Serabi Gold plc
Annual Report
2024
COMPANY NUMBER – 5131528
1
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 shorter-term strategy is to increase production to 60,000 oz pa Au by end 2026 and
become a 100,000 - 200,000 oz 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
2
KEY FIGURES
Revenue
Cash Flow from Operations
$94.54 million (up 48%)
$30.9 million (up by US$18.8m)
Gold Production
Average Grade processed
37,520 ounces (up 13%)
5.71 g/t (down 10%)
Cash Held at 31 December 2024
Bank Borrowings at 31 December 2024
$22.2 million (up by $10.6m)
$5.0 million (unchanged)
Cash Costs per Ounce
AISC per Ounce
$1,326
$1,700
Contents
Inside this report
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Key Figures and Contents
2
Chair’s Introduction
55
Independent Auditor’s Report
93
Chair’s Statement
4
Corporate Governance Report
56
Group Statement of Comprehensive
Income
99
Chief Executive Officer’s Review
6
Audit and Risk Committee Report
67
Group Balance Sheet
100
Mineral Reserves and Resources
10
Remuneration Committee Report
71
Company Balance Sheet
101
Strategy and Business Model
13
Sustainability Committee Report
85
Group Statement of Changes in
Equity
102
Stakeholder Engagement
16
Directors’ Report
87
Company Statement of Changes in
Equity
103
Section 172 Statement
19
Group and Company Cash Flow
Statements
104
Chief Financial Officer‘s Review
21
Notes to the Financial Statements
105
Going Concern and Longer-Term
Prospects
24
Glossary
148
Risks and Controls
26
Corporate Information and Advisers
151
Environmental and Social
35
Non-Financial and Sustainability
Information Statement
43
Strategic Report
3
Strategic Report
Contents
4
Chair’s Statement
6
Chief Executive Officer’s Review
10
Mineral Reserves and Resources
13
Strategy and Business Model
16
Stakeholder Engagement
19
Section 172 Statement
21
Chief Financial Officer‘s Review
24
Going Concern and Longer-Term Prospects
26
Risks and Controls
35
Environmental and Social
43
Non-Financial and Sustainability
Information Statement
Strategic Report
Chair’s Statement
4
Dear Shareholders,
Whilst 2024 was a remarkable year for Serabi, I am pleased
to report that the momentum in our growth has continued
into 2025, as the Company remains on track for executing
its growth strategy, ramping up annual production to
60,000 oz per annum by 2026 year-end and ultimately
growing into a +100,000 oz per annum producer thereafter
through our 2025 and 2026 brownfield exploration
programmes at the Palito Complex and Coringa.
Serabi kicked off the year with the announcement of the
renewal of the 3-year GU trial mining license, a testament to
the support from the Brazilian National Mining Agency -
Agência Nacional de Mineração (“ANM”) and the state
environmental agency - Secretaria de Meio Ambiente e
Sustentabilidade (“SEMAS”), which from a permitting
perspective, underpins our ability in achieving the 60,000 oz
per annum target for 2026. Alongside this, we remain in
pursuit of the Installation License (“LI”) at Coringa, which
awaits final acceptance of the indigenous impact study
(“ECI”) by Fundação Nacional dos Povos Indígenas
(“FUNAI”), the government agency for the indigenous
population.
I am pleased to report that the progress in the ramp up of
Coringa did not end there. Our operations team were able to
install and commission the crusher and ore sorter
(“Classification Plant”) within a span of 10 months.
Additionally,
the
Company
published
an
updated
Preliminary Economic Assessment for the Coringa Mine
outlining the economics of utilizing the Classification Plant
at Coringa with preconcentrated ore being processed at the
Palito Complex. This demonstrated improved economics in
comparison to building a stand-alone processing plant as
contemplated
in
our
2019
Preliminary
Economic
Assessment. Dependent on the success of Phase 2 of our
growth strategy, which has the goal of delineating a
consolidated resource of 1.5 - 2.0 million ounces of gold with
our upcoming brownfield drill programme, we will
maintain the optionality of constructing a stand-alone
processing plant in the future.
I commend the management team for increasing production
13.2% year-over-year. The production growth continues
well into 2025 as guidance was issued by management at
44,000 to 47,000 ozs, demonstrating the focus of the
management team to execute our growth strategy.
The macroeconomic backdrop during 2024 resulted in a rise
in the price of gold, reaching record highs, a trend that has
continued into 2025. Interest rate cuts by the US Federal
Reserve, geopolitical uncertainty in Eastern Europe and the
Middle East, the US Presidential Election, increased global
central bank demand for gold, and market volatility all
contributed to a higher-than-expected realised gold price at
Serabi.
Significant free cash flow generation contributed to a
strengthening balance sheet, as cash grew during the year,
after the capital investment for the installation and
commissioning of the Classification Plant and underground
development at Coringa. At the date of this report, the price
of gold has maintained its elevated levels with multiple
market analysts calling for additional increases to the price
of gold in 2025. Whilst I do not possess a crystal ball, our
operations remain robust at current gold price levels. Given
we don’t have any significant capital investment required
for the year, one can reasonably expect the cash flow
generation of our operations to remain strong.
Our stand-alone strategy envisions growing the Palito
Complex and Coringa into a consolidated +100,000 oz per
annum producer, however, we remain amenable to
inorganic growth opportunities, continuing to utilise a
disciplined approach to M&A. While we do not intend to
pay a dividend for our 2024 results, our policy going
forward will be to make returns to shareholders through
dividends or share buy back programmes of up to 20% to
30% of the Group’s free cash flow, defined as net cash
generated from operating activities less sustaining capital
expenditure and necessary brownfield exploration.
