and
commitment of all of the Group’s stakeholders. The Board, when necessary, engages directly with stakeholders as set out on pages
17 to 19.
However, considering the relative geographical locations of the operations and some of the Board members, much of the
stakeholder engagement mainly takes place at an operational level and the Board is therefore reliant on management to help it
fully understand the impact of the Group’s operations on its stakeholders as set out on pages 17 to 19.
During the year in review, the Board considered information from across the Group’s business and received presentations from
management, working groups and Board advisers. In addition to this, the Board reviewed papers and reports and took part in
discussions which considered, where relevant, the impact of the Group’s activities on its key stakeholders. These activities,
together with direct engagement by the Board and individual Directors with some of the Group’s key stakeholders and
shareholders, helped to inform the Board in its decision-making processes.
Our decision making
The Board recognises that balancing the needs and expectations of stakeholders is important. We set out below how we consider
the matters in our decision making:
S172 factor
Our approach
Relevant disclosure
(a) the likely consequence
of any decision in the long
term.
(b) the interests of the
company’s employees.
The Board is always mindful of the long term and the
consequence of any decision on this timeframe. The decision-
making process has been structured to enable Directors to
evaluate the merit of proposed business activities and the likely
consequences of its decisions over the short, medium and long
term, with the aim of safeguarding the Company and the Group
so that it can continue in existence, fulfilling its purpose and
creating value
for stakeholders. The exploration and
development required prior to initial gold production can be a
long process, so the Board are always mindful of the longer-
term plan including the longer-term strategic vision to become
the premier gold growth company in Brazil. Decisions are
therefore always made with this longer-term plan in mind.
Our employees and their welfare are fundamental to our
business. Employees are encouraged to feedback directly to
management and senior management. A Whistleblowing Policy
is also operational across the Group to allow employees to
feedback in an anonymous manner.
20
Strategic report on pages 17 to
19
Strategic report on pages 17 to
19 and pages 37 to 42
Strategic Report
Section 172 Statement (Companies Act 2006)
(c) the need to foster the
company’s business
relationships with
suppliers, customers and
others.
The Board is committed to fostering the Company’s business
relationships with contractors, suppliers and also governmental
agencies and representatives. These relationships are vital to our
business model so key management staff hold regular meetings
with relevant officials and keep them appraised with regular
reporting. Suppliers and contractors’ relationships also require
a high level of senior management engagement.
Strategic report on pages 17 to 1
(d) the impact of the
Company’s operations on
the community and the
environment.
the
local
in which
community
The Board recognises the importance of the Group’s operations
on
operates
and the environment. Early and continued engagement with the
local communities is the cornerstone to Serabi’s ESG policies.
How the Group’s activities may impact these communities and
the
considered
is
environment
and monitored closely.
always
it
Strategic report on pages 17 to
19 and pages 37 to 42
(e) the desirability of the
company maintaining a
reputation for high
standards of business
conduct.
The Board recognises the importance of operating to the highest
standards of compliance across the business. Morality and
ethics are central to the Company’s values and define how we
wish to interact with all stakeholders. Regulation, monitoring
and scrutiny are welcomed and considered at each level of
decision making.
Strategic report on pages 17 to
19
Corporate Governance Report
on pages 53 to 62
(f) the need to act fairly as
between members of the
company.
The Board recognises the importance of treating all members
fairly and monitors the views of all Company shareholders
(including the views of the substantial shareholders) through
reports on investor and analyst communications so that their
views and opinions can be considered when setting strategy.
Strategic report on pages 17 to
19
Directors’ Report on pages 82 to
86
21
Strategic Report
Chief Financial Officer’s Review
Overview
Twelve months ago, I reported that 2022 had been planned
as a year of investment as the Group commenced the
development of Coringa, which will drive production
growth over the next couple of years. The reward for that
investment has been manifesting itself through the year.
Production from Coringa was over 8,800 ounces and we
anticipate a further significant uplift during 2024 as we
target 38,000 to 40,000 ounces, with that increase expected
to be primarily attributable to Coringa. Whilst overall
gold production improved by four per cent, sales revenue
was up by almost nine per cent as we benefited from
continued improvement in the gold price. At the same
time we were able to maintain operating costs at a very
similar level to the previous year and as a result Operating
Profit is up by US$5.3 million, a 241 per cent increase, with
EBITDA of US$13.7 million being up by US$4.9 million, a
57 per cent improvement year on year.
Revenue
More importantly despite continued development of
Coringa, cash has also improved with net cash up by
US$4.75 million. Cash generated from operations and
after capitalised mine development expenditure was
US$7.7 million, a significant improvement on the net
outflow of US$1.7 million of 2022.
In my 2022 overview I indicated that we would only be able
to secure the necessary longer term funding for Coringa
once adequate progress had been made on the licencing
situation. Roll forward 12 months to today, and with the
continued support from existing lenders and the cash flow
we expect to generate given current market conditions, we
are confident that we can continue the planned development
of Coringa without any financing related delays. The ore
sorter has been purchased and cleared customs in Brazil in
early April. The area for its installation has been cleared and
the civil works for installation are already underway.
2024 will nonetheless be another year of investment. In
addition to the purchase and installation of the crushing and
ore-sorting plant, we are undertaking an underground
drilling campaign on the Serra orebody at Coringa. This will
allow the Group to issue a new Technical Report with
updated mineral reserves and resources for the Coringa
project later this year. We are specifically drilling the down
dip extension of the Serra orebody. These investments will
be key to the Group positioning itself to deliver its continued
growth plans for 2025 which in turn can be expected to
provide the opportunity to reduce unit production costs.
One of our largest cost items is power and in particular the
cost of diesel for generators to run the Palito Complex and
the process plant. In the latter part of 2023, we have been
increasingly reliant on these generators due to fluctuations
in the voltage of the power delivered by the grid,
particularly during the wet season. We are working with the
local transmission company, and anticipate that later in 2024
we will have a more reliable and higher capacity
transmission line connected to the Palito Complex. This
should in turn reduce our need for diesel sourced power,
improving our
providing both costs savings and
environmental credentials as the grid power will come from
renewable sources.
For the year ended 31 December 2023, the Group generated US$31,103,442 (2022: US$29,185,137) in revenue through sales of an
estimated 14,819 ounces of gold sold as copper/gold concentrate (2022: 15,443 ounces) and 16,873 ounces of gold bullion generating
revenue of US$32,604,026 (2022: 16,368 ounces for revenue of US$29,524,191)
The average gold price received during 2023 was US$1,945 compared with a price of US$1,785 received during 2022.
22
Strategic Report
Chief Financial Officer’s Review
Production of gold bullion for the year to 31 December 2023 was 17,718 ounces of gold compared with 16,820 ounces for the
previous year, an increase of five per cent.
During the same 12 month period 1,714 wet tonnes of copper/gold concentrate, containing an estimated 15,435 ounces, was
produced (12 months to 31 December 2022: 1,316 wet tonnes of copper/gold concentrate, containing 14,999 ounces of gold). The
unsold material is held as inventory.
Revenue improved by US$5.0 million year on year a consequence of the higher gold production which was up by four per cent
(1,334 ounces) and the improved average gold price which was nine per cent better from US$1,785 in 2022 to US$1,945 in 2023.
Total sales volume for 2023 was 32,537 ounces compared with 31,811 ounces realised in 2022. Shipments of copper/gold
concentrate for 2023 increased by 16 per cent year on year.
Concentrate sold (ounces)
Bullion sold (ounces)
Total Ounces Sold
12 months
ended
December 2023
US$
14,819
16,873
31,692
12 months
ended
December 2022
US$
15,443
16,368
31,811
Average gold sales price achieved
US$1,945
US$1,785
Revenue from Ordinary Activity
Gold (in Concentrate)
Copper (in Concentrate)
Silver (in Concentrate)
Total Concentrate Revenue
Gold Bullion
Total Sales
Costs of sales
Operational costs
Stock impairment provision
Provision for impairment of State taxes receivable
Shipping costs
Treatment charges
Royalties
Amortisation of mine property
Accelerated amortisation of fixed assets
Depreciation of plant & equipment
Total operating costs
Gross profit
Costs of sales
27,880,515
3,051,879
171,048
31,103,442
32,604,026
63,707,468
40,245,823
230,000
–
1,503,995
703,381
731,540
2,719,243
1,572,192
1,948,121
49,654,295
14,053,173
26,576,214
2,478,897
130,026
29,185,137
29,524,191
58,709,328
40,210,382
–
1,151,899
1,351,120
701,303
848,065
4,660,861
–
1,911,600
50,835,230
7,874,098
Variance
US$
(624)
505
(119)
1,304,301
572,982
41,022
1,918,305
3,079,835
4,998,140
35,441
230,000
(1,151,899)
152,875
2,078
(116,525)
(1,941,618)
1,572,192
36,521
(1,180,935)
6,179,075
Operational costs for the twelve months ended 31 December 2023 were US$40.25 million (2022: US$40.21 million). Operational
costs include those related to the operational mining and administrative expenditures at Palito, Coringa and Sao Chico and the
plant costs at the Palito Complex where the ore mined from the Palito, Sao Chico and Coringa deposits is processed.
Tonnes mined
Tonnes milled
Ounces produced
Ounces sold
12 months ended
December 2023
177,870
172,200
33,153
32,537
12 months ended
December 2022
173,741
172,404
31,819
31,811
Variance
4,129
(204)
1,334
726
23
Strategic Report
Chief Financial Officer’s Review
Operating Costs
Labour
Mining consumables & maintenance
Plant consumables
General site
12 months ended
December 2023
US$’000
12 months ended
December 2022
US$’000
Variance
US$’000
17,306
13,684
5,433
3,823
40,246
17,290
13,672
5,428
3,820
40,210
16
12
5
3
36
During 2023 the average exchange rate was BrR$4.99 to US$1.00 compared with an average exchange rate of BrR$5.16 to US$1.00
during the same period of the previous year, a weakening of approximately three per cent.
Operational costs for 2023 are one percent higher than in 2022 which reflects the two percent increase in tonnes mined. The increase
in shipping costs reflects the increase in concentrate tonnes shipped in 2023 in comparison to the previous year.
Amortisation charges are reduced significantly compared with the same period in 2022. As previously advised, the Group had
been reducing its activities during 2022 at its Sao Chico operation and has been using the development of the Coringa operations
to generate gold production to replace that which has been lost from Sao Chico. Amortisation is calculated using the “units of
production” basis and, as a result of the current limited mining activity at Sao Chico during the first quarter of 2023, amortisation
has been significantly reduced. Whilst activities at Coringa have been growing, this project is still in a trial mining phase and a
decision regarding commercial production will be made by the Board once the Company is in a position to expand production
with the installation of the crushing and ore-sorting plant complete and commissioned. Until this time, in accordance with
accounting regulations, no amortisation change is being recorded in respect of the Coringa operations.
Trade Debtors
The trade debtor balance has decreased by US$2.43 million from US$5.29 million at 31 December 2022 to US$2.86 million at 31
December 2023. This is primarily due to timing differences on the receipt of sales proceeds from monthly sales of copper
concentrate. At 31 December 2022 the Group was owed US$2.23 million from the sale completed shortly before the end of the
calendar year. The payment was received in early January 2023. At the end of December 2023 initial proceeds from all sales
recorded during the period had been received.
Hedging Activities
During the first of quarter the Group entered into hedging contracts with HSBC Bank plc whereby it acquired sell options over
monthly quantities of gold over the period March 2023 to February 2024 totalling 10,215 ounces of gold at a price of US$1,800. At
the same time, it sold to the bank options in favour of the bank to buy the equivalent monthly quantities of gold at prices ranging
between US$2,000 and US$2,065 per ounce. It also acquired options to sell monthly receipts of US Dollars ranging between US$2.3
million and US$1.15 million for Brazilian Real at an exchange rate of BRL5.10 to USD1.00. At the same time, it sold to the bank
options in favour of the bank to buy from the Group the equivalent Brazilian Real receipts at exchange rates ranging from 5.325
to 5.800 over the same 12 month period. In this way the Group secured a minimum equivalent gold price in Brazilian Real of
BRL9,180 per ounce in respect of 10,215 ounces and sold options in favour of the bank of future prices ranging between BRL10,650
per ounce and BRL11,997 per ounce depending on the option expiry date. Since January 2021 the BRL price for gold peaked at
BRL10,500 in March 2023 and was at a low of BRL8,556 in October 2022. The hedging arrangements are unsecured and not subject
to margin calls.
Gold and hedging contracts entered into by the Group are valued on a mark-to market basis at the end of each period and any
increase or decrease in value reported through the income statement. Any settlement values receivable or payable during the
period are recognised in the period and reported through the income statement. During the twelve month period ended 31
December 2023 the Group received net settlements in its favour totalling US$466,803. The outstanding foreign exchange hedges
at 31 December 2023 had a mark to market value of US$110,249 whilst the outstanding gold hedges had a net mark to market
value of a loss of US$41,635. The hedging transactions that were outstanding to be settled at the end of the year had a value of
US$47,695, in favour of the Group.
24
Strategic Report
Chief Financial Officer’s Review
Borrowings
In May 2022, the Group received US$5.0 million of short-term loan funding from Itau BBA in Brazil, providing the Group with
additional working capital. In February 2023 the Group was offered a further similar unsecured loan arrangement for US$5.0
million with an interest coupon of 7.96 per cent by Santander Bank in Brazil. The proceeds raised from the Santander loan were
used for working capital and secured adequate liquidity to allow the repayment on 12 May 2023 of the loan with Itau. On 7
January 2024 the Company secured a new US$5.00 million loan from Itau BBA and the Santander loan was repaid as a bullet
payment on 22 February 2024. The new Itau loan is repayable as a bullet payment on 6 January 2025 and carries an interest coupon
of 8.46 per cent.
The Group also has access to an unsecured facility with HSBC Bank plc allowing the Group to enter into leasing of precious metals
for up to 12 months at a time. The Group has not utilised this facility, but it provides a further opportunity for accessing short-
term working capital.
Clive Line
Finance Director
26 April 2024
25
Strategic Report
Going Concern and Longer-Term Prospects
The Group’s business activities, together with factors likely to affect its future development, performance and position are set out
in this Strategic Report. At 31 December 2023, the Group held cash of US$11.6 million. It has subsequently reported that at 31
March 2024 it held cash of US$11.1 million with delayed receipts of US$1.1 million also due to be received.
Further details of the financial position of the Group, its cash flows and liquidity position are described in the Chief Financial
Officer’s Review, with details of its balance sheet commitments set out in notes 17 to 21 of the Group Financial Statements. The
Group Financial Statements includes commentary in note 23 regarding the Group’s objectives, policies, and processes for
managing its capital; whilst details regarding the Group’s objectives concerning its financial risk management objectives; details
of its financial instruments; and its exposures to credit, market and liquidity risk are set out in note 26. The Group monitors its
capital position and its liquidity risk regularly throughout the year, updating as required cash flow models and forecasts taking
into account revised production estimates, foreign exchange rates and metal price estimates as well as any variations in capital or
operating cost estimates. Sensitivities are prepared that reflect the key operational and financial parameters.
Whilst each of the risks outlined in the Principal Risks section below has a potential impact on the business, the Directors focussed
on those that are the most critical to the Group’s prospects, which are considered to be:
Geological risk (risk 2)
Mining risk (risk 3);
Licencing and environmental risk (risk 5) and
Gold price and exchange rate risk (risk 7).
The Group’s base case going concern assessment assumed the following:
average gold price of US$1,950 per ounce in 2024 and 2025;
average exchange rate of BRL4.90 to USD1.00 in 2024 and 2025;
gold production in line with published guidance;
ore recovered from mining operations at Coringa continuing to be transported to the Palito Complex for processing;
the installation of the crushing and ore sorting circuit at Coringa and this being operational from 1 October 2024 onwards;
and
a brownfield exploration programme to continue the advancement of certain gold exploration targets using the Group’s
own personnel and equipment supplemented by third party contractors as required
Under the base case scenario, the Board considers that the Group has sufficient liquidity with sufficient headroom thereafter for
a period of at least 12 months from the date of this report to fund ongoing working capital requirements subject to the Group
being able to renew or replace the January 2024 a working capital loan of US$5 million when it falls due in that month. The Group
currently has access to an undrawn, unsecured lending facility with a major international bank that could replace this US$5 million
loan as well as strong relationships with three Brazilian banks (including the current loan provider) willing to provide lines of
credit. In addition, the Group has flexibility to restrict some of its capital plans and exploration activity to liberate additional
working capital.
Since 1 January 2024, the gold price, quoted in US Dollars, has traded above the levels of the base case scenario, and since early
March has traded at a price in excess of US$2,150 per ounce and since early April 2024 has traded at a price in excess of US$2,300
per ounce. Over the same period the exchange rate between the US Dollar and the Brazilian Real has been above the 4.90 rate
assumed in the base case scenario, and during April 2024 the exchange rate in response to global economic factors weakened to a
rate of 5.20. the Group pays for up to 85% of its costs in Brazilian Real and therefore a weakening of the Brazilian Real will result
in a reduction in its US Dollar reported costs.
The Group operations are subject to a variety of licences issued by differing governmental bodies. At the current time
management consider that the Group is in compliance with its licence obligations and there is no expectation that any existing
licence will be withdrawn or may not be renewed when appropriate. The withdrawal or suspension of any licence may restrict
or result in a suspension of the current operations. In recent years legislation and/or regulations have been amended at short
notice in reaction to events at other mining operations. The Group has been able to react and fund the costs of complying with
such changes in the past and management anticipate, given the nature and size of its operations, that the Group would continue
to be able to do so in the future.
26
Strategic Report
Going Concern and Longer-Term Prospects
Conclusion
The Directors have concluded that, based on the current operational projections, it remains appropriate to adopt the going concern
basis of accounting in the preparation of these audited financial statements. The Directors acknowledge that the Group remains
subject to operational and economic risks and any unplanned interruption or reduction in gold production or unforeseen changes
in economic assumptions may adversely affect the level of free cash flow that the Group can generate on a monthly basis and its
ability to secure further finance as and when required The Directors consider that the Group will be able to secure short term
working capital finance if this is required for the ongoing operational activities and development of its projects. The Directors
have received no indications that the necessary permits and licences will not be awarded.
Assessment of the Group’s longer-term prospects
The longer-term prospects of the Group are driven by its strategy and business model, as outlined on pages 14 to 16, whilst
factoring in the Group’s principal risks and uncertainties (pages 28 to 36). Assessment of the business is performed over a number
of different time periods for differing reasons, which include an annual budget cycle (with reforecasts made as appropriate during
the year) and a long-term corporate model which incorporates the latest annual budget and provides forecast cash flow detail for
each of the Group’s mining operations.
Extending the base case assessment (using long term gold prices of US$1,950 per ounce and an exchange rate of BRL4.90 to
USD1.00), and assuming that Coringa production ramps up in a similar manner to that originally projected in the 2018 Pre-
feasibility study, the Group is projected to continue generating positive cash flows from operations sufficient to meet the ongoing
requirements for the development of Coringa. Thereafter, the Group intends to use cash generated from operations to develop
other opportunities that it identifies from successful exploration and seek attractive investment opportunities, focused on the gold
sector in Brazil and South America to grow the underlying value of the Group and build a broader base to develop in the future.
27
Strategic Report
Risks and Controls
There are many risks inherent with mining operations which to a greater or lesser degree companies can anticipate, plan for and
seek to mitigate. These risks may impact on a company only in the short-term or may have longer-term implications for the
success and development of the enterprise and its mining projects. When assessing the Group’s operations, the Board and
management are conscious that the Group can elect to assume or tolerate a risk, introduce controls and processes that are intended
to mitigate that risk, transfer the risk to third parties through insurance or other means or not pursue certain activities or actions
to eliminate the risk entirely.
Risk Framework
In addition to management of risks inherent in mining and development operations, the Board is responsible for putting in place
a system to manage risk and implement internal controls. The Board has considered mechanisms by which the business and
financial risks facing the Group are managed and reported to the Board. The Board and management consider the principal
business and financial risks have been identified and appropriate control procedures implemented. The Board acknowledges it
has responsibility for reviewing the effectiveness of the systems that are in place to manage risk.
The Board determines the Group’s “risk profile” and is responsible for overseeing and approving risk management strategy and
policies, internal compliance and internal control.
The Board has delegated to the Audit and Risk Committee responsibility for overseeing the implementation of the risk
management system.
The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management.
Management is required to assess risk management and associated internal compliance and control procedures and report back
to the Audit Committee at least annually. The Board reviews assessments of the effectiveness of risk management and internal
compliance and control at least annually.
The Board is responsible for reviewing and approving overall Group strategy, budgets, and plans. Monthly results and variances
from plans and forecasts are reported to the Board.
There are procedures for budgeting and planning, for monitoring and reporting to the Board business performance against those
budgets and plans, and for forecasting expected performance over the remainder of the financial period. These cover cash flows,
capital expenditures and balance sheets.
The Audit Committee meets at least four times during a year and in these meetings will consider and discuss with the auditors,
the audit approach and key areas of risk for reporting the annual financial results, review and approve the annual financial
statements and all interim financial statements.
The Audit Committee is responsible, inter alia, for:
Reviewing the Group’s risk management framework at least annually in order to satisfy itself that the framework
continues to be sound and to determine whether there have been any changes in the material business risks the Group
faces.
Ensuring that the material business risks do not exceed the risk appetite determined by the Board.
Overseeing the Group’s risk management systems, practices and procedures to ensure effective risk identification and
management, and compliance with internal guidelines and external requirements.
The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies
and the maintenance of proper internal business, and operational and financial controls.
The Audit Committee reviews the adequacy of accounting and financial controls together with the implementation of
any associated recommendations of the external auditor.
28
Strategic Report
Risks and Controls
The Board considers that the following risks are those which present the most significant uncertainty for the Group at the current
time and could have the most serious adverse effect on its performance and reputation.
Risk
1
2
3
4
5
6
7
8
9
Capital and funding requirements for
development of new projects
Geological risk
Mining risk
Project development risk
Licencing and environmental risk
Personnel and expertise
Gold prices and exchange rates
Bribery and corruption
Litigation
Link to going
concern
assessment
Sustainable
production
Link to Strategy and Business Model
Exploration
Development
Acquisition
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Current risk assessment matrix
t
s
o
m
A
l
n
i
a
t
r
e
c
y
l
e
k
i
L
e
l
b
i
s
s
o
P
y
l
e
k
i
l
n
U
e
r
a
R
Increasing
likelihood
Very low
Low
Moderate
High
Very high
Increasing financial and non-financial consequences
Further details of these are set out below in the section Principal Risks and Uncertainties.
29
Strategic Report
Risks and Controls
Internal Controls
The Group has an established framework of internal financial controls, the effectiveness of which is regularly reviewed by the
senior management team, the Audit Committee, and the Board considering ongoing assessments of the significant risks facing
the Group.
The Directors acknowledge their responsibility for the Group’s system of internal controls and procedures and for reviewing the
effectiveness of these and ensuring that management of its subsidiaries review the internal controls and procedures operating in
the subsidiaries. Such controls and procedures are designed to safeguard the Company’s and the Group’s assets and ensure
reliability of reporting information, financial and otherwise, for both internal use and external publication. The Group’s
management has designed internal controls over financial reporting, in order to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
The Board and management, taking account of the size and nature of the Group, base the design of the Group’s internal control
procedures using the criteria, having taken account of the size and nature of the Group, put forward by the Financial Reporting
Council in their revised guidance for directors on internal controls for UK listed companies (issued September 2014). Nonetheless
the Group’s management, including the Chief Executive Officer and the Chief Financial Officer, does not expect that its disclosure
controls and internal controls over financial reporting will prevent or detect all errors and fraud. A cost-effective system of internal
controls, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of
the internal controls over financial reporting are achieved.
The Board is responsible for ensuring that a sound system of internal control exists in order to safeguard shareholders’ interests
and the Group’s assets. In conjunction with the Audit Committee, it is responsible for the regular review of the effectiveness of
the systems of internal control. Internal controls are necessarily designed to manage risk rather than eliminate it. The key features
of the system that operated during the period are:
•
•
•
•
•
•
Regular Board meetings to consider the schedule of matters reserved for Directors’ consideration;
A risk management process;
An established organisation with clearly defined lines of responsibility and delegation of authority;
Appointment of staff of the necessary calibre to fulfil their allotted responsibilities;
Comprehensive budgets, forecasts and business plans, approved by the Board, reviewed on a regular basis, with
performance monitored against them and explanations obtained for material variances;
Documented whistle-blowing policies and procedures.
30
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
Key
Risk has increased
Risk has decreased No change
1. Capital and funding requirements for development of new projects
The Group requires access to capital in order to develop its Coringa project and other future
potential projects. Uncertainty over the future returns from these projects and other
macroeconomic factors may constrain ability to raise external finance. Reliance on cash flow
from the Group’s operations may not provide sufficient cash flow to fund development
projects organically.
Potential Impact
Impairment of development assets.
Mitigation
Major new project developments need to
have certainty of being fully funded
before any construction and/or
development decision can be taken.
Impairment of exploration assets.
Ability to replace and grow mineral resource
inventory.
Loss of value for stakeholders.
Change in risk level
Risk Movement
Improvement in the gold price has
provided improved potential for cash
generation both from existing and new
projects reducing risk for lenders.
Delays in start up are unlikely to result
in revocation of licences or other
authorisations.
Current interest rate projections are
expected to result in reduced borrowing
costs.
Recent governmental change is not
considered to have significantly changed
the long-term political and economic risk
rating for Brazil.
Establishing annual budgets for
exploration activity funded from
operational cash flow. Exploration
obligations can be spread over the
licence period improving the likelihood
of extension or conversion into mining
licences for the most prospective areas.
Active engagement with providers of
finance including current and potential
shareholders. brokers, banks and other
financing institutions.
Looking at opportunities for joint
ventures particularly for exploration
activity which may significantly reduce
funding risk whilst retaining significant
upside optionality.
2. Geological risk
The Group’s production and development projects are underground narrow vein gold
deposits. By their nature such ore bodies can be erratic in the grade of gold within the vein
and also the widths of these veins. Geological interpretations and therefore mine plans can be
subject to change as additional data becomes available and greater understanding regarding
the nature of the veins and their origins is established.
Potential Impact
Reduction in gold production and associated
cash flow.
Mitigation
Impairment of development assets.
Impairment of exploration assets.
Ability to replace and grow mineral resource
inventory.
The Group undertakes significant and
systematic exploration activity before
evaluating an ore body as an economic
mineable resource and commissions
independent technical experts to prepare
reports to support the Group’s internal
assessments.
Independent accredited laboratories are
used to confirm assay data from samples
recovered from exploration activity and
confirm results from the Group’s own
laboratory facilities.
31
Change in risk level
Risk Movement
In November 2023, the Group published
an updated Reserve and Resource
estimate for the Palito Complex. This
resulted in a threefold increase in
Mineral Reserves, sufficient to provide
six more years of production at current
rates with a further Mineral Resource of
171,000 ounces in the Measured and
Indicated category. This significantly
reduces the geological risk of the Palito
Complex operations.
The mine development of the Serra Vein
system at Coringa has resulted in better
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
2. Geological risk
As part of its on-going daily operational
expenditure the Group actively
undertakes exploration activity to assist
its medium and long-term mine
planning.
than predicted results in particular
higher levels of payability. Rock
conditions encountered to date have also
not raised any cause for concern for the
longer term viability of the operation.
The Group seeks to maintain a number
of mining faces at any one time to
minimise the risk of unforeseen
geological events significantly impacting
production.
Management concludes that geological
risk to its current mining operations has
reduced based on the results derived
during 2023.
3. Mining risk
The Group’s production and development projects are underground narrow vein gold
deposits. Underground mines have inherent risks including those resulting from geological
faults or varying rock types which may ultimately compromise certain areas from being mined
on the basis of safety.
Change in risk level
Potential Impact
Reduction in gold production and associated
cash flow
Cessation or suspension of mine activity.
Mitigation
Risk Movement
The continued development of the
Coringa mine during 2023 has allowed
management to understand better the
prevailing ground conditions and
evaluate and mitigate any potential
problems that could impact the safety of
mining operations of this new deposit.
Whilst new areas continue to be
identified and mined at the Palito
deposit there has been no identifiable
change in the competency of the host
rock.
The Group employs personnel with
significant experience and
understanding of similar deposits and
mining operations.
Mining methods consider the ground
conditions and competency of the host
rock and appropriate and recognised
measures are taken to provide support
in areas where the integrity of the host
rock may be compromised.
The ground conditions at the Group’s
various operations have historically
been very good with limited occurrences
of faulting or other features that may
present significant challenges to
working conditions and employee
safety.
The Group uses remote controlled
equipment in any areas that are
considered to present any potential
hazard.
4. Project development risk
The Group’s Coringa project was originally scoped to include the construction of a full scale
gold processing and production plant. With any engineering project there is always the
potential for delays, cost-overruns or under-performance which can significantly impact
economic viability or result in increased financial resources being required.
Change in risk level
Potential Impact
Mitigation
Risk Movement
32
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
4. Project development risk
Inability to secure funding because of
perceived construction and development risks
Reduction in forecast gold production and
associated cash flow
Inability to repay debt obligations resulting in
breaches of covenants or other undertakings
leading to security undertakings and other
guarantees being enforced against the Group.
Higher operational costs than forecast.
The Group has identified that using ore
sorting technology, it has adequate
capacity to process Coringa gold ore at
the existing Palito Complex process
plant. This will allow for significantly
reduced development risk, lower capital
costs and therefore financing needs.
Operating cash flows will be impacted
by costs of transportation of ore between
the Coringa and Palito sites.
Future process capacity can be
established by further expansion of the
Palito Complex plant or a dedicated
Coringa plant as originally envisaged
but can be financed with the support of
higher production levels and free cash
flow subject always to the prevailing
metal prices and exchange rates.
The Group’s operations are based in
Brazil, a country with a long and
successful mining history and with a
well-established and experienced
network of contractors, fabricators and
engineering expertise.
The Group has an established and
skilled workforce and access to
engineering and fabrication specialists
with experience of designing, building
and operating similar mines and gold
process plants.
The Group owns and operates a gold
process plant at its Palito Complex
which has been processing gold ore
recovered from Coringa since July 2022.
The Group has successfully developed
the Coringa mine to the 225mRL
approximately 120 metres below surface
without encountering any significant
issues.
The Group has trialled successfully ore
sorting on ore recovered from the Serra
deposit at Coringa. Ore sorting test
work has significantly reduced the levels
of waste that would otherwise be
processed and increased the underlying
average grade of the resulting material
that remains to be processed.
5. Licencing and environmental risk
The Group’s mining, development and exploration projects are subject to a variety of licencing
conditions including environmental permits. The ability to continue mining operations,
undertake construction and development activities or exploration is dependent on obtaining
the necessary licences in good time, and maintaining these in good order.
Change in risk level
Potential Impact
Mining operations may be suspended or
subject to other enforcements notices.
Construction and development of new projects
may be delayed whilst permits are obtained
and permits and licences that have been
granted may still be subject to legal appeals or
other disruptive actions by other interested
parties.
Exploration activities may be delayed or
cancelled if authorisations to obtain access or
environmental permissions are delayed or
denied.
Mitigation
The Group has operated in the Tapajos
region of Para, where its projects and
exploration activities are located, for
over 20 years. During this time, it has
established strong relationships with the
various governmental agencies and local
communities and obtained excellent
understanding of the necessary
procedures and policies to be followed.
The Group’s operations have a small
footprint, the mines are underground,
and with high-grade ore. The volume of
material required to be mined is low
compared with surface mining
operations and therefore have a
relatively low environmental impact.
Risk Movement
Under a court decision made in
December 2021, following an action
brought by the office of the Brazilian
public prosecutors (“MPF”), the ANM
(the National Mining Agency)and
SEMAS (the State Environmental
Agency) were not permitted to issue
new licenses until appropriate
consultations had been made with
indigenous communities.
The Group commenced in late 2021 the
commissioning of the necessary studies
and the steps required to complete the
consultation process.
In July 2023, the Group, executed an
agreement with the indigenous
33
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
5. Licencing and environmental risk
The Group has established processes for
monitoring and reporting and updates
these as required to meet changing
legislative and other requirements.
6. Personnel and expertise
The Group’s is reliant on a small number of senior individuals who manage the day to day
activities. In addition, the specialised nature of the Group’s mining operations means that it is
dependent on an operational team that has specific skills and experience in the mining of
narrow vein underground deposits. These skills are not readily available in Brazil and the
Group has trained its personnel in the particular skills and understanding relevant to its
mining operations Although there is no significant similar mining operation expected to be
developed in the near vicinity, other gold mining projects are being developed nearby
resulting in increased competition for personnel and there is no guarantee that the Group will
be able to attract and retain all personnel necessary for the operation and development of its
business. Mining professionals are accustomed to relocating for the purposes of progressing
their careers and therefore the Group’s employees may be attracted to employment
opportunities both in other parts of Brazil and in other countries.
Potential Impact
Mitigation
Increased staffing costs as a result in increased
salary levels required for staff retention.
The Group seeks to provide attractive
remuneration and benefits arrangements
for its staff, designed to attract and
retain key employees.
Reduced productivity as a result of higher
staff turnover, unfilled vacancies and reduced
experience and skill levels.
The Group has established a loyal group
of senior employees who have
responsibility for planning and strategy.
Bonus schemes in place to incentivise
key employees.
34
communities securing their ongoing
support for the project. In December
2023 a further agreement with all other
stakeholders was executed and ratified
by the court which granted permission
to the ANM and SEMAS to renew the
existing licence arrangements for the
project.
In January 2024, the ANM issued a new
trial mining licence for the project valid
for three years.
Climate change considerations continue
to increase as well as the awareness of
the potential for environmental damage
arising from mining operations. The
Group is dependent on actions, that the
Group cannot control, being taken by
the providers of electricity in the region
to reduce key factors affecting its CO2
emissions. It is working with these
providers and hopes that a new reliable
power supply will be stablished during
2024 that will allow for a significant
reduction in the Group’s CO2 emissions.
Nonetheless the Group’s greenhouse
gas emissions intensity of 420kgs CO2.-e/
oz Au is 49% lower than the industry
average.