Whilst we believe that the best use of surplus cash in the
short-term would be to further drive organic growth, we
Strategic Report
Chair’s Statement
5
will continue to evaluate investment opportunities and risk
against shareholder return strategies.
In April 2025, we have had personnel changes at the Board
of Directors. I would like to express sincere gratitude to
Mark Sawyer and Carolina Margozzini for their significant
contributions to Serabi during their tenure and wish them
well on all of their future endeavours. Colm Howlin, who
was appointed to the role of Chief Financial Officer on 31
December 2024, joined the Board on 25 April 2025.
My tenure as the Chair of Serabi continues to be exciting.
Having joined the Board in August 2022, I remain pleased to
be part of the transformation the Board and management
have envisioned. Whilst I have no doubt there may be
challenges which lie ahead, I do believe there are many
reasons to remain confident and optimistic for the future of
Serabi. The remainder of the year will be significant for
Serabi, as we embark on Phase 2 of our growth strategy and
plan for positive drilling success through our brownfield
drill programme. 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.
My continuing thanks to the efforts from the management
team and our employees and for the support of my fellow
Board members.
Michael D Lynch-Bell
Chair
29 April 2025
Strategic Report
Chief Executive Officer’s Review
6
2024 was a pivotal year for Serabi with the achievement of
critical milestones in its plans for growth. In January 2024,
the Group announced the receipt a 3-year extension to our
trial mining license (“GUIA”) for Coringa. The GUIA
initiated an investment decision to install the ore crusher
and ore sorter (“Classification Plant”), which was
commissioned on time and on budget in a period of 10
months. Moreover, after two years of operations at
Coringa, the Group’s understanding of the geology and
amenability to ore sorting significantly improved. We
issued a new NI 43-101 compliant updated preliminary
economic assessment (“PEA”) for the Coringa project
outlining our mine plan utilising the Classification Plant
to preconcentrate Coringa ore, effectively trucking
Coringa ore with an estimated grade of 10g/t Au, to be
processed at the Palito Complex, roughly 200km by a
paved, federally-owned, tolled highway. The 2024 PEA
illustrated significant improvement over the previous
study of 2019, and since its publication in late 2024, current
gold prices at the time of this Annual Report only further
add value.
We completed the year with a much balance sheet which
bodes well for the continued growth of Serabi as we target
an annual production run-rate of 60,000 oz by year end
2026, using current processing capacity and longer-term
growth plans to achieve 100,000 oz per year production
with our current mines.
The focus for the Group in the near-term will be on Phase 1
and Phase 2 of our growth strategy. Phase 1 of our strategy
involves the ramp up of consolidated production to 60,000
oz per annum by 2026. Coringa continues to ramp up
production with the utilisation of the benefits of increased
grade and decreased volumes per truckload, and it will be a
matter of executing on our production plan to achieve the
60,000 oz per annum target in 2026. In conjunction with this
Phase 1 ramp up, Phase 2 will commence, as we begin a
brownfield exploration programme designed to grow
current resources from 1.0 million ounces to over 1.5 million
ounces and beyond. The rationale behind this desired
resource growth is to develop into a +100,000 oz per annum
gold producer. During 2025 we will continue to work with
the relevant authorities to secure the full mining permit for
Coringa with the receipt of the Installation License (“LI”).
Operations Overview
The Group significantly improved gold production year on
year by 13.2%, as the increased contribution from Coringa
to production for the year outweighed the lower than
budgeted mined grades at Palito. As Coringa continues its
ramp up, we are forecasting another significant increase in
gold production for 2025, of between 44,000 and 47,000
ounces, with much of the increase coming from Coringa
expansion. Additional mining crews working at Coringa
have been, in part, relocated from Palito. Output from Palito
continues to remain steady and in the near term I continue
to reiterate that the Palito Complex will be a consistent
contributor of 20,000 to 25,000 ounces of gold production
annually, as Coringa ramps up.
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
same methodology used at Palito. The most encouraging
aspect has been the much better level of payability that we
have experienced, compared to our forecasts. Payability is
the percentage of inferred resources that converts to
reserves. This translates into more ounces per vertical metre
of development and in the long term will help drive down
unit production costs.
At the start of 2024 we moved an underground drilling rig
to Coringa with the intention of growing the mineral
resource inventory of the Serra orebody. All previous
exploration drilling has been undertaken from surface and
the underground drilling programme has provided 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.
Strategic Report
Chief Executive Officer’s Review
7
The stark contrast of the quartz veins and the granite waste
lends to the orebody’s high amenability to optical ore
sorting, where waste rock that inevitably enters the run of
mine (ROM) extracted ore stream, can be removed resulting
in a pre-concentrated ore product prior to being trucked to
Palito for processing.
As the Classification Plant was only commissioned at the
end of 2024, 2025 is expected to yield higher head grades
from Coringa as well as bringing mining efficiencies. Before
the Classification Plant was operational, split blasting was
employed to minimise dilution as much as possible; this
however came at a cost as it slows development. The ore
sorting removes the need for split blasting, thereby
accelerating
underground
development
rates
and
ultimately reducing production costs.
The underground development of the Coringa mine made
excellent progress in 2024. In the Serra zone, ore was mined
at levels 260m and 225m, with development almost
complete on levels 225m, 195m, and 165m, whilst the Serra
ramp approached level 130m. While ore was primarily
mined from the Serra zone, the portal in the second zone at
Coringa, Meio was successfully completed in the fourth
quarter of 2024, and the orebody intersected in December
2024.
On permitting at Coringa, in addition to securing the 3 year
GUIA, the Group made significant progress towards
obtaining the Installation License (“LI”). In July 2023, the
Company previously reported that it 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 confirmed the
indigenous communities’ long-term support for Coringa
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 (“ANM”) and the state
environmental agency (“SEMAS”) to renew the existing
GUIA and accompanying Environmental Licenses for
Coringa in January 2024.
The indigenous consultation process for the award of the LI
at Coringa continues. The Group has engaged with the
government
agency
for
the
indigenous
population
(“Fundação Nacional dos Povos Indígenas” or “FUNAI”) to
review the final ECI report and complete the indigenous
consultation process. In April 2024, the Group received
comments from FUNAI pertaining to the ECI, which were
immediately considered by the Group and our responses
accepted by FUNAI. We continue to await the final
acceptance from FUNAI on the ECI, a crucial step in
obtaining our LI, as this is required before SEMAS can
award the LI. It is therefore hoped that this LI will be
awarded in 2025. Without the LI, the GUIA license
nonetheless provides the capacity for Serabi to ramp up
consolidated production to 60,000 oz by 2026.
Exploration work undertaken to date indicates additional
potential along an eight-kilometre northwest-southeast
trending strike, primarily to the north, much of which has
not been exposed by artisanal workings. There are multiple
areas that have seen past artisanal mining but have yet to be
drilled by the Group. Within the permitted area, there are
approximately 30km of continuous soil geochemistry
anomalies, which largely remains to be drilled and some of
which will be a focus in 2025 and onward as we aim to fulfil
Phase 2 of our growth strategy.
There is significant potential to materially grow the resource
in the oncoming years. Whilst in the near term it makes
economic sense to truck preconcentrated ore from Coringa
for processing at Palito, depending on the drilling success of
Phase 2 at both Coringa and Palito, there may eventually be
economic justification for the construction of a dedicated
gold plant, which is an option for the Company if justified
once the LI is received.
Palito
Palito remains as it has for many years, a steady, albeit
modest producer.
2024 production chiefly came from Chico da Santa, but it
also saw the renaissance of the G3 vein and the discovery of
new zones in Barrichello. The Barrichello zone was only
discovered in mid-2023, and such has been its success, it will
now form 50% of the mine production in 2025. The return to
activity into G3 is most welcome. G3 was the backbone of
Palito production from its opening year of production in the
early 2000’s until 2016. Drilling campaigns in 2023 and 2024
have breathed new life into the zone, and 2025 will see
significant development on levels -85m south and below on
Strategic Report
Chief Executive Officer’s Review
8
level -210m. We are also re-entering upper levels as high as
210m, where a previously overlooked part of the vein was
not mined. This area is especially interesting as it is very
close to surface and therefore brings cheap and quick
ounces.
As mentioned above, Chico da Santa did contribute much of
2024 Palito production and the first 6 months of the year saw
some challenges. One of which resulted from the need to
employ bulk mining in the sector where selective mining
had originally been planned. Bulk mining inevitably brings
with it greater, unavoidable dilution and lower than
budgeted head grades. Despite this decision being made
based on safety concerns, sadly we suffered a fatality at
Palito where a mining-related accident resulted in an
employee regrettably succumbing to his injuries weeks
later. As safety remains a top priority at Serabi, in light of
this accident, we have implemented additional controls and
training measures to prevent any future fatal accidents to
the best of our ability as well as hiring a new Chief
Operating Officer who now oversees the Health and Safety
Department.
On a positive note, in the last quarter of 2024, Serabi was
able to return to selective mining in the Chico da Santa
sector, yielding a return to a head grade of >6.0g/t, in-line
with our budget.
Exploration
With the ending of the Exploration Alliance with Vale Base Metals at the start of the second quarter of 2024, the exploration team
was left with a significant amount of exploration data to process. The focus of the year was on interpretation and incorporation
of the ground geophysics and geochemistry conducted, 13,902 metres drilled across 53 drill holes, 24 kilometres of Induced
Polarisation (“IP”) studies completed and 6,772 soil samples taken with the $5 million funding through the Exploration Alliance.
Q1
Q2
Q3
Q4
Fiscal
Q1
Q2
Q3
Q4
Fiscal
2024
2024
2024
2024
2024
2023
2023
2023
2023
2023
Group
Gold production
(1)(2)
Ounces
9,007
9,003
9,489
10,022
37,520
8,005
8,518
8,738
7,891
33,153
Mined ore
Tonnes
56,296
59,564
58,682
50,327
225,049
41,546
41,022
44,744
49,541
176,853
Gold grade (g/t)
5.31
5.06
5.48
6.19
5.49
6.49
6.94
6.64
5.22
6.28
Milled ore
Tonnes
54,521
55,192
54,579
52,363
216,655
39,004
41,116
43,092
48,988
172,201
Gold grade (g/t)
5.38
5.31
5.59
6.21
5.61
6.75
6.84
6.72
5.31
6.35
Horizontal development
Metres
3,131
3,550
3,325
3,511
13,135
2,464
2,977
2,923
3,134
11,498
SUMMARY PRODUCTION STATISTICS FOR 2024 AND 2023
Strategic Report
Chief Executive Officer’s Review
9
The geochemistry results in conjunction with the geophysics
and geological information already available to Serabi,
significantly advanced Serabi’s geological understanding of
geological domains, structures and anomalies that now
need to be validated and tested.
This resulted in over 70 regional targets which were ranked
and prioritised by geochemical results, the level of detail of
the geological knowledge and the location within defined
clusters, amongst other factors. We expect to systematically
drill these targets during Phase 2 of our growth strategy
where we focus on brownfield exploration. High priority
targets include São Domingos where we drilled 7.15m at
258g/t Au in 2021. Results from the second phase of drilling
at São Domingos were highly encouraging, demonstrating
potential for a satellite deposit at the Palito Complex.