Change in risk level
Risk Movement
The Group has been a significant
employer in the region for a number of
years with little competition from other
mining companies. In the last 24 months
the development of the Tocantinzinho
gold project located approximately 60
kms from the Palito Complex has
commenced and the Group’s staff
increasingly approached to work with
this new project. Employment numbers
at Tocantinzinho are reported to have
reached the maximum projected levels
during 2023. The Group in 2023
experienced high levels of turnover but
operations were not affected.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
7. Gold prices and exchange rates
The Group sells all of its product into the international market and receives prices for its gold
and other metals linked to world market prices. Whilst revenues are denominated in US
Dollars the Group estimates that 85 per cent of its expenditures are undertaken in Brazilian
Real. It is therefore exposed to any adverse correlation between the gold price denominated in
US Dollars and the Brazilian Real exchange rate with the US Dollar.
Potential Impact
Reduced operating margins and cash flow
generation.
Mitigation
Reduced ability to raise finance because of
perceived risk.
Restrictions on cash flow may require that
discretionary expenditure for project
development or exploration be reduced or
delayed.
The Group monitors the gold price in
Brazilian Real to ascertain its exposure
to gold price and exchange rate
movements. Over the past 3 years the
average price per ounce has not declined
below BRL8,500 for any significant
period providing an element of stability
for planning purposes.
The Group has available finance
facilities that allow it to hedge some of
its exposure to gold price and exchange
rate fluctuations for a period of time.
8. Bribery and corruption
The Group operates in a jurisdiction that has experienced a number of well documented high
and low level cases of bribery and corruption and it is known that certain public and private
sector officials have been involved in bribery or other corrupt practices. Any licence or permit
that the Group is awarded could be rescinded in the event that it was identified that its award
had been directly or indirectly influenced by actions of bribery or corruption.
Potential Impact
Loss of licences may lead to cessation of
production, inability to develop projects or
limit exploration opportunities.
Mitigation
Engagement in bribery is likely to limit the
Group’s competitiveness in the market place
going forward, resulting in loss of value for
stakeholders.
The Group’s code of corporate
governance specifies the measures the
Group takes to comply with all
applicable Anti Bribery & Corruption
legislation. The Board, through its
statutory oversight commitment,
enforces adherence and management
has implemented policies and provided
training to all staff who have decision
making responsibility and may, in their
day-to-day activities, be solicited to
engage in bribery or other corrupt
practices.
The Group operates a confidential
whistle-blower line and any events are
reported to the Audit and Risk
Committee. .
35
Change in risk level
Risk Movement
Gold prices in BRL were broadly similar
between 2022 and 2023 with the average
price of BRL9,218 per ounce being 4%
lower than the average price for 2022
The price has fluctuated between
BRL9,500 and BRL12,500 per ounce since
1 January 2024 with the current price
towards the higher of this range.
The market price for gold appears
relatively strong supported by
uncertainty over interest rates and
geopolitical uncertainties. The current
projections by economic forecasters are
for the Brazilian Real to be around
BrR$5.00 to USD$1.00 for 2024.
Change in risk level
Risk Movement
There have been no recent new high-
profile proven cases of corruption, in the
country.
No events relating to potential instances
of bribery/corruption or fraud have been
reported via the whistle-blower line .
Change in risk level
Risk Movement
The Group has not experienced any
significant increase or decrease in claims
in the past 12 month period.
The Group dismissed a senior member
of its Brazilian management in 2021 on
suspicion of fraud against the Group.
The individual has counterclaimed for
wrongful dismissal. The court has
continued to gather evidence and expert
witness reports and received
submissions from the parties. A formal
hearing before the judge calling
witnesses from both sides has not yet
been held.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
9. Litigation
The Group is subject, as a matter of course, to various actions both as defendant and plaintiff.
Actions against the Group are often brought by former employees seeking additional
compensation related to their employment. The court process in Brazil can be lengthy with a
number of stages of appeal as cases progress from Municipal to State to Federal levels. As a
result, claims may take many years to be resolved
Potential Impact
Uncertainty over the level of potential
compensations claims as actions may be
vexatious or frivolous.
Mitigation
The Group has robust recruitment and
HR measures, medical monitoring and
accident recording and prevention to
minimise the potential for spurious
accident or medically related claims.
Litigation can be time consuming and detract
management focus from core activities.
Contingent liabilities arising from litigation
may impact on the Balance Sheet of the Group
and its ability to raise finance.
The Group employs specialist lawyers to
manage the day to day court processes
with the Group’s HR personnel
providing supporting documents and
records as required.
The Group seeks a negotiated settlement
if and when it considers that the
claimant has any justified claim.
36
Strategic Report
Environmental and Social
Serabi is committed to delivering value for all stakeholders through building a long-term, sustainable mining business.
Through a series of programmes and initiatives, the Company seeks to minimise any environmental impacts whilst
maximising the social benefits for the local communities and broader region. Serabi seeks to meet and exceed all operating
standard requirements within Brazil and has the objective of achieving international best practice.
The Company enjoys strong local and regional support and has an excellent track record from an environmental perspective
although continually strives to improve.
Senior management and the Board have put in place a reporting regime that tracks a large number of metrics across the areas of
environmental control, and social and community engagements. This data is also used to provide regular reporting to the relevant
Brazilian authorities to ensure constant compliance with all regulatory requirements. The following summarises the actions that
Serabi has taken, and the performance achieved during the 2023 calendar year.
Key highlights
Compliance with all legal, environmental and regulatory requirements to operate
Continued improvement in health & safety record with only two Lost Time Injuries (LTIs) reported in the year.
Responsible environmental stewardship with
small footprint from underground mines with no conventional tailings dams
zero activity in primary rain forest
continuous monitoring of air and water quality
maximising recycling of water and waste materials
ongoing remediation of sites degraded by artisanal mining activity
monitoring of biodiversity and on site nursery for cultivation of indigenous plants and trees
62% of waste recycled or repurposed
Greenhouse Gas Emissions well below industry average Scope 1+2 emissions of 0.42t CO2 equivalent per ounce of gold
produced, compared with 0.45t CO2 e/oz in 2022 a 6% year on year reduction
Supporting the local economy:
69% of employment sourced from Para State (70% in 2022)
61% of procurement of goods and services sourced from Para State (45% in 2022)
Community & stakeholder support and engagement:
130 community/ stakeholder meetings held
investment of US$460,000 in community programmes
investment of US$520,000 in environmental management programmes.
13,300 hours of training.
clean water and electricity to local communities
road and infrastructure maintenance
support for local indigenous communities
over 2,000 school children supported with the donation of musical instruments, support for sports events and
awareness campaigns, in addition to help with infrastructure and equipment
350 people from the local communities, passed through the Company’s environmental education programmes
495 community residents received medical support
60 people participated in Young Apprentice programme
Establishment of a committee of the Board of Directors with specific responsibility for monitoring ESG performance
37
Strategic Report
Environmental and Social
Serabi has been operating for over 20 years in the Tapajós region in the State of Pará and has close cooperation with the local
communities around its mines, Jardim do Ouro, Moraes d'Almeida, Novo Progresso and Itaituba. The Group’s presence has
generated many jobs and opportunities for local communities, as well as other improvements in living conditions through
assistance with infrastructure, educational and health projects. It is a key objective of the Group that its own successes and growth
should also result in maximising the economic benefits for local companies and individuals and for the State of Pará.
All of Serabi's socio-environmental activities are carried out ethically, in accordance with local laws and regulations, and aim to
establish strong relationships with the local communities. Through consultation we try to identify social and environmental issues
and work with local communities to find ways to address these with sustainable and responsible solutions.
Legal, environmental and regulatory compliance
During 2023, Serabi remained in compliance with all legal, environmental and regulatory requirements. Other than for planned
maintenance downtime or power outages, the Company was required to stop the plant on only a single occasion due to unplanned
maintenance on the plant discharge systems. There were no reportable environmental incidents during the year.
Occupational Health and Safety
a
Serabi has made
significant
investment in personal health and
safety at work. The Group has
implemented two macro programmes,
the Risk Management Programme
(“PGR”) and the Occupational Health
and Medical Control Programme
(“PCMSO”), which are supplemented
by the Internal Accident Prevention
Commission (“CIPA”) and the Daily
Health, Safety and Environment
initiative
These
programmes help make employees
aware of safety
issues and best
practices to reduce the risk of accidents.
During 2023 a total of 13,000 hours of
safety
to
employees, an average of 20 hours per
employee.
training was provided
(“DSSMA”).
Injury rates remained low during the
year with
Injuries
(“LTIs”) reported and five Total Reportable Injuries (“TRIs”) compared with one and five respectively in 2022. Since 2017, LTIs
have shown a 29.9% compound annual decline and TRIs have declined by a compound annual rate of 31.1%.
two Lost-Time
The Group undertakes regular health initiatives for all its staff covering matters such as mental health, stress management,
sexually transmitted diseases and breast and prostate cancer awareness. These group sessions involving specialist health
professionals, are aimed at improving understanding, prevention and treatment of these and other health problems.
38
Strategic Report
Environmental and Social
Environmental Stewardship
Operating within the Amazon basin brings additional responsibility on Serabi as well as added scrutiny. The Company welcomes
this scrutiny and at all times seeks to minimise its impact on the environment and maintains a policy of undertaking zero activity
within primary rainforest.
Continuous monitoring of any
impacts the Company may have,
ensures adherence to the required
standards and also allows
the
Company to identify any issues that
may arise and address them. Eighty
three environmental monitoring
stations are established across each
of the Group’s operating sites,
measuring the quality of air and
surface, underground and potable
water , whilst measuring noise and
vibration levels and controlling the
risk of effluent leakage.
the monitoring
In addition
the Company
described above,
undertakes annual
surveys of
biodiversity at its operating sites.
This is both to monitor the general
health of biodiversity but also
identify any endangered or threatened species. With the tight controls on suppression of vegetation and protection of wildlife,
Serabi’s operating sites are typically more densely forested than the surrounding area which is frequently cleared for farming. As
such, the operating sites become havens for wildlife with a broad spectrum of mammals, birds, amphibians and reptiles identified.
Mammal species in particular were found to be in higher concentrations than expected.
to
Distribution of environmental monitoring stations operated by Serabi
39
Strategic Report
Environmental and Social
Serabi has a nursery in which it grows native trees for rehabilitating deforested areas including areas impacted by historic artisanal
mining activity and areas licenced for suppression by the Company to undertake exploration activities.
During 2023, a programme of reforestation around the Palito mine site has been undertaken with the planting of 1,000 native tress
grown in Serabi’s own nursery. Restoration of exploration drill sites has been on-going throughout the year using hydro-seeding
of native grasses on the impacted areas.
Serabi aims to maximise the amount of process plant water it recycles to minimise its fresh water demand. In total 24% of process
water was recycled during 2023, down from 32% during 2022 following modifications in the process plant. The overall water
usage, however, declined by almost 10% from 302,000m3 in 2022 to 270,000m3 in 2023. This followed a similar 10% decline in 2022.
In addition, the Company has a policy of recycling as much waste material as possible, achieving a level of 78% during the year
compared with 62% in 2022.
Supporting the local economy:
Serabi seeks to ensure its activity maximises the benefits to the local region. 69% of employees come from Para State and 23% are
from the immediate communities. Whilst this latter figure is down slightly compared with 2022, it reflects the transfer of staff
from the Group’s Palito and Sao Chico operations to Coringa as that project ramps up. Year on year we continue to try and
increase the numbers of staff recruited from both the neighbouring communities and the wider State of Para. In addition, the
Company tries to maximise its procurement of goods and services locally, sourcing US$18.7 million (61%) of its requirements
from within Para State including US$10.7 million (36%) sourced from within 100km of its operating sites.
40
Strategic Report
Environmental and Social
Community programmes
The Group’s community and social relations professionals
undertake regular meetings with the neighbouring communities
to understand the needs of the local residents, as well as
explaining the role that Serabi can play in improving community
life. These meetings with residents' associations and community
representatives and the programmes that are generated through
this dialogue, help strengthen ties with the community and
reinforce the positive benefits that our operations bring to the
region. In total 113 meetings were organised by the team, and the
company supported 19 initiatives for the local communities and
made 34 separate donations. It is estimated that the impact of
these actions benefitted over 6,600 local residents.
Our staff have also run health awareness campaigns in the local
communities,
environmental
educational including waste disposal and recycling facilities, and
provided continued support for local vaccination programmes.
programmes
initiated
for
the City Hall of Novo Progresso and Lions Club International
for road maintenance activities and health projects
respectively.
We are also providing financial support to an educational,
and training initiative in Novo Progresso supporting a school
for
craftsmanship and
developing new skills and opportunities for residents in the
community.
jewellery manufacture and
Our community engagement work was recognised at the
2023 Brazilian Gold symposium held in Belem during
October 2023, when Serabi secured more that 73% of the
votes in the Community Relations category.
We have also established partnerships with key groups including
We are constantly seeking to maximise the
opportunities that can be made available to the
local workforce and provide assistance with
training and support in a number of fields. At
school level we have established a partnership
with the schools in Moraes Almeida to stimulate
and improve the reading skills of students, created
a young apprentices programme providing an
opportunity for young people to prepare for
working life, and are developing a technical
training programme for young adults.
41
Strategic Report
Environmental and Social
Community health
Serabi, through its own medical staff, supports communities
such as São Chico and Jardin do Ouro with medical and
emergency care and for more serious cases the Group provides
an ambulance to take patients to hospitals.
Indigenous population
Interaction with indigenous communities is strictly controlled
by legislation, and Serabi has worked with government agencies
to bring about improvements in the levels and quality of water
supply to the Kayapó community. During 2023, the Group,
through its consultants and in collaboration with FUNAI the
government agency for indigenous communities, completed an
impact assessment study for the Group’s Coringa project.
During this process we have continued to receive very positive
support and encouragement from the indigenous communities.
Diversity
The following table summarises the levels of staff, by gender, employed by the Group at the end of 2023.
Board
Administrative offices
Palito Mine
Sao Chico Mine
Coringa Mine
Male
Female
Number
5
9
516
5
141
(per cent)
71%
60%
94%
83%
93%
Number
2
6
32
1
10
(per cent)
29%
40%
6%
17%
7%
42
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Non-Financial and Sustainability Information Statement
The Board recognises the importance of adopting a sound framework that supports the business to enhance the sustainability of
our resources and the environment. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022
amended sections 414C, 414CA and 414CB of the Companies Act 2006 to place requirements on companies the size of Serabi Gold
listed on AIM to incorporate Task Force for Climate Related Financial Disclosures (TCFD) aligned climate disclosures in their
annual reports. During the year the Company has carried out a TCFD gap assessment and going forward will develop a TCFD
integration roadmap. We therefore set out below our TCFD aligned disclosures where we comply with TCFD as our Non-Financial
and Sustainability Statement.
TCFD Recommendation
Recommended disclosures contained with this report
Reference
Governance
the
Disclose
organisation’s
governance around climate-related
risks and opportunities.
Strategy
a) Describe the Board’s oversight of climate-related risks and
opportunities.
b) Describe management’s role in assessing and managing
climate-related risks and opportunities.
Read more on
page 44 to 45.
Disclose the actual and potential
impacts of climate-related risks and
opportunities on the organisation’s
businesses, strategy, and financial
planning where such information is
material.
a) Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and long
term.
b) Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial
planning.
Read more on
pages 45 to 48.
c) Describe the resilience of the organisation’s strategy, taking
scenarios,
climate-related
consideration different
into
including a 2°C or lower scenario.
Risk management
Disclose how
the organisation
identifies, assesses and manages
climate-related risks.
a) Describe the organisation’s processes for identifying and
assessing climate-related risks.
b) Describe the organisation’s processes for managing climate-
Read more on
page 48.
related risks.
c) Describe how processes for
managing climate-related risks are
organisation’s overall risk management.
identifying, assessing and
into the
integrated
Metrics and targets
Disclose the metrics and targets
used to assess and manage relevant
and
climate-related
opportunities
such
information is material.
risks
where
a) Disclose the metrics used by the organisation to assess climate-
related risks and opportunities in line with its strategy and risk
management process.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
Read more on
pages 49 to 50
43
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the Board’s oversight of climate-related risks and opportunities.
Board’s oversight
The Board has oversight and ultimate responsibility for Serabi’s sustainability strategy, targets, disclosures and reporting,
including climate related risks and opportunities.
The Board has established a Sustainability Committee (“SC”) comprised of the Chair of the Company, Michael Lynch-Bell (who
is also Chair of the SC), two Non-executive Directors, Mark Sawyer and Deborah Gudgeon and the CEO, Michael Hodgson. The
Sustainability Committee convened its first meeting in February 2024.
The Board will receive regular reports from the SC to monitor progress against the priorities and strategy that have been set.
The SC will work with the Audit and Risk Committee (“ARC”) to ensure that the Board establishes and maintains an effective
risk management framework, in particular identifying risk and opportunities regarding climate change, and other environmental
and social matters related to the business.
The Board and the Remuneration and People Committee will look at options to align the delivery of strategy and priorities into
the Group’s incentive plans.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
s
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r
a
t
d
n
a
y
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e
t
a
r
t
S
BOARD
SUSTAINABILITY COMMITTEE
ENVIRONMENTAL, SOCIAL
AND HEALTH AND SAFETY
DEPARTMENT
OPERATIONAL
DEPARTMENTS
Board
Management
R
i
s
k
s
,
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44
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Management’s role
Monthly and quarterly statistics performance statistics across Environmental, People, Communities and Stakeholders are
prepared and performance and trends reviewed by management to ensure on-going compliance with strategy and priorities
Key statistics and progress have been reported to the Board (and in future to the SC) through monthly reports submitted by
management
Data collection is the responsibility of the Environmental, Social and Health and Safety department gathering information
submitted by each of the operational departments.
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,
and financial planning where such information is material.
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
Serabi recognises climate change as a key risk. The assessment and management of Serabi’s climate related risks is integrated into
the Group’s overall risk management framework, so that their relative significance is comparable to all other corporate risks.
Whilst the Board has overall responsibility for the management of the risk framework and risks, the risk management process is
overseen by the Audit and Risk Committee. Identified Group risks are assessed using a scoring system in terms of impact and
probability. This applies also to climate related risks.
We have identified the following potential climate related transition risks and opportunities over the timescales indicated as
follows:
Risk/Opportunity
Area
Description
Impact
Probability Mitigation
Risk
Supply Chain
Short Term (1-2 years)
Increased costs of raw materials
imposed by suppliers reflecting
climate related tariffs.
Increased costs of fuel from
increases in fuel excise taxes,
Brazil’s implicit carbon pricing
method.
(cid:1)
(cid:1)
The Company is taking action
to significantly reduce its
usage of fossil based fuel
products to minimise potential
impacts.
Risk
Legal
Regulatory changes requiring
further reporting and tracking of
supply chains.
(cid:1)
(cid:1)
Opportunity
Renewable
Energy
An improvement in the regional
infrastructure will allow greater
availability and use of
hydroelectric power as an
energy source.
(cid:1) (cid:1)
The Company plans to expand
its emissions data capture
programme in the near future
to include Scope 3 emissions.
The Company is working with
the local energy supplier to
transition the Palito site to a
dedicated transmission line
with increased capacity
minimising the need for
supplementary power to be
provided from fossil fuel
sources.
Medium Term (3-4 years)
Risk
Legal
Legislative change requiring the
business to implement process (cid:1) (cid:1) The Group works closely with
advisers to anticipate any
impending legislative changes.
45
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Risk/Opportunity
Area
Description
Impact
Probability Mitigation
Risk
Capital costs
changes to reduce climate
impacts.
The cost of capital may increase
driven by changes in the basis of
credit assessments.
(cid:1) (cid:1)
Risk
Equipment
costs
There may be additional
equipment costs due to the need
to make equipment
modifications to reflect
alternative fuel solutions.
(cid:1) (cid:1)
Opportunity
Reforestation With an increased focus on
finding nature-based solutions
to tackle climate change,
biodiversity actions, such as
rehabilitation and reforestation,
could contribute to lowering
overall carbon emissions.
(cid:1) (cid:1)
Long Term (greater than 4 years)
Investor demand for
environmental and climate
related disclosures may lead to
an increased cost of capital or
inability to access capital.
(cid:1) (cid:1)
Risk
Reputation
Risk
Reputation
Stakeholders, including
investors, may react to social
pressure to withdraw support
for certain industries and
activities.
(cid:1) (cid:1)
Risk and
Opportunity
Markets and
Economy
Environmental pressure may
reduce the demand for luxury
items affecting prices for
precious metals.
Conversely, heightened market
volatility and uncertainty from
climate-related risks will likely
support the demand for gold as
risk hedge and market insurance
asset.
46
(cid:1) (cid:1)
The Group targets high grade
mineral opportunities with
small carbon footprints, low
water requirements, and low
impact on flora and fauna.
The Group’s emissions
intensity is 49% lower than the
industry average.
The Group has a replacement
programme for its fleet and
will factor the need for
alternative fuels in its
procurement programme.
The Group has a continuous
programme of revegetation
and remediation across its
areas of operation.
The Group plans to investigate
finding reliable and
quantifiable methods to record
the carbon capture of these
programmes.
Climate change related
disclosures form part of this
report.
Further to this, the Group is
actively updating its policies
and procedures to improve its
climate related information.
The Group strives to ensure
that its environmental and
climate related programmes
are actively disclosed to the
public to minimise negative
perceptions about the impact
of the Group’s activities.
Cultural history supports
significant personal demand
for jewellery (~45% of
demand) and is less likely to
be swayed by environmental
considerations.
Gold for investment accounts
for ~47% to 50% of demand
with no obvious alternative.
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
planning.
Within the current global economic models, it is not anticipated that demand metrics for gold will be directly affected by climate-
related considerations in the near or medium term.
The Group remains focussed on gold mining opportunities and seeks to expand its activities through organic growth and
acquisition. It is not, in the near term, seeking to divest itself of gold opportunities or pursue opportunities for other minerals.
The Group recognises its current activities are located close to a region considered a global climate-related risk area. This will
bring increased focus on the footprint of the Group’s operations and its ongoing programmes of revegetation and remediation.
The Group anticipates that goods used that are reliant upon fossil fuels will continue to experience upward cost pressures through
climate-related tariffs. The Group is in co-operation with local power providers and will transition to sustainable energy sources
and explore the use of replacement raw materials and consumables that are have reduced climate-related impact.
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including
a 2°C or lower scenario.
Whilst the Company has not yet undertaken a detailed location-based climate change scenario analysis of its assets to ascertain
any physical risks that could result from climate change, the Company believes that its risk mitigation methods, as outlined in the
preceding table, combined with its low carbon intensity methods of production, will ensure that the effects of global and market
based changes resulting from climate change will have minimal impact upon the business.
The Company believes it remains particularly resilient to the transition risks associated with climate change by focusing on high-
grade, low volume assets and using low carbon intensive methods, such as underground mining and ore-sorting technology, to
produce quality gold ounces that have a much lower associated carbon intensity than the industry average. An S&P Global study1
of 146 primary gold mines globally shows greenhouse gas emission intensity averaged 829 kilograms of CO2 equivalent per ounce
of gold in 2022, based on sustainability reporting by related companies. In comparison the greenhouse gas emissions intensity of
Serabi’s operations was 420 kilograms of CO2 equivalent per ounce of gold for the 2023 reporting year, some 49% lower than the
industry average.
The potential for future climate-related legislation and policy cannot be ignored. The federal government of Brazil continues to
support its commitment to climate change as outlined in the United Nations Framework Convention on Climate Change
(“UNFCCC”) and the Paris Agreement which aims to keep global temperature rise below 2 degrees Celsius above pre-industrial
levels. The government has committed to reducing national greenhouse gas emissions by 37% in 2025, compared with 2005, 50%
in 2030, compared with 2005 and achieving climate neutrality by 2050. To this end a summary of the probability and the impact
that the Company expects for future potential climate related policy is set out within the table below.
> 3oC Scenario
Description
A national decarbonization pathway that is less rapid and less stringent is unlikely to significantly
impact projected company economics and demand, as it closely aligns with existing national policies
and plans.
≤ 2oC Scenario
Description
Probability
Impact
Unlikely
Minor
Probability
Impact
The economic viability of the company in the future may be influenced by a national decarbonization
pathway that is more rapid and stringent.
Low
Moderate
1. Footnote: S&P Global Market Intelligence, “GHG and gold mines – Canada emissions drop the most”, Aug-2023,
https://www.spglobal.com/marketintelligence/en/news-insights/research/ghg-and-gold-mines-canada-emissions-drop-the-most
47
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Case Study – The Use of Ore Sorting Technology
The unique nature of Serabi’s assets has allowed it to use
innovative ore-sorting technology to reduce its carbon
footprint without compromising on production efficiency or
profitability.
Traditional gold mining operations often involve extensive
processing of ore to extract the valuable metal, which
consume substantial energy, resulting in significant carbon
emissions. To improve operational efficiency and address
environmental concerns, ore sorting was introduced to the
Palito processing plant in 2020.
Ore sorting technology utilizes sensors and advanced
algorithms to identify and separate valuable ore from waste
material before it enters the processing plant. This allows for
selective processing of high-grade ore, reducing the overall
volume of material that needs to be processed, resulting in
lower energy consumption and reduced carbon emissions, as
well as improving the efficiency of gold recovery, leading to
higher overall yields and increased profitability.
The impact of ore sorting has on Serabi’s greenhouse gas
emissions is shown in the chart below.
Effect of Ore Sorting on Palito GHG Emissions
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
)
e
-
2
O
C
t
(
s
n
o
i
s
s
i
m
E
G
H
G
0
2019
2020
2021
2022
2023
GHG Emissions with Ore Sorter
GHG Emissions without Ore Sorter
Following the successful implementation of ore sorting at the
Palito complex, a second ore sorting unit has been ordered for
the Coringa operation and is scheduled to be commissioned
in 2024. It is anticipated that the greenhouse gas emissions
savings from this unit will be substantial as it will significantly
reduce the volume of material that needs to be transported
from the Coringa mining operation to the Palito processing
complex.
Risk management
Disclose how the organisation identifies, assesses and manages climate-related risks.
a) Describe the organisation’s processes for identifying and assessing climate-related risks.
Climate related risks are identified through Serabi’s integrated risk management framework. Our risk management framework,
overseen by the Audit and Risk Committee, considers both emerging and principal risks with the potential to impact our business
including climate-related risks.
Management annually reviews the organisational risk matrix taking into account operational, social and climate-related risk. Risks
are ranked according to impact and probability and the mitigation strategies considered. The risk matrix and mitigation strategies
are presented to the Audit and Risk Committee for consideration and prioritisation.
b) Describe the organisation’s processes for managing climate-related risks.
The monthly and quarterly measurements of key statistics compared with prior years and positive and negative variances are
investigated. Half-yearly reviews are also considered and mitigation activities are reviewed and amended where planned actions
are not achieving the anticipated outcomes.
c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the
organisation’s overall risk management.
As set out earlier, climate-related risks are assessed as part of the overall risk management framework process. All operational
areas compile their own climate-related statistics for review and aggregation. These are reported up to the Sustainability
Committee.
The Local ESG management team co-ordinate, oversee mitigation plans and interreact with local government agencies in
establishing any requirements imposed by regulators.
Local ESG teams charged with identifying potential risks and escalating to management for inclusion on the risk matrix.
48
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such
information is material.
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy
and risk management process.
The Company recognizes the importance of transparently disclosing climate-related risks and opportunities to stakeholders. In
alignment with the recommendations set forth by the Task Force on Climate-related Financial Disclosures (TCFD), the Company
has established key metrics to effectively manage and report on climate-related impacts. During 2024 the Company intends to
establish its future targets.
The Group considers Scope 1 & 2 greenhouse gas emissions and emissions intensity as the principal metric to assess the Group’s
performance in relation to its climate related risks and opportunities. As the global fight against climate change is linked to
greenhouse gas emissions, these metrics are considered the most relevant to use as a key performance indicator.
Scope 1 & 2 greenhouse gas emissions and emissions intensity are measured and recorded in accordance with the framework and
methodologies developed by the GHG Protocol to manage and measure GHG emissions.
The Group also measures and reports on its energy consumption and management, including the amount of grid supplied energy
and the amount of energy from renewable sources.
The Group plans to expand its emissions data capture programme in the future to include Scope 3 emissions.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
Metric
Unit
2023
2022
2021
Greenhouse Gas Emissions
Scope 1 Emissions
Scope 2 Emissions
tCO2-e
12,946
13,206
13,192
tCO2-e
962
938
1,471
Scope 1 + 2 Emissions
tCO2-e
13,908
14,144
14,663
Scope 1 + 2 Emissions Intensity
kg CO2-e / oz Au
420
445
433
Energy Management
Total Electricity Consumed
Grid Electricity
Grid Electricity Percent of Total Electricity Consumed
Percent of Grid Electricity from Renewable Sources
Total Energy Use
Energy Intensity
Scope 1: All direct GHG emissions.
kWh
kWh
%
%
GJ
22,435,780
22,139,621
21,258,207
12,910,874
12,595,605
10,960,415
58
61*
57
61
52
61
229,397
231,921
225,813
GJ / oz Au
6.9
7.3
6.7
Scope 2: Indirect GHG emissions from the consumption of purchased electricity. Scope 2 emissions are calculated using location-based emission
factors.
49
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
* Estimate extrapolated from past years reported data.
In 2023, total combined Scope 1 and 2 emissions for the Group were 13,908 tCO2-e, a decrease of 2% from 14,144 tCO2-e in 2022.
Scope 1 emissions were 12,946 tCO2-e for 2023, a 2% decrease from 13,206 tCO2-e in 2022 and Scope 2 emissions were 962 tCO2-e
in 2023, up 3% from 938 tCO2-e in 2022.
Scope 1 emissions, from the direct combustion of fossil fuels, make up 93% of the Group’s Scope 1 and 2 emissions and represent
the greatest opportunity for emissions reduction as the Group transitions to more grid utilization.
The Group’s greenhouse gas emissions intensity per ounce of gold decreased to 420 tCO2-e/oz Au, compared to 445 tCO2-e/oz Au
in 2022. This represents a 6% decrease from 2022 and still remains well below the industry average and within the lower spectrum
of emissions intensities for gold mining companies.
Electricity consumption for the Group was 22,435,780 kWh in 2023, of which 58% was from purchased electricity. The regional
electricity supplier, Equatorial Para, reported that 61% of supplied electricity to the state was generated by renewable energy
sources in 2022. Whilst 2023 data from Equatorial Para is not available at the time of writing, the energy mix of the supplied
electricity is not expected to be materially different. The Group maintains no premises in the UK and therefore electricity
consumption from a UK source was immaterial relative to the rest of the Group.
In 2023, the Group’s overall energy use decreased by 1% in 2023 to 229,397 million GJ, from 231,921 million GJ in 2022, and the
associated energy intensity per ounce of gold decreased 5% from 7.3 GJ/oz Au to 6.9 GJ/oz Au.
This Strategic Report was approved by the Board on 26 April 2024
By order of the Board
Mike Hodgson
Chief Executive Officer
50
Strategic Report
Environmental and Social
Non-Financial and Sustainability Information Statement
26 April 2024
51
Corporate Governance
Contents
52 Chair’s Introduction
53 Corporate Governance Report
63 Audit and Risk Committee Report
67 Remuneration Committee Report
80 Sustainability Committee Report
82 Directors’ Report
52
CORPORATE GOVERNANCE
Corporate Governance Report
Dear Shareholders,
Chair’s introduction
As Chair, my role includes leading the Board and upholding the highest standards of corporate governance throughout the Group.
As a Board, we recognise the benefits and value of a robust governance framework and how this supports the Group’s continued
growth. We have developed our governance structure to support these growth aspirations. The Board has an Audit and Risk
Committee, Remuneration and People Committee, a Sustainability Committee, Mergers and Acquisitions Committee and a
Disclosure Committee. The Structure of the Board Committees is set out on page 58.
FY23 Governance in focus
During 2023 we have continued to develop our governance framework and practices. We have reviewed the membership of each
committee and reviewed and updated the terms of reference of each committee. We have also revised the Group’s authority limits
and the Schedule of Matters Reserved for Board decision and documented all these and other Board procedures in an updated
Board charter. A Board Programme and calendar has been developed to take into account the requirements of this updated Board
charter and to ensure that requirements are fulfilled on a timely basis across the year. Further details of these governance
improvements are set out in the Governance Report.
Board appointments
In January 2023 we welcomed Carolina Margozzini to the Board, as a Non-executive Director. Carolina is a principal of Megeve
Consulting S.A which manages the assets of Fratelli Investments Limited (Fratelli) on a non-discretionary basis. Fratelli holds a
25.5% investment in the Company. As a principal of Megeve, Carolina is focused on direct private equity investments in Mining
and Energy in Latin America and technology investments globally. In May 2023 we also welcomed Deborah Gudgeon to the
Board as an Independent Non-executive Director and Chair of the Audit and Risk Committee. Deborah has significant experience
in acting as an independent Non-executive director and as chair of Audit Committees. The Report of the Audit and Risk
Committee can be found on pages 63 to 66.
Board Evaluation
During 2021 and 2022 a Board evaluation was undertaken by an independent board evaluator and the Board has since then
implemented the primary recommendations from that evaluation. Between November 2023 and February 2024, a further evaluation
has been undertaken by Ceradas Limited, a board effectiveness consultancy. Further details of the process of this board evaluation
and the recommendations can be found on page 61.
Compliance with the QCA Corporate Governance Code
In recognising the importance of high standards of corporate governance, we continue to apply the Quoted Company Alliance
Corporate Governance Code (the “QCA Code”). A description of how the Board complies with the principles of the QCA Code is
provided on pages 55 to 57.. The Corporate Governance Report on pages 53 to 62 sets out further information about the Group’s
governance framework and how the Board applies the recommendations of the QCA Code.
In addition, the Company, as a result of the listing of its shares on the TSX, is obliged to comply with the Canadian National Policy
- 58-201 - Corporate Governance Guidelines, which establishes corporate governance guidelines that apply to all public companies.
The Company has instituted corporate governance practices that also, where practical, take consideration of these guidelines.
Michael D Lynch-Bell
Chair
26 April 2024
.