With the exploration department’s understanding of the
geology considerably enhanced, I remain optimistic about
Phase 2 of our growth strategy and look forward to sharing
updates as we execute on Phase 2. Meanwhile, with the
Classification Plant at Coringa now commissioned, we will
finally redirect our focus back to brownfield exploration in
2025. I look forward to what is in store for the Company in
2025.
Corporate
Since our last Annual Report, Serabi has made numerous
positive management changes. In 2024, we welcomed
Andrew Khov as Vice President, Investor Relations &
Business Development, based out of Toronto, Ontario,
Canada. Andrew brings considerable experience in mining
capital markets and M&A. In 2025, we promoted Colm
Howlin to Chief Financial Officer and Executive Director, to
replace Clive Line who retired in 2024 after over 20 years
with the Company. Colm has been part of our finance team
for over 11 years and is fluent in Brazilian Portuguese.
Concurrently in 2025, we appointed Marcus Brewster to
Chief Operating Officer. Marcus brings with him extensive
experience in operating roles in West Africa and Brazil, and
is also fluent in Brazilian Portuguese.
Finally, I would like to extend my sincere appreciation and
personal thanks to Clive Line, who retired after over 20
years service at the year end. Clive has worked alongside me
and his support and significant contribution to Serabi
during those many years will be much missed. I wish him
the very best for all of his future endeavours and retirement.
Michael Hodgson
Chief Executive
29 April 2025
Strategic Report
Mineral Reserves and Resources
10
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 resource and reserve figures, these
are estimates based in part on forward-looking information.
Estimates are based on management’s knowledge, mining methods, analysis of drilling results, the quality of available data and
management’s best judgement. There is no assurance that the indicated levels of metal will be produced. For this reason the
estimates are imprecise by nature and therefore, the Group re-estimate the mineral resources and reserves periodically, or when
necessary, using the latest economical and production parameters. Changes on the geological interpretation of certain areas, or
previous assumptions made as to metal price, currency exchange rates, production costs, recovery or operating and capital costs
can change the overall economic outlook and make levels or sectors more or less profitable, economical or feasible.
The most recent mineral resource and reserve estimation for the Coringa mineral complex was published in November 2024. The
most recent estimation for the Palito Complex, incorporating the Palito and São Chico gold deposits, was completed in July 2023.
Both statements were provided by the independent consultancy of NCL Ingeniería y Construcción SpA of Santiago de Chile
(“NCL”), and produced in compliance with Canadian National Instrument 43-101, and which is summarised in the table 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. The mineral resource and reserve estimates for the Coringa
Mine considers all available core drilling, underground chip sampling and other geological sampling by Serabi and previous
operators up until 16 April 2024.
The Palito complex has several orebodies and operates on a full mining licence. The Coringa mine is currently operating under a
trial mining licence with all ore produced from the Coringa mine during 2024 being extracted from the Serra vein. The Meio vein
portal and ramp development commenced during the fourth quarter of 2024 with mineralisation at Meio intersected in December
2024. Meio is expected to contribute significantly to Coringa production in 2025.
In addition to drilling and as part of the resource and reserves estimation process, the mine technical services team regularly
executes mine sampling control, ensuring that the planning models are always informed with the most up to date technical
information.
Strategic Report
Mineral Reserves and Resources
11
The tables below show the Mineral Resource estimates and Mineral Reserve Estimates.
Mineral Resource Estimates
Palito Mineral Resource Statement (effective 31 July 2023)
Notes:
(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.
São Chico Mineral Resource Statement (effective 31 July 2023)
Notes
(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.
Coringa Mineral Resource Statement (effective 6 April 2024)
Notes
(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 3.16g/t gold assuming an underground extraction scenario, an operating cost of $107/t for mining,
crushing and sorting, sorting efficiency of 61% of the tonnes and 1.59 upgrade factor, $88/t for hauling to Palito, processing at Palito plant and site
costs, metallurgical recovery of 97%, 4% on royalties and 2.3% for refining, insurance, freight and sales, and a gold price of $1,950/troy oz.
(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 NCL Ingeniería y Construcción SpA in accordance with the standard of CIM and Canadian National Instrument
43- 101, with an effective date of 6 April 2024 by Mr Nicolás Fuster, who is a Qualified Person under the Canadian National Instrument 43-101.
10100001-RPT-0001 Page 15 Coringa Gold Project, Pará State, Brazil, Technical Report Date: November 13, 2024.
Resource Category
Tonnes (kt)
Au (g/t)
Au (koz)
Measured Resources
772.3
11.03
273.8
Indicated Resources
243.0
8.39
65.6
Measured + Indicated Resources
1,015.3
10.40
339.4
Inferred Resources
674.2
7.02
152.2
Resource Category
Tonnes (kt)
Au (g/t)
Au (koz)
Measured Resources
122.5
8.10
31.9
Indicated Resources
28.5
7.07
6.5
Measured + Indicated Resources
151.0
7.91
38.4
Inferred Resources
8.2
6.53
1.7
Resource Category
Tonnes (kt)
Au (g/t)
Au (koz)
Measured Resources
171.5
8.96
49.4
Indicated Resources
623.2
6.49
130.1
Measured + Indicated Resources
794.7
7.03
179.5
Inferred Resources
1,453.6
5.81
271.3
Strategic Report
Mineral Reserves and Resources
12
(3) NCL believes that the resource estimates shown in the table above meets the CIM standards for a resource estimate based on CIM Standards of
Mineral Resources and Reserves Definitions and Guidelines adopted by the CIM council 10 May, 2014.
Total Group Mineral Resource Statement
Notes:
Please note The Palito and São Chico Mineral Resource and Reserve Estimates were prepared by NCL Ingeniería y Construcción SpA in
accordance with the standard of CIM and NI 43-101, with an effective date of 31 July 2023, the Coringa Mineral Resource and Reserve Estimates
were prepared by NCL Ingeniería y Construcción SpA in accordance with the standard of CIM and NI 43-101, with an effective date of 6 April
2024.
Mineral Reserve Estimates
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.
3) Serabi is the operator and owns 100% of the Palito Mine 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.
Resource Category
Tonnes (kt)
Au (g/t)
Au (koz)
Measured Resources
1,066.3
10.36
355.1
Indicated Resources
894.7
7.03
202.2
Measured + Indicated Resources
1,961.0
8.84
557.3
Inferred Resources
2,136.0
6.19
425.2
Classification
Tonnes (kt)
Au (g/t)
Au (koz)
Palito
Proven
567.8
8.08
147.5
Probable
196.8
6.83
43.2
Total Palito
764.6
7.76
190.8
São Chico
Proven
46.1
8.20
12.2
Probable
14.1
7.68
3.5
Total São Chico
60.2
8.08
15.6
Palito Mining Complex
Proven
614.0
8.09
159.7
Probable
210.8
6.89
46.7
Total Palito Mining Complex
824.8
7.78
206.4
Strategic Report
Strategy and Business Model
13
Serabi has been present in the Tapajós 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.
STRATEGY
LINK TO
PRINCIPAL
RISKS
1.
Sustainable production
2, 3, 5, 6, 7, 8, 9
Producing operations provide the foundation for longer term growth
•
Over 10 years of continuous gold production from the Palito Complex
•
Successful track record of resource replacement
•
Near term production growth to over 60,000 oz pa Au for 2026, is
expected to drive an AISC reduction
2.
Exploration
1, 2, 5, 6
Identify high-quality opportunities through exploration within the
Group’s highly prospective tenement holdings
•
Near mine exploration at Palito and Coringa to target a 1Moz Au
resource at each project
•
84,000ha exploration tenements in the 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
3.
Development
1, 2, 4, 5, 6
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 Pará and Brazil
•
Well established relationships with local communities. Historic
expenditure on community support programmes of over $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 Pará
•
100% Brazilian in-country management
4.
Corporate opportunities
1, 4, 7, 8
The Coringa project is 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
•
Cash balance of US$22.2 million at 31 December 2024 in comparison
to US$11.6 million at 31 December 2023. Net cash position of US$16.2
million (no long-term debt).
•
Robust cash flow generation expected
Strategic Report
Strategy and Business Model
14
Current focus on successful development of its Coringa project.
•
Gold production is already underway with run of mine (“ROM”) ore from the Serra vein being transported to the
process plant at Palito.
•
The Meio vein portal and ramp development commenced during the fourth quarter of 2024 with mineralisation at
Meio intersected in December 2024. Meio is expected to contribute significantly to Coringa’s production in 2025.
•
The classification plant at Coringa was commissioned in December 2024. The ore sorting process reduces the mass
of the ROM ore by more than 50 per cent with grade increasing as a result.
•
Continued production growth forecast in 2025 and 2026.
Evaluate opportunities for organic growth
•
84,000ha exploration tenements in the highly prospective and under-explored Tapajós gold district.
•
Near mine exploration at both Palito and Coringa to target an increase of 1Moz Au resource across both sites.
Modular plant expansion to accommodate increased mined volumes
•
The Company owns mills to add up to an additional 750tpd of processing capacity (more than doubling current
throughput).
•
New satellite discoveries to provide increased ore feed for central Palito plant.
•
“Hub and spoke approach” minimises upfront capital requirements and reduces development risk.
Strategic Report
Strategy and Business Model
15
Growth opportunities from mine development and exploration activities
•
An exploration programme with spend of up to US$9.0 million per year for each of the next two years began in January 2025
with the objective of adding Resource ounces at both the Palito Complex and Coringa sites. For 2025 the budget includes:
o
30,000m of diamond drilling (16,000m at Coringa and 14,000m at the Palito Complex) to test:
▪
Extensions of known ore bodies at both sites.
▪
New IP geophysical targets at Palito.
▪
Anomalous geochemical/geophysical trends at Coringa.
o
100km IP geophysical survey at Coringa covering the Southwestern and Northern portions of the exploration
tenements as well as soil sampling, primarily focused on targets at Demetrio and Sr Domingos.
o
Exploration continues at the Mae de Leite, Come Quieto, Valdete, and Galena veins.
•
In addition to the US$9.0 million exploration programme forecast for 2025, the Group will undertake an underground
resource definition and reserve conversion drilling campaign, targeting 6,000m at the Palito Complex and 13,000m at Coringa.
•
100% of the ore produced at the Coringa mine during 2024 was mined from the Serra vein with ore from the Meio vein
expected to add to production during 2025.
•
Use of ore-sorting and a centralised processing facility significantly reduces upfront project capital costs and eliminates the
significant build, performance and cost over-run risk and environmental impact 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 when necessary.
•
Additional plant capacity can accommodate additional ore feed from new satellite opportunities including a potential re-
start of São Chico and the discovery of new greenfield and brownfield resources at both Coringa and Palito.
Strategic Report
Stakeholder Engagement
16
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
SHAREHOLDERS
FINANCIERS
Why we engage
Why we engage
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.
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.