53
CORPORATE GOVERNANCE
Corporate Governance Report
The Board of Directors
Committee Membership
Michael Hodgson
Chief Executive
Clive Line
Finance Director
Michael Lynch-Bell
Non-executive Chair
A
D
M
R
S
Audit & Risk
Committee
Disclosure
Committee
Mergers & Acquisitions
Committee
Remuneration
Committee
Sustainability
Committee
Chair
Committee Membership
Committee Membership
Committee Membership
D
S
D
A D M R
S
Mike has worked in the mining
industry for 40 years and has
extensive international
experience. Most recently he
worked as Chief Operating
Officer and Vice President
Technical Services for Canadian-
based Orvana Minerals
Corporation. Prior to that, Mike
provided consulting services to
a number of mining companies
in Europe and South America.
Previous appointments include
Manager Technical Services and
Operations for TVX Gold Inc.,
Mining Technical Consultant at
ACA Howe International Ltd
and similar roles at Rio Tinto plc
and Zambia Consolidated
Copper Mines Ltd. Mike has,
during his career, acquired
extensive experience in narrow
vein underground mining
operations.
Originally qualified in mining
geology, Mike is a Fellow of the
Institute of Materials, Minerals
and Mining, a Chartered
Engineer of the Engineering
Council of UK and a “Qualified
Person” in accordance with the
Canadian National Instrument
43-101 - Standards of Mineral
Disclosure for Mineral Projects.
Clive is a Chartered Accountant
and has been involved in mining
and other natural resources
companies since 1987,
overseeing financial and legal
issues for exploration and
development projects in Africa,
Europe and the former Soviet
Union.
Having worked with Price
Waterhouse in both the UK and
Australia, Clive joined Cluff
Resources plc in 1987, where he
was finance director prior to
joining the privately owned
Quest Petroleum Group in a
similar position in 1993.
Following the successful sale of
this group he became involved
with Eurasia Mining plc and
Northern Petroleum plc, both of
which were admitted to trading
on AIM in 1996. Between 1999
and 2005 Clive worked as a
divisional finance director
within the Interpublic Group,
one of the world’s largest
marketing services companies,
prior to joining Serabi in 2005.
Clive has an Honours degree in
Accounting and Finance and is a
member of the Institute of
Chartered Accountants of
England and Wales.
Michael spent a 38-year career
with Ernst & Young (EY),
having led its Global Oil and
Gas, UK IPO and Global Oil and
Gas and Mining transaction
advisory practices. He was a
member of EY’s assurance
Practice from 1974 to 1996, when
he transferred to the Transaction
Advisory Practice. Michael was
also UK Alumni sponsor and a
member of the firm’s Europe,
Middle East, India and Africa
and Global Advisory Councils.
He retired from EY as a partner
in 2012 and continued as a
consultant to the firm until
November 2013. Michael is also
senior independent director of
London-listed Gem Diamonds
Limited and independent non-
executive chairman of ASX-
listed Little Green Pharma
Limited.
Michael graduated from the
University of Sheffield with a
BA Hons Economics and
Accountancy and is a member of
the Institute of Chartered
Accountants in England and
Wales.
54
CORPORATE GOVERNANCE
Corporate Governance Report
The Board of Directors
Luis Azevedo
Independent Non-executive
Director
Deborah Gudgeon
Independent Non-executive
Director
Carolina Margozzini
Non-executive Director
Mark Sawyer
Non-executive Director
Committee Membership
Committee Membership
Committee Membership
A
D
S
M
R
A
M
R
S
Luis is a seasoned industry
professional both as a licensed
lawyer and geologist with over
37 years of international
experience including Brazil. He
is currently a Partner at FFA
Legal Ltda, a legal firm he
founded with its main office in
Rio de Janeiro, Brazil, which is
focused on natural resources
companies. Luis is also
Chairman and CEO of Bravo
Mining Group and an Executive
Director of Harvest Minerals
Limited, Jangada Mines plc and
GK Resources. Luis previously
worked for Western Mining
Corporation, Barrick Gold
Corporation and Harsco
Corporation and was also an
executive director of Avanco
Resources Ltd..
Luis received a geology degree
from Universidade do Estado do
Rio de Janeiro in 1986, a law
degree from Faculdade
Integradas Cândido Mendes in
1992 and a post graduate degree
from Pontifícia Universidade
Católica of Rio de Janeiro in
1995.
Deborah qualified as an ACA
accountant at PwC (Coopers &
Lybrand) before spending eight
years as Finance Executive with
Lonrho plc, the Africa-focused
mining and trading group.
Deborah subsequently held
positions with Deloitte, BDO,
Gazelle Corporate Finance and
Penfida Limited. Deborah has
significant experience in acting
as an independent non-
executive director, having held
that position at Ithaca Energy
plc, Petra Diamonds Limited,
Evraz plc, Highland Gold
Mining Limited and Acacia
Mining plc. As well as being an
independent non-executive
director, Deborah is or was also
chair of the audit committee for
each of these entities.
Deborah has a degree in
Economics from the London
School of Economics, a post-
graduate degree in Journalism
and is a member of the Institute
of Chartered Accountants of
England and Wales.
Carolina is Principal of Private
Equity & Venture Capital at
Megeve Investments
(“Megeve”), where she is
focused on direct private equity
investments in Mining and
Energy within Latin America,
and technology investments
globally. Megeve is an
investment adviser to Fratelli.
Carolina currently serves as
Board Member at Haldeman
Mining Company, a copper and
gold producer in Chile, and at
Colgener, a Colombian Energy
Company. Previously, Carolina
was Head of Research and
Financial Analysis at Blumar,
a fishery and salmon farming
company. Carolina started her
career in Investment Banking
at Citibank, where she gained
experience in M&A, Equity,
and Debt Capital Markets.
Carolina has a bachelor’s degree
in Business and Administration
with a Major in Finance from
Universidad Católica de Chile.
Mark has a 28-year career in the
mining sector. He co-founded
Greenstone Resources in 2013
with a strategy to back junior
mining companies and assist
them in realising their growth
potential. Prior to establishing
Greenstone, Mark was GM and
Co-Head Group Business
Development at Xstrata plc
where he was responsible for
originating, evaluating and
negotiating new business
development opportunities.
Prior to Xstrata, Mark held
senior roles at Cutfield Freeman
& Co (a boutique corporate
advisory firm in the mining
industry) and Rio Tinto plc.
Mark qualified as a lawyer and
has a law degree from the
University of Southampton.
55
CORPORATE GOVERNANCE
Corporate Governance Report
Corporate Governance Code
The QCA Code requires the Company to apply the ten principles of corporate governance as set out below and to publish certain related
disclosures in the Annual Report, on the website, or a combination of both. The Company has complied with the QCA Code’s
recommendations and has provided full disclosure relating to all of the principles in a corporate governance statement on its website at
Serabigold.com.
A summary of compliance with the principles of the QCA Code is set out below.
Section 1: Deliver growth
Links to the following
report section
Principle 1:
Establish a strategy and
business model that
promote long-term value
for shareholders.
Serabi’s objective is to become a pre-eminent junior gold mining
company, securing future growth through expansion of its
existing projects and, taking advantage of its position as a gold
producer, to become involved with and successfully develop
other carefully selected opportunities.
The Group’s business model
and strategy are described in
the Strategic Report on pages
14 to 16.
Principle 2:
Seek to understand and
meet shareholder needs
and expectations.
The Board is committed to providing shareholders with clear
and timely information on Serabi’s activities, strategy and
financial position. General communication with shareholders is
coordinated by the Executive Directors together with the
Business Development Manager.
The Group’s approach to
shareholder communications
is described further in this
Corporate Governance
Report on pages 55 to 57.
Principle 3:
Take into account wider
stakeholder and social
responsibilities and their
implications for long-
term success.
The Board is kept informed of the views and concerns of
shareholders through briefings from the Executive Directors, the
Chair and the Company’s brokers.
The Board recognises that the long-term success of the Company
is reliant upon the efforts of its key stakeholders. The Group has
staff dedicated to ensuring that it has active relationships with
local communities who are within the vicinity of its operations to
understand their concerns and expectations, thereby seeking to
ensure mutually beneficial co-operation for both sides. The Group
is subject to oversight by a number of different governmental and
other bodies who directly or indirectly are involved with the
licensing and approval process of mining operations in Brazil.
Additionally, given the nature of the Company’s business, there
are other parties who, whilst not having regulatory power,
nonetheless have interest in seeing that the Company conducts its
operations in a safe, responsible, ethical and conscientious
manner. The Board makes all reasonable efforts, directly or
through its advisors, to engage in and maintain active dialogue
with each of these governmental and non-governmental bodies, to
ensure that any issues faced by the Company, including but not
limited to regulations or proposed changes to regulations, are well
understood and ensuring, to the fullest extent possible, that the
Company is in compliance with all appropriate regulation,
standards and specific licensing obligations, including
environmental, social and safety, at all times.
The Group’s community and
corporate social
responsibility disclosure is
provided as part of the
Environmental and Social
section on pages 37 to 42.
The Group’s engagement
model with clients and
wider stakeholders is
described in the Strategic
Report on pages 17 to 19.
56
CORPORATE GOVERNANCE
Corporate Governance Report
Section 1 continued: Deliver growth
Principle 4:
Embed effective risk
management considering
both opportunities and
threats throughout the
organisation.
The Board, supported by the Audit and Risk Committee and the
Group’s senior management, are responsible for the Group’s
Risk Management framework and ensuring that procedures are
in place and are being implemented effectively to identify,
evaluate and manage the significant risks faced by the
Company.
Section 2: Maintain a dynamic framework
Links to the following
report section
The Group’s risk
management framework is
described further in the
Strategic Report on pages 28
to 36 and in this Corporate
Governance Report on
pages 63 to 66.
Links to the following
report section
Principle 5:
Maintain the Board as
a well-functioning,
balanced team led by
the Chair.
The Board's composition reflects a broad range of commercial
and professional skills across geographies and industries. The
framework of Board Committees, each with their own Terms of
Reference, the Board meeting timetable and administration,
access to advice and regular Board performance reviews, all
ensure continued Board effectiveness.
The Board’s composition and
operating framework and
activities are described
further in this Corporate
Governance Report on pages
53 to 62.
Principle 6:
Ensure that between
them, the Directors have
the necessary up-to-date
experience, skills and
capabilities.
As a publicly owned, junior gold mining company, the Board
needs to represent a wide range of skills and competencies. The
Serabi Board includes Directors with technical mining and
geological expertise, financial backgrounds, a legal background
specialising in the natural resources sector in Brazil and
investment banking and corporate finance experience.
Biographical details of the
Directors, including relevant
experiences are provided on
pages 53 to 54.
Principle 7:
Evaluate Board
performance based on
clear and relevant
objectives, seeking
continuous
improvement.
The Board understands the importance of assessing the
effectiveness and contributions of the Board as a whole and its
governance structure. During 2021 and 2022 an independent
evaluation was undertaken by an independent board evaluator
and the Board has since then implemented the primary
recommendations from that evaluation. Between November 2023
and February 2024, a further evaluation has been undertaken by
Ceradas Limited, a board effectiveness consultancy.
The Board’s evaluation
framework and FY23
evaluation process are
described further in this
Corporate Governance
Report on page 61.
Principle 8:
Promote a corporate
culture that is based on
ethical values and
behaviours.
The Board, through its actions and direction, has sought to
establish a corporate culture that places the emphasis on the
Group’s and Board’s cultural priorities of social responsibility,
transparency, health and safety, risk management and
sustainability.
The Group’s culture and
values are discussed in the
Environmental and Social
section on pages 37 to 42.
Principle 9:
Maintain governance
structures and processes
that are fit for purpose
and good decision
making by the Board.
The Board is ultimately responsible for the strategy, management,
performance and long-term success of the Group. The
appropriateness of the Board’s structures has been assessed by the
board evaluations and have evolved in parallel with the Group's
objectives and as the Company develops. The Board's governance
framework supports the executive team to develop and execute
the Group's strategy and the size of the Board enables it to reach
decisions through open and constructive discussions.
The governance structure is
provided on pages 57 to 59
and processes are described
further on pages 60 to 62 of
this Corporate Governance
Report.
57
CORPORATE GOVERNANCE
Corporate Governance Report
Section 3: Build trust
Principle 10:
Communicate how the
Company is governed
and is performing by
maintaining a dialogue
with shareholders and
other relevant
stakeholders.
Links to the following
report section
The Company is committed to open communications with all of
its shareholders. It is important for the Board to appreciate the
aspirations of the shareholders and equally that the shareholders
understand how the actions of the Board and short-term
financial performance relate to the achievement of the Group's
longer-term goals.
The governance of the
Company, which is led by
The Board, is described
further in this Corporate
Governance Report on pages
58 to 62.
The website, serabigold.com,
provides the Group’s reports
and presentations, notices of
AGMs and results of voting
on all resolutions at AGMs.
Board Composition and independence
The Board is comprised of seven Directors: the Chief Executive Officer, Mike Hodgson, the Finance Director, Mr Clive Line and
five Non-executive Directors. Of the Non-executive Directors, Mr Michael Lynch-Bell, who is also the Chair and Mr Luis Azevedo
and Deborah Gudgeon are considered to be independent. Mr Mark Sawyer and Ms Carolina Margozzini, are not considered to
be independent under the QCA Code, by virtue of being appointed representatives of significant shareholders.
The Company has also entered into relationship agreements (Relationship Agreements) with each of Fratelli Investments Limited
(Fratelli) and Greenstone Resources II LP (Greenstone), its two principal shareholders. These Relationship Agreements allow each
of Fratelli and Greenstone, based on their current shareholdings, to appoint up to two Non-executive Directors each to the Board.
Fratelli has therefore appointed Carolina Margozzini to the Board and Greenstone has appointed Mark Sawyer to the Board.
The Relationship Agreements require that (i) the Company is capable of carrying on its business independently of each of Fratelli
and Greenstone; (ii) transactions between any member of the Group and any member of either Fratelli or Greenstone are made at
arm’s length on a normal commercial basis and approved by Directors independent of Fratelli or Greenstone as appropriate; (iii)
any disputes between Fratelli and/or Greenstone and any member of the Group shall be dealt with by a committee of the
independent Directors; (iv) the selection, approval and removal of senior management and Executive Directors shall be subject to
the approval of a majority of the Non-executive Directors of the Company; and (v) neither Fratelli nor Greenstone shall take any
action as a result of which there would be fewer than two Directors independent of Fratelli and Greenstone on the Board.
Board and Board Committee Structure
The Board has established an Audit & Risk Committee, a Remuneration & People Committee, a Disclosure Committee,
a Mergers & Acquisitions Committee and a Sustainability Committee. In addition, at the executive level, there are two committees
- the Executive Committee and the Project Steering Committee - which meet as and when necessary.
The Board has not established a separate Nominations Committee as it considers that this responsibility can be currently
discharged by the Remuneration & People Committee or, if the circumstances so dictate, the Board as a whole. As such, the
Remuneration Committee was renamed the Remuneration & People Committee.
58
CORPORATE GOVERNANCE
Corporate Governance Report
Board Governance Framework
BOARD
Responsible for the strategy, management, performance and long-term success of the Group.
Key documents: Schedule of Matters reserved for the Board, Articles of Association.
AUDIT AND RISK
COMMITTEE
Reviews the principles,
policies and practices
adopted in preparation of
the financial statements and
monitors the integrity of
these financial statements.
Oversees the relationship
with the external auditors,
oversees the risk
management framework.
REMUNERATION AND
PEOPLE COMMITTEE
Responsible for determining
and reviewing the policy for
the remuneration of the
Board, Chair and the
Executive Directors.
SUSTAINABILITY
COMMITTEE
Supports and monitors the
sustainable development of
Serabi’s business and the
communities in which it
operates and oversees the
integrity of the Company’s
sustainability reporting.
MERGERS AND
ACQUISITIONS
COMMITTEE
Works closely with
management to manage and
have oversight of potential
non-organic growth
opportunities for Serabi.
DISCLOSURE
COMMITTEE
Responsible for overseeing
the disclosure of information
by the Company to meet its
obligations under the UK
version of the Market Abuse
Regulations and other
relevant disclosure
regulations
Maintains the procedures,
systems and controls for
identification, treatment and
disclosure of inside
information and for
complying with the
obligations falling on the
Company and its Directors
and employees under the
Market Abuse Regulations.
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CORPORATE GOVERNANCE
Governance Report
Operation of the Board
The Board is responsible for the overall management of the Group including the formulation and approval of the Group’s long-
term objectives and strategy, the approval of budgets, the oversight of Group operations, the maintenance of sound internal
control and risk management systems and the implementation of the Group’s strategy, policies and plans. The Chief Executive
Officer and the Finance Director are responsible for the daily operation of the Group and they involve other levels of management
in the day-to-day operations as appropriate. The Chief Executive Officer and Finance Director are also responsible for making
recommendations to the Board regarding short and medium-term budgets, targets and overall objectives and strategies for the
Group. During the year the formal schedule of matters specifically reserved for decision by the Board was updated and includes:
setting the Company’s purpose, values and long-term objectives and strategy
approval of the annual budget;
approval of material capital expenditure projects;
any extension of the Group’s activities into new business or geographic areas outside the UK or Brazil;
changes relating to the Group’s capital structure and major changes relating to the Group’s corporate structure
approval of acquisitions;
approval of quarterly financial reports, trading updates, the half-yearly reports, announcement of year-end results and
the Annual Report and Accounts;
internal control and risk management; and
material contracts, expenditure and Group borrowings.
The Board holds regular, scheduled meetings throughout the year to review the Group’s financial and operational performance
and to consider any other matters as appropriate, including risk management and shareholder feedback. The Board meeting
timetable is based on the financial and reporting timetable. There are up to 10 scheduled Board meetings throughout the year.
All of the Directors receive comprehensive Board packs in advance of Board and Committee meetings. During the year a Board
portal was set up as a repository for Board and committee papers. This provides a confidential and efficient mechanism for the
distribution of Board papers in a timely manner.
Given the geographical distribution of Directors a number of the scheduled Board and Committee meetings are held online but meetings
are also held in person whenever possible. All Directors have access to the advice and services of the Company Secretary, who is
responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition,
procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, as required.
A record of the number of meetings of the Board during the year and the attendance by each of the Directors is provided below:
Director
Michael Lynch-Bell
Michael Hodgson
Clive Line
Luis Azevedo
Hector Alegria (1)
Nicholas Bañados (2)
Deborah Gudgeon (3)
Carolina Margozzini (4)
Mark Sawyer
1. Resigned on 9 March 2023
2. Resigned on 24 January 2023
3. Appointed on 9 May 2023
4. Appointed on 24 January 2023
Board Meetings (Attended/Held)
10/10
10/10
10/10
7/10
3/3
0/1
5/5
10/10
8/10
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CORPORATE GOVERNANCE
Governance Report
Board Activities During the Year
Strategy
A number of strategic presentations have been received at meetings throughout the
Operations
Finance
year
The Board has set up a Mergers and Acquisitions Committee to discuss non-organic
growth opportunities
The CEO has presented a report at each Board meeting which includes updates on
production, plant performance, health and safety, exploration, licenses and permits
and ESG
The Finance Director has presented a financial report and cash management report at
each Board meeting
Approval of the Annual Report and interim report, quarterly reports and associated
financial statements
Approval of the annual budget
Approval of the extension of the Santander US$5 Million facility
Approval of the Group Authority Limits
The Chair of the Audit and Risk Committee reported to the Board on the proceedings
of each Audit and Risk Committee meeting
The Board were updated on the whistleblowing procedures and amendments to
Audit and Risk
the policy
The Audit and Risk Committee assessed the competency of the Group’s auditors and
reported their opinion to the Board.
Stakeholders
Governance
Stakeholders including local communities, Governmental agencies and regulators,
the
considered as part of
shareholders were
regularly
lenders and
CEO’s report and separately
HR reports were either reported separately or in the CEO’s report
Share register analysis reports were provided at each meeting
The Committee chairs reported on key matters discussed at the Board Committees
The Company Secretary reported on key governance regulatory developments and
on the work carried out to update the Group’s governance policies and procedures
The Board reviewed their Schedule of Matters and updated the Terms of Reference of
the Board committees, updated the Group authority limits and adopted a Board
charter
A Board effectiveness review has been undertaken by an independent board
effectiveness consultancy
Conflicts of Interest
The Board is satisfied that, as a whole, it is able to exercise independent judgement. The Articles of Association of the Company
restrict the role of the Directors in any situation where there is considered to be a conflict of interest and requires such conflicted
Director(s) to abstain from voting and participation in any meeting or voting where the matter giving rise to the conflict is to be
considered. The Company Secretary keeps a register of conflicts of interest. The register sets out the situations where each
Director’s interest may conflict with those of the Company (situational conflicts). The register is considered and reviewed at each
Board meeting so that the Board may consider and authorise any new situational conflicts identified. At the beginning of each
meeting, the Chair reminds the Directors of their duties under sections 175, 177 and 182 of the Companies Act 2006 which relate
to the disclosure of any conflicts of interest prior to any matter that may be discussed by the Board.
Training and Development
Directors are encouraged to continue their ongoing professional development. During the year the Directors received training
from the Company’s lawyers, Travers Smith LLP on the UK Market Abuse Regulations and the procedures that the Company
had adopted to manage inside information and its dissemination including the operation of the Disclosure Committee. During
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CORPORATE GOVERNANCE
Governance Report
the year the Directors also received update training on Directors’ duties and the AIM Rules from Travers Smith LLP. The Company
Secretary provides updates on governance and regulatory matters at each Board meeting.
Induction
On joining the Board, Directors receive an induction programme including meetings with members of the Board and senior
management, access to Board and Committee papers, minutes, Company procedures and policies and meetings with relevant
external advisers including the Company’s Nomad.
Time Commitment
All Directors pre-clear any proposed appointments to listed company boards with the Board, prior to committing to them.
The Non-executive Directors are required, by their letters of appointment, to devote as much of their time, attention, ability and
skills as are reasonably required for the performance of their duties. This is anticipated as a minimum of one day a month.
Advice
The Board has access to Travers Smith LLP, as UK legal advisers to the Company, to Peterson McVicar LLP as legal advisers in
Canada and to Beaumont Cornish Limited as Nominated Adviser.
Board Evaluation
Between November 2021 and February 2022, an independent evaluation was undertaken by Board Excellence, an international
board practice. Board Excellence’s report highlighted the need to improve the current system of corporate governance. During
2022, the Board implemented a primary recommendation of the Board Excellence report and appointed an independent chair.
During 2023, the Board has taken steps to further improve its corporate governance and regulatory compliance framework,
including:
The appointment of a new chair of the Audit & Risk Committee
The establishment of a Sustainability Committee
Redrafting of the Board Charter and Guidelines and revision of the terms of reference of the Audit & Risk Committee,
Remuneration & People Committee and Sustainability Committee
The establishment of a Disclosure Committee
The outsourcing of the Company Secretarial function
Revision of the Company’s Market Abuse Regulation compliance handbook and training
Updating the Board programme and calendar
Revision of the Board Conflicts Policy and Directors Interest procedures
Between November 2023 and February 2024, a Board evaluation has been undertaken by Ceradas Limited, an independent board
effectiveness consultancy. The objective of the review was to assess how the Directors perceive the progress that the Board and
Company generally had made since the 2022 Board evaluation in order to identify and make recommendations to further improve
the effectiveness of the Board and its committees. The Board review was undertaken using interviews of all Directors, meeting
observations and key documentation research. A Board report setting out the assessment of the Board and the Committees was
presented to the Board in February 2024. Generally it was acknowledged that there was widespread evidence of significant
improvements to the Board’s overall effectiveness. There were also some opportunities for further improvements. The key
recommendations from the review were:
Include on the Board timetable a standalone session to discuss strategic direction and milestones for the longer term
Consider holding a Board meeting in Brazil at least once a year
Consider appointing one of the South American based Non-executive Directors as a Workforce Engagement Director to
Include in the Board programme a regular session to review business performance on culture and ESG matters
meet with representatives from the workforce on site in Brazil at least annually and report back to the Board
Consider options for bringing additional technical, engineering or mining expertise/advisors into the Board discussions
Relations with Shareholders
The Board is committed to providing shareholders with clear and timely information on Serabi’s activities, strategy and financial
position. General communication with shareholders is coordinated by the Executive Directors together with the Business
Development Manager. The Company publishes on its website a range of information which helps current and potential
shareholders to make an assessment of the Group’s position and prospects.
The Board maintains dialogue with the Company’s major institutional investors. The Board also acknowledges that the majority
of its private investors hold their shares via nominee shareholders and may not be able to fully exploit their shareholder rights
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CORPORATE GOVERNANCE
Governance Report
effectively. Management attends selected industry events at which they are available to engage with private investors. The Board
is kept informed of the views and concerns of shareholders through briefings from the Executive Directors and the Company’s
brokers.
Annual General Meeting (AGM)
The AGM is the annual opportunity for all shareholders to meet with the Directors and to discuss with them the Company’s business and
strategy. The notice of AGM is posted to all shareholders at least 21 clear days before the meeting. Separate resolutions are proposed on all
substantive issues for each resolution, shareholders will have the opportunity to vote for or against or to withhold their vote. Following
the meeting, the results of votes lodged will be announced to the London Stock Exchange and displayed on the Company’s website
63
CORPORATE GOVERNANCE
Audit and Risk Committee Report
The following report sets out the responsibilities and activities of the Audit and Risk Committee for the year ended 31 December
2023. This report is prepared in accordance with the Quoted Companies Alliance (“QCA”) corporate governance code for small
and mid-sized quoted companies, revised in April 2018.
Committee Composition
The Audit and Risk Committee is comprised of Non-executive Directors. It is chaired by Deborah Gudgeon and its other members
are Michael Lynch-Bell and Mark Sawyer. Deborah joined the Committee on appointment to the Board on 9 May 2023. Michael
chaired the Committee on an interim basis from August 2022 before handing over to Deborah in May 2023.
The Committee is considered, as a whole, to have the required competence relevant to the mining sector. Deborah Gudgeon has
significant, recent and relevant financial experience. Deborah qualified as a Chartered Accountant with PwC (Coopers and
Lybrand) and is currently chair of the Audit Committee of Ithaca Energy plc and Petra Diamonds Ltd. Michael Lynch-Bell is a
chartered accountant with a 38-year career with Ernst and Young. More information on the Committee members’ skills and
experience can be found on pages 53 to 54.
The Committee meets at least four times a year. During the year the Committee met five times. Attendance at regular scheduled
Committee meetings is shown below.
Director
Audit Committee Meetings
(Attended/Held)
Deborah Gudgeon (Chair)(1)
Michael Lynch-Bell
Mark Sawyer
(1) - Appointed 9 May 2023
4/4
5/5
5/5
The Finance Director is invited to attend the Committee meetings and the Committee has the right to request other Executive
Directors and senior management to attend its meetings. Other advisers to the Group also attend meetings as requested by the
Committee. The external auditor attends the meetings to report on the planning, execution and results of the annual audit and
has direct access to the Chair of the Committee. Following each meeting, the Committee Chair reports formally to the Board on
the main issues considered by the Committee and its recommendations to the Board. The Company Secretary attends each
meeting as Secretary to the Committee.
At least once a year, the Committee meets with the external auditor without management present to ensure that there are no
issues in the relationship between management and the external auditors that should be addressed.
Committee Responsibilities
The purpose of the Audit and Risk Committee (“ARC”) is to assist the Board in discharging its governance responsibilities in
respect of external audit, internal audit, risk and internal control and to oversee the integrity of the Group’s financial reporting
and associated narrative statement.
The main duties of the Committee are set out in the Terms of Reference. These Terms of Reference were reviewed and updated
during the year and a copy can be found on the Company’s website.
The Committee’s key responsibilities include the following:
monitoring the integrity of the Group’s financial reporting including the annual and interim reports and other significant
announcements relating to financial performance and reporting to the Board on significant issues;
reviewing and challenging significant accounting policies and practices adopted by the Group;
reviewing and challenging whether the Group has adopted appropriate accounting standards and policies and made
appropriate estimates and judgements;
advising on the clarity of disclosures and information contained in the financial reports;
reviewing the procedures and systems established to identify, assess, monitor and manage risks, including emerging
risks;
reviewing the adequacy and effectiveness of the systems of internal control and the risk management framework;
overseeing the relationship with the external auditor, including their remuneration and the effectiveness of the audit
processes and making recommendations on the auditor’s appointment;
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CORPORATE GOVERNANCE
Audit and Risk Committee Report
maintaining and reviewing the external auditor’s independence and objectivity; and
reviewing the Group’s whistleblowing procedures and reports to the Board.
Activities during the year
Relationship with the external auditors
The Committee has primary responsibility for managing the relationship with the external auditor, including assessing their
performance, effectiveness and independence annually and recommending to the Board their reappointment or removal.
Following a tender process in 2022, PKF Littlejohn LLP (PKF) were appointed as Serabi’s auditor and KPMG Auditores
Independentes (“KPMG”) were appointed to undertake the statutory audits of each of the Group’s subsidiaries in Brazil and
support the audit work of PKF. During the year, the members of the Committee met with representatives from PKF without
management present, to ensure that there were no issues in the relationship between management and the external auditor that
it should address. In addition, the Chair of the Committee met KPMG in Brazil without management present. Neither PKF or
KPMG raised any issues.
Audit Process
The Committee considers the nature, scope and results of the external auditor’s work and reviews, develops and implements a
policy on the supply of any non-audit services that are to be provided by the external auditor. It receives and reviews reports from
the Group’s auditors relating to the Group’s annual report and accounts and the external audit process. In respect of the audit for
the financial year ended 31 December 2023, PKF presented their audit plan (prepared in consultation with management) to the
Committee in December 2023. The Audit Plan included an assessment of audit risks, and robust testing procedures. The
Committee approved the implementation of the plan following discussions with both PKF and management.
Audit and non-audit fees
The Company has agreed to pay £140,000 for the audit fees of the Group Auditor for the financial year ended 31 December 2023.
In addition it will pay a fee of US$141,638 to KMPG for the fee as the component auditor reporting to the Group Auditor. The
Company has adopted a non-audit services policy which limits the external auditor to working on the audit or such other matters
where their expertise as the Company’s auditor makes them the logical choice for the work. This is to preserve their independence
and objectivity. The Company did not incur any non-audit fees with PKF for the financial year ended 31 December 2023.
Effectiveness and independence
The Chair of the Committee speaks regularly to the audit partner to ascertain if there are any concerns, to discuss the audit reports
and to ensure that the auditor has received support and information requested from management. The Committee continues to
monitor the external auditor’s objectivity and independence and is satisfied that PKF and the Group have appropriate policies
and procedures in place to ensure these requirements are not compromised and that PKF continue to be independent and
objective.
Re-appointment of the external auditor
The Committee recommends to the Board the re-appointment of PKF Littlejohn LLP as auditor at the forthcoming Annual General
Meeting (AGM)
Key judgements and estimates
The Committee reviewed the external reporting of the Group. In assessing the annual report, the Committee considers the key
judgements and estimates. The significant issues considered by the Committee in respect of the year ended 31 December 2023 are
set out in the table below:
Significant issues and judgement
How the issues were addressed
Valuation of capitalised exploration costs
As at 31 December 2023, the Group’s Deferred
exploration assets are valued at $20.5m (2022:
$18.6m) and are key to the long-term success of
the Group.
Significant judgement and estimation is required
by management to assess the recoverability of the
balances and as a result there is the risk that these
balances are incorrectly valued.
The ARC have reviewed management reports detailing the exploration
expenditures incurred and ensured that costs are capitalised according to
accounting stands and in line with policies set by the Group.
The ARC has reviewed with management the validity of current
exploration licences ensuring that they remain valid during the year and
at the year-end;
Management have prepared details of future plans for each license
including providing potential expenditure projections for each licence
where necessary;
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CORPORATE GOVERNANCE
Audit and Risk Committee Report
Significant issues and judgement
How the issues were addressed
Consideration was given to the impairment indicators set out in IFRS 6 &
IAS 36; and key external reports were reviewed for indicators of
impairment.
The ARC have also considered the work undertaken by the Auditors and
their reviews of the exploration and evaluation expenditures and
assessment of their eligibility for capitalisation under IFRS 6 by
corroborating spend to original source documentation.
.
The ARC has reviewed and challenged management’s projections of
future revenues and costs for each cash generating unit (“CGU”). The
have considered and satisfied themselves of the economic assumptions
used by managements in generating discounted cash flow model and the
discount rates used.
The ARC has assessed and reviewed any potential indicators of
impairment that may apply to the Group or a CGU.
Members of the ARC have visited the operations and discussed
operational plans with site management.
The ARC has discussed with the Auditors the work that thee Auditiors
have undertaken including own review of management’s discounted cash
flow model; involving
assessing and challenging the appropriateness of management’s
inputs and assessment of each cash generating unit;
assessing and reviewing indicators of impairment as per IAS 36 and
considering whether any apply to the Group;
ensuring that the basis of preparation of the model is in line with
applicable accounting standards;
assessing and challenging the appropriateness of estimates and
inputs; ; and
ensuring inputs into the model are in line with third party expert’s
opinion of total mineral resources available at each site.
The ARC has also required management to undertake an independent
verification of plant and equipment and discussed with the Auditors their
separate verification work undertaken in respect of plant and equipment.
Ownership of investments held by the Parent Company were reviewed
and confirmed
An impairment review for all investments was prepared by management
and management were challenged in respect of the assumptions and
judgements made;
The value of the net investment in subsidiaries was reviewed against the
underlying assets to assess the recoverability of investments;
Management’s assumptions that the operation in Brazil is one cash
generating unit (CGU) was reviewed and challenged; and
Management’s cash flow forecast for the CGU was tested which underpins
the value held as investments by Serabi Gold plc.
Carrying value of mining assets
As at 31 December 2023 the Group’s Mining
Assets totalled $53.3m (2022: $48.4m).
Management assess the recoverable amounts of
these balances on a cash generating unit (CGU)
basis using a management prepared discounted
cash flow model.
Significant judgements and estimates used are
used by management
the
valuation of these assets.
in determining
Valuation of investments and intercompany
receivables
As at 31 December 2023, the carrying value of
investments in subsidiaries is $103.3m (2022:
$102.9m). This value is ultimately dependent on
the value of the underlying assets. The carrying
value of these investments is material to the
parent company financial statements.
A significant portion of the underlying assets are
exploration mining assets making it difficult to
definitively determine their value.
Valuations for these projects are therefore based
judgments and estimates made by the
on
Directors - which leads to a risk of misstatement.