The Group considers that cash flow
from existing operations provide
enhanced opportunities 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
How we engage
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.
Prospective and existing investors:
• The AGM and Annual and
Quarterly Reports.
• Investor roadshows and
presentations.
• One-on-one investor meetings
with the CEO, CFO, COO and
the VP of Investor Relations &
Business Development.
• Access to the Company’s brokers
and advisers.
• Regular news and project
updates.
• Social media accounts.
One-to-one meetings with the CEO,
CFO, COO and/or the 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 meetings keep providers
of financing solutions appraised of
progress with all aspects of the Group’s
operations.
How the Board engaged
How the Board engaged
How the Board engaged
Executive Board members and
management 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.
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 and management provide
regular interviews and engage in
road shows to supplement
regulatory news announcements.
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
17
GOVERNMENTAL AGENCIES
AND REGULATORS
CONTRACTORS AND
SUPPLERS
LOCAL COMMUNITIES
Why we engage
Why we engage
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.
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.
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 assists 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.
Approximately 68% of the Group’s
workforce reside within the State of
Pará and the Group sources many of its
support services from local businesses.
How we engage
How we engage
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.
The Group has a dedicated
procurement department and a
formal process for adding new
suppliers 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
has 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
How the Board engaged
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
Engagement with contractors and
suppliers is carried out by
members of the management team,
with feedback provided to the
Board.
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.
Strategic Report
Stakeholder Engagement
18
they provide regular feedback to the
Board.
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 are 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.
Strategic Report
Section 172 Statement (Companies Act 2006)
19
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 2024.
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
16 to 18.
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 16 to 18.
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.
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, fulfil its purpose and create
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.
Strategic report on pages 16 to
18.
(b) the interests of the
company’s employees.
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. The whistle blowing reports
Strategic report on pages 16 to
18 and pages 35 to 42.
Strategic Report
Section 172 Statement (Companies Act 2006)
20
and the whistleblowing policy are regularly reviewed by the
Audit and Risk Committee.
(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 16 to
18.
(d) the impact of the
Company’s operations on
the community and the
environment.
The Board recognises the importance of the Group’s operations
on
the
local
community
in
which
it
operates
and the environment. Early and continued engagement with the
local communities is the cornerstone to The Group’s ESG
policies. How the Group’s activities may impact these
communities and the environment is always considered
and monitored closely.
Strategic report on pages 16 to
18 and pages 35 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 16 to
18.
Corporate Governance Report
on pages 56 to 66 .
(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 16 to
18.
Directors’ Report on pages 87 to
91.
Strategic Report
Chief Financial Officer’s Review
21
Overview
2024 was another great year for the Group with gold
production of 37,520 ounces, permitting progress at
Coringa with the renewal for three years of the trial mining
permit, the successful build and commissioning of the
Coringa classification plant and the issuing of a new
Technical Report for the Coringa mine with 180,000 ounces
of Measured and Indicated Resources. More importantly,
despite continued development of the Coringa mine with
increased activity at the Serra vein, as well as the portal
and ramp development commencing at the Meio vein, cash
has also improved, with cash almost doubling, increasing
by US$10.6 million from US$11.6 million at 31st December
2023 to US$22.2 million at 31st December 2024. The Group
has started 2025 positively with an excellent first quarter
being recorded with cash balances further increasing to
US$26.5 million as at 31st March 2025.
During 2024 cash generated from operations and after
capitalised mine development expenditure was US$22.6
million, a significant improvement on the net cash inflow of
US$7.7 million in 2023.
While gold production improved by 13 percent year on year,
sales revenue was up by almost 48 percent as a result of the
strengthening of the gold price during 2024 with the average
gold price achieved during 2024 being up 24 percent in
comparison to the previous year. At the same time total
operating expenses only increased by 10 percent resulting in
Operating Profit being up by US$24.0 million, a 319 percent
increase, and EBITDA of US$35.9 million being up by
US$22.1 million, a 160 percent improvement year on year.
Twelve months ago, we communicated that 2024 would be
another year of investment for the Group as we sought to
continue development of the Coringa mine as well as
installing and commissioning the classification plant at the
Coringa mine. We completed both of these long-term project
plans within the planned timelines and under budget which
is a great reflection on our entire Operations team. This will
allow us to increase production in 2025 to our target of
44,000 - 47,000 ounces with the increase in production
primarily attributable to Coringa, a direct result of the
development work performed over the last 24 months.
The Group currently has a strong Balance Sheet with no
long-term debt and only a short term working capital facility
with a local bank in Brazil worth US$5.0 million. With
US$22.2 million cash in bank at the end of 2024 which
increased to US$26.5 million at the end of first quarter of
2025, the aim of the Group is to use this money as effectively
as possible during 2025 to bring value to all of our
shareholders and we are actively researching and planning
the best way to deploy this cash.
Production for the first quarter of 2025 was positive with
over 10,000 ounces produced and US$4.3 million added to
our bank balance. This strong operational performance
together with the commencement of an exciting exploration
programme involving two diamond drill rigs at both the
Palito Complex and the Coringa mine means the future for
the Group is looking very exciting.
Subject to availability of distributable reserves, dividends
will be paid to shareholders when the Board of Directors
believe it is appropriate and prudent to do so. 2024 was a
year for investment and development and we will continue
to look at both organic and inorganic growth opportunities
which should help the Group fulfil its potential of moving
from the junior mining space into becoming a mid-tier
producer in the medium term.