Risk management and internal controls
Internal control structure
The Board oversees the Group’s risk management and internal controls and determines the Group’s risk appetite. The Board has,
however, delegated responsibility for review of the risk management methodology and the effectiveness of internal controls to
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CORPORATE GOVERNANCE
Audit and Risk Committee Report
the Audit and Risk Committee. The Group’s system of internal controls includes financial, operational and compliance controls
and risk management, with the Group’s policies and procedures including clearly defined levels of delegated authority. During
the year the Committee has reviewed and revised these defined levels of delegated authority and has ensured that they have been
communicated throughout the Group. Internal controls have been implemented in respect of the key operational and financial
processes of the business. These policies are designed to ensure the accuracy and reliability of financial reporting and govern the
preparation of the Financial Statements.
The Board is ultimately responsible for the Group’s system of internal controls and risk management and discharges its duties in
this area by:
•
•
•
•
•
•
•
holding regular Board meetings to consider the matters reserved for its consideration;
receiving regular management reports which provide an assessment of key risks and controls;
scheduling regular Board reviews of strategy including reviews of the material risks and uncertainties (including
emerging risks) facing the business;
ensuring there is a clear organisational structure with defined responsibilities and levels of authority;
ensuring there are documented policies and procedures in place and reviewing these policies and procedures regularly;
having comprehensive budgets, forecasts and business plans, approved by the Board, reviewed on a regular basis, with
performance monitored against them and explanations obtained for material variances;
reviewing regular reports containing detailed information regarding operational and financial performance, rolling
forecasts, cashflows and key performance indicators.
having documented whistleblowing policies and procedures
Internal audit function
The Group does not currently have an internal audit team. The need for this is reviewed annually by the Committee. During
2021/22 an external review of the Group’s key internal controls at its operations in Brazil was undertaken by Deloitte Touche
Tohmatsu Consultores Ltda in Brazil (Deloitte). Management and the Board have been working through 2022 and 2023 to
implement the additional recommendations from this review. The review observed that whilst management had implemented a
number of additional procedures and processes, there continued to be areas for improvement and additional financial and
operational controls that could be implemented. The Committee has overseen the implementation of management’s responses to
the Deloitte recommendations. Now the implementation of these recommendations is largely complete the Committee have
concluded that it is now appropriate to establish an internal audit function to provide a key source of internal assurance going
forward, with a recruitment process currently in progress.
Anti-bribery and whistleblowing
The Company is required to maintain, subject to the oversight by the Audit and Risk Committee, a mechanism for the confidential
reporting of suspected fraud and other wrongdoing. The Group has in place a whistleblowing policy, which sets out the formal
processes to be followed by employees and the procedures for reporting incidents. A confidential third-party email and phone
number are provided within the policy to ensure staff can report on a confidential basis. The policy is provided to every employee
of the Group and training is provided. The Audit and Risk Committee reviews the whistleblowing policy annually to ensure that
it remains fit for purpose. The Committee receives regular whistleblowing reports and other reports on the effectiveness of the
Whistleblowing policy and then reports regularly to the Board on these matters. During the year the Committee has also reviewed
the Group Bribery policy and approved a Gift and Hospitality policy to support the Bribery policy. These updated policies are
being rolled out throughout the Group and training will be provided to all staff on the operation of these policies.
Deborah Gudgeon
Chair of the Audit Committee
26 April 2024
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Remuneration Committee Report
Directors Remuneration Report
Statement from the Chair of the Remuneration Committee
Serabi Gold is listed on the Alternative Investment Market (AIM) and therefore provides these remuneration disclosures on a
voluntary basis. As such, charts and tables included here are unaudited.
As the Company Chair has set out earlier, during 2023 the Company has achieved some key milestones and we are on track to
build on these in 2024. The Board however recognises that there will be challenges ahead and that compensation plays an
important role in achieving short and long-term business objectives that drive success.
The Group’s principal goal is to create value for its shareholders. The Group’s compensation philosophy is based on the objectives
of linking the interests of the senior management with both the short and long-term interests of the Group’s shareholders, of
linking executive compensation to the performance of the Group and the individual and of compensating senior management at
a level and in a manner that ensures the Group is capable of attracting, motivating and retaining individuals with exceptional
skills. The Remuneration Policy is designed to encourage, compensate and reward employees on the basis of individual and
corporate performance, both in the short and the long-term. Base salaries are aligned with and judged against corporations of a
comparable size and stage of development within the mining industry, thereby enabling the Group to compete for and retain
executives critical to the Group’s long-term success. Incentive compensation is directly tied to corporate performance. Share
ownership opportunities are provided to align the interests of senior management with the longer-term interests of shareholders.
Implementation of the Remuneration policy during the year
Base Salary
Although approved in principle by the Board in 2022 no salary increases were applied to the Executive Directors’ salaries during
2022. Salary increases were however approved and implemented for all other staff including the rest of the senior management.
In early 2023 the Committee therefore agreed to apply and backdate the salary increases agreed in 2022 for the Executive Directors.
These amounted to 12% for Michael Hodgson and 7% for Clive Line. Pay rises of 5% were applied to all senior management for
2023 including the Executive Directors.
Annual Bonus
The 2023 Annual Bonus was based on health and safety targets, production targets, cash costs, financing and permitting. There
was a strong performance against these operational targets. The maximum theoretical payout for the Executive Directors was 75%
of base salary for Michael Hodgson and 65% of base salary for Clive Line. The resultant out-turn based on performance against
agreed KPIs was 45% of maximum for both Michael Hodgson and Clive Line.
Share Based Incentive Plans
Conditional share awards are awarded annually under the Serabi 2020 Restricted Share Plan (the “2020 Plan”). The performance
criteria for these awards are Total Shareholder Return, Return on Capital Employment and Return on Sales. In respect of all of the
404,700 Conditional Share Awards granted for the calendar year 2020, the Board determined that none of the performance criteria
were achieved and accordingly all 404,700 Conditional Share Awards have lapsed. While the intention of the Board is that awards
under the 2020 Plan are awarded annually, as a result of exceptional circumstances in 2022, no awards under the 2020 Plan were
made in 2022. The Board therefore granted awards for 2022 and 2023 during 2023.
Remuneration arrangements for 2024
For 2024 it is currently intended that the Executive Director remuneration framework will operate in line with the prior year and
there will be minimal changes proposed to incentive opportunities or performance measures. The Committee undertook an
independent third-party benchmarking exercise during 2023. The benchmarking review examined the competitiveness of the
current remuneration arrangements relative to sector peers and typical market practice. It also reviewed the effectiveness of the
current arrangements in supporting the delivery of the strategy and motivating the senior management team as well as its
alignment with the expected governance standards for the Company. In general, the review concluded that total compensation
was competitive. The review also concluded that the use of multiple metrics for the bonus plan ensured a more motivational
bonus plan. The metrics used for the long-term incentive share based plan were consistent with market peers although the review
highlighted that binary targets were unusual and that it was more common to set an explicit performance range with vesting
based on a straight-line sliding scale. A more linear approach has therefore been taken for assessment of performance targets
linked to the grant of awards in 2023.
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Directors Remuneration Report
Closing remarks
The Board is committed to maintaining high standards of corporate governance and complies with the provisions of the Quoted
Companies Alliance (QCA) corporate governance code in so far as is practicable for the Company’s size and structure. During
2023, as outlined in the corporate governance report, there have been significant improvements to the Company’s corporate
governance arrangements and the Company aims to continuously improve governance as the Company grows. The
Remuneration and People Committee has spent time in 2023 reviewing the appropriateness of the Remuneration policy. The
Committee also changed its name to the Remuneration and People committee and amended its terms of reference in 2023 to ensure
that there was a people focus when setting the policy for the Executive Directors and that the remuneration of the wider workforce
was also considered and catered for. During 2024 the Committee intends to further review the appropriateness of the policy for
its senior management and colleagues in Brazil, including the possibility of share-based arrangements for Brazilian based
colleagues to ensure all key staff incentives are aligned with shareholders.
On behalf of the Remuneration Committee
Mark Sawyer
Chair of the Remuneration Committee
26 April 2024
Directors’ Remuneration Policy framework
Following industry practice and best practice corporate governance guidelines, Serabi’s Executive Directors’ Remuneration Policy
comprises fixed and variable annual compensation to drive delivery of near-term targets, with an additional overarching long-
term incentive plan to maintain a longer-term focus on generating value for shareholders and stakeholders. A significant
proportion of each Director’s total remuneration package is structured to link rewards to the attainment of performance targets,
both short-term and long-term.
Our Policy continues to ensure there are no rewards for failure, by providing clarity around the Committee’s discretion under the
Policy. This includes committee powers to override formulaic outcomes if pay-outs do not reflect overall business or individual
performance, as well as discretion to pay some or all of the bonus in shares and/or to require deferral of a portion of the bonus.
Purpose and link to
strategy
Base salary
Operation
Opportunity
Performance metrics
Implementation
of Remuneration
Policy for 2024
the
role
To reflect size and scope
of
and
individual’s
performance
contribution.
and
Reviewed on an annual
basis with any increases
taking effect
normally
from 1 January.
The Committee reviews
base
salaries with
reference to:
the size and scope of
the individual’s roles;
individual’s
and
the
performance
experience;
Company
and
individual performance
are considered when
setting
Executive
Director base salaries.
Base remuneration
will be increased
by 4.2% with effect
from 1
January
2024 to:
CEO: £343,000
FD: £241,000
There is no maximum
increase. The
salary
retains
Committee
discretion
to make
appropriate
adjustments to salary
levels to ensure they
remain appropriate in
the context of the size
and scope of the role
and
and
complexity
the
business.
size
of
the
business performance
and
external
the
economic
environment;
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CORPORATE GOVERNANCE
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Directors Remuneration Report
Purpose and link to
strategy
Operation
Opportunity
Performance metrics
Implementation
of Remuneration
Policy for 2024
Annual bonus
incentivise
of
the
To
annual
delivery
operational
and
financial performance
and the achievement of
strategic
business
priorities.
Share based incentive
plans
To drive sustained long-
term performance that
supports the creation of
shareholder value.
market practice at
other companies of a
similar
and
complexity; and
size
salary increases across
the Group
Performance
is
measured on an annual
basis for each financial
year.
Performance measures
are reviewed at the start
of the year to ensure they
remain appropriate and
align with the business
strategy and priorities
Stretch targets are set.
At the end of the year the
committee determined
the extent to which these
were achieved.
Awards are paid in cash.
Conditional
share
awards (CSAs) under the
reward
2020
plan
delivery of
sustained
long-term improvements
in shareholder returns
by aligning performance
directly with an increase
fundamental
in
the
the
measure
of
generation
shareholder value.
of
seeks
to
The Board
related
award equity
incentives on an annual
basis. Whilst
is
generally expected that
these will be equity
settled, provisions exist,
the
to be used at
it
The
opportunity
Directors is:
maximum
the
for
CEO
FD
75% of base
salary
65% of base
salary
Performance measures
are selected and their
respective weightings
may vary from year to
year depending
on
financial and strategic
priorities.
is
It
currently
intended that the
annual bonus will
operate in line with
the prior year.
(within
The Committee has
discretion to adjust the
bonus
formulaic
both
outcomes
the
upwards
policy
and
downwards to ensure
alignment of pay with
underlying
the
the
performance
business
the
financial year.
of
over
limits)
The executive directors
receive annual awards
of up to 50% of base
salary.
The vesting of the CSAs
is subject to company
performance
and
continued employment.
is
It
currently
intended that the
CSA will operate in
line with prior
years albeit
the
performance
will
measures
operate on a more
linear basis.
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Purpose and link to
strategy
Operation
Opportunity
Performance metrics
Implementation
of Remuneration
Policy for 2024
discretion of the Board,
for these awards to be
cash
an
settled on
equivalent basis where,
tax
for example,
treatment
might
significantly disadvantage
an individual recipient.
the
Benefits and pension
Serabi offers health care benefits to its Executive Directors and employees. In Brazil this also extends to dental care. The Group
does not operate any pension plans for its Executive Directors except to the minimum extent required under UK law. The level of
pension contribution made to an individual’s defined contribution scheme will generally be linked to an employee’s base salary,
though the Committee may, at its election, approve single lump sum payments which can increase the overall level of retirement
benefit provided for any individual. To the extent that a Director exceeds their annual allowance or lifetime allowance, they receive
no additional remuneration in lieu of pension.
Notes on the Policy Table
Malus and clawback
Malus and clawback provisions may be applied to the share-based incentive plans in the following circumstances:
Material misstatement of results
An error in assessing the performance conditions
An act or omission by the participant which would enable the Company to summarily dismiss them
Any other instance where the Remuneration Committee regards it appropriate
Non-executive Director Policy Table
Details of the policy on fees paid to our Non-executive Directors and how this policy will be implemented for 2024 or set out in
the table below:
Purpose and link to
strategy
Fees
To attract and retain
Non-executive Directors
of the highest calibre
with broad commercial
and other experience
relevant
the
company.
to
Operation
Opportunity
Performance metrics
Not
related.
performance
The Chair and Non-
Directors
executive
receive a basic fee for
their respective roles.
to
Additional fees may be
Non-
payable
executive Directors for
additional services such
as acting as Senior
Independent Director or
as Chair of any of the
Board’s Committees etc.
is expected
that
It
to Non-
increases
executive Director fee
levels will be in line
with
salaried
employees over the life
of the policy.
However, in the event
that there is a material
misalignment with the
market or a change in
complexity,
the
71
Implementation
of Remuneration
Policy for 2024
The Base fees for
Non-executive
Directors
Chair
is
increased by 4.2%
and
to be
Chair - £83,360
Non-executive
Directors - £44,806
and
The Chair
other
Non-
executive Directors
CORPORATE GOVERNANCE
Remuneration Committee Report
Directors Remuneration Report
Purpose and link to
strategy
Operation
Opportunity
Performance metrics
roles
Fee levels are reviewed
from time to time against
similar
at
comparable companies,
taking into account time,
commitment
and
responsibility of the role,
with any adjustments
1
normally
January
the year
following review.
effective
in
fulfil
responsibility or time
commitment required
to
a Non-
executive Director role,
has
Board
the
discretion to make an
appropriate adjustment
to the fee level.
Implementation
of Remuneration
Policy for 2024
also receive fees for
membership and
chairing a Board
Committee
of
Chair
a
committee - £7,500
or £10,000
Membership of a
committee £5,000
The fees paid to the Chair
are determined by the
Committee, whilst the
fees of the Non-executive
Directors are determined
by the Board.
Discretion
The Committee will operate all incentive plans according to the rules and discretions contained therein to ensure that the
implementation of the Remuneration Policy is fair, both to the individual director, shareholders and stakeholders. The discretions
cover aspects such as:
selection of participants;
timing of grant and vesting of awards;
size of awards (subject to the Policy limits);
choice of measures, weightings and targets;
determining level of pay-out or vesting based on an assessment of performance and to override formulaic outcomes
where appropriate;
determining whether and, if so, the proportions at which the bonus will be payable in cash, deferred cash, shares or
deferred shares and the terms applying to such shares and deferrals;
treatment of awards on termination of employment and change of control;
adjustment of awards in certain circumstances, e.g., changes in capital structure;
adjustment of performance conditions in exceptional circumstances; and
application of malus and/or clawback.
Any such use of discretion will be fully disclosed in the subsequent Annual Report.
Performance Measures and target setting
The Committee reviews annually performance measures and target weightings. Performance measures used under the annual
bonus and long-term incentives are selected and reviewed annually to reflect the Group’s main short and long-term objectives
and reflect both financial and non-financial priorities. These will typically include a mix of strategic, financial, operational and
health and safety targets. Performance measures are set to be stretching but achievable, taking into account a range of internal
and external reference points, having regard to the particular strategic priorities and economic environment in a given year.
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Directors Remuneration Report
Recruitment policy for Executive Directors
In the case of a new externally appointed Executive Director, the Committee may make use of all existing components under the
Remuneration Policy applying to existing Executive Directors, including salary, pension, benefits, annual bonus and CSA awards.
The current maximum limits under the existing Policy will apply similarly on recruitment, except that the maximum annual
bonus opportunity will be pro-rated to reflect the proportion of employment during the year. Depending on the timing of
appointment, it may be appropriate to operate different performance measures for the remainder of that bonus period. Where
appropriate and necessary to facilitate the recruitment of an individual, the Committee may consider using other remuneration
tools and may exercise discretion, as appropriate, to make awards using a different structure.
Directors’ service contracts and termination policy
The Executive Directors have rolling-term Service Agreements with the Group. The Executive Directors’ Service Agreements
each include the ability for the Group, at its discretion, to pay basic salary only in lieu of any unexpired period of notice. Payments
may be made as either a lump sum or in equal monthly instalments until the end of the notice period at the discretion of the
Group. The Committee will seek to ensure that there are no unjustified payments for failure. For the current Executive Directors,
where the appointment is terminated by reason of the executive’s death, redundancy, injury, ill health or disability, the Executive
Director shall be entitled to participate in such bonus scheme arrangements of the Group applicable to Directors of the Group, in
line with the Group’s bonus policy. Any bonus awarded to the executives is entirely discretionary and may at the Group’s
discretion be paid to the executive as a combination of shares and cash.
Shareholder views
The Company has not, to date, sought formal shareholder approval for its Remuneration Policy although welcomes discussion
with shareholders on the policy. The Committee is aware of the forthcoming changes to the QCA Code and will therefore seek
approval of the Remuneration Policy and the Remuneration Report at its 2025 Annual General Meeting in accordance with the
QCA Code.
Directors’ Remuneration Report
The Service Agreements contain provisions enabling the Group to place the Executive Director on gardening leave during the
period of notice.
Name
Michael Hodgson
Clive Line
Non-executive Directors
Michael Lynch-Bell
Luis Azevedo
Deborah Gudgeon
Caroline Margozzini
Mark Sawyer
Date of Service Agreement
Notice by Group/Individual
1 February 2007
14 March 2005
8 August 2022
27 April 2020
9 May 2023
N/A (1)
N/A(1)
12/6 months
12/6 months
N/A (2)
N/A (2)
N/A (2)
N/A
N/A
(1)
Service agreements are not entered into with Non-executive Directors appointed by major shareholders pursuant to the Relationship Agreement
between the Company and the respective shareholder.
(2) Non-executive Directors are appointed for terms of up to three years. The service agreements anticipate a Non-executive Director serving up to two
terms, each of three years.
When considering exit payments, the Committee reviews all potential incentive outcomes to ensure they are fair to both
shareholders and participants. The table below summarises how incentive awards are typically treated in specific circumstances.
Whilst the Committee retains overall discretion on determining good leaver status, it typically defines a good leaver in
circumstances such as death, redundancy, injury, ill health or disability, retirement with the agreement of the Group and personal
circumstances affecting immediate family preventing the individual working for the Group. Other leavers may include those
leaving employment for any other reason as well as those leaving due to misconduct, wilful failure to perform duties and any
action that would entitle the Group to terminate employment without notice or payment in lieu of notice:
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Directors Remuneration Report
Component
Annual bonus
Conditional Share Awards
Good leaver reasons
Other leaver reasons
Change of control
No bonus payable unless the
Committee
determines
otherwise (as set out above).
Shall cease
to have any
including the
entitlements
right to exercise any vested
but unexercised options
Paid at the same time as
continuing employees, to the
extent that the performance
conditions are achieved and
pro-rating for the proportion
of the financial year served,
Committee
unless
determines otherwise
the
May retain
their awards
which will vest in accordance
with the original terms and
whilst
to be
continuing
subject
performance
conditions and pro-rating for
the time elapsed since grant.
These provisions may be
over-ridden at
sole
the
discretion of the Board
to
to
Paid
the
immediately on
effective date of change of
the
subject
control,
achievement of performance
conditions and pro-rated for
the proportion of the year
served to the date of change of
control, unless the Committee
determines otherwise.
All awards that have not
vested shall vest on the date of
the event and any Option must
be exercised within 30 days (or
such other period as the Board
agrees) of the event. In certain
circumstances the Board with
the consent of the acquiring
to
company may
for
exchange
equivalent awards in the new
company provided the terms
of the awards are not modified
in any significant way.
agree
the awards
The Committee reserves the right to make any other payments in connection with termination of employment where the payments
are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by
way of a compromise or settlement of any claim arising in connection with the cessation of a director’s office or employment. Any
such payment may include, but is not limited to, paying reasonable fees for outplacement assistance and/or the director’s legal or
professional advice fees in connection with their cessation of office or employment.
External appointments
The Executive Directors are restricted under the terms of their Service Agreements from assuming any responsibilities or duties
in any person without written Board consent. The Board may agree to such external appointments at its discretion, provided that
any such external appointments do not and are unlikely to interfere with the Executive Director’s duties to the Group. The Policy
is for the individual to retain any fee earned in relation to an external appointment.
Consideration of employment conditions elsewhere in the Group
In making decisions on Executive Director remuneration, the Committee considers pay and conditions of other employees
across the Group, and considers any informal feedback received. The Group does not formally consult with employees on
executive remuneration as the size and scope of Serabi’s operations at this stage in its development would make any consultation
process ineffectual.
Annual Report on remuneration
The following section provides details of how Serabi Gold's Remuneration Policy was implemented during the financial year
ending 31 December 2023.
Remuneration Committee membership and activities in 2023
The Remuneration Committee’s members as at 31 December 2023 were Non-executive Director Mark Sawyer, who is the Chair
of the Committee, Michael Lynch-Bell and Carolina Margozzini.
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Directors Remuneration Report
Director
Mark Sawyer (Chair)
Michael Lynch-Bell
Carolina Margozzini
Remuneration Committee
Meetings (Attended/Held)
2/2
2/2
2/2
The Committee operates under agreed Terms of Reference which set out its duties, including reviewing senior executive
appointments and determining the Group’s policy in respect of the terms of employment, including remuneration packages of
Executive Directors and other members of senior management.
The Committee’s Terms of Reference were reviewed and updated during the year and are available on the Group’s website.
The Remuneration Committee met formally twice during 2023 and also on an ad-hoc basis when required.
Remuneration Committee activities during the year were as follows:
Review and approval of Executive Director performance against annual bonus targets for 2022.
Review and assess approval of Executive Director performance against 2020 CSA targets (lapsed).
Determination of performance targets for the share incentives for 2023.
Determination of performance targets for the 2023 annual bonus.
Receipt and discussion about the third-party benchmarking exercise.
Review of remuneration arrangements and policies for Executive Directors, senior management and the wider Group.
Review and approval of salary increases for the Executive Directors and senior management and agree the backdating
of the salary increases for 2002 previously agreed.
During the year the Committee appointed an external third-party consultant, Ellason LLP, to provide a benchmarking exercise.
The benchmarking review examined the competitiveness of the current remuneration relative to sector peers and typical
market practice. FFA Legal also carried out a compensation survey in Brazil to benchmark the managers’ salaries in Brazil to
ensure these salaries were competitive.
Director
Michael Hodgson (1)
Clive Line (1)
Luis Azevedo (2)
Michael Lynch-Bell (3)
Carolina Margozzini (4) (8)
Deborah Gudgeon (5)
Financial
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Salary
US$
398,906
376,847
287,064
270,936
–
–
–
–
–
–
–
–
Fees as
Director
Other
fees
Bonus
Pension
IFRS 2
charge for
options
granted
Other
Total
US$
US$
US$
US$
US$
US$
US$
–
–
–
–
–
–
–
–
–
–
–
–
138,126
9,989
82,174
5,574
634,769
43,411
9,752
26,389
5,285
461,685
83,882
26,416
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
61,159
4,645
436,750
18,472
4,404
320,228
663
5,278
–
–
–
–
–
–
–
–
–
–
–
–
–
–
663
33,774
115,495
44,610
–
–
44,349
–
–
–
–
–
–
28,496
115,495
44,610
–
–
44,349
–
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Directors Remuneration Report
Director
Mark Sawyer (8)
Aquiles Alegria (6)
Nicolas Bañados (7)
Total
Total
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Financial
Year
Salary
US$
Fees as
Director
Other
fees
Bonus
Pension
US$
US$
US$
US$
IFRS 2
charge for
options
granted
US$
633
5,278
–
5,278
633
–
Other
Total
US$
–
–
–
–
–
–
US$
633
24,549
–
31,847
633
21,618
–
–
–
–
–
–
–
–
–
–
–
–
222,008
9,989
145,262
10,219
1,233,292
69,828
9,752
60,695
9,689
907,786
2023
2022
2023
2022
2023
2022
2023
2022
–
–
–
–
–
–
–
19,271
–
26,569
–
21,618
685,970
159,844
647,783
140,564
–
–
–
–
–
–
0
0
Salaries and bonuses paid to the executive directors reflect the period to which they relate and may not have been received during those periods.
Luis Azevedo is the owner of FFA Legal which provides legal services to the Group and its Brazilian subsidiaries. During 2023 charges issued
by FFA Legal US$484,350 of which US$155,785 was outstanding at the period end.
Michael Lynch-Bell was appointed on 8 August 2022
Carolina Margozzini was appointed on 24 January 2023
Deborah Gudgeon was appointed on 9 May 2023
Aquiles Alegria stepped down from the Board on 9 March 2023
Nicolas Bañados stepped down from the Board on 24 January 2023
Fratelli Investments Ltd and Greenstone Resources II LP agreed to waive any fees due in respect of their nominee directors with effect from
1 July 2022 until 31 December 2023. Fees for the nominee directors were reinstated with effect from 1 January 2024
Incentive outcomes for the year ended 31 December 2023
Annual bonus in respect of 2023 performance
The maximum bonus award for 2023 was 75% of salary for Mike Hodgson and 65% of salary for Clive Line. Operational
performance criteria were set for the annual bonus. These KPIs included: health and safety, production, costs, financing and
permitting. The KPIs each had different weightings. The resultant out turn was 45% of the maximum for each Director. These
bonus amounts will be settled to the individuals in 2024 and reflected in the remuneration paid in 2024.
Annual bonus in respect of 2022 performance
The maximum bonus award for 2022 was 75% of salary for Mike Hodgson and 65% of salary for Clive Line. Operational
performance criteria were set for the annual bonus. These KPIs included: health and safety, production, costs, financing and
permitting. The KPIs each had different weightings. The resultant out turn was 15% of the maximum for each Director. These
bonus amounts were settled to the individuals in 2023 and reflected in the remuneration paid in 2023.
Conditional Share Awards vesting in 2023
CSA granted in respect of the 2021 calendar year were scheduled to vest on 7 December 2024 based on the performance
measurements between 1 January 2021 to 31 December 2023. The awards were based on 40% Total Shareholder Return (TSR), 30%
Return on Capital Employment (ROCE) and 30% on Return on Sales (ROS). None of these performance targets have been met so
accordingly these awards have lapsed.
CSA granted in in respect of the 2020 calendar year were scheduled to vest on 7 December 2023 based on the performance
measurements between 1 January 2020 to 31 December 2022. The awards were based on 40% Total Shareholder Return (TSR), 30%
Return on Capital Employment (ROCE) and 30% on Return on Sales (ROS). None of these performance targets have been met so
accordingly these awards have lapsed.
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Directors Remuneration Report
Ordinary shares and options
The Directors of the Company, who held office during the year and as of 31 December 2023, had the following interests in the
ordinary shares of the Company according to the register of Directors’ interests:
Michael Hodgson
Clive Line
Michael Lynch-Bell
Carolina Margozzini(2)
Luis Azevedo
Deborah Gudgeon
Mark Sawyer(3)
Shares held at 31
December 2023
Shares held at 31
December 20221
70,066
73,332
–
–
–
–
–
70,066
73,332
–
–
–
–
–
(1) Or date of appointment if later.
(2) Carolina Margozzini is Principal of Megeve Investments which is investment adviser to Fratelli Investments Limited which as at 31 December 2023 was
interested in 19,318,785 ordinary shares.
(3) Mark Sawyer is a partner of Greenstone Resources II LP which as at 31 December 2023 was interested in 19,083,394 ordinary shares.
During the year ended 31 December 2023 the Company’s shares have traded between 21.00 pence and 45.94 pence.
Conditional Share Awards - The 2020 Plan
All employees of the Group (including Executive Directors who are employees) are eligible to participate in the 2020 Plan. Awards
provide rights to acquire ordinary shares (subject to restrictions) in the capital of the Company (whether by transfer or
subscription) in such form (including but not limited to conditional shares or options) as the Board may determine in its absolute
discretion. The number of shares over which awards to subscribe for shares may be granted under the 2020 Plan on any date shall
be limited so that the total number of shares issued and issuable pursuant to rights granted under any employee share scheme
operated by the Company in any rolling ten year period is restricted to 10% of the Company’s shares in issue calculated at the
relevant time excluding any lapsed awards or those that are no longer capable of exercise. Awards may be granted subject to
performance conditions which will be specified at the time of grant. All awards under the 2020 Plan are subject to malus and
clawback provisions.
Grants in 2023
No Conditional Share Awards were made by the Company during 2022. In 2023 the Board has approved the issue of a further
Conditional Shares Award (“CSA”) to the Executive Directors in respect of the annual Long Term Incentive Plan awards for the
calendar year 2022. In accordance with the terms of the Serabi 2020 Restricted Share Plan (the “2020 Plan”), Michael Hodgson and
Clive Line received an entitlement equivalent in value to 50% of their respective salaries for the calendar year 2022. The awards
will vest, subject to the achievement of the stipulated performance criteria, on the second anniversary of the award. This is in
recognition that the award was delayed by one year. Performance conditions will still be assessed over a three-year period.
The Board also approved the issue of CSA to the Executive Directors in respect of the annual Long Term Incentive Plan awards
for the calendar year 2023. In accordance with the terms of the Serabi 2020 Restricted Share Plan (the “2020 Plan”), Michael
Hodgson and Clive Line each received an entitlement equivalent in value to 50% of their respective salaries for the calendar year
2023. The awards will vest, subject to the achievement of the stipulated performance criteria, on the third anniversary of the
award.
Executive Share Option Plan
The Serabi 2011 Share Option Plan has reached the end of its intended life and no new options will be issued under this
arrangement. All remaining options in issue on 1 January 2023, expired on 26 May 2023. No options were exercised in 2023.
77
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2021
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2020
Total
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2022
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2020
2020
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Remuneration Committee Report
Directors Remuneration Report
Summary of Directors’ Interests
The beneficial interests of the Executive Directors in share awards and share options as at 31 December 2023 are shown in the
following tables.
CSA – Conditional Share Awards (2020 Plan)
ESOP – Executive Share Option Plan (Serabi 2011 Share Option Plan)
Award year
Plan
Vesting by
Michael Hodgson
Share price
at date of
award £
Exercise
price £
At 31
December
2022
Granted
Lapsed
Exercised
CSA
CSA
CSA
CSA
31 Jul 2026
UK£0.25
31 Jul 2025
UK£0.25
7 Dec 2024
UK£0.67
7 Dec 2024
UK£0.67
n/a
n/a
n/a
n/a
193,000
162,500
–
–
490,400
271,900
ESOP
26 May 2023
UK£0.85
500,000
–
–
–
(162,500)
(500,000)
(1) The performance criteria related to theses CSA’s were measured after 31 December 2023 and it was determined that none of the performance criteria had
been met, Accordingly, these CSAs lapsed after the end of the calendar year
855,500
762,300
(662,500)
Award year
Plan
Vesting by
Clive Line
Share price
at date of
award £
Exercise
price £
At 31
December
2022
Granted
Lapsed
Exercised
CSA
CSA
CSA
CSA
2026
2025
–
–
344,300
190,500
7 Dec 2024
UK£0.67
7 Dec 2024
UK£0.67
n/a
n/a
138,000
128,600
ESOP
26 May 2023
UK£0.85
350,000
–
–
–
(128,600)
(350,000)
616,600
534,800
(478,600)
(1) The performance criteria related to theses CSA’s were measured after 31 December 2023 and it was determined that none of the performance criteria had
been met, Accordingly, these CSAs lapsed after the end of the calendar year
Award year
Plan
Vesting by
Luis Azevedo
Share price
at date of
award £
Exercise
price £
At 31
December
2022
2020
Total
ESOP
26 May 2023
UK£0.85
100,000
100,000
Granted
Lapsed
Exercised
At 31
December
2023
–
–
100,000
100,000
–
–
-
-
78
At 31
December
2023
490,400
271,900
193,000 (1)
–
–
955,300
At 31
December
2023
344,300
190,500
138,000 (1)
–
–
672,800
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CORPORATE GOVERNANCE
Remuneration Committee Report
Directors Remuneration Report
Award year
Plan
Vesting by
Mark Sawyer
Share price
at date of
award £
Exercise
price £
At 31
December
2022
2020
Total
ESOP
26 May 2023
UK£0.85
100,000
100,000
Granted
Lapsed
Exercised
At 31
December
2023
–
–
100,000
100,000
–
–
-
-
Award year
Plan
Vesting by
Nicolas Bañados (1)
Share price
at date of
award £
Exercise
price £
At 31
December
2022
2020
Total
ESOP
26 May 2023
UK£0.85
100,000
100,000
(1) Nicolas Bañados resigned from the Board on 24 January 2023.
Award year
Plan
Vesting by
Hector Alegria (1)
Share price
at date of
award £
Exercise
price £
At 31
December
2022
2020
Total
ESOP
26 May 2023
UK£0.85
100,000
100,000
(2) Hector Alegria resigned from the Board on 9 March 2023.
Granted
Lapsed
Exercised
At 31
December
2023
–
–
100,000
100,000
–
–
-
-
Granted
Lapsed
Exercised
At 31
December
2023
–
–
100,000
100,000
–
–
-
-
One Year TSR Comparison
250
200
150
100
50
0
BMO Junior Gold
Serabi Gold plc
Gold
79
CORPORATE GOVERNANCE
Remuneration Committee Report
Directors Remuneration Report
Two Year TSR Comparion
140
120
100
80
60
40
20
0
140
120
100
80
60
40
20
-
BMO Junior Gold
Serabi Gold plc
Gold
Three Year TSR Comparison
BMO Junior Gold
Serabi Gold plc
Gold
80
CORPORATE GOVERNANCE
Sustainability Committee Report
During 2023, the Board has established a Sustainability Committee to enhance Serabi’s social licence to operate by supporting and
monitoring the sustainable development of Serabi’s business and the communities in which it operates and overseeing the
integrity of its sustainability reporting.