Strategic Report
Chief Financial Officer’s Review
22
Revenue
For the year ended 31 December 2024, total revenue for the Group was US$94,536,392 in comparison to US$63,707,468 in the prior
year. The Group generated US$30,534,432 (2023: US$31,103,442) in revenue through sales of an estimated 11,178 ounces of gold
sold as copper/gold concentrate (2023: 14,819 ounces) and 26,504 ounces of gold bullion generating revenue of US$64,001,960
(2023: 16,873 ounces for revenue of US$32,604,026)
The average gold price received during 2024 was US$2,407 compared with a price of US$1,945 received during 2023.
Production of gold bullion for the year to 31 December 2024 was 27,087 ounces of gold compared with 17,718 ounces for the
previous year, an increase of 53 per cent.
During the same 12 month period 1,459 wet tonnes of copper/gold concentrate, containing an estimated 10,434 ounces, was
produced (12 months to 31 December 2023: 1,714 wet tonnes of copper/gold concentrate, containing 15,435 ounces of gold). The
unsold material is held as inventory.
Revenue improved by US$30.8 million year on year as a consequence of the higher gold sales which were up by 19 per cent (5,990
ounces) from 31,692 ounces sold during 2023 to 37,682 ounces realised in 2024, as well as the improved average gold price which
improved by 24 per cent from US$1,945 per ounce in 2023 to US$2,407 per ounce in 2024.
12 months ended
December 2024
US$
12 months ended
December 2023
US$
Variance
US$
Concentrate sold (ounces)
11,178
14,819
(3,641)
Bullion sold (ounces)
26,504
16,873
9,631
Total Ounces Sold
37,682
31,692
5,990
Average gold sales price achieved
US$2,407
US$1,945
462
Revenue from Ordinary Activity
Gold (in Concentrate)
26,769,976
27,880,515
(1,110,539)
Copper (in Concentrate)
3,515,045
3,051,879
463,166
Silver (in Concentrate)
249,411
171,048
78,363
Total Concentrate Revenue
30,534,432
31,103,442
(569,010)
Gold Bullion
64,001,960
32,604,026
31,397,934
Total Sales
94,536,392
63,707,468
30,828,924
Costs of sales
Operational costs
48,569,810
40,245,823
8,323,987
Stock impairment provision
(230,000)
230,000
(460,000)
Shipping costs
476,457
1,503,995
(1,027,538)
Treatment charges
667,658
703,381
(35,723)
Royalties
1,226,082
731,540
494,542
Accelerated amortisation of fixed assets
—
1,572,192
(1,572,192)
Amortisation of mine property
2,265,216
2,719,243
(454,027)
Depreciation of plant & equipment
2,008,108
1,948,121
59,987
Total operating costs
54,983,331
49,654,295
5,329,036
Gross profit
39,553,061
14,053,173
25,499,888
Strategic Report
Chief Financial Officer’s Review
23
Costs of sales
Operational costs for the twelve months ended 31 December 2024 were US$48.6 million (2023: US$40.2 million). Operational costs
include those related to the operational mining and administrative expenditures at Palito, Coringa and São Chico and the plant
costs at the Palito Complex where the ore mined from the Palito, São Chico and Coringa deposits is processed. The increase in
operational costs is a direct result of the increase in activity particularly at the Coringa mine.
12 months ended
December 2024
12 months ended
December 2023
Variance
Tonnes mined
225,049
176,853
48,196
Tonnes milled
216,655
172,201
44,454
Ounces produced
37,520
33,153
4,367
Ounces sold
37,682
31,692
5,990
Operating Costs
Labour
20,885
17,306
3,579
Mining consumables & maintenance
16,514
13,684
2,830
Plant consumables
6,557
5,433
1,124
General site
4,614
3,823
791
48,570
40,246
8,324
Operational costs for 2024 are 21 percent higher than in 2023 which reflects the nineteen percent increase in ounces produced. The
decrease in shipping is a result of changing freight providers which has results in more favourable shipping costs. During 2024
the average exchange rate was BrR$5.39 to US$1.00 compared with an average exchange rate of BrR$4.99 to US$1.00 during the
same period of the previous year, an increase of approximately eight per cent.
Whilst Coringa is making a strong contribution to quarterly gold production, management considers that during 2024 the project
remained only in a trial mining phase and not yet considered to be in full operation and therefore had not yet attained commercial
production. Therefore, during 2024 the project costs were not subject to amortisation charges. In accordance with accounting
regulations the gold sales and related operating costs of Coringa are being reflected in the Group’s income statement. The Group
began recording amortisation charges against the value of the Coringa mining property on 1 January 2025 following the renewal
of the 3 year GU trial mining licence and the commissioning of the Classification Plant at the Coringa mine during 2024.
Trade Debtors
The trade debtor balance has decreased by US$0.3 million from US$2.9 million at 31 December 2023 to US$2.6 million at 31
December 2024. This is primarily due to timing differences on the receipt of sales proceeds from the sales of copper concentrate.
Borrowings
On 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement which carried an interest coupon of 8.47
per cent with Itaú Bank in Brazil. The proceeds raised from the loan were used for working capital requirements. The loan was
repaid on 6 January 2025. On 22 January 2025 the Group secured a new US$5.0 million loan from Banco Santander. The new
Santander loan is repayable as a bullet payment on 21 January 2026 and carries an interest coupon of 6.16 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.
Lastly, I would personally like to thank our outgoing CFO, Clive Line, for all his mentoring during the eleven years that we shared
together and his continued support during the transition phase as I have stepped into the CFO role.
Colm Howlin
Chief Financial Officer
29 April 2025
Strategic Report
Going Concern and Longer-Term Prospects
24
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 2024, the Group held cash of US$22.2 million. It has subsequently reported that at 31
March 2025 it held cash of US$26.5 million, an increase of US$4.3 million during the first quarter of 2025.