Committee Composition
The Sustainability Committee is comprised of one Executive Director and three Non-executive Directors. It is chaired by Michael
Lynch-Bell, Chair of the Company. Its other members are Mark Sawyer, Mike Hodgson and Deborah Gudgeon.
The Committee plans to meet four times a year. The Committee did not meet in 2023 but has so far met once in 2024.
Committee Responsibilities
The Committee has oversight of the following areas:
(a)
Safety, including:
(i) major hazards, including underground mines, tailings and water storage;
(ii) critical risk management; and
(iii) safety maturity;
(b) Health, including:
occupational health; and
(i)
(ii) mental health and well-being in the workforce;
(c)
(d)
(e)
Environment, including:
(i) water management;
(ii) air emissions, including dust;
(iii)
(iv) waste management; and
(v) mine closure and legacy management,
land stewardship and biodiversity;
Climate change, including compliance with the Taskforce on Climate-related Financial Disclosure (TCFD)
requirements and decarbonisation initiatives and targets
Communities and social performance, including:
(i)
community relations, including with traditional owners and other indigenous peoples on whose lands Serabi
operates and local politicians;
the economic, cultural and social development of the communities in which Serabi operates, including
employment, training and development, and local supply chain development;
(ii)
(iii) sustainable development issues as they relate to suppliers and supply chains, including modern slavery;
(iv) security (being the security of the Group’s people and assets, including business resilience); and
(v) human rights monitoring (including oversight of equality, diversity and inclusion initiatives) and issue
management.
Committee Activities
The Committee has considered the reporting requirements that apply to the Company in 2023 and 2024 and the Company’s
compliance with these requirements. To further advise the Committee, proposals from ESG consultants have been considered by
the Committee and an appointment process is being undertaken. The plan is for the consultant to assist with compliance reporting
of current and future regulations and assist with target setting, measurement and assurance including assurance of our supply
chains.
The Committee has reviewed key data from operations on health and safety, community engagement, water usage, waste
production, energy intensity, emissions, tailings management and diversity. Going forward the Committee will review this data
on a quarterly basis and will be setting targets on these matters.
81
CORPORATE GOVERNANCE
Sustainability Committee Report
The Committee has reviewed and approved its TCFD aligned reporting disclosures, the environmental and social reporting in
the Annual Report and is working on its reporting disclosures for the Canadian Fighting Against Forced Labour and Child Labour
in Supply Chain Act.
Michael Lynch-Bell
Chair of the Sustainability Committee
26 April 2024
82
CORPORATE GOVERNANCE
Directors Report
The Directors present their report together with the audited financial statements for the year ended 31 December 2023.
Results and dividends
The Group profit for the year after taxation amounts to US$6,575,612 (2022: loss of US$983,047). The Directors do not recommend
the payment of a dividend.
The results for the year are set out on page 94 in the statement of comprehensive income.
Principal activities and business review
The principal activity of the Company is that of a holding and gold sales company and a provider of support and management
services to its operating subsidiaries. Together with its subsidiaries (see note 12), it is involved in the development of gold and
other metals mining projects in Brazil and the operation of the Palito gold mine in the Tapajos region of Brazil. The Company
does not have any branches outside of the UK and the operations in Brazil are conducted through wholly owned subsidiaries
incorporated in Brazil.
A detailed review of activities, future developments and the Group’s projects is included in the Chair’s Statement and the Strategic
Report.
The Board
The Directors, who served throughout the year unless stated otherwise are detailed below:
Name
Michael Lynch-Bell
Michael Hodgson
Clive Line
Luis Azevedo
Hector Alegria
Nicholas Bañados
Deborah Gudgeon
Carolina Margozzini
Mark Sawyer
Service in the year 31 December 2023
Served throughout the year
Served throughout the year
Served throughout the year
Served throughout the year
Resigned on 9 March 2023
Resigned on 24 January 2023
Appointed on 9 May 2023
Appointed on 24 January 2023
Served throughout the year
The roles and biographies of the Directors in office as at the date of this report are set out on pages 53 to 54.
Substantial shareholdings
The tables below show the interests in the shares notified to the Company in accordance with Chapter 5 of the Disclosure Guidance
and Transparency Rules issued by the Financial Conduct Authority as at 31 December 2023 and as at 25 April 2024 (being the
latest practicable date prior to the publication of this report).:
As at 31 December 2023
Fratelli Investments Limited
Greenstone Resources II LP
Premier Miton Group PLC
River and Mercantile Asset Management
Kave Sigaroudinia
As at 25 April 2024
Fratelli Investments Limited
Greenstone Resources II LP
Premier Miton Group PLC
Kave Sigaroudinia
83
Number of
shares held
19,318,785
19,083,394
3,569,225
3,622,550
2,326,476
Number of
shares held
19,318,785
19,083,394
3,569,225
3,241,021
Per centage
25.5%
25.2%
4.7%
4.8%
3.1%
Per centage
25.5%
25.2%
4.7%
4.2%
CORPORATE GOVERNANCE
Directors Report
Share capital
Details of the share capital and movements in share capital during the period are disclosed in note 22 to the financial statements.
The Company’s share capital consists of one class of ordinary share, which does not carry rights to fixed income. As at 31
December 2023, there were 75,734,551 ordinary shares of £0.10 each in issue. Ordinary shareholders are entitled to receive notice
and to attend and speak at general meetings. Each shareholder present in person or by proxy (or by duly authorised corporate
representatives) has, on a show of hands, one vote. On a poll, each shareholder present in person or by proxy has one vote for
each share held.
Other than the general provisions of the Articles (and prevailing legislation) there are no specific restrictions on the size of a
holding or on the transfer of the ordinary shares. The Directors are not aware of any agreements between holders of the Company’s
shares that may result in the restriction of the transfer of securities or on voting rights. No shareholder holds securities carrying
any special rights or control over the Company’s share capital. The Company did not undertake any purchases of its own shares
during the period.
As at 31 December 2023, there were no warrants in issue (2022: 4,003,527). The warrants in issue at 31 December 2022 were
unexercised and expired on 23 May 2023.
Company’s listings
The Company’s ordinary shares have been traded on AIM since 10 May 2005 and on the TSX since 30 March 2011.
Powers of Directors
Subject to the Company’s Articles of Association, UK legislation and any directions given by special resolution, the business of
the Company is managed by the Board, which may exercise all the powers of the Company. The Board’s role is to provide
entrepreneurial leadership of the Company within a framework of prudent and effective controls which enables risk to be assessed
and managed. It also sets up the Group’s strategic aims, ensuring that the necessary financial and human resources are in place
for the Group to meet its objectives and review management performance. The Board also sets the Group’s values, standards and
culture. Further details on the Board’s role can be found in the Corporate Governance Report on pages 52 to 62.
Directors’ interests
Details of the Directors’ share interests can be found in the Remuneration Committee Report on pages 67 to 79. All related party
transactions are disclosed in note 25 to the financial statements.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set
out in the Group Strategic Report. The financial position of the Group, its cash flows, and liquidity position are described in the
Chief Financial Officer’s Review and set out in the Group Financial Statements. Further details of the Group’s commitments and
maturity analysis of financial liabilities are set out in note 24 and 26 respectively of the Group Financial Statements. In addition,
note 23 to the Group Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.
The Directors have a reasonable expectation that, after taking into account reasonably possible changes in trading performance,
and the current macroeconomic situation, the Group has adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Financial Statements.
Further details are provided in Going Concern section of the Group Strategic Report on pages 26 and 27.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website.
Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance
and integrity of the Group's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
84
CORPORATE GOVERNANCE
Directors Report
Engagement with stakeholders
Details of the approach taken by the Directors to engage with its various stakeholders including its suppliers are outlined in the
Strategic Report on pages 17 to 21.
Principal risks and uncertainties
The principal risks and uncertainties are outlined in the Strategic Report on pages 28 to 36.
Management of financial risks
Capital management and financial risk disclosures are provided within notes 23 and 26 of the financial statements.
Corporate governance
The Directors have responsibility for the overall corporate governance of the Group and recognise the need for the highest
standards of behaviour and accountability. The Directors are committed to the principles underlying best practice in corporate
governance and have adopted the Corporate Governance Code (“the QCA Code”) prepared by the Quoted Companies Alliance
(“QCA”). In addition, the Company as a result of the listing of its shares on the TSX observes the principles of Canadian National
Policy 58-201 – Corporate Governance Guidelines which establishes corporate governance guidelines that apply to all public
companies. The Group has instituted corporate governance practices that also, where practical, take consideration of these
guidelines. Further details are set out in the Report on Corporate Governance on pages 52 to 62.
Employees
The Group has a policy of equal opportunities throughout the organisation and is proud of its culture of diversity and tolerance.
Employees benefit from regular communication both informally and formally with regard to Group issues (external and internal
developments, updates, etc.), including regular news updates distributed electronically and displayed at the mine site and in the
corporate offices. Employees are made aware of the Company’s share dealing policy, both to ensure compliance with listing rules
but also to make them aware of the opportunity to participate in the Company’s share performance.
Share dealing
The Company has adopted a share dealing code for Directors and employees in accordance with the AIM Rules and Market Abuse
Regulations and takes proper steps to ensure compliance by the Directors and its employees.
Internal controls
Taking into account the principal risks, emerging risks and the ongoing work of the Audit & Risk Committee in monitoring the
risk management and internal control systems on behalf of the Board, the Directors:
are satisfied that they have carried out a robust assessment of the principal and emerging risks facing the Group,
including those that would threaten its business model, future performance, solvency or liquidity; and
have reviewed the effectiveness of the risk management and internal control systems and no significant failings were
identified.
Key contracts
The Group has contractual arrangements with key suppliers for its operations notably for fuel, power, reagents and equipment
spare parts. It also has an existing commitment to sell its production of copper/gold concentrate to a single customer which was
entered into at the start of 2022 for a two year period and which has subsequently been extended for a further 12 month period.
However, management considers that alternative suppliers and purchasers could be arranged if necessary and do not therefore
consider that the Group is unduly reliant on any single contract or supplier.
The Group is reliant on retaining its exploration and mining licences and its operating licences which are subject to compliance
with various Federal and State regulations and obligations. The Group considers such compliance a high priority in view of this
reliance.
85
CORPORATE GOVERNANCE
Directors Report
Relationship Agreements
Details of the relationship agreements with each of Fratelli Investments Limited and Greenstone Resources II LP, the Company’s
two principal shareholders are contained within the Corporate Governance Report on page 57.
Indemnification of Directors and officers
During the financial year, the Group paid a premium in respect of a contract, insuring the Directors of the Company, the Company
Secretary and all executive officers of the Group against liability incurred as such a Director, Company Secretary or executive
officer to the extent permitted under legislation. This insurance has been in place during the year and remains in place at the
signing of this report.
Articles of Association
The Company’s latest Articles of Association were adopted on 3 March 2014. The rules governing the appointment and
replacement of Directors are contained in the Company’s Articles of Association. Changes to the Articles of Association must be
approved by shareholders in accordance with legislation in force from time to time. A copy of the Company’s Articles of
Association can be found on the Company’s website at www.serabigold.com.
Political donations
No political donations were made in 2023 (2022: Nil).
Auditor
The auditor, PKF Littlejohn LLP, has confirmed its willingness to remain as auditor to the Company. A resolution to appoint PKF
Littlejohn LLP will be put to the Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held on 13 June 2024. At the meeting, resolutions will be proposed to receive the Annual
Report and financial statements, re-elect the Directors and appoint as auditor and authorise the Audit and Risk Committee to
determine the remuneration of PKF Littlejohn LLP. In addition, it will be proposed that expiring authorities to allot shares and to
repurchase shares are extended. An explanation of the resolutions to be put to shareholders at the 2024 AGM and
recommendations in relation to them will be set out in the 2024 AGM Notice.
Disclosure of audit information
As far as each of the Directors is aware, at the time this report was approved:
(a) there is no relevant available information of which the auditor is unaware; and
(b) they have taken all steps that ought to have been taken to make themselves aware of any relevant audit information and
to establish that the auditor is aware of that information.
Directors’ responsibilities statement
The Directors are responsible for preparing the Strategic Report, the Director’s Report and the Financial Statements in accordance
with applicable laws and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
elected to prepare the Group and Parent Company financial statements in accordance with United Kingdom (“UK”) -adopted
international accounting standards (“UK-IAS”).. The Directors are required by the AIM Rules of the London Stock Exchange to
prepare Group Financial Statements in accordance with UK-IAS.
Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.
In preparing these Financial Statements, the Directors are required to:
select suitable accounting policies and then apply them consistently,
make judgements and estimates that are reasonable and prudent,
state whether applicable UK IAS and regulations have been followed, subject to any material departures
86
CORPORATE GOVERNANCE
Directors Report
disclosed and explained in the financial statements, and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the
Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors confirm that:
So far as each Director is aware, there is no relevant audit information of which the Group‘s auditor is unaware,
and
The Directors have taken all steps that they ought to have taken as directors to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information.
This confirmation is given pursuant to section 418 of the Companies Act 2006 and should be interpreted in accordance with and
subject to those provisions.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website.
By order of the Board
Kerin Williams
Company Secretary
26 April 2024
87
FINANCIAL STATEMENTS
Financial Statements
Contents
88
94
Independent Auditor’s Report
Group Statement of Comprehensive
Income
95 Group Balance Sheet
96
Company Balance Sheet
Group Statement of Changes in
Equity
Company Statement of Changes in
Equity
Group and Company Cash Flow
Statements
97
98
99
100 Notes to the Financial Statements
88
FINANCIAL STATEMENTS
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SERABI GOLD PLC
Opinion
We have audited the financial statements of Serabi Gold Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for
the year ended 31 December 2023 which comprise the Group Statement of Comprehensive Income, the Group Balance
Sheet, the Company Balance Sheet, the Group and Company Statements of Changes in Equity, the Group and Company
Cashflow Statement and notes to the financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs
as at 31 December 2023 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act 2006;
and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and
parent company’s ability to continue to adopt the going concern basis of accounting included:
obtaining the group cash flow forecast and assessing the reasonableness of underlying assumptions, including
forecast levels of expenditure and revenue used in preparing these forecasts. To assess the reasonableness and
timings of the cash inflows and outflows, we used our knowledge of the business and compared the forecasts to
the Directors’ approved budgets and challenged the inputs used;
assessing whether a liquidity shortfall arises at any point during management’s assessment;
comparing forecast sales with recent historical financial information to consider accuracy of forecasting;
verifying cash balances used in the forecast close to the date of sign off of these financial statements;
performing sensitivity analysis thereon and evaluating potential mitigating factors that could be actioned by
management; and
assessing the appropriateness of the going concern disclosures included in the financial statements against the
requirements of the relevant auditing standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the group's or parent company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
89
FINANCIAL STATEMENTS
Independent Auditor’s Report
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. At the planning stage materiality is used to determine the financial statement areas that are included
within the scope of our audit.
Materiality for the group financial statements as a whole was $900,000 (2022: $881,000) with performance materiality
set at $630,000 (2022: $528,000), being 70% of group materiality. Materiality for the financial statements as a whole was
based upon 1.5% of the group’s revenues.
In determining materiality, we considered the Key Performance Indicators (“KPIs”) used in the Annual Report and
Accounts. We consider revenue to be the primary measure used by the shareholders in assessing the performance of the
group, driving profitability within the group and revenue is expected to provide a more stable measure year on year. The
percentage applied to this benchmark has been selected to bring into scope all significant classes of transactions, account
balances and disclosures relevant for the shareholders, and also to ensure that matters that would have a significant
impact on the reported profit were appropriately considered.
In determining performance materiality, we have increased the performance materiality from 60% to 70% of overall
materiality for the group as this is our second year as auditors and we did not identify any material errors or adjustments
in the prior period.
We agreed with the audit committee that we would report all individual audit differences identified for the group during
the course of our audit in excess of $45,000 (2022: $44,000) together with any other audit misstatements below that
threshold that we believe warranted reporting on qualitative grounds.
Materiality applied to the company’s financial statements was $850,000 with performance materiality set at $595,000,
being 70% of the company materiality.
The benchmark for materiality of the company was 0.6% of the company’s gross assets. The significant judgements used
by us in determining this were that total assets are the primary measure used by the shareholders in assessing the
performance of the company. The percentage applied to this benchmark has been selected to bring into scope all
significant classes of transactions, account balances and disclosures relevant for the shareholders, and also to ensure that
matters that would have a significant impact on the reported profit were appropriately considered.
In determining performance materiality, we have increased the performance materiality from 60% to 70% of overall
materiality for the Company as this is our second year as auditors and we did not identify any material errors or
adjustments in the prior period.
We agreed with the Audit Committee that we would report all individual audit differences identified for the company
during the course of our audit in excess of $42,500 (2022: $36,000) together with any other audit misstatements below
that threshold that we believe warranted reporting on qualitative grounds.
While materiality for the group financial statements as a whole was set at $900,000, each significant component of the
group was audited to an overall materiality ranging between $300,000 and $600,000, with performance materiality set
at 70%. We applied the concept of materiality in planning and performing our audit and in evaluating the effects of
misstatement
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as greatest complexity, risk and size.
As part of designing our audit, we determined materiality, as above, and assessed the risk of material misstatement in the
financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the
directors and considered future events that are inherently uncertain. These areas of estimate and judgement included:
90
FINANCIAL STATEMENTS
Independent Auditor’s Report
- Quantification of mineral resources
- Revenue recognition
-
Inventory valuation
-
Impairment of mining assets and other property, plant and equipment
- Recoverability of debts including recoverable taxes
- Recoverability of investments in subsidiaries and inter-company debts
- Restoration, rehabilitation and environmental provisions
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How our scope addressed this matter
Valuation of capitalised exploration costs (Note 9)
As at 31 December 2023, the Group’s Deferred
exploration assets are valued at $20.5m (2022:
$18.6m) and are key to the long-term success
of the Group. Details of these assets and the
related critical judgements and estimates are
disclosed in notes 1 and 9.
judgement and estimation
Significant
required by management to assess the
recoverability of the balances and as a result
there is the risk that these balances are
incorrectly valued.
is
Our work in this area included:
Reviewing the exploration and evaluation expenditures
to assess their eligibility for capitalisation under IFRS 6
by corroborating spend to original source
documentation;
Obtaining the current exploration licences and ensured
that they remain valid during the year and at the year
end;
Challenging management over the future plans for each
license including obtaining cashflow projections for
each licence where necessary;
A consideration of any impairment indicators set out in
IFRS 6 & IAS 36; and
A review of key external reports for indicators of
impairment.
Carrying value of Mining assets (Note 10)
As at 31 December 2023 the Group’s Mining Assets
totalled $53.3m (2022: $48.4m) and details of these
assets and the related critical judgements and
estimates are disclosed in notes 1 and 10.
Management assess the recoverable amounts
of these balances on a cash generating unit (CGU) basis
using a management prepared discounted cash flow
model.
Given the significant judgements and estimates used by
management in determining the valuation of these
assets there is the risk that the valuation of the mining
assets is incorrect.
Our work in this area included:
Obtaining, reviewing & challenging management’s
discounted cash flow model;
Assessing & challenging the appropriateness of
management’s inputs and assessment of each cash
generating unit;
Assessing and reviewing indicators of impairment as
per IAS 36 and considering whether any apply to the
Group;
Ensuring that the basis of preparation
91
FINANCIAL STATEMENTS
Independent Auditor’s Report
Key Audit Matter
How our scope addressed this matter
of the model is in line with applicable accounting
standards;
Assessing & challenging the appropriateness of
estimates and inputs; and
Ensuring inputs into the model are in line with third
party expert’s opinion of total mineral resources
available at each site.
Our work in this area included:
Confirming ownership of investments held by the
Parent Company to underlying documentation;
Obtaining the impairment review for all investments
prepared by management and challenging management
in respect of the assumptions & judgements made;
Reviewing the value of the net
in
subsidiaries against the underlying assets to assess the
recoverability of investments; and
investment
Obtaining and testing management’s cash flow forecast
for the CGU which underpins the value held as
investments by Serabi Gold plc.
Valuation of
receivables (Plc only) – (Note 12)
investments and
Intercompany
As at 31 December 2023, the carrying value of
investments in subsidiaries is $103.3m (2021:
$102.9m). This value is ultimately
dependent on the value of the underlying assets. The
carrying value of these investments is material to the
parent company financial statements.
A significant portion of the underlying assets are
exploration mining assets making it difficult to
definitively determine their value.
Valuations for these projects are therefore based on
judgments and estimates made by the Directors -
which leads to a risk of misstatement.
Other information
The other information comprises the information included in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the group and parent company financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
92
FINANCIAL STATEMENTS
Independent Auditor’s Report
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of
the group and parent company financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group
and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they operate to identify
laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management, industry research and
experience of the sector etc.
We determined the principal laws and regulations relevant to the group and parent company in this regard to be
those arising from the Companies Act 2006, UK-adopted international accounting standards, the AIM Rules for
Companies, as well as local laws and regulations in the jurisdiction in which the group and parent company
operate.
We designed our audit procedures to ensure the audit team considered whether there were any indications of
non-compliance by the group and parent company with those laws and regulations. These procedures included,
but were not limited to:
o
o
o
o
conducting enquiries of management regarding potential instances of non-compliance;
reviewing RNS announcements;
reviewing legal and professional fees ledger accounts; and
reviewing board minutes and other correspondence from management.
93
FINANCIAL STATEMENTS
Independent Auditor’s Report
We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls,
whether key management judgements could include management bias was identified in relation:
o Valuation of capitalised exploration costs
o Carrying value of Mining assets
o Valuation of investments and Intercompany receivables
We addressed these as outlined in the Key audit matters section above. The potential for management bias also
existed in the recognition and recoverability of current & deferred tax assets, valuation of inventory and share-
based payments recognised in the year. Audit procedures were performed in this regard to recalculate the charge
with reference to the underlying agreements.
As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Compliance with laws and regulations at the subsidiary level was ensured through enquiry of management,
communication with component auditors and correspondence for any instances of non-compliance
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the
more that compliance with a law or regulation is removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
26 April 2024
15 Westferry Circus
Canary Wharf
London E14 4HD
94
FINANCIAL STATEMENTS
Group Statement of Comprehensive Income/(Loss)
For the year ended 31 December 2023
Revenue from continuing operations
Cost of sales
Stock impairment provision
Provision for impairment of taxes receivable
Depreciation and amortisation charges
Total cost of sales
Gross operating profit
Administration expenses
Share-based payments
Gain on disposal of fixed assets
Operating profit
Foreign exchange gain
Other income – exploration receipts
Other expenses – exploration expenses
Finance expense
Finance income
Profit / (loss) before taxation
Income tax expense
Profit / (loss) for the period(1)
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translating foreign
operations
Total comprehensive profit for the period(1)
Earnings per ordinary share (basic) (1)
Earnings per ordinary share (diluted) (1)
Notes
2
3
4
4
5
5
6
8
8
Group
For the year
ended
31 December
2023
US$
For the year
ended
31 December
2022
US$
63,707,468
(43,184,739)
(230,000)
—
(6,239,556)
(49,654,295)
14,053,173
(6,492,165)
(197,344)
180,966
7,544,630
174,105
4,680,414
(4,339,554)
(739,245)
847,523
8,167,873
(1,592,261)
6,575,612
58,709,328
(43,110,870)
—
(1,151,899)
(6,572,461)
(50,835,230)
7,874,098
(5,447,224)
(249,210)
33,993
2,211,657
131,938
—
—
(3,411,784)
291,885
(776,304)
(206,743)
(983,047)
4,496,030
2,371,399
11,071,642
8.68c
8.68c
1,388,352
(1.30c)
(1.30c)
(1)
(2)
The Group has no non-controlling interests and all profits are attributable to the equity holders of the Parent Company.
Notes to the Accounts on pages 100 to 142 form an integral part of these financial statements
95
FINANCIAL STATEMENTS
Group Balance Sheet
As at 31 December 2023
Non-current assets
Deferred exploration costs
Property, plant and equipment
Right of use assets
Taxes receivable
Deferred taxation
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepayments
Derivative financial assets
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Interest-bearing liabilities
Accruals
Total current liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Trade and other payables
Provisions
Deferred tax liability
Interest-bearing liabilities
Total non-current liabilities
Net assets
Equity
Share capital
Share premium reserve
Share incentive reserve
Other reserves
Translation reserve
Retained surplus
Equity shareholders’ funds attributable
to owners of the parent
Notes
9
10
11
14
6
13
14
15
20
16
17
19
17
18
6
19
22
Company Number 5131528
Group
At 31 December
2023
US$
At 31 December
2022
US$
20,499,257
53,340,903
5,316,330
4,653,063
1,791,983
85,601,536
12,797,951
2,858,072
2,320,256
115,840
11,552,031
29,644,150
8,626,292
6,403,084
649,225
15,678,601
13,965,549
99,567,085
3,960,920
2,663,892
—
150,224
6,775,036
92,792,049
18,621,180
48,482,519
5,374,042
3,446,032
1,545,684
77,469,457
8,706,351
5,291,924
1,572,149
—
7,196,313
22,766,737
5,830,872
6,111,126
461,857
12,403,855
10,362,882
87,832,339
3,800,886
1,190,175
480,922
837,293
6,309,276
81,523,063
11,213,618
36,158,068
175,573
15,960,006
(61,780,741)
91,065,525
11,213,618
36,158,068
1,324,558
14,459,255
(66,276,771)
84,644,335
92,792,049
81,523,063
Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$15,598,545 (2023: merger reserve of
US$361,461 and taxation reserve of US$14,097,794).
The financial statements were approved and authorised for issue by the Board of Directors on 26 April 2024 and signed on its
behalf by:
Clive Line
Finance Director
26 April 2024
96
FINANCIAL STATEMENTS
Company Balance Sheet
As at 31 December 2023
Non-current assets
Investments in subsidiaries
Other receivables
Total non-current assets
Current assets
Trade and other receivables
Prepayments and prepaid taxes
Derivative financial assets
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Accruals
Total current liabilities
Net current liabilities
Total assets less current liabilities
Net assets
Equity
Share capital
Share premium reserve
Share incentive reserve
Merger reserve
Retained surplus
Equity shareholders’ funds attributable
to owners of the parent
Notes
12
14
14
15
16
17
22
Company Number 5131528
Company
At 31 December
2023
US$
At 31 December
2022
US$
103,350,358
9,788,536
113,138,894
2,491,548
226,216
115,840
7,713,125
10,546,729
33,527,595
225,381
33,752,976
(23,206,247)
89,932,647
89,932,647
11,213,618
36,158,068
175,572
361,461
42,023,928
102,950,962
9,786,036
112,736,998
5,244,841
163,737
—
4,156,908
9,565,487
30,773,071
231,278
31,004,349
(21,438,862)
91,298,136
91,298,136
11,213,618
36,158,068
1,324,558
361,461
42,240,431
89,932,647
91,298,136
A separate statement of comprehensive income for Serabi Gold plc has not been prepared as permitted by Section 408 of the
Companies Act 2006. The loss of the Company for the year ended 31 December 2023 was US$1,562,831 (2022: loss of US$2,128,003).
The financial statements were approved and authorised for issue by the Board of Directors on 26 April 2024 and signed on its
behalf by:
Clive Line
Finance Director
26 April 2024
97
FINANCIAL STATEMENTS
Statements of Changes in Shareholders’ Equity
For the year ended 31 December 2023
Group
Equity shareholders’
funds at 31 December
2021
Foreign currency
adjustments
Profit for year
Total comprehensive
income for the year
Transfer to taxation
reserve
Share based incentive
expense
Equity shareholders’
funds at 31 December
2022
Foreign currency
adjustments
Profit for year
Total comprehensive
income for the year
Transfer to taxation
reserve
Share based incentives
lapsed in period
Share based incentive
expense
Equity shareholders’
funds at 31 December
2023
Share
capital
US$
Share
premium
US$
Share
incentive
reserve
US$
Other
reserves
US$
Translation
reserve
US$
Retained
surplus Total equity
US$
US$
11,213,618
36,158,068
1,075,348
13,694,731
(68,648,170)
86,391,906
79,885,501
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
764,524
249,210
–
2,371,399
–
2,371,399
–
(983,047)
(983,047)
2,371,399
(983,047)
1,388,352
–
–
(764,524)
–
–
249,210
11,213,618
36,158,068
1,324,558
14,459,255
(66,276,771)
84,644,335
81,523,063
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,346,329)
197,344
–
–
–
4,496,030
–
4,496,030
–
6,575,612
6,575,612
4,496,030
6,575,612
11,071,642
1,500,751
–
–
–
–
–
(1,500,751)
1,346,329
–
–
–
197,344
11,213,618
36,158,068
175,573
15,960,006
(61,870,741)
91,065,525
92,792,049
Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$15,598,545 (2022: merger reserve of
US$361,461 and taxation reserve of US$14,097,794).
The following is a description of each of the reserve accounts that comprise equity shareholders’ funds
Share capital
Share premium
Share incentive reserve
Other reserves
Translation reserve
Retained surplus
The share capital comprises the issued ordinary shares of the Company at par.
The share premium comprises the excess value recognised from the issue of ordinary shares at par.
Cumulative fair value of options charged to the statement of comprehensive income net of transfers to the profit and
loss reserve on exercised and cancelled/lapsed options.
Other reserves is comprised of a merger reserve arising on the acquisition of Kenai Resources Limited, representing the
difference between the nominal value of the shares issued and their fair value, and a warrant reserve being the
cumulative fair value of warrants issued associated with equity shares issued.
The Group has also established a taxation reserve. The reserve is used to accumulate taxation savings received by the
Group as a result of a lower taxation rate being applied in Brazil through its eligibility for a tax incentive programme
(“SUDAM”). SUDAM reduces the Group’s effective tax rate from approximately 34 per cent to approximately 15.25 per
cent. The regulations of the incentive programme require the Group to accumulate incentives received through tax
savings in a taxation reserve. The taxation reserve is not considered a distributable reserve but can be used to meet the
cost of regional investment programmes completed by the Group and approved by SUDAM.
Cumulative gains and losses on translating the net assets of overseas operations to the presentation currency.
Retained surplus / (accumulated losses) comprise the Group’s cumulative accounting profits and losses since inception.
98
FINANCIAL STATEMENTS
Statements of Changes in Shareholders’ Equity
For the year ended 31 December 2023
Share
capital
US$
Company
Share
premium
US$
Share option
reserve
US$
Other
reserve
US$
Retained
surplus
US$
Total equity
US$
Equity shareholders’ funds
at 31 December 2021
Loss for the year
Comprehensive loss for year
Share based incentive
expense
Equity shareholders’ funds
at 31 December 2022
Loss for the year
Comprehensive loss for year
Share based incentives
lapsed in period
Share based incentive
expense
Equity shareholders’ funds
at 31 December 2023
11,213,618
36,158,068
1,075,348
361,461
44,368,434
93,176,929
–
–
–
–
–
–
–
–
249,210
–
–
–
(2,128,003)
(2,128,003)
(2,128,003)
(2,128,003)
–
249,210
11,213,618
36,158,068
1,324,558
361,461
42,240,431
91,298,136
–
–
–
–
–
–
–
–
–
–
(1,346,328)
197,342
–
–
–
–
(1,562,831)
(1,562,831)
(1,562,831)
(1,562,831)
1,346,328
–
–
197,342
11,213,618
36,158,068
175,572
361,461
42,023,928
89,932,647
99
FINANCIAL STATEMENTS
Cashflow Statements
For the year ended 31 December 2023
Notes
6
Cash outflows from operating activities
Profit/(loss) for the period
Net financial (income)/expense
Depreciation – plant, equipment and mining properties
Provision for impairment of taxes receivable
Provision for inventory impairment
Taxation expense
Share-based payments
Gain on fixed asset sales and other items
Taxation paid
Interest paid
Foreign exchange (loss)/gain
Changes in working capital
Increase in inventories
Group
Company
For the
year ended
31 December
2023
US$
For the
year ended
31 December
2022
US$
For the
year ended
31 December
2023
US$
For the
year ended
31 December
2022
US$
6,575,612
(623,243)
6,239,556
–
230,000
1,592,261
197,344
(180,966)
(1,400,365)
(426,366)
(82,829)
(983,047)
2,987,961
6,572,461
1,151,899
–
206,743
249,210
(33,993)
(129,426)
(208,592)
(191,328)
(1,562,831)
(638,250)
–
–
(2,128,003)
(12,712)
–
–
–
197,343
–
(90,586)
(10,067)
–
–
249,210
–
(23,140)
35,384
–
(2,830,651)
(1,435,025)
–
–
Increase in receivables, prepayments and accrued income
1,614,497
(6,465,608)
2,690,814
(2,987,542)
Increase/(decrease) in payables, accruals and provisions
Increase in short-term intercompany payables
Net cash inflow/(outflow) from operations
1,188,337
–
12,093,187
234,314
–
1,955,569
56,305
3,111,857
3,754,585
(262,720)
1,159,973
(3,969,552)
(2,378,317)
(4,447,588)
–
–
(4,425,839)
(571,411)
–
326,727
–
313,106
(6,735,734)
5,000,000
(5,096,397)
(1,171,602)
(1,267,999)
4,089,454
7,196,313
266,264
11,552,031
(3,629,505)
(855,607)
(2,328,113)
171,824
–
126,390
(10,962,599)
4,917,775
–
(1,027,151)
3,890,624
(5,116,406)
12,217,751
94,968
7,196,313
–
–
–
–
(399,396)
189,164
(210,232)
–
–
–
–
(327,119)
2,090
(325,029)
–
–
–
–
–
–
–
–
3,544,353
4,156,908
11,864
7,713,125
(4,294,581)
8,586,734
(135,245)
4,156,908
Investing activities
Purchase of property, plant, equipment, and projects in
construction
Mine development expenditure
Geological exploration expenditure
Pre-operational project costs
Proceeds from sale of assets
Investment in subsidiaries
Interest received and other finance income
Net cash outflow on investing activities
Financing activities
Receipt of short-term loan
Repayment of short-term loan
Payment of lease liabilities
Net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange difference on cash
Cash and cash equivalents at end of period
10
10
9
9
12
19
19
100
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
1
Significant accounting policies
(a)
Basis of preparation
Serabi Gold plc (the “Company”) is a public limited company incorporated and domiciled in England, the shares of which are
listed on AIM, part of the London Stock Exchange, and the Toronto Stock Exchange. The public registered office and principal
place of business are disclosed in the shareholder information section of the Annual Report.
The principal activities of the Group are described in the Directors’ Report on page 82.