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 cash flow models and forecasts as required to take
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$2,500 per ounce in 2025 and 2026;
average exchange rate of BRL5.60 to USD1.00 in 2025 and 2026;
gold production in line with published guidance;
ore recovered from mining operations at Coringa continuing to be transported to the Palito Complex for processing; 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 for a period of
at least 12 months from the date of this report to fund ongoing working capital requirements. The Group currently has access to
an undrawn, unsecured lending facility with a major international bank that could replace the existing 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 2025, the gold price, quoted in US Dollars, has traded above the levels of the base case scenario, and during April
has traded at a price in excess of US$3,400 per ounce. Over the same period the exchange rate between the US Dollar and the
Brazilian Real has been above the 5.60 rate assumed in the base case scenario. 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.
Strategic Report
Going Concern and Longer-Term Prospects
25
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 13 to 15, whilst
factoring in the Group’s principal risks and uncertainties (pages 26 to 34). 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$2,500 per ounce and an exchange rate of BRL5.60 to
USD1.00), and assuming that Coringa production ramps up in a similar manner to that projected in the 2024 Preliminary Economic
Assessment, 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.
Strategic Report
Risks and Controls
26
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 that 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 the 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 and Risk 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 and Risk Committee meets at least four times during a year. The Committee discusses the annual audit approach and
plan with the External Auditor as well as the key risk areas for the financial statements. The Committee reviews and recommends
the annual financial statements and all interim financial statements to the Board.
The Audit and Risk 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.
•
Assisting the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance
of proper internal business, and operational and financial controls.
•
Reviewing the adequacy of accounting and financial controls together with the implementation of any associated
recommendations of the external auditor.
Strategic Report
Risks and Controls
27
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
Link to going
concern
assessment
Link to Strategy and Business Model
Sustainable
production
Exploration
Development
Acquisition
1
Capital and funding requirements for
development of new projects
●
●
2
Geological risk
●
●
●
●
3
Mining risk
●
●
4
Project development risk
●
●
5
Licencing and environmental risk
●
●
●
●
6
Personnel and expertise
●
●
●
7
Gold prices and exchange rates
●
●
●
8
Bribery and corruption
●
●
9
Litigation
●
Current risk assessment matrix
Increasing
likelihood
Almost
certain
Likely
Possible
Unlikely
Rare
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.
Strategic Report
Risks and Controls
28
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 and Risk 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 set out 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 and Risk 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 and to date are:
•
Regular Board meetings to consider the schedule of matters reserved for Directors’ consideration;
•
A risk management process
•
Initial internal gap analysis programme began during the first quarter of 2025, as the first step in developing an internal
audit function.
•
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.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
29
Key
Risk has decreased
No change
Risk has increased
1. Capital and funding requirements for development of new projects
The Group requires access to capital in order to develop its Coringa Mine 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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Impairment of development assets.
Impairment of exploration assets.
Ability to replace and grow mineral resource
inventory.
Loss of value for stakeholders.
Major new project developments need to
have certainty of being fully funded
before any construction and/or
development decision can be taken.
Delays in start-up are unlikely to result
in revocation of licences or other
authorisations.
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.
Continued improvement in the gold
price which is currently above US$3,200
an ounce compared to a gold price of
US$2,610 at 31 December 2024 has
provided improved potential for cash
generation both from existing and new
projects reducing risk for lenders.
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.
The cash position of the Group at the
end of 2024 is significantly stronger than
at the end of 2023. The ramp up in
activity at the Coringa Mine during 2024
has progressed in line with management
plans.
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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Reduction in gold production and associated
cash flow.
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.
In November 2023, the Group published
an updated Reserve and Resource
estimate for the Palito Complex
confirming 378,000 ounces in the
Measured and Indicated category as
well as 154,000 in the Inferred category.
In November 2024, the Group published
an updated Reserve and Resource
estimate for the Coringa Complex
confirming 179,000 ounces in the
Measured and Indicated category as
well as 271,000 in the Inferred category.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
30
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.
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.
The mine development of the Serra Vein
system at Coringa has resulted in better
than predicted results in particular
higher levels of payability.
During the fourth quarter of 2024,
development of the Meio vein began
which will provide access to an
additional ore body and increased
production during 2025.
Management concludes that geological
risk to its current mining operations has
reduced based on the results derived
during 2024.
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
Mitigation
Risk Movement
Reduction in gold production and associated
cash flow.
Cessation or suspension of mine activity.
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.
The continued development of the
Coringa Mine during 2024 and in
particular with the opening of the portal
of the Meio vein, 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.
4. Project development risk
The Group’s Coringa Mine 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
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
31
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’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 158mRL
approximately 190 metres below surface
without encountering any significant
issues.
The Group has trialled successfully and
now implemented on a commercial scale
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.
During the fourth quarter of 2024, a new
43-101 compliant technical report on the
Coringa Mine was issued. The
commissioning of the ore sorter at the
Coringa Mine has reduced development
risk, lowered capital costs and therefore
financing needs.
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 prevailing metal
prices and exchange rates.
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
Mitigation
Risk Movement
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.
The Group has operated in the Tapajós
region of Pará, 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.
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.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
32
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.
In July 2023, the Group, executed an
agreement with the indigenous
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
the next 24 months that will allow for a
significant reduction in the Group’s CO2
emissions. Nonetheless the Group’s
greenhouse gas emissions intensity of
532kgs CO2.-e/ oz Au is 33% lower than
the industry average.
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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Increased staffing costs as a result in increased
salary levels required for staff retention.
Reduced