The consolidated financial statements are presented in US Dollars and has been selected based on the currency of the primary
economic environment in which the Group as a whole operates on the basis that the Group’s primary product is generally traded
by reference to its pricing in US Dollars. The functional currency of the Company is also considered to be the US Dollar. The
consolidated financial statements 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 parent and consolidated financial statements have been prepared in accordance with UK-adopted international accounting
standards (UK IAS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those
standards.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted
international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group
prepares its consolidated financial statements in accordance with UK IAS.
Accounting standards, amendments and interpretations effective in 2023
The Group has not adopted any standards or interpretations in advance of the required implementation dates.
The following Accounting standards came into effect as of 1 January 2023
IFRS 17 Insurance Contracts, including Amendments to IFRS 17
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) and
Classification of Liabilities as Current or Non-current – Deferral of Effective Date
1 January 2023
1 January 2023
There is no material impact on the financial statements from the adoption of these new accounting standards or amendments to
accounting standards,
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and
have not been early adopted. These standards are not expected to have a material impact on the Company’s current or future
reporting periods.
Going concern and availability of finance
The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set
out in the Group Strategic Report. The financial position of the Group, its cash flows, and liquidity position are described in the
Chief Financial Officer’s Review and set out in the Group Financial Statements. Further details of the Group’s commitments and
maturity analysis of financial liabilities are set out in note 24 and 26 respectively of the Group Financial Statements. In addition,
note 23 to the Group Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.
The Directors have a reasonable expectation that, after taking into account reasonably possible changes in trading performance,
and the current macroeconomic situation, the Group has adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Financial Statements.
Further details are provided in Going Concern section of the Group Strategic Report on pages 26 and 27.
101
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
(b)
Basis of consolidation
(i)
Subsidiaries and acquisitions
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is recognised where an investor is expected, or has
rights, to variable returns from its investment with the investee, and has the ability to affect these returns through its power
over the investee. Based on the circumstances of the acquisition an assessment will be made as to whether the acquisition
represents an acquisition of a business or the acquisition of assets. In the event of a business acquisition, the assets, liabilities
and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition. Any excess of the cost of
the acquisition over the fair values of the identifiable net assets acquired is recognised as a “fair value” adjustment. If the cost
of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in
profit or loss. In the event of an asset acquisition, assets and liabilities are assigned a carrying amount based on relative fair
value.
The results of subsidiaries acquired or disposed of during the year are included in the statement of comprehensive income
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
In the Company’s balance sheet, investments in subsidiaries includes the investment in Kenai Resources Limited (“Kenai”)
which was calculated at fair value, and the difference between the value of the shares issued and their fair value has been
credited directly to a merger reserve.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line
with those used by the Group.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
(c)
Foreign currencies
The Group’s presentational currency is US Dollars and has been selected based on the currency of the primary economic
environment in which the Group as a whole operates on the basis that the Group’s primary product is generally traded by
reference to its pricing in US Dollars. The functional currency of the Company is also considered to be the US Dollar.
Transactions in currencies other than the functional currency of a company are recorded at a rate of exchange approximating to
that prevailing at the date of the transaction. At each balance sheet date, monetary assets and liabilities that are denominated in
currencies other than the functional currency are translated at the amounts prevailing at the balance sheet date and any gains or
losses arising are recognised in the income statement.
On consolidation, the assets and liabilities of the Group’s overseas operations for which the US Dollar is not the functional
currency are translated at exchange rates prevailing at the balance sheet date. Income and expense items are translated at the
average exchange rate for the period. Exchange differences arising on the net investment in subsidiaries are recognised in other
comprehensive income.
The US Dollar/Sterling exchange rate at 31 December 2023 was 1.2769 (2022: 1.2055). The Brazilian Real/US Dollar exchange rate
at 31 December 2023 was 4.9947 (2022: 5.2171.).
102
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
(d)
Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation (note 1(d) (iii)) and impairment losses
(note 1(h)).
Upon demonstration of the feasibility of commercial production, any past deferred exploration, evaluation and development
costs related to that operation are reclassified as projects in construction. When commercial production commences these
expenditures are then subsequently transferred at cost to mining properties. They are stated at cost less amortisation charges
and any provision for impairment.
(ii) Subsequent costs
Costs relating to maintenance and upkeep of the Group’s assets, once such assets have been commissioned and entered into
commercial operations, will generally be expensed as incurred. In the event, however, that the costs demonstrably result in
extending the original estimated life of such asset or enhances its value, then such expenditure is added to the carrying value
of that asset and amortised over its remaining estimated useful life.
(iii) Depreciation
Amortisation of mining property is calculated over the estimated life of the mineable inventory on a unit of production basis.
Mineable inventory will be based on management’s judgement as to the recoverability of Measured, Indicated and Inferred
Resources and these judgements may vary from time to time as the level of management’s understanding and historical
operational performance information increases. Future forecasted capital mine development expenditure is included in the
unit of production amortisation calculation.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
Mining assets
Processing plant
Other plant and assay equipment
Heavy vehicles
Light vehicles
Buildings
Mining properties
3 – 7 years
2 – 10 years
8 years
3 years
10 – 20 years
unit of production
Other assets
Furniture and fittings
Office equipment
Communication installations
Computers
4 years
4 years
5 years
3 years
The Group reviews the economic lives at the end of each annual reporting period.
The residual value, if not insignificant, is reassessed annually. Gains and losses on disposal are determined by comparing
proceeds with carrying values and are included in profit or loss.
(e)
Deferred exploration costs
All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off
as incurred. Subsequent to the legal rights being obtained, all costs related to the exploration of mineral properties are capitalised
on a project by project basis and deferred until either the properties are demonstrated to be commercially viable (see note 1(d)(i))
or until the properties are sold, allowed to lapse or abandoned, at which time any capitalised costs are written off to the income
statement. In addition to the direct costs involved in exploration activity, including sample collection, drilling costs, geophysical
surveys and assay expenses, exploration costs are also considered to include technical and administrative overheads directly
103
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
attributable to the exploration department including the cost of consultants, security, salaries, travel and accommodation but not
general overheads of the Group. Deferred exploration costs are carried at cost, less any impairment losses recognised.
At such time as commercial feasibility is established and a development decision is reached, the costs associated with that property
will be transferred to and re-categorised as projects in construction and upon commercial production being achieved, re-
categorised as mining property.
Property, plant and equipment used in the Group’s exploration activities are separately reported.
(f)
Trade and other receivables
Trade receivables are not interest-bearing and are stated at amortised cost at the balance sheet date.
Other receivables are not interest-bearing and are stated at amortised cost at the balance sheet date.
Receivables in respect of sale of gold/copper concentrate are re-valued using the best estimate of the forecast metal prices for the
expected date of settlement (see Revenue policy - note 1(o)).
The Group recognises a loss allowance for expected credit losses (“ECL”) on financial assets that are measured at amortised cost
which comprise mainly trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes
in credit risk since initial recognition of the respective financial instrument.
The Group always recognises lifetime ECL on trade receivables. The expected credit losses on these financial assets are estimated
using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting
date, including time value of money where appropriate.
(g)
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within interest-bearing liabilities in
current liabilities on the balance sheet.
(h)
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have suffered impairment. Prior to carrying out impairment reviews,
the significant cash generating units are assessed to determine whether they should be reviewed under the requirements of IFRS
6 - Exploration for and Evaluation of Mineral Resources or IAS 36 - Impairment of Assets. Such determination is by reference to
the stage of development of the project and the level of reliability and surety of information used in calculating value in use or
fair value less costs to sell. Impairment reviews performed under IFRS 6 are carried out on a project by project basis, with each
project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment
arise; typically when one of the following circumstances applies:
(i)
(ii)
(iii)
(iv)
sufficient data exists that render the resource uneconomic and unlikely to be developed
title to the asset is compromised
budgeted or planned expenditure is not expected in the foreseeable future
insufficient discovery of commercially viable resources leading to the discontinuation of activities
Impairment reviews performed under IAS 36 are carried out when there is an indication that the carrying value may be impaired.
Such key indicators (though not exhaustive) to the industry include:
(i)
(ii)
(iii)
a significant deterioration in the spot price of gold
a significant increase in production costs
a significant revision to, and reduction in, the life of mine plan
If any indication of impairment exists, the recoverable amount of the asset is estimated, being the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
104
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (or cash generating unit) is reduced to its recoverable amount. Such impairment losses are recognised in profit or loss
for the year.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A
reversal of an impairment loss is recognised in profit or loss for the year.
At each balance sheet date the Company reviews the potential recoverability of investments in subsidiaries and intercompany
debts by reviewing the underlying value of the assets of those subsidiaries and the future cash generation of those subsidiaries to
determine whether there is any indication that those assets have suffered impairment or the debts may not be repaid. As with
the Group each subsidiary is reviewed to determine whether they should be reviewed under the requirements of IFRS 6 -
Exploration for and Evaluation of Mineral Resources or IAS 36 - Impairment of Assets and this determination and the indicators
of impairment are consistent with those applied to the Group.
(i)
Share capital and share premium
The Company’s ordinary shares are classified as equity.
Called up share capital is recorded at par value of 10 pence per ordinary share.
Monies raised from the issue of shares in excess of par value are recorded as share premium. Costs associated with the raising of
capital are netted off this amount.
(j)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in profit
or loss over the period of the borrowings using the effective interest rate method.
If there is an adjustment to the repayment terms of any borrowings which generates a variation of more than 10 per cent of the
future cash flows, under IFRS 9 this constitutes a substantial modification to the original valuation of the loan. Accordingly, the
original loan under the terms of IFRS 9 would be considered to be repaid and a new loan is considered to have been taken out. If
the variation is less than 10 per cent of the future cash flows, this variation would be considered a non-substantial modification.
For a non-substantial modification, the difference between the revised measurement of the liability (calculated as the present
value of the revised cash flows discounted at the original effective interest rate) and the carrying amount at the point of the
modification should be recognised through profit or loss.
Interest on borrowings used specifically to fund the acquisition of non-current assets is capitalised as part of the acquisition cost
of the asset, otherwise borrowing costs are expensed as incurred. Borrowing costs comprise interest and other costs that the
Group incurs in connection with the borrowing of finance.
(k)
Employee benefits
(i)
Share-based payment transactions and share options
The Group issues share-based payments including share options and restricted share awards to certain employees, which are
measured at fair value at date of grant. The fair value of share options is determined at the grant date and expensed on a graded
vesting basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Dependent on the nature
of the award and any performance conditions attaching thereto, the Group use either Monte Carlo simulation methods or the
Black-Scholes method to calculate fair value. The expected life of the instrument used in the model is adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions (if any are imposed as a condition of the
award but including periods when management and Directors are prevented from trading) and behavioural considerations.
The fair value of restricted stock awards is determined at the grant date based on the value of the award and expensed on a
graded vesting basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.
105
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The entity measures the fair value of the services received by reference to the fair value of the equity instruments granted,
because typically it is not possible to estimate reliably the fair value of the services received. The fair value is measured at the
date of grant. Where the equity instruments granted do not vest immediately but after a specified number of years, the fair value
is accounted for over the vesting period.
(ii)
Pension costs
The Group does not operate any pension plan for its employees although it does make contributions to employee pension plans
in accordance with its arrangements with those employees. The Company has no contractual commitment as to the ability of
those funds to provide any minimum level of future benefit to the individual and is contracted only to make pre-defined levels
of contribution. Company contributions to such schemes are charged against profit as they fall due.
(l)
Provisions, contingent liabilities and contingent assets
Provisions are recognised when:
(i)
the Group has a present legal or constructive obligation as a result of past events;
(ii)
it is more likely than not that an outflow of resources will be required to settle the obligation; and
(iii)
the amount can be reliably estimated.
Restoration, rehabilitation and environmental costs
Provision for environmental remediation and decommissioning of the Group’s mining and exploration facilities has been
estimated using current prices which are inflated and then discounted for the time value of money. While the provision has
been based on the best estimates of future costs and economic life, there is uncertainty regarding the amount and timing of
these costs.
Employment provision
Provision for employment claims is made where sums are claimed by employees or employees by third parties contracted
by the Group, based on management’s best estimate of the potential value of any settlement that could arise based on legal
opinion.
(m)
Trade and other payables
Trade and other payables that are not interest-bearing are stated at amortised cost. Any interest charges or late payment penalties
are recognised only when agreed with the supplying party or it is considered probable that they will be levied.
(n)
Inventories
Inventories are stated at the lower of cost and net realisable value. Materials that are no longer considered as likely to be used by
the Group, or their value is unlikely to be readily realised through a sale to a third party, are provided for.
Materials held for consumption within operations are valued based on purchase price or, when manufactured internally, at cost.
Costs are allocated on an average basis and include direct material, labour, related transportation costs and an appropriate
allocation of overhead costs.
Gold bullion, copper/gold concentrate, run of mine ore and any other production inventories are valued at the lower of cost and
net realisable value. Dependent on the current stage of any product inventory in the process cycle, cost will reflect, as appropriate,
mining, processing, transport and labour costs, as well as an allocation of mine services overheads required to bring the product
to its current state.
Net realisable value is the estimated selling price in the ordinary course of business, after deducting any costs to completion and
any applicable marketing, selling, shipping and other distribution expenses.
106
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
(o)
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. All revenue is derived from the sales of copper/gold concentrates produced
by the Palito Mine and gold doré produced from the Palito and São Chico ore bodies and the Coringa mine.
Revenues are recognised in full using contractual pricing terms ruling at the date of sale with adjustments in respect of final
contractual pricing terms being recognised in the month that such adjustment is agreed. Fair value adjustments for gold prices in
respect of any sale for which final pricing has not been agreed at any balance sheet date is accounted for using the gold price at
that balance sheet date. Any unsold production, and in particular concentrate, is held as inventory and valued at the lower of
production cost and net realisable value until sold. Under the terms of the sales contracts, the Group’s performance obligation is
considered to be the delivery of gold doré and copper/gold concentrate in accordance with agreed criteria.
The Group recognises 100 per cent of the revenue on transfer of title where it is considered highly probable there will be no
reversals, having consideration of quality tests performed upon delivery of shipment.
The performance obligation and associated revenue from customers is recorded when the title for a shipment is transferred to the
customer in accordance with the contract terms. On transfer of title, control is considered to have passed to the customer with the
Group having the right to payment, but no ongoing physical possession or involvement with the concentrate or gold doré, legal
title and insurance risk having transferred.
All sales revenue from incidental production arising during the exploration, evaluation, development and commissioning of a
mineral resource prior to commercial production are taken as a contribution towards previously incurred costs and offset against
the related asset accordingly.
Interest income is recognised on a time-proportion basis using the effective interest rate method.
(p)
Financing expenses
Financing expenses comprise interest payable on borrowings calculated using the effective interest rate method and interest
receivable on funds invested. It also includes charges arising on the unwinding of discount factors relating to the provisions for
future charges.
(q)
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted or substantively enacted at the year end and any adjustments in respect of
prior years.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using
the balance sheet method. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and
differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable
future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which
the asset can be utilised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
(r)
Segmental reporting
An operating segment is a component of the Group engaged in exploration or production activity that is regularly reviewed by
the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and assessing financial performance. The
107
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
CODM is considered to be the Board of Directors. The Group has only one primary business activity namely the conduct of gold
mining and exploration in Brazil. For management purposes, however, the Group recognises two separate segments, Brazil and
UK. Copper/gold concentrate is produced in Brazil and sales routed through the UK, whilst sales of gold bullion are conducted
directly from Brazil. The operating segments are reported in a manner consistent with the internal reporting provided to the
CODM.
The Group does not report geographic segments by location of customer as its business is the production of gold which is traded
as a commodity on a worldwide basis. Sales are ultimately made into the bullion market, where the location of the ultimate
customer is unknown.
(s)
Investments in subsidiaries
Investments in subsidiaries are recognised at cost, less any provision for impairment.
(t)
Financial instruments
Financial assets and financial liabilities are recognised in the Group statement of financial position when the Group becomes a
party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset, and the net amount
reported in the consolidated statement of financial position and statement of comprehensive income when there is a currently
enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset and
liability simultaneously.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on
the classification of the financial assets.
(i) Classification of financial assets
The Company is a trading entity, selling directly to its end customers and receiving payments directly from such customers
and as such within its business model all financial assets are treated on a hold to collect basis.
Financial assets that meet the following conditions are measured subsequently at amortised cost using effective interest rate
method:
The financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
The Group’s trade receivables are subject to subsequent recognition at fair value through profit or loss (“FVTPL”). The Group
does not otherwise hold any financial assets that meet conditions for subsequent recognition at fair value through other
comprehensive income (“FVTOCI”) or FVTPL.
108
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
(ii) Impairment of financial assets
The Group recognises a loss allowance for expected credit losses (“ECL”) on financial assets that are measured at amortised
cost which comprise mainly trade receivables. The amount of expected credit losses is updated at each reporting date to
reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognises lifetime ECL on trade receivables. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific
to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of
conditions at the reporting date, including time value of money where appropriate.
The Company recognises lifetime ECL on intercompany loans, based on management’s assessment and understanding of the
credit risk attaching to each loan, changes in the level of credit risk between periods and assessment of the scenarios under
which management expects the loan to be repaid. Any credit loss will be calculated as the net present value of the difference
between the contractual and expected cash flows and the ECL will represent the weighted average of those credit losses based
on the respective risks of each scenario. Further details of the reviews undertaken during the year are set out in note 14.
(iii) Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to
recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
(i) Classification of financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was
issued and its characteristics.
All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group’s financial
liabilities approximate to their fair values.
The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value
through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or
(iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. The Group’s
financial liabilities measured at amortised cost comprise loans and other borrowings, equipment loans, leases, and other
payables and accruals. The effective interest method is a method of calculating the amortised cost of a financial asset/liability
and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that discounts
estimated future cash receipts/payments through the expected life of the financial asset/liability or, where appropriate, a
shorter period.
(ii) Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on derecognition is taken to the statement of comprehensive income.
(iii) Derivatives
This category comprises out-of-money derivatives where the time value does not offset the negative intrinsic value. They are
carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the
109
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
consolidated statement of comprehensive income. The Group does not hold or issue derivative instruments for speculative
purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities
held for trading.
The Company issued warrants to subscribe for shares at a share price of 93 pence per warrant exercisable at any time at the
warrant holders election until 22 May 2023. The conversion rights embedded in the warrant notes represented a derivative
as the Group’s functional currency is United States Dollars but the conversion price was denominated in Pounds Sterling.
Therefore, the amount to be released in US Dollars on conversion was variable dependent upon the exchange rate between
the US Dollar and GB Pound.
(u)
Leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of
time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
There is an identified asset;
The Group obtains substantially all the economic benefits from use of the asset; and
The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract
is not identified as giving rise to a lease. In determining whether the Group obtains substantially all the economic benefits from
use of the asset, the Group considers only the economic benefits that arise from use of the asset. In determining whether the Group
has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used
throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other
applicable IFRSs rather than IFRS 16.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the
discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the
Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in
the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
Amounts expected to be payable under any residual value guarantee;
The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;
and
Any penalties payable for terminating the lease, if the term of the lease has been estimated based on the termination
option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and
increased for:
Lease payments made at or before commencement of the lease;
Initial direct costs incurred; and
The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the
leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right of use assets are amortised on a straight-line basis over the remaining
term of the lease.
The Group has elected not to recognise right of use assets and lease liabilities for leases of low-value assets (where the value of
the lease obligation over the lease period is less than US$5,000) and short-term leases (where the period of the contractual lease
obligations is 12 months or less). The Group recognises the lease payments associated with these leases as an expense on a straight-
line basis over the lease term.
110
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
(v)
Payments for business acquisition
The acquisition of Chapleau Resources Ltd in December 2017, incorporating the rights to the Coringa gold project, was accounted
for as an asset purchase and the assets and liabilities of Chapleau were consolidated within the Group financial statements from
21 December 2017, being the effective date of the acquisition. The cash payments due were to be paid over a period of time and
each of the stage payments were discounted at a 10 per cent cost of capital. On 31 March 2020, the Group agreed with the vendor
that the final payment of US$12 million due on 31 March 2020 would instead be paid over a series of monthly instalments over
approximately 15 months. The Group recognised this change in payment terms as a non-substantial modification and re-
categorised the remaining payment schedule as an interest-bearing liability rather than as a general creditor. The interest-bearing
liability was recorded at fair value at the date of initial recognition and interest charged and the new effective interest rate.
(w)
Payments for mineral property acquisition
Under existing agreements in place at the time that the Group acquired Kenai Resources Limited in 2013, the Group, subject to
certain conditions, had rights to acquire or could be obliged to acquire a net profits interest held by a third party in the property
which includes the São Chico orebody. The Group had initially accounted for the future acquisition of this net profits interest
and the concurrent potential liability based on the fair value of the potential future obligations under the agreement. In February
2019, the conditions of the existing agreement having not been satisfied, the Group entered into a separate agreement to acquire
the rights of the third party with the consideration being paid over 24 months. The variation in the fair value of the amended
consideration was treated as an amendment to the original recognised value of the investment included within mining
property. The unwinding of the fair value as the staged payments were made was being treated as a further amendment to the
value of the investment in mining property.
(x)
Taxes receivable
The Group expects at any point in time to be due rebates of taxes in each of the jurisdictions that it has operations. The
recoverability of these tax debts varies according to the jurisdictions and whether these taxes are recoverable at a Municipality,
State or Federal level. Where permitted, the Group will always seek to offset any tax debts owing against tax debts that it is owed.
The Group makes regular assessments as to the potential for non-recoverability and will make provision accordingly. In making
its judgement, management will consider the legal advice that it receives, the history of recoverability both of itself and also other
entities, arrangements that may be available for partial recovery through approved schemes and the timescale during which
recovery may occur. The Group will make provision for the estimate of any taxes that are considered as potentially not recoverable
within a reasonable time period (up to five years) and will also discount the value of any final amount that management estimates
may be recoverable, for the time value of money. Taxes receivable are classified as long-term or short-term receivables based on
the expected time frame over which they are expected to be recovered.
(y)
Earnings per share
Basic earnings per share is calculated by dividing profit after tax attributable to members of the holding company by the
weighted average number of shares in issue during the year. Any shares held by nominees of the Company in respect of any
employee share trust arrangements are eliminated from the weighted average number of shares. Diluted earnings per share is
calculated by dividing the profit after tax attributable to members of the holding company by the weighted average number of
shares in issue during the year, adjusted for potentially dilutive share options, warrants or other equity related instruments that
can be converted into shares of the Company and to the extent that these share options, warrants and other instruments have
vested and are exercisable at the end of the year. Where there is a loss, and therefore the effect of dilution would be to increase
the loss per share such dilutive effect is ignored and the basic measure is used.
(z)
Hedging activities
In order to reduce its exposure to foreign exchange and commodity price, the Group may from time to time enter into forward,
option or other contracts. These derivatives, if classified as cash flow hedges, will initially be recognised at fair value and then
re-measured at fair value at the end of each reporting date. For hedging instruments that are not classified as a cash flow hedge
111
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
these derivative financial instruments will be accounted for at fair value through the profit and loss (FVTPL). Hedging
instruments will be documented at inception and effectiveness will be tested throughout their duration.
Changes in the value of cash flow hedges will be recognised in other comprehensive income and any ineffective portion is
immediately recognised in the income statement. If the firm commitment or forecast transaction that is the subject of a cash flow
hedge results in the recognition of a non-financial asset or liability, then at the time the asset is recognised, the associated gains
or losses on the derivative that had been previously recognised in other comprehensive income are included in the initial
measurement of the asset or liability. For hedges that do not result in the recognition of an asset or liability, amounts deferred in
other comprehensive income are recognised in the statement of comprehensive income in the same period in which the hedged
item affects net profit.
To qualify for hedge accounting, the hedging relationship must meet all of the following requirements:
• There is an economic relationship between the hedged item and the hedging instrument
• The effect of credit risk does not dominate the value changes that result from that hedging relationship
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the
entity actually uses to hedge that quantity of hedged item.
At inception of the hedge relationship, the group will document the economic relationship between hedging instruments and
hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash
flows of hedged items. The group will also document its risk management objective and strategy for undertaking its hedge
transactions.
Hedge ineffectiveness may occur due to:
• Fluctuation in volume of hedged item caused due to operational changes
• Index basis risk of hedged item vs hedging instrument
• Credit risk as a result of deterioration of credit profile of the counterparties
During the first of quarter of 2023, the Group entered into hedging contracts with HSBC Bank plc whereby it acquired sell
options over monthly quantities of gold over the period March 2023 to February 2024 totalling 10,215 ounces of gold at a price of
US$1,800. At the same time, it sold to the bank options in favour of the bank to buy the equivalent monthly quantities of gold at
prices ranging between US$2,000 and US$2,065 per ounce. It also acquired options to sell monthly receipts of US Dollars
ranging between US$2.3 million and US$1.15 million for Brazilian Real at an exchange rate of BRL5.10 to USD1.00. At the same
time, it sold to the bank options in favour of the bank to buy from the Group the equivalent Brazilian Real receipts at exchange
rates ranging from 5.325 to 5.800 over the same 12 month period. In this way the Group has secured a minimum equivalent
gold price in Brazilian Real of BRL9,180 per ounce in respect of 10,215 ounces and sold options in favour of the bank of future
prices ranging between BRL10,650 per ounce and BRL11,997 per ounce depending on the option expiry date. The hedging
arrangements are unsecured and not subject to margin calls.
The gold and hedging contracts entered into by the Group are valued on a mark-to market basis at the end of each period and
any increase or decrease in value reported through the income statement. Any se@lement values receivable or payable during
the period are recognised in the period and reported through the income statement.
(aa)
Critical accounting estimates and judgements
The preparation of financial statements requires management to make judgements and assumptions about the future for the
purpose of accounting estimates. These are based on management’s best knowledge of the relevant facts and circumstances.
However, these judgements and estimates regarding the future are a source of uncertainty and actual results may differ from the
amounts included in the financial statements and adjustment will consequently be necessary. Estimates are continually evaluated,
based on experience and reasonable expectations of future events.
Accounting estimates are applied in assessing and determining the carrying values of significant assets and liabilities.
112
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
The following are the critical estimates that management has made in the process of applying the entity’s accounting policies and
that have the most significant effect on the amounts recognised in financial statements.
Mineral resources – see statement of Mineral resources and reserves in the Strategic Report
Quantification of mineral resources requires a judgement on the reasonable prospects for eventual economic extraction. These
judgements are based on assessments made in accordance with the procedures stipulated under Canadian National Instrument
43-101 and the estimation undertaken in accordance with the requirements of Canadian National Instrument 43-101. These
factors are a source of uncertainty and changes could result in an increase or decrease in mineral resources and changes to the
categorisation or mineral resources between Mineral Reserves, Measured and Indicated Mineral Resources and Inferred Mineral
Resources. Only Mineral Reserves have been established to have economic viability and only at the time that such estimation
is undertaken, and any change in the underlying factors under which the economic assessment was made may give rise to
management making a judgement as to the continuing economic viability of such Mineral Reserves and how they should be
used for the purpose of forecasts. This would, in turn, affect certain amounts in the financial statements such as depreciation,
which is calculated on projected life of mine figures, and carrying values of mining property and plant which are tested for
impairment by reference to future cash flows based on projected life of mine figures.
Mineral Resources have not been established to have economic viability and to the extent that management includes Mineral
Resources to calculate projected life of mine figures or in calculations of amortisation or depreciation, management will make
judgements based on historical reports, future economic factors and other empirical measures to make estimates as to the level
of Mineral Resources that it incorporates into its assessments.
The Group includes all of its Measured, Indicated and Inferred Resources in its calculations of amortisation, its life of mine plans
for the purposes of assessing the long-term value of its mines and in calculating its estimates for rehabilitation expenditures. In
prior periods the Group whilst including all of its Measured, Indicated and Inferred Resources for the São Chico deposit had
used 100 per cent of Measured, Indicated and Inferred Resources but only 25 per cent of the Inferred Resources identified at the
Palito deposit. This historical situation reflected the uncertainty when mining of the Palito deposit was restarted in 2013 and
Inferred Resources were located in areas of the deposit that had no immediate access. With the successful development of the
deposit over the intervening years and continuing improvement in the understanding of this deposit and its geology,
management has established much greater confidence in the ability for the deposit to continue to be expanded and for Inferred
Resources to be converted into production ounces. Accordingly, effective from 1 January 2020, the Group has determined that
it is reasonable to use 100 per cent of the Inferred Resources attributable to the Palito deposit in its calculations of amortisation,
its life of mine plans for the purposes of assessing the long-term value of its mines and in calculating its estimates for
rehabilitation expenditure for Palito.
In assessing amortisation, the Group is required to determine the future capital mine development required to gain access to all
identified mineral resources used as the basis for amortisation. Management assesses the vertical extent of the remaining
mineral resources to be mined and estimate, based on current operating costs and operating parameters, the expected costs of
ramp development required to reach the lowest elevations of the mineral resources. A summary of the Group’s mineral
resources is set out in the Strategic Report in the section Mineral Reserves and Resources.
Revenue
Revenues are recognised in full using contractual pricing terms ruling at the date of sale with adjustments in respect of final
contractual pricing terms being recognised in the month that such adjustment is agreed. In estimating the revenue derived from
the sale of copper/gold concentrate the Group will use assay information provided by the Group’s in house laboratory, and
assessments of weight and humidity also provided by on-site personnel in the determination of the total metal content of the
product being sold and therefore its sales value. These estimates are subject to amendment when the product is received at the
refinery and is weighed and assayed under the scrutiny of the refinery, the purchaser and a representative of the Group. The
final metal content is determined only based on the results of these measurements and the data derived from the Group’s on-
site laboratory is not used in the final calculation of metal content. Taking into account production time frames, transport and
hipping, the final determination of metal content may occur up to six months after the date of production. Adjustments to
revenue to reflect the final agreed metal content are generally made at the time that the metal content is agreed.
113
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Inventory valuation (note 13)
Valuations of gold in stockpiles and in circuit require estimations of the amount of gold contained in, and recovery rates from,
the various stages of work in progress. These estimations are based on analysis of samples and prior experience. A judgement
is also required about when stockpiles will be used and what gold price should be applied in calculating net realisable value;
these are both sources of uncertainty.
The amounts recognised in the consolidated financial statements are derived from the Group’s best estimation and judgement.
Based on operational history management has high confidence in the estimations of gold contained in inventory and the
expected recovery rates for the gold contained within each stage of work-progress. Once material enters the process plant it is
transformed into a saleable product which will be sold within approximately six to eight weeks of that date. The prevailing
price of gold and copper is the most critical variable in the assessment of valuation. The Group carries an impairment provision
of US$230,000 against the carrying value of its low grade stockpile of Coringa ore valued (after provision) at US$1.1 million.
The Group estimates that a prevailing gold price of US$1,586 would have been required before there was any requirement to
impair the valuation of other work in progress inventory at 31 December 2023.
Impairment of mining property and other property, plant and equipment ( note 10)
An initial judgement is made as to whether the mining assets are impaired based on the matters identified for mining assets in
the impairment policy at 1 h) relating to IAS 36 impairment.
In considering the impairment of its mining assets in accordance with IAS 36, management will use gold prices and exchange
rates applicable at the balance sheet date. The mine life will be based on the judgement of management of that portion of
Measured, Indicated, and Inferred Resources that can be recovered on the basis that, given the nature of the Group’s orebodies,
the mineral reserves (that portion of the mineral resource that has been proven by independent study to have economic viability)
comprises a small part of the total mineral resource of the Group’s orebodies and does not reflect management’s view of the
true life of the orebody. Production costs, estimated capital costs and plant performance are based on current operating
performance and costs. The value in use calculation will also be determined by the judgements made by management regarding
any future changes in legislation or economic circumstances that might impact the operations.
Management has noted that over the last financial year and up to the date of the signing of the financial statements:
The gold price has since March 2020 being trading at levels which represent an extended period of pricing at five year
highs for gold.
The Brazilian Real has since the end of 2019 generally been at a level of BrR$4.90 to US$1:00 or weaker representing an
extended period of trading when the currency has been at its weakest for over 10 years. The Company incurs between
82 per cent and 85 per cent of its expenditure in Brazilian Real.
The Group has continued to identify and replenish its total Mineral Resources
As a result of these considerations, management has determined that it is not aware of any indicator of impairment.
In the event that there is an indication of impairment, mining assets are assessed for impairment through an estimation of the
value in use of the cash generating units (“CGUs”). The value in use calculation requires the entity to estimate the future cash
flows expected to arise from a CGU and a suitable discount rate in order to calculate present value. A CGU is a group of assets
that generates cash inflows from continuing use. Given their interdependences and physical proximity, the Palito and São Chico
Mines are considered to be one single CGU. Management considers that there was no indicator of impairment identified in the
year.
As described in note 1(d) (iii), the Group reviews the estimated useful lives of property, plant and equipment at the end of each
annual reporting period. Further details regarding the annual review that has been undertaken is set out in Note 10.
Recoverability of debts including recoverable taxes ( notes 14 and 15)
In making its judgements over the recoverability of any amounts owed to the Group management will assess the
creditworthiness of the debtor, the legal enforceability of the Group’s rights and the practicalities and costs of obtaining and
enforcing judgements relative to the debt outstanding. Based on these assessments it will estimate the likely recoverability of
114
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
sums that are due to the Group, the likely time period over when such debts might be received and any provision that needs to
be established against the future recoverability. Recoverable taxes comprise any Federal or State levied input taxes incurred by
the Group including taxes levied on the purchase of goods and services that are designated in law as being recoverable either
in cash, kind or by way of set-off against other tax liabilities at either a Federal or State level. IFRS 9 requires the Parent Company
to make assumptions when implementing the forward-looking expected credit loss model.
In making its judgement regarding recoverable taxes, management will consider the legal advice that it receives, the history of
recoverability both of itself and also other entities, arrangements that may be available for partial recovery through approved
schemes and the timescale during which recovery may occur. The Group will make provision for the estimate of any taxes that
are considered as potentially not recoverable within a reasonable time period (up to five years) and will also discount the value
of any final amount that management estimates may be recoverable, for the time value of money.
Recoverability of investments in subsidiaries and inter-company debts (note 12)
In making its judgements over the recoverability of any amounts invested into subsidiary companies by way of share capital or
loans advanced to subsidiaries, management estimates the expected future cash flows that might be generated by the underlying
projects owned and operated by these subsidiaries and the potential value of exploration and development projects owned and
managed by these subsidiaries. As each of the subsidiaries is 100 per cent owned (directly or indirectly) by the Company the
creditworthiness of the subsidiary is the same as the creditworthiness of the Company subject only to any restrictions that may
be imposed on the repatriation of capital and loans by the host government of the subsidiary. Further details are set out in note
(s) above.
Restoration, rehabilitation and environmental provisions (note 18)
Management uses its judgement and experience to provide for and amortise the estimated mine closure and site rehabilitation
over the life of the mine. Provisions are discounted at a risk-free rate and cost base inflated at an appropriate rate. The ultimate
closure and site rehabilitation costs are uncertain and cost estimates can vary in response to many factors including changes to
relevant legal requirements or the emergence of new restoration techniques. The expected timing and extent of expenditure can
also change, for example in response to changes in ore reserves or processing levels. As a result, there could be significant
adjustments to the provisions established which could affect future financial results.
The following are the critical judgements that management has made in the process of applying the entity’s accounting policies
and that have the most significant effect on the amounts recognised in the financial statements.
Recoverability of deferred exploration expenditure (note 9)
The recoverability of exploration expenditure capitalised within intangible assets is assessed based on a judgement about the
potential of the project to become commercially viable and if there are any facts or circumstances that would suggest the costs
should be impaired. In making this judgement management will consider the items noted in the impairment policy in respect
of exploration assets as noted in accounting policy 1 h). Should an indicator of impairment be identified the value in use is
estimated on a similar basis as the mining asset as detailed above. Management determined that there were no indicators of
impairment in the year. Management consider that the issues disclosed with regard to the issue of the Installation Licence for
Coringa, are matters that are and will be resolved and in particular are not expected to create any material delay to the
development of the project. Management has reached its conclusion based on advice from the Group’s Brazilian lawyers but
has also received positive indications from other parties with whom it has discussed the matter.
Utilisation of historic tax losses and recognition of deferred tax assets (note 6)
The recognition of deferred tax assets is based upon whether sufficient and suitable taxable profits will be available in the future
against which the reversal of temporary differences can be deducted. Recognition of deferred tax assets therefore involves
judgement regarding the future financial performance of the particular legal entity or tax group in which the deferred tax asset
has been recognised. Where the temporary differences are related to losses, relevant tax law is considered to determine the
availability of the losses to offset against the future taxable profits.
115
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Recoverability of ICMS tax debts (note 15)
ICMS tax is a State-imposed sales tax which is recoverable from the State of Para. The Group has not to date received any cash
refunds and as an exporter generates no output ICMS on its sales. It is reliant on its ability to offset ICMS tax payable against
existing debt to minimise the accumulation of an increased level of tax recoverable from the State of Para. It has identified
certain arrangements that may allow the Group to recover over next five years some of the debt that is owed to the Group and
has provided in full against the remainder. Management considers that based on legal advice received the Group has a good
chance of being able to benefit from these schemes. In the event that it is unable to utilise these schemes or that the rate of
recovery is slower than anticipated the amount of ICMS that may be recovered in the future will be reduced and may be nil.
The Group does not take account of any future benefit from recovery of ICMS tax in its cash flow projections. The Group has
made provision for recoverable ICMS that is not anticipated to be recovered within the next five years.
116
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
2
Segmental analysis
The following information is given about the Group’s reportable segments, further details of which are set out in note 1(r).
The Chief Operating Decision Maker is the Board of Directors. The Board reviews the Group’s internal reporting in order to assess
performance of the business. Management has determined the operating segments based on the reports reviewed by the Board.
An analysis of the results for the year by management segment is as follows:
Brazil
US$
32,604,026
2023
UK
US$
31,103,442
Total
US$
63,707,468
Brazil
US$
29,524,191
2022
UK
US$
29,185,137
26,582,279
(26,582,279)
–
25,058,005
(25,058,005)
Total
US$
58,709,328
–
(39,361,191)
(3,823,548)
(43,184,739)
(39,299,976)
(3,810,894)
(43,110,870)
Revenue
Intra-group sales
Operating expenses
Provision for impairment of
taxes receivable
Stock impairment provision
Depreciation and amortisation
Gross profit/(loss)
Administration expenses
Share-based payments
Proceeds from sale of assets
–
(230,000)
(6,069,205)
13,525,909
(3,250,393)
–
180,966
–
–
–
(1,151,899)
(230,000)
–
–
–
(1,151,899)
–
(170,351)
(6,239,556)
(6,335,957)
(236,504)
(6,572,461)
527,264
(3,241,772)
(197,344)
–
–
(18,960)
(90,586)
723,581
(2,297,817)
14,053,173
(6,492,165)
(197,344)
180,966
7,544,630
340,860
174,105
847,523
8,167,873
–
(1,752,479)
7,794,364
79,734
7,874,098
(2,860,672)
(2,586,552)
(5,447,224)
–
(249,210)
(249,210)
33,993
4,967,685
–
134,665
124,299
1,874,807
(206,743)
1,668,064
–
(2,756,028)
–
(2,727)
(59,942)
167,586
(2,651,111)
–
(2,651,111)
33,993
2,211,657
–
131,938
(3,411,784)
291,885
(776,304)
(206,743)
(983,047)
(739,245)
(3,351,842)
Operating profit/(loss)
10,456,482
(2,911,852)
Net other income
Foreign exchange (loss)/gain
Finance expense
Finance income
Profit /(loss) before taxation
Income tax expense
340,860
193,065
(648,659)
123,942
10,465,690
(1,752,479)
Profit/ (loss) for the period
8,713,211
(2,297,817)
6,415,394
Transactions between segments are accounted for in accordance with the Group’s accounting policy for a transaction of that
nature. In particular inter-group sales which comprise sales of copper/gold concentrate are recognised at the same time as the
Group makes the sale to the end purchaser, with the sale value made in accordance with the contractual terms between the
separate entities of the Group. Inter-group sales are transacted at prices intended to conform with accepted norms of international
transfer pricing practice.
An analysis of non-current assets by location is as follows:
Brazil – operations
Brazil – exploration
Brazil – taxes receivable
Brazil – deferred tax
Brazil – total
UK
117
Total non-current assets
31 December
2023
US$
58,657,233
20,499,257
4,653,063
1,791,983
85,601,536
–
85,601,536
31 December
2022
US$
53,856,561
18,621,180
3,446,032
1,545,684
77,469,457
–
77,469,457
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
An analysis of total assets by location is as follows:
Brazil
UK
Total assets
31 December
2023
US$
104,898,070
10,347,616
115,245,686
31 December
2022
US$
90,659,109
9,577,085
100,236,194
During the year, the following amounts incurred by project location were capitalised as pre-operating or deferred exploration
costs (see note 9):
Brazil
Group
For the
year ended
31 December
2023
US$
571,411
For the
year ended
31 December
2022
US$
3,183,720
During the year, the following amounts were capitalised as land and buildings, mine assets, property, plant, equipment and
projects in construction (see note 10):
Brazil
Revenue
Group
For the
year ended
31 December
2023
US$
6,804,156
For the
year ended
31 December
2022
US$
8,077,093
All of the Group’s revenue arises from its activities in Brazil.
An analysis of the revenue by reference to the domicile of the entity within the Group that concludes the sale is as follows:
Brazil
UK
Total
31 December
2023
US$
32,604,026
31,103,442
63,707,468
31 December
2022
US$
29,524,191
29,185,137
58,709,328
118
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
An analysis of major customers (accounting for more than 10 per cent of the Group’s revenues) is as follows:
Customer 1 – sale concluded from UK
Customer 2 – sale concluded from Brazil
Other – sale concluded from Brazil
Total
31 December 2023
31 December 2022
US$
31,103,442
22,170,738
10,433,288
63,707,468
%
48.8%
34.8%
16.4%
100.0%
US$
29,185,137
28,305,378
1,218,812
58,709,328
%
49.7%
48.2%
2.1%
100.0%
3
a.
Operating profit
Group operating profit for the year is stated after charging the following:
Staff costs
Depreciation (property, plant and equipment)
Amortisation of the mine asset
b.
Auditor’s remuneration
Fees payable to the Group’s auditor for the audit of the Group’s annual financial
statements
Fees payable to the Group’s auditor and its associates for other services:
-
-
-
audit of the Group’s subsidiaries pursuant to legislation
tax compliance services
audit-related assurance services
Group
For the
year ended
31 December
2023
US$
18,714,746
1,948,121
4,291,435
For the
year ended
31 December
2022
US$
18,433,319
1,911,600
4,660,861
Group
For the
year ended
31 December
2023
US$
For the
year ended
31 December
2022
US$
178,010
168,835
–
–
–
–
–
–
119
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
4
Other income and expense
Under its copper exploration alliance with Vale announced on 10 May 2023, the related exploration activities being undertaken
by the Group under the management of a working committee (comprising representatives from Vale and Serabi), are being
funded in their entirety by Vale up to a value of US$5 million during Phase 1 of the programme. The Group at this time has no
certainty that the exploration for copper deposits will result in a project that is commercially viable recognising that exploration
and development of copper deposits is not the core activity of the Group, there is a significant cost involved in developing new
copper deposits and it is unlikely that without the financial support of Vale that the Group would independently seek to
develop a copper project in preference to any of its existing gold projects and discoveries.
As a result, it is recognising both the funding received from Vale and the related exploration expenditures through its income
statement. As this is not the principal business activity of the Group these receipts and expenditures are classified as other
income and other expenses.
5
Finance expense and income
Interest and fines on state sales tax
Provision for interest on disputed tax refunds claimed
Interest on short term unsecured bank loan
Interest in finance leases
Interest on short term trade loan
Variation on discount on rehabilitation provision
Total finance expense
Gain on revaluation of warrants
Gain on revaluation of derivatives
Realised gain on hedging activities
Interest income
Total finance income
Net finance (expense)/income
Group
12 months
ended
31 December
2023
US$
—
—
(453,675)
(103,568)
(90,586)
(91,416)
(739,245)
—
431,348
103,069
313,106
847,523
108,278
12 months
ended
31 December
2022
US$
(1,819,909)
(1,090,586)
(211,793)
(148,650)
(59,942)
(80,904)
(3,411,784)
165,495
—
—
126,390
291,885
(3,119,899)
120
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
6
Taxation
Current tax
UK tax
Foreign tax – Tax on current year profits
Foreign tax – Adjustment to prior year’s tax charges
Total current tax
Deferred tax
Increase of deferred tax asset arising from temporary timing differences
Decrease of deferred tax liability arising from temporary timing differences
Total deferred tax
Income tax charge
Group
For the
year ended
31 December
2023
US$
For the
year ended
31 December
2022
US$
–
2,199,658
–
2,199,658
–
890,176
–
890,176
(104,652)
(238,569)
(502,745)
(444,864)
(607,397)
1,592,261
(683,433)
206,743
The tax provision for the current period varies from the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%). The
differences are explained as follows:
Profit/(loss) on ordinary activities before tax
Tax thereon at UK corporate tax rate of 25.00% (2022: 19.00%)
Factors affecting the tax charge:
expenses not deductible for tax purposes
temporary differences (not recognised)
lower rate tax overseas – regional tax incentives
higher rate tax overseas
unrecognised tax losses carried forward and similar adjustments
other movements
Tax charge
Group
For the
year ended
31 December
2023
US$
8,167,873
2,041,969
For the
year ended
31 December
2022
US$
(776,304)
(147,498)
423,008
(64,933)
(917,056)
372,537
(158,612)
(104,6524)
1,592,261
150,778
34,563
(53,764)
–
461,233
(238,569)
206,743
121
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Unrecognised gross deferred tax position - 2023
Tax losses brought forward
Tax movement not recognised in the period
Total unrecognised gross deferred tax position at end of period
Unrecognised gross deferred tax position - 2022
Tax losses brought forward
Tax losses not recognised in the period
Movement in temporary differences
Total unrecognised gross deferred tax position at end of period
Unrecognised deferred tax asset
Tax losses (1)
Temporary differences
Total unrecognised deferred tax asset
Recognised deferred tax asset
Tax losses brought forward
Tax losses and untaxed expenses recognised in the period
Tax losses utilised in the period
Exchange
Net recognised deferred tax asset
Recognised deferred tax liability
Untaxed income brought forward
Untaxed income recognised in the period
Exchange
Net recognised deferred tax liability
Trading losses
US$
72,372,386
4,361,980
76,734,366
Trading losses
US$
68,515,983
3,856,404
–
72,372,386
Temporary
differences
US$
–
–
–
Temporary
differences
US$
–
–
–
Total
US$
72,372,386
4,361,980
76,734,366
Total
US$
68,515,983
3,856,404
–
–
72,372,386
For the
year ended
31 December
2023
US$
19,183,592
–
19,183,592
For the
year ended
31 December
2022
US$
18,093,097
–
18,093,097
1,545,684
104,652
–
141,647
1,791,983
480,922
(502,745)
21,823
–
1,224,360
237,550
1,019
82,756
1,545,684
861,430
(444,864)
64,355
480,922
(1)
the unrecognised deferred tax asset in respect of UK tax losses has been calculated by reference to the enacted rate of UK corporation tax of
25%.
The deferred tax asset has been recognised in the financial statements only to the extent that the Group has reasonable certainty
as to the level and timing of future profits that might be generated and against which this asset may be recovered.
122
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Employee information
7
The average number of persons, including Executive Directors, employed by the Group during the year was:
Management and corporate administration
Exploration
Mine operations and maintenance
Mine management and administration
Plant and processing
Total
Staff costs
Wages and salaries
Cost of incentive scheme shares
Social security costs
Termination costs
Pension contributions
Total
Group
Company
For the
year ended
31 December
2023
Number
24
12
521
30
68
655
For the
year ended
31 December
2023
US$
14,407,282
197,344
3,413,039
577,215
119,866
18,714,746
For the
year ended
31 December
2022
Number
24
22
483
35
82
646
For the
year ended
31 December
2022
US$
14,283,360
249,210
3,321,560
558,194
20,996
18,433,319
For the
year ended
31 December
2023
Number
4
–
8
1
–
13
For the
year ended
31 December
2023
US$
4,173,534
197,344
147,859
–
119,866
4,638,603
For the
year ended
31 December
2022
Number
5
–
9
1
–
15
For the
year ended
31 December
2022
US$
4,162,827
249,210
119,950
–
20,996
4,552,983
No company within the Group operates a pension plan for the Directors or the employees. For those Executive Directors and UK
based employees who have an entitlement to pension provision, the premiums are paid directly to the personal pension plans
selected by or agreed with the individuals. The Company’s obligation is limited to making fixed payments to these individual
plans.
Serabi Mineração SA, Chapleau Exploração Mineral Ltda and Gold Aura do Brasil Mineração Ltda all contribute via social security
payments to the state pension scheme which operates in Brazil and to which all their respective employees are entitled.
Directors’ remuneration
The compensation of the Directors is:
Salary and other benefits
Post-employment benefits
Total
For the
year ended
31 December
2023
US$
916,343
89,204
1,005,547
For the
year ended
31 December
2022
US$
728,848
9,752
738,601
The remuneration paid to the highest paid Director plus the charge in respect of share incentive awards during the year was
US$568,986 (2022: US$318,426). This includes cash contributions made by the Company to his money purchase pension scheme
of US$9,989 (2022: US$$9,752).
During the year ended 31 December 2023, two of the Directors (2022: two) were contractually entitled to accrue retirement benefits
under money purchase schemes.
123
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
During the years ended 31 December 2023 and 31 December 2022, none of the serving Directors exercised any share options nor
did any shares vest pursuant to the Restricted Stock Plan operated by the Company. Details of share incentives held by the
Directors at 31 December 2023 and other equity related interests are set out in the Remuneration Report on pages 67 to 79.
8
Earnings per share
Profit/(loss) attributable to ordinary shareholders (US$)
Weighted average ordinary shares in issue
Basic profit per share (US cents)
Diluted ordinary shares in issue (1)
Diluted profit per share (US cents)
For the year
ended
31 December
2023
6,575,612
75,734,551
8.68
75,734,551
8.68
For the year
ended
31 December
2022
(983,047)
75,734,551
(1.30)
81,488,078
(1.30)(2)
(1) At 31 December 2023 there were 2,075,400 conditional share awards in issue (31 December 2022 - 864,500). These are subject to
performance conditions which may or not be fulfilled in full or in part. These CSAs have not been included in the calculation of the
diluted earnings per share.. At 31 December 2022 there were also 1,750,000 options and 4,003,527 unexercised warrants in issue.
(2) As the effect of dilution is to reduce the loss per share, the diluted loss per share is considered to be the same as the basic loss per share
9
Intangible assets
Deferred exploration costs
Cost
Opening balance
Exploration and evaluation expenditure
Pre-operational project costs
Reclassified as tangible assets
Foreign exchange movements
Total as at end of period
Group
31 December
2023
US$
31 December
2022
US$
18,621,180
571,411
–
–
1,306,666
20,499,257
34,857,905
855,607
2,328,113
(20,287,902)
867,457
18,621,180
The value of these assets is dependent on the development of mineral deposits.
Past exploration and evaluation expenditures for a project are transferred to mining property and projects in construction at the
commencement of the mine and process plant construction activities for that project.
124
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
10
Tangible assets
Property, plant and equipment – Group
2023
Cost
Balance at 31 December 2022
Additions
Reallocations from projects in construction
Changes in estimates in provision for
rehabilitation
Disposals
Foreign exchange movements
At 31 December 2023
Depreciation
Balance at 31 December 2022
Charge for period
Released on asset disposals
Foreign exchange movements
At 31 December 2023
Net book value at 31 December 2023
Land and
buildings
– at cost
US$
2,589,667
236,907
2,616,100
Mining
property
– at cost
US$
Projects in
construction
– at cost
US$
66,114,988
4,425,839
1,014,644
11,106,563
841,845
(4,902,222)
Plant and
equipment
– at cost
US$
18,099,900
1,299,565
1,271,478
Total
US$
97,911,118
6,804,156
–
–
1,222,800
–
–
1,222,800
–
299,699
5,742,373
–
4,391,929
77,170,200
(1,287,242)
(270,396)
–
(157,356)
(1,714,994)
4,027,379
(34,406,476)
(3,016,791)
–
(2,332,560)
(39,755,827)
37,414,373
(60,598)
154,593
7,140,181
–
–
–
–
–
7,140,181
(4,511,613)
2,037,353
18,196,683
(4,572,211)
6,883,574
108,249,437
(13,734,881)
(1,512,472)
2,798,953
(989,313)
(13,437,713)
4,758,970
(49,428,599)
(4,799,659)
2,798,953
(3,479,229)
(54,908,534)
53,340,903
No costs of borrowing have been capitalised during the period (2022: nil).
Land and
buildings
– at cost
US$
Mining
property
– at cost
US$
Projects in
construction
– at cost
US$
Plant and
equipment
– at cost
US$
Total
US$
2,041,452
88,785
321,572
–
–
137,858
2,589,667
39,897,573
3,629,505
3,128,001
20,287,902
(2,833,444)
2,005,451
66,114,988
2022
Cost
Balance at 31 December 2021
Additions
Reallocations from projects in construction
Reclassified from deferred exploration costs
Disposals
Foreign exchange movements
At 31 December 2022
Depreciation
Balance at 31 December 2021
Charge for period
Released on asset disposals
Foreign exchange movements
At 31 December 2022
Net book value at 31 December 2022
In determining the recoverability of the carrying value of these assets, the Group prepares estimates of future cash flows based
on management’s best estimates of future production rates, costs and capital expenditure. Production estimates are based on
utilisation of current estimates of mineral resources at each ore deposit operated by the Group.
12,919,502
1,840,007
(4,605,572)
–
–
952,626
11,106,563
14,581,075
2,518,796
1,155,999
–
(593,917)
437,947
18,099,900
(28,970,616)
(4,339,961)
981,804
(2,077,703)
(34,406,476)
31,708,512
(11,936,287)
(1,530,433)
425,247
(693,408)
(13,734,881)
4,365,019
(957,364)
(222,005)
–
(107,873)
(1,287,242)
1,302,425
–
–
–
–
–
11,106,563
69,439,602
8,077,093
–
20,287,902
(3,427,361)
3,533,882
97,911,118
(41,864,267)
(6,092,399)
1,407,051
(2,878,984)
(49,428,599)
48,482,519
Management used a base price of US$1,950 per ounce for the duration of its cash flow projection and a fixed exchange rate of
BrR$4:90 to US$1:00. The projection was for the period to 31 December 2033.
125
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Management considered a range of discount rates and was satisfied that even at a 15% discount rate which is above the current
WACC of the Group, there was no indicator of impairments.
Management has assumed inter-alia that:
current production rates from the Palito ore body will be maintained.
ore production from Coringa will increase as the Serra orebody continues to be developed with an ore sorter and crushing
plant being installed and operational during Q3 2024.
As anticipated in the 2019 PEA, a second ore body at Coringa will need to be developed, which will be operational during
2028 to supplement and in time to replace the Serra ore body Production levels broadly consistent with the projections
set out in the 2019 PEA are achieved from 2028 onwards.
During 2025, the Group will expand the current Palito process plant to expand capacity using a ball mill that was
acquired with the Coringa project. This will increase mill capacity by approximately 33% equivalent to an additional
60,000 tpy.
11
Right of use assets
Cost
Opening balance
Additions
Foreign exchange movements
Total as at end of period
Depreciation
Opening balance
Charge for period
Foreign exchange movements
Total as at end of period
Net book value at end of period
Plant and equipment
31 December
2023
US$
31 December
2022
US$
7,199,992
–
559,851
7,759,843
(1,825,950)
(460,919)
(156,644)
(2,443,513)
5,316,330
3,968,038
2,985,889
246,065
7,199,992
(1,367,407)
(367,126)
(91,417)
(1,825,950)
5,374,042
The Group only leases underground mining equipment. As at 31 December 2023, the future minimum lease payments due in
respect of outstanding lease contracts for mining equipment are US$844,624 (2022: US$1,946,811). The net present value of these
lease contracts is US$726,831 (2022: US$1,781,332).
Current lease liabilities
Plant and equipment
Non-current lease liabilities
Plant and equipment
Total lease liabilities
31 December 2023
US$
31 December 2022
US$
694,400
694,400
150,224
150,224
844,624
1,109,518
1,109,518
837,293
837,293
1,946,811
126
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
12
Investments in subsidiaries
The Group consists of the following subsidiary undertakings:
Name
Incorporated
Registered office address
Serabi Mineração SA
Brazil Rodovia Transgarimpeira, km
Kenai Resources Ltd
British Columbia,
Canada
22,
Bairro Jardim do Ouro –
Itaituba/PA CEP 68181-000
Brazil
Royal Centre, P.O Box 11125,
Suite 1750-1055
W Georgia Street,
Vancouver, Canada
Gold Aura do Brasil
Mineração Ltda
Brazil Rodovia Transgarimpeira, KM
54
Comunidade São Chico –
Itaituba/PA CEP 68181-000
Brazil
Serabi Mining Ltd
British Virgin
Islands
Craigmuir Chambers,
Road Town, Tortola,
British Virgin Islands
Chapleau Resources Ltd
British Colombia,
Canada
Royal Centre, P.O Box 11125,
Suite 1750-1055
W Georgia Street,
Vancouver, Canada
Chapleau Resources
(USA) Inc
Chapleau Exploração
Mineral Ltda
Alaska,
USA
1029 West 3rd Avenue
Suite 400
Anchorage,
Alaska USA
Brazil Avenida Jornalista Ricardo
Marinho no 360, loja 113
Barra da Tijuca
Rio de Janeiro
RJ Brazil CEP 22.361-350
Serabi Gold Nominee
Limited
England 66 Lincoln’s Inn Fields
London WC2A 3LH
England
127
Activity
%
holding
Gold mining and
exploration
100%(1)
Investment
100%
Gold mining and
exploration
99.9%(1)
Investment
100%
Investment
100%
Gold exploration
100%(1)
Gold mining and
exploration
100%(1)
Dormant
100%
(1) indirectly held.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Cost at start of period
Investment in subsidiary during period
Cost at end of period
Impairment provision
Net book value at end of period
Company
31 December
2023
US$
112,735,884
399,396
113,135,280
31 December
2022
US$
112,408,765
327,119
112,735,884
(9,784,922)
103,350,358
(9,784,922)
102,950,962
The value of these investments is dependent on the development of the Group’s mineral deposits in Brazil. The Company
established an initial impairment provision against the carrying value of its investments in subsidiary entities in 2008. Subsequent
to that date the Company has made further acquisitions and invested new capital into certain of its subsidiaries. At the end of
2023 the Company has made an assessment as to whether any indicators exist that could give rise to a potential impairment of or
restriction on the future recoverability of the value of the investments that it holds in subsidiary entities and in particular the
investments made since 2008. The Board has determined that based on its assessment, it is not aware of any indicators of further
impairment.
In determining the recoverability of the carrying value of these assets, management has considered the cash flow projections
described in Note 10 above and the value attributed to exploration assets that are not currently considered in the Group’s current
life of mine operating plans. Following this analysis management considers that there has been no indicator of impairments.
13
Inventories
Consumables
Stockpile of mined ore
Other material in process
Finished goods awaiting sale
14
Trade and other receivables
Current
Trade receivables
Other receivables
Trade and other receivables
Non-current
Taxes receivable
Amounts owed by subsidiaries
Gross receivable
Impairment provision
Net value of non-current other
receivables
Group
31 December
31 December
2023
US$
4,112,470
1,230,046
3,835,693
3,619,742
12,797,951
2022
US$
4,015,338
812,794
2,703,297
1,174,922
8,706,351
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
2,478,386
379,686
2,858,072
6,300,583
–
6,300,583
5,233,976
57,948
5,291,924
4,974,687
–
4,974,687
2,478,386
13,162
2,491,548
–
18,180,258
18,180,258
5,233,975
10,866
5,244,841
–
18,177,758
18,177,758
(1,647,520)
(1,528,655)
(8,391,722)
(8,391,722)
4,653,063
3,446,032
9,788,536
9,786,036
128
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The trade receivables owed to the Group at the balance sheet date are recoverable from parties with which the Group has had
long standing relationships and at the balance sheet date none of the amounts owed to the Group were overdue. The Group has
not made any provision for any expected credit losses in respect of these trade receivables.
The Group, in common with all businesses in Brazil, is subject to a number of State and Federal taxes on goods that it purchases.
As an exporter of goods, it is exempt from any sales taxes on its products. As a result, it is due tax rebates by both Federal and
State tax bodies. In general, the Company is able to utilise its tax debts by way of offset against other taxes that it owes. The
Group has however determined, based on the actions of the State tax authorities and the expected future operational expenditures
over the next 12 months, that certain State taxes that it is able to recover and is owed at 31 December 2023, are not expected to be
recovered through such an offset arrangement during the next 12 months and has therefore categorised the balance owed in
respect of these State taxes as being due in more than 12 months. The Group has received legal advice confirming that these taxes
owed to the Group by the State of Para are fully recoverable.
At 31 December 2023, Serabi Gold plc has two loans outstanding to subsidiaries that are not fully impaired.
These loans are owed by Chapleau Exploração Mineral Ltda. (“CEML”) and Kenai Resources (“Kenai”). Both advances were
made on an interest free loan basis and at the time of the initial and each subsequent advance the Company has determined that
there was no significant credit risk attaching to each of the loan advances being made.
In determining the credit risk attached to the CEML loan, management has considered different scenarios through which the loan
will be recovered.
a) Scenario 1 – the loan is repaid within the next five years from the successful start up of the Coringa project.
b) Scenario 2 – the loan is repaid in less than 12 months from the sale of equipment and machinery.
The loan to Kenai is for a total amount of US$9,015. The credit risk is considered to be immaterial.
15
Prepayments and prepaid taxes
Recoverable State and Federal taxes
Supplier down payments
Other prepayments and employee advances
Prepayments
16
Cash and cash equivalents
Cash and cash equivalents
Group
Company
31 December
2023
US$
438,861
424,685
1,456,710
2,320,256
31 December
2022
US$
486,889
216,941
868,319
1,572,149
31 December
2023
US$
–
–
226,216
226,216
31 December
2022
US$
–
–
163,737
163,737
Group
Company
31 December
2023
US$
11,552,031
31 December
2022
US$
7,196,313
31 December
2023
US$
7,713,125
31 December
2022
US$
4,156,908
Funds are primarily held with HSBC Bank plc in the UK, and Bradesco Bank, ITAU SA, and Santander Bank in Brazil. All of
the banking institutions have a AAA credit rating.
129
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
17
Trade and other payables
Current
Trade payables
Other payables
Employee benefits
Other taxes and social security
Amounts due to subsidiaries
Due in less than one year
Non-current
(Between one and five years)
Long term tax payable
Other taxes and social security
Due in more than one year
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
3,587,065
1,260,628
778,746
2,999,853
–
8,626,292
3,367,626
593,294
3,960,920
2,701,805
1,106,393
561,702
1,460,972
–
5,830,872
3,321,255
479,631
3,800,886
364,120
45,300
308,899
–
38,318
33,118,175
33,527,595
30,425,854
30,773,071
–
–
–
–
–
–
18
Non-current provisions
Environmental rehabilitation provision
Opening balance
Provided for in year
as a result of additions on initial recognition
as a result of changes in estimates
as a result of variations in discount
as a result of exchange variations
Total provided for in year
Total non-current provisions
Group
Company
31 December
2023
US$
1,190,175
31 December
2022
US$
2,581,431
31 December
2023
US$
–
31 December
2022
US$
–
–
1,222,800
(91,416)
342,333
1,473,717
2,663,892
–
(792,737)
(407,485)
(191,034)
(1,391,256)
1,190,175
–
–
–
–
–
–
–
–
–
–
–
–
The environmental rehabilitation provision has been established to cover any asset decommissioning and rehabilitation
obligations for the Palito, São Chico and Coringa Mines. Such obligations include the dismantling of infrastructure, removal of
residual materials and remediation of disturbed areas. The provision does not allow for any additional obligations expected from
future developments. The timing and scope of the rehabilitation is uncertain and is dependent on mine life and quantities
extracted from the mine.
Cost estimates are formally reviewed at regular intervals and the provisions are adjusted accordingly.
In calculating the rehabilitation provision, management consider the anticipated date of closure based on the latest available
estimations of mineral resources. In addition, the future costs involved in dismantling, earthmoving, on-going monitoring, site
clearance and revegetation are based on quotations or management’s best estimates, based on historic costs or estimates.
Costs have inflated using the current cost inflation rate in Brazil of 3.9 per cent (2022: 6 per cent) and discounted to provide a fair
value using a discount rate of 12.25 per cent (2022: 12.29 per cent) being the Brazilian Government Bond Rate at the time of
calculation.
130
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
19
Interest-bearing liabilities
Current
Short term loan
Obligations under right of use leases (note 11)
Due in less than one year
Non-current
(Between one and five years)
Obligations under right of use leases (note 11)
Due in more than one year
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
5,708,684
694,400
6,403,084
5,001,608
1,109,518
6,111,126
150,224
150,224
837,293
837,293
–
–
–
–
–
–
–
–
–
–
Each right of use lease is secured against the underlying assets that are the subject of that lease.
Short term loan
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
Short term loan
Balance of short term loan at the start of the period
Repayment of short-term loan
Drawdown of short term loan
Interest repaid
Accrued interest
Impact of exchange rate
Value of short term loan at the end of the period
5,001,608
(5,096,397)
5,000,000
(334,523)
453,675
684,321
5,708,684
–
4,917,775
211,793
(127,960)
5,001,608
–
–
–
–
–
–
–
–
–
–
Reconciliation of net cash flow to movement in net funds
Change in cash resulting from cash flows
Translation movements on cash
Movement in cash in the period
Opening net funds
Movement in interest bearing loans and
borrowings
Drawdown of loan
Loan repayment
Loan and interest repayments
Movement in lease liabilities
Non cash movement
Cash movement
Closing Net Funds
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
(5,116,406)
94,968
(5,021,438)
11,482,741
(5,001,608)
–
–
(184,650)
(1,027,151)
247,894
3,544,353
11,864
3,556,217
4,156,908
(4,294,581)
(135,245)
(4,429,826)
8,586,734
–
–
–
–
–
–
–
–
7,713,125
–
–
4,156,908
4,089,454
266,264
4,355,718
247,894
(5,000,000)
5,001,608
(708,684)
(69,415)
1,171,602
4,998,723
131
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Analysis of net funds:
Cash and cash equivalents
Interest-bearing liabilities - current
Interest-bearing liabilities – non-current
Closing net funds
20
Derivatives
Group
Company
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
11,552,031
(6,403,084)
(150,224)
4,998,723
7,196,313
(6,111,126)
(837,293)
247,894
7,713,125
–
–
7,713,125
4,156,908
–
–
4,156,908
Group
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
Foreign exchange hedging contracts
US$
US$
US$
US$
Fair value at start of period
Movement in fair value during period
Fair value at end of period
–
158,475
158,475
–
–
–
–
158,475
158,475
–
–
–
Foreign exchange hedging contracts
Fair value at start of period
Movement in fair value during period
Fair value at end of period
Total fair value of financial asset at end of period
115,840
31 December
2023
US$
31 December
2022
US$
31 December
2023
US$
31 December
2022
US$
–
(42,635)
(42,635)
–
–
–
–
–
(42,635)
(42,635)
115,840
–
–
–
–
The Group has determined that the gold and foreign exchange hedges entered into by the Group do not meet the eligibility criteria
to be accounted for under the provisions of IFRS 9 – Hedge Accounting. These contracts are therefore fair valued on a mark-to-
market basis at the end of each period and any increase or decrease in value reported through the income statement. Any
settlement values receivable or payable during the period are recognised in the period and reported through the income statement.
Group
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
Derivative liability related to warrants in issue
US$
US$
US$
US$
Fair value at start of period
Decrease in fair value at end of period
Fair value at end of period
–
–
–
165,495
(165,495)
–
–
–
–
165,495
(165,495)
–
Fair value was determined using a Black-Scholes model and by reference to quoted mid-market prices at each balance sheet date
for the ordinary shares. The fair value of the derivative has been measured using level 1 and level 2 inputs.
132
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The conversion rights embedded in the warrant notes represented a derivative as the Group’s functional currency is United States
Dollars but the conversion price was denominated in Pounds Sterling. Therefore, the amount to be released in US Dollars on
conversion was variable dependent upon the exchange rate between the US Dollar and GB Pound.
21
Analysis of changes in liabilities arising from financial activities
At 1 January 2023
Cash flows
Non-cash flows
Transfers
Exchange rate movements
At 31 December 2023
At 1 January 2022
Cash flows
Non-cash flows
- New lease arrangements
-
-
At 31 December 2022
Transfers
Exchange rate movements
22
Share capital
Current
obligations
under right of
use assets
1,109,518
(1,171,602)
Non-current
obligations
under right of
use assets
837,293
–
716,923
39,561
694,400
(716,923)
29,854
150,224
Current
obligations
under right of
use assets
290,060
(1,691,259)
–
1,940,476
564,283
5,958
1,109,518
Non-current
obligations
under right of
use assets
444,950
–
–
925,683
(564,283)
30,943
837,293
Total
1,946,811
(1,171,602)
–
69,415
844,624
Total
735,010
(1,691,259)
2,866,159
–
36,901
1,946,811
Each of the ordinary shares carries equal rights and entitles the holder to voting and dividend rights and rights to participate in
the profits of the Company and in the event of a return of capital equal rights to participate in any sum being returned to the
holders of the ordinary shares. There is no restriction, imposed by the Company, on the ability of the holder of any ordinary share
to transfer the ownership or any of the benefits of ownership to any other party.
Allotted, called up and fully paid
Ordinary shares in issue at start of period
Shares issued in period
Ordinary shares in issue at end of period
Conditional Share Awards
2023
Number
$
Number
$
2022
75,734,551
–
75,734,551
11,213,618
–
11,213,618
75,734,551
–
75,734,551
11,213,618
–
11,213,618
On 16 June 2020, shareholders approved the adoption of the Serabi 2020 Restricted Share Plan (the “2020 Plan”) which was
subsequently adopted by the Board on 10 November 2020. Details of the 2020 Plan were set out in the Notice of Annual General
Meeting dated 15 May 2020, which is available from the Company’s website. The 2020 Plan as a Long-term Incentive Plan (“LTIP”)
replaced the Serabi 2011 Share Option Plan
133
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Details of the number of the conditional shares awards outstanding under the 2020 Plan are as follows:
Awards in issue at start of period
Issued in period
2022 awards
2023 awards
Expired in period
Awards in issue at end of period
31 December
2023
Number
864,500
31 December
2022
Number
864,500
629,600
986,000
(404,700)
2,075,400
–
–
–
864,500
On 1 August 2023, the Company announced that the performance conditions in respect of the 2020 awards had not been achieved
and therefore 404,700 conditional share awards issued in respect of 2020 lapsed.
On 1 August 2023, the Company also announced the issuance of a further 1,615,600 Conditional Share Awards to employees
(including directors) of the Company.
The awards are subject to a three-year performance period during which time certain performance criteria stipulated by the Board
must be attained. Vesting only occurs at the end of the performance period. The performance criteria and minimum thresholds to
be achieved can be summarised as follows:
40% of the award is subject to Total Shareholder Return, (where TSR must be 1.2 times or more the BMO Junior
Gold Index)
30% of the award is subject to Return on Capital Employed (where ROCE premium over Weighted Average
Cost of Capital must be 1.2 times or more), and
30% of the award is subject to Return on Sales (where ROS must exceed average annual budget by 10 per cent
or more)
The number of Conditional Shares awarded for the calendar years 2022 and 2023 were calculated by reference to the respective
30 day VWAP average of the Company's shares on each of 31 January 2022 and 31 January 2023. The underlying shares to be
issued pursuant to each of the Conditional Share Awards will only be issued at the time of vesting and only in such amount (if
any) as is required based on the achievement of the performance criteria.
The awards are granted as part of the Company's normal annual compensation review.
During the year a charge of US$187,074 (2022: US$167,405) has been recorded in the financial statements in respect of these
conditional share awards.
Warrants
As at 31 December 2023, there were no warrants in issue (31 December 2022: 4,003,527 warrants in issue). The exercise period for
the warrants expired on 23 May 2023 with no warrants having been exercised. Each warrant entitled the holder to acquire one
new ordinary share at an exercise price of 93.75 pence per shares,
Options to subscribe for ordinary shares
In 2011 the Company established a share option scheme (the “Serabi 2011 Share Option Plan”) the terms of which were re-
approved by shareholders at the Annual General Meeting of the Company held on 15 June 2017. This plan had a 10 year life and
no awards have been made under this plan since May 2020.
134
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Details of the number of share options and the weighted average exercise price (“WAEP”) outstanding under the Serabi 2011
Share Option Plan are as follows:
Outstanding at the beginning of the period
Expired during the period
Outstanding at the end of the period
Exercisable at end of the period
31 December
2023
Number
1,750,000
(1,750,000)
–
–
31 December
2023
WAEP UK£
0.85
(0.85)
–
–
31 December
2022
Number
1,750,000
–
1,750,000
1,750,000
31 December
2022
WAEP UK£
0.85
–
0.85
0.85
Options granted had no market performance criteria and were valued using the Black-Scholes model. The fair value of options
is charged to the income statement or capitalised as an intangible asset as appropriate over the vesting period. During the year a
charge of US$10,270 (2022: US$81,805) has been recorded in the financial statements in respect of these options.
23
Capital management
The Group considers that its capital is comprised of funds available for long term investment plans including project development
and exploration activities which may be generated from both internal activities and external sources. The Group has historically
sourced equity capital through share issues on the London Stock Exchange and the Toronto Stock Exchange and the Board has
managed the capital structure of the Group and aligned this with the risk profiles of its underlying assets.
The Group has historically sourced equity capital through share issues on the London Stock Exchange and the Toronto Stock
Exchange and the Board has managed the capital structure of the Group and aligned this with the risk profiles of its underlying
assets.
The Group’s objectives, when managing its capital are to maintain financial flexibility to achieve its development plans, safeguard
its ability to continue to operate as a going concern through management of its costs whilst optimising its access to capital markets
by endeavouring to deliver increases in value of the Group for the benefit of shareholders. In establishing its capital requirements,
the Group will take account of the risks inherent in its plans and proposed activities and prevailing market conditions.
The Group plans to undertake the development of Coringa including the purchase and installation of a crushing plant and ore-
sorter, using cash flow generated from its current operations. If required, the Group plans to borrow additional funds to
supplement any additional working capital requirements. The Group’s borrowings currently comprise a 12 month, US$5 million
bank loan maturing in January 2025, and lease finance obligation of a further US$0.84 million. The Group currently has an
undrawn facility with a major UK bank and indications of additional lines of credit with three Brazilian banks. It is therefore
confident of being able to refinance or repay existing debts as they fall due and meet the costs for the development of Coringa.
Should additional funding be required the Group would explore a variety of sources which could include a combination of longer
term bank debt, royalty, streaming of gold and copper revenues convertible loans and new equity capital. The Group has been
successful in raising funding as and when required in the past and the Directors consider that the Group continues to have strong
support from its major shareholders who been supportive of and provided additional funding when required on previous
occasions.
The Company’s shares are listed on both AIM and the TSX and quoted on the OTCQX. which management considers increases
the potential of the Group to raise finance through further issues of shares in the future.
Commitments and contingencies
24
Capital commitments
The Group holds certain exploration prospects which require the Group to make certain payments under rental or purchase
arrangements allowing the Group to retain the right to access and undertake exploration on these properties. Failure to meet these
obligations could result in forfeiture of any affected prospects.
Management estimates that the cost over the next 12 months of fulfilling the current contracted commitments on these exploration
properties in which the Group has an interest is US$0.02 million (2022: US$0.02 million).
135
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Capital Purchases
At 31 December 2023 the Group had confirmed its order for an ore-sorter for use at its Coringa operation. It has made, during
2023, an initial down payment of €336,100 representing 50% of the purchase costs and a further €268,880 (40% of the purchase
price) during March 2023. The remaining cost will be paid 14 days after successful commissioning or within 6 months of delivery
whichever is earlier. At 31 December 2023, other than the ore sorter, the Group had not made any other commitments for other
capital purchases.
Lease commitments
The Group has elected not to recognise right of use assets and lease liabilities for leases of low-value assets and short-term leases.
The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Contingencies
Employment legislation in Brazil allows former employees to bring claims against an employer at any time for a period of two
years from the date of cessation of employment and regardless of whether the employee left the company voluntarily or had their
contract terminated by the company. The Group considers that it operates in compliance with the law at all times but is aware
that claims are made against all companies in Brazil on a regular basis. Whilst not accepting legal liability, the Group makes
provision or accrues for all known claims. Further claims may arise at any time.
The Company has taken legal action against a former employee for the recovery of funds that the Company considers had been
misappropriated during the period January 2015 to March 2021. The former employee has submitted his defence to the claims
made by the Company and submitted a counterclaim against the Company for wrongful dismissal for a value of approximately
BRL11.0 million (approximately US$2.2 million). The Company’s lawyers consider that the prospect of the counterclaim being
granted against the Company as being very remote.
25
Related party transactions
Transactions with intergroup entities
During the period the Company made one loan to a subsidiary of US$2,500 (2022: US$1,151). There were no loans converted into
new shares issued by subsidiaries during 2023 (2022: US$Nil). The balance of these loans at 31 December 2023 was US$9.79 million
(2022: US$9.79 million).
The Company has loans receivable from subsidiaries totalling US$18,180,258 (2022: US$18,177,758) before any provision for the
impairment of these loans (see note 14).
The Company has purchased, during the year from its subsidiary SMSA, 1,560 tonnes of copper/gold concentrate for a
consideration of US$26,602,457 (2022: 1,340 tonnes; US$25,058,005). At the end of the period the Company owed US$33,118,175
to its subsidiary SMSA (2022: US$30,425,854).
During the year the Group has received legal advice from FFA Legal, a Brazilian based law firm totalling US$484,350 for which
UIS$155,785 was outstanding at the period end. Luis Mauricio, a non-executive Director of the Group, is the founding Partner of
FFA Legal
Key management remuneration
Key management comprises the Executive Directors and the Non-executive Directors only. Their compensation is:
Short-term employee benefits
Post-employment benefits
Share-based payments
136
For the
year ended
31 December
2023
US$
916,343
89,204
145,430
For the
year ended
31 December
2022
US$
832,126
9,752
60,695
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Total
1,150,977
902,573
Further details regarding the remuneration of the Executive Directors and the Non-executive Directors is set out in the
Remuneration Report and in note 7.
26
Financial risk management
The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies
and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of
these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risk nor its objectives, policies and
processes for managing those risks or the method used to measure them from the previous period unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group up during the year to 31 December 2023 from which financial instrument
risk arose or may arise in the future are as follows:
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Convertible loan notes
Loans and borrowings
Leases and asset loans
Derivative
The principal financial instruments by category are as follows:
Group financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Group financial liabilities
Trade and other payables
Other loans and borrowings
Derivatives
Total financial liabilities
Fair value through profit or
loss
Amortised cost
2023
US$
–
2,858,072
2,858,072
2022
US$
2023
US$
–
5,291,924
5,291,924
11,552,031
–
11,552,031
2022
US$
7,196,313
–
7,196,313
Fair value through profit or
loss
2023
US$
2022
US$
–
–
–
–
Amortised cost
2023
US$
12,587,212
6,553,308
–
19,140,520
2022
US$
9,631,758
6,948,419
–
16,580,177
–
–
–
–
137
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Company financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Company financial liabilities
Trade and other payables
Total financial liabilities
General objectives, policies and processes
Fair value through profit or
loss
2023
US$
–
2,491,548
2,491,548
2022
US$
–
5,244,841
5,244,841
Amortised cost
2023
US$
7,713,125
–
7,713,125
2022
US$
4,156,908
–
4,156,908
Fair value through profit or
loss
Amortised cost
2023
US$
–
–
2022
US$
2023
US$
2022
US$
–
–
33,527,595
33,527,595
30,773,071
30,773,071
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group's finance function.
The Board receives regular information from the Group's management through which it reviews the effectiveness of the processes
put in place and the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that
seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility.
The Group is exposed to commodity price volatility, interest rate risks, credit risks, liquidity risks and currency risks arising from
the financial instruments it holds.
The main financial risks arising from the Group’s activities remain unchanged from the previous financial year, namely,
commodity prices, currency, liquidity, credit and interest rates. The Board reviews and agrees policies for managing each of these
risks and these are summarised below:
Commodity price risk
By the nature of its activities the Group and the Company are exposed to fluctuations in commodity prices and, in particular, the
price of gold and copper as these could affect its ability to raise further finance in the future, its future revenue levels and the
viability of its projects. During February 2023, the Group entered into commodity price hedging arrangements for approximately
10,000 ounces of gold production over a 12 month period to help protect cash flow. It has, however, not established a formal
policy regarding hedging of its commodity or currency exposures.. The Group closely monitors the prices of these commodities
and the Board does regularly review the Group’s strategy towards hedging and the nature and cost of the hedging products
available to the Company.
Trade receivables are subject to future variation in commodity prices and accordingly the results for the period and the equity
position of the Group may be affected by any change in commodity prices subsequent to the end of the period. Any subsequent
adjustment is recognised at FVTPL.
Whilst not representing a financial instrument all inventory as at 31 December 2023 which is unsold, is subject to future variation
in commodity prices and accordingly the results for the period and the equity position of the Group may be affected by any
change in commodity prices subsequent to the end of the period.
138
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Interest rate risk
The Group and the Company has fixed rate finance leases for the acquisition of some equipment and utilises fixed rate short-term
trade finance (approximately 30 days) in respect of sales of copper/gold concentrate production.
On 28 February 2023, the Group completed a US$5.0 million unsecured loan arrangement with a Brazilian bank which carried a
fixed interest coupon of 7.96 per cent. The loan was repaid as a bullet payment on 22 February 2024. On 7 January 2024, the Group
completed a further US$5.0 million unsecured loan arrangement with a different Brazilian bank which carries a fixed interest
coupon of 8.47 per cent. This loan is repayable on 6 January 2025.
As a result, neither the Group nor the Company had any material exposure to market rate movements.
Group
2023
Financial assets
Cash
Receivables
Total
Financial liabilities
Payables
Interest-bearing liabilities
Total
2022
Financial assets
Cash
Receivables
Total
Financial liabilities
Payables
Interest-bearing liabilities
Total
Weighted
average
effective
interest
rate
%
Fixed interest maturity
Non-interest-
bearing
US$
Floating
US$
One year or
less
US$
Over one to
five years
US$
–
–
–
–
2,858,072
2,858,072
11,552,031
–
11,552,031
–
–
–
–
–
–
–
7.81%
–
13,236,437
–
13,236,437
–
–
–
–
6,403,084
6,403,084
–
150,224
150,224
Weighted
average
effective
interest
rate
%
Non-interest-
bearing
US$
–
–
–
–
5,291,924
5,291,924
Fixed interest maturity
One year or
less
US$
Over one to
five years
US$
–
–
–
–
–
–
Floating
US$
7,196,313
–
7,196,313
–
6.66%
–
10,093,615
–
10,093,615
–
–
–
–
6,111,126
6,111,126
–
837,293
837,293
Total
US$
11,552,031
2,858,072
14,410,103
13,236,437
6,553,308
19,789,745
Total
US$
7,196,313
5,291,924
12,488,237
10,093,615
6,948,419
23,814,394
139
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
Company
Weighted
average
effective
interest
rate
%
Non-interest-
bearing
US$
–
–
–
–
–
–
–
12,506,300
12,506,300
33,752,976
–
33,752,976
Weighted
average
effective
interest
rate
%
Non-interest-
bearing
US$
–
–
–
–
–
–
–
15,194,614
15,194,614
31,004,349
–
31,004,349
Fixed interest maturity
One year or
less
US$
Over one to
five years
US$
–
–
–
–
–
–
–
–
–
–
–
–
Fixed interest maturity
One year or
less
US$
Over one to
five years
US$
–
–
–
–
–
–
–
–
–
–
–
–
Floating
US$
7,713,125
–
7,713,125
–
–
–
Floating
US$
4,156,908
–
4,156,908
–
–
–
Total
US$
7,713,125
12,506,300
20,219,425
33,752,976
–
33,752,976
Total
US$
4,156,908
15,194,614
19,351,522
31,004,349
–
31,004,349
2023
Financial assets
Cash
Receivables
Total
Financial liabilities
Payables
Derivatives
Total
2022
Financial assets
Cash
Receivables
Total
Financial liabilities
Payables
Derivatives
Total
Liquidity risk
Historically the Group has relied primarily on funding raised from the issue of new shares to shareholders but has also received
short-term loans from its shareholders and other recognised lenders and during 2020 issued convertible loan notes to one of its
shareholders. It also uses floating rate short-term trade finance and fixed rate finance leases to finance its activities.
On 28 February 2023, the Group completed a US$5.0 million unsecured loan arrangement with a Brazilian bank which carried a
fixed interest coupon of 7.96 per cent. The loan was repaid as a bullet payment on 22 February 2024. On 7 January 2024, the Group
completed a further US$5.0 million unsecured loan arrangement with a different Brazilian bank which carries a fixed interest
coupon of 8.47 per cent. This loan is repayable on 6 January 2025.
In addition to the above, the Group had obligations under fixed rate right of use asset leases amounting to US$0.84 million (2022:
US$1.95 million) (see note 19).
140
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The following table sets out the maturity profile of the financial liabilities as at 31 December 2023:
Due in less than one month
Trade payables and accruals
Interest-bearing liabilities
Total due in less than one month
Due in less than three months
Trade payables and accruals
Interest-bearing liabilities
Total due in less than three months
Due between three months and one year
Trade payables and accruals
Interest-bearing liabilities
Total due between three months and one year
Total due within one year
Due more than one year
Trade payables and accruals
Interest-bearing liabilities
Total due more than one year
Total
Currency risk
Group
2023
US$
1,089,407
57,867
1,147,274
3,117,037
5,824,417
8,941,454
5,069,073
520,800
5,589,873
2022
US$
652,366
92,460
744,826
2,027,529
5,186,528
7,214,057
3,612,834
832,139
4,444,973
15,678,601
12,403,855
3,960,920
150,224
4,111,144
19,789,745
3,800,886
837,293
4,638,179
17,042,034
Company
2023
US$
3,397,836
–
3,397,836
9,120,065
–
9,120,065
21,235,075
–
21,235,075
33,752,976
–
–
–
33,752,976
2022
US$
3,123,563
–
3,123,563
8,378,113
–
8,378,113
19,502,674
–
19,502,674
31,004,349
–
–
–
31,004,349
Although the Company is incorporated in the United Kingdom, its financial statements and those of the Group are presented in
US Dollars which is also considered to be the functional currency of the Company as funding of activities of its subsidiaries is
generally made in US Dollars, all sales for the Group are denominated in US Dollars and future remittances of dividends, loans
or repayment of capital from the subsidiaries are expected to be received in US Dollars.
Share issues have historically been priced solely in Sterling but an issue of special warrants undertaken in December 2010 and an
issue of new ordinary shares and warrants on 30 March 2011, were priced in Canadian Dollars. The Company expects that future
issues of ordinary shares may be priced in Sterling or Canadian Dollars. Expenditure is primarily in Brazilian Real and also in US
Dollars, Sterling, Euros and Australian Dollars.
The functional currency of the Company’s operations is US Dollars, which is also the reporting currency for the Group. The
Group’s cash holdings at the balance sheet date were held in the following currencies:
US Dollar
Canadian Dollar
Sterling
Australian Dollar
Euro
Brazilian Real
Total
Group
31 December
2023
US$
7,619,990
24,108
27,765
15,146
55,777
3,809,245
11,552,031
31 December
2022
US$
3,777,903
68,137
253,751
17,583
202,581
2,876,358
7,196,313
The Group is exposed to foreign currency risk on monetary assets and liabilities, including cash held in currencies other than the
functional currency of operations.
141
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The Group seeks to manage its exposure to this risk by ensuring that the majority of expenditure and cash holdings of individual
subsidiaries within the Group are denominated in the same currency as the functional currency of that subsidiary. Income is
generated in US Dollars. However, this exposure to currency risk is managed where the income is generated by subsidiary entities
whose functional currency is not US Dollars, by either being settled within the Group or by ensuring settlement in the same month
that the sale is transacted where settlement is with a third party. The following table shows a currency analysis of net monetary
assets and liabilities by functional currency of the underlying companies:
Currency of net monetary
asset/(liability)
US Dollar
Canadian Dollar
Sterling
Australian Dollar
Euro
Brazilian Real
Total
Brazilian Real
31 December 2023
US$
–
–
–
–
(885,234)
(9,532,192)
(10,417,426)
Functional currency
Canadian $
31 December 2023
US$
9,787
5,130
–
–
–
–
14,917
United States $
31 December 2023
US$
12,927,431
24,108
(144,045)
15,146
55,777
–
12,878,417
TOTAL
31 December 2023
US$
12,937,218
29,238
(144,045)
15,146
(829,457)
(9,532,192)
2,475,908
The above indicates that the Group’s and the Company’s primary exposure is to exchange rate movements between UK Pounds
Sterling and the US Dollar and the Euro and the Brazilian Real.
The table below shows the impact of changes in exchange rates on the results and financial position of the Group and the
Company.
10% weakening of Brazilian Real
10% strengthening of Brazilian Real
10% weakening of US Dollar
10% strengthening of US Dollar
10% weakening of Brazilian Real
10% strengthening of Brazilian Real
Against US Dollar
US$
(88,523)
88,523
Against Sterling
US$
8,192
(9,584)
Against Euro
US$
(4,148)
4,968
The Group’s main subsidiaries operate in Brazil with their expenditure being principally in Brazilian Real and their financial
statements are maintained in that currency. The Group’s policy for dealing with exchange differences is outlined in the statement
of Significant Accounting Policies under the heading “Foreign currencies”.
The Group does not presently utilise swaps or forward contracts to manage its currency exposures, although such facilities are
considered and may be used where appropriate in the future.
The Group seeks to minimise its exposure to currency risk by closely monitoring exchange rates and holding surplus funds in
currencies considered most appropriate to their expected future utilisation.
Credit risk
The Group’s exposure to credit risk is limited to its cash and cash equivalents and trade and other receivables amounting to
US$21,186,927 (2022: US$17,506,418). It is the Group’s policy to only deposit surplus cash with financial institutions that hold
acceptable credit ratings.
142
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2023
The Group currently sells all of its gold bullion to a single customer. The Group seeks to receive full settlement by bank transfer
on delivery of its product to the purchaser to minimise its exposure to any credit risk on that customer.
During 2023, the Group sold all of its 15 shipments of its copper/gold concentrate production to a single customer, a publicly
quoted metals refining group. Settlement terms were in accordance with industry norms. The customer has a strong reputation
within the industry and has a good credit risk history. As at the balance sheet date there were no amounts owed to the Group
that were overdue (2022: amount overdue: US$Nil).
The Company’s exposure to credit risk amounted to US$20,219,425 (2022: US$19,351,523). Of this amount US$9,788,536 (2022:
US$9,786,036) is due from subsidiary companies, US$7,713,125 represents cash holdings (2022: US$4,156,908) and a significant
portion of the remainder is represented by trade debtors for the sale of copper/gold concentrate.
Since the inception of its operations the Group has incurred no credit losses nor at any time has the Group been required to
consider any impairment of any financial asset. The Group makes its selection of its preferred customers and other credit risk
counterparties having given appropriate consideration to their creditworthiness and reputation. On this basis it considers that
the credit risk associated with its cash and cash equivalents and in respect of its trade and other receivables to be low. At no time
has any customer or credit counterparty been in default of contractual payment terms or sought to vary such terms. The Group
would consider a customer to be in default of their obligations in the event that they failed to make payment on the due date
without prior notification and agreement or having sought a variation of payment terms failed to make settlement by the revised
date. The Group would consider any other credit risk counterparty to be in default of their obligations in the event that they failed
to make payment promptly in accordance with contractual arrangements.
In the event that the Group considered that an event had occurred which might indicate that there was no reasonable expectation
of recovery, the Group would recognise an impairment at that time. At this time and given publicly available knowledge of its
counterparties and their affairs the Group does not consider that it will incur any credit losses in the next 12 month period nor
does it consider that any of its credit risk as at 31 December 2023 has been impaired subsequent to the end of the year.
The Company is exposed to credit risk through amounts due from its subsidiary undertakings. Refer to note 1(t) and note 14 for
details on the credit loss allowance made.
27
Ultimate controlling party
Fratelli Investments Ltd owns 19,318,785 ordinary shares representing 25.5 per cent of the voting shares in issue and Greenstone
Resources II LP owns 19,083,395 ordinary shares representing 25.2 per cent of the voting shares. Both shareholders are completely
independent and neither is therefore considered to be a controlling party.
28
Post balance sheet events
On 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Itau Bank in Brazil. The loan is
repayable as a bullet payment on 6 January 2025 and carries an interest coupon of 8.47 per cent. The proceeds raised from the
loan are being used for working capital and secure adequate liquidity to repay a similar arrangement which was repaid on 22
February 2023.
Except as set out above, there has been no item, transaction or event of a material or unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the continuing operation of the entity, the results of these operations, or the state
of affairs of the entity in future financial periods.
143
Glossary
“actinolite”
“Ag”
“alkalic porphyry”
“albite”
“aplite”
“argillic alteration”
“AISC”
“ANM”
“Au”
“assay”
“biotite”
“breccia”
“brecciation”
“CIM”
“CIP” or “Carbon in
Pulp”
amphibole silicate mineral commonly found in metamorphic rocks, including those surrounding cooled
intrusive igneous rocks
means silver.
A class of copper-porphyry mineral deposits characterised by disseminated mineralisation within and
immediately adjacent to silica-saturated to silica-undersaturated alkalic intrusive centres and being
copper/gold/molybdenum-rich.
is a plagioclase feldspar mineral
An intrusive igneous rock in which the mineral composition is the same as granite, but in which the grains are
much finer
is hydrothermal alteration of wall rock which introduces clay minerals including kaolinite, smectite and illite
means All-In Sustaining Cost – a non IFRS performance measurement established by the World Gold
Council
means the Agencia Nacional de Mineral.
means gold.
in economic geology, means to analyse the proportions of metal in a rock or overburden sample; to
test an ore or mineral for composition, purity, weight or other properties of commercial interest.
A phyllosilicate mineral composed of a silicate of iron, magnesium, potassium, and aluminum found in
crystalline rocks and as an alteration mineral.
a rock composed of large angular broken fragments of minerals or rocks cemented together by a fine-grained
matrix
Describes the process where large angular broken fragments of minerals or rocks become cemented together by
a fine-grained matrix.
means the Canadian Institute of Mining, Metallurgy and Petroleum.
means a process used in gold extraction by addition of cyanide.
“chalcopyrite”
is a sulphide of copper and iron.
“copper porphyry”
“Cu”
“cut-off grade”
“dacite porphyry
intrusive”
“deposit”
“electromagnetics”
“epidote”
“garimpo”
copper ore body formed from hydrothermal fluids. These fluids will be predated by or associated with are
vertical dykes of porphry intrusive rocks
means copper.
the lowest grade of mineralised material that qualifies as ore in a given deposit; rock of the lowest
assay included in an ore estimate.
a silica-rich igneous rock with larger phenocrysts (crystals) within a fine-grained matrix
is a mineralised body which has been physically delineated by sufficient drilling, trenching, and/or
underground work, and found to contain a sufficient average grade of metal or metals to warrant
further exploration and/or development expenditures; such a deposit does not qualify as a
commercially mineable orebody or as containing ore reserves, until final legal, technical, and
economic factors have been resolved.
is a geophysical technique tool measuring the magnetic field generated by subjecting the sub-surface
to electrical currents.
is a calcium aluminium iron sorosilicate mineral
is a local artisanal mining operation
“garimpeiro”
is a local artisanal miner.
“geochemical”
refers to geological information using measurements derived from chemical analysis.
“geophysical”
“geophysical
techniques”
“gold equivalent”
refers to geological information using measurements derived from the use of magnetic and electrical
readings.
include the exploration of an area by exploiting differences in physical properties of different rock
types. Geophysical methods include seismic, magnetic, gravity, induced polarisation and other
techniques; geophysical surveys can be undertaken from the ground or from the air.
refers to quantities of materials other than gold stated in units of gold by reference to relative product
values at prevailing market prices.
144
Glossary
“gossan”
“grade”
“g/t”
is an iron-bearing weathered product that overlies a sulphide deposit.
is the concentration of mineral within the host rock typically quoted as grams per tonne (g/t), parts
per million (ppm) or parts per billion (ppb).
means grams per tonne.
“granodiorite”
is an igneous intrusive rock like granite.
“hectare” or a “ha”
is a unit of measurement equal to 10,000 square metres.
“hematite”
“igneous”
“indicated mineral
resource”
“inferred mineral
resource”
“IP”
“intrusive”
“lithocap”
“measured mineral
resource”
“mineralisation”
is a common iron oxide compound
is a rock that has solidified from molten material or magma.
is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.
is that part of a mineral resource for which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information and sampling
gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes.
refers to induced polarisation, a geophysical technique whereby an electric current is induced into
the sub-surface and the conductivity of the sub-surface is recorded.
is a body of rock that invades older rocks.
Lithocaps are subsurface, broadly stratabound alteration domains that are laterally and vertically extensive.
They form when acidic magmatic-hydrothermal fluids react with wallrocks during ascent towards the
paleosurface.
is that part of a mineral resource for which quantity, grade or quality, densities, shape, and physical
characteristics are so well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support production planning
and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable
exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to
confirm both geological and grade continuity.
the concentration of metals and their chemical compounds within a body of rock.
“mineralised”
refers to rock which contains minerals e.g. iron, copper, gold.
“mineral reserve”
“mineral resource”
is the economically mineable part of a measured or indicated mineral resource demonstrated by at
least a preliminary feasibility study. This study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that demonstrate, at the time of
reporting, that economic extraction can be justified. A mineral reserve includes diluting materials
and allowances for losses that may occur when the material is mined.
is a concentration or occurrence of diamonds, natural solid inorganic material or natural fossilised
organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s
crust in such form and quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics and continuity of a
mineral resource are known, estimated or interpreted from specific geological evidence and
knowledge.
“Mo-Bi-As-Te-W-Sn” Molybdenum-Bismuth-Arsenic-Tellurium-Tungsten-Tin
“magnetite”
Magnetic mineral composed of iron oxide found in intrusive rocks and as an alteration mineral.
“monzodiorite”
Is an intrusive rock formed by slow cooling of underground magma.
“monzogranite”
a biotite rich granite, often part of the later-stage emplacement of a larger granite body.
“mt”
means million tonnes.
145
Glossary
“NI 43-101”
“ore”
“oxides”
“paragenesis”
“phyllic alteration”
“porphry”
“ppm”
means Canadian Securities Administrators’ National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
means a metal or mineral or a combination of these of sufficient value as to quality and quantity to
enable it to be mined at a profit.
are near surface bed-rock which has been weathered and oxidised by long-term exposure to the
effects of water and air.
Is a term used to describe the sequence on relative phases of origination of igneous and metamorphic rocks and
the deposition of ore minerals and rock alteration.
is a hydrothermal alteration zone in a permeable rock that has been affected by circulation of hydrothermal
fluids
any of various granites or igneous rocks with coarse grained crystals
means parts per million.
“proterozoic”
means the geological eon (period) 2.5 billion years ago to 541 million years ago
“pyrite”
an iron sulphide mineral
“quartz-alunite ±
kaolinite”
“saprolite”
“scapolites”
“sulphide”
Alunite is a hydroxylated aluminium potassium sulfate mineral. It presence is typical in areas of advanced
argillic alteration and usually accompanied by the presence of quartz (a crystalline silica mineral) and
sometimes kaolinite.(a clay mineral).
is a weathered or decomposed clay-rich rock.
are a group of rock-forming silicate minerals composed of aluminium, calcium, and sodium silicate with
chlorine, carbonate and sulfate
refers to minerals consisting of a chemical combination of sulphur with a metal.
“tailings”
are the residual waste material that it is produced by the processing of mineralised rock.
“tpd”
“vein”
“VTEM”
“vuggy”
means tonnes per day.
is a generic term to describe an occurrence of mineralised rock within an area of non-mineralised
rock.
refers to versa time domain electromagnetic, a particular variant of time-domain electromagnetic
geophysical survey to prospect for conductive bodies below surface.
a geological feature characterised by irregular cavities or holes within a rock or mineral, often formed by the
dissolution or removal of minerals leaving behind empty spaces
146
Shareholder Information
Company
Serabi Gold plc
UK Office
The Long Barn
Cobham Park Road
Downside
Surrey KT11 3NE
Tel:
+44 (0)20 7246 6830
Registered Office
66 Lincoln’s Inn Fields
London WC2A 3LH
Company Number
5131528
Board of Directors
Michael Lynch Bell – Non-executive Chair
Mike Hodgson – Chief Executive
Clive Line – Finance Director
Luis Azevedo – Non-executive Director
Deborah Gudgeon – Non-executive Director
Carolina Margozzini – Non-executive Director
Mark Sawyer – Non-executive Director
Company Secretary
Kerin Williams
Nominated Adviser
Beaumont Cornish Limited
Building 3, Chiswick Park
566 Chiswick High Road
London W4 5YA
Solicitors – UK
Farrer & Co
66 Lincoln’s Inn Fields
London WC2A 3LH
Travers Smith
10 Snow Hill
London EC1A 2AL
Serabi Mineração S.A.
Av. Getúlio Vargas 671
11th Floor,
Funcionarios,
Belo Horizonte
Minas Gerais
Brazil
Email:
Web: www.serabigold.com
contact@serabigold.com
Auditor
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Legal Counsel – Canada
Peterson McVicar LLP
18 King Street East, Suite 902
Toronto,
Ontario M5C 1C4
Joint Brokers – UK
Peel Hunt LLP
100 Liverpool Street, London, EC2M 2AT
Joint Brokers – UK
Tamesis Partners LLP
125 Old Broad Street, London EC2N 1AR
Registrars – UK
Computershare Investor Services PLC
PO Box 82, The Pavilions
Bridgwater Road
Bristol BS99 7NH
Registrar & Transfer Agent – Canada
Computershare Investor Services Inc
100 University Avenue, 8th Floor
Toronto
Ontario M5J 2Y1
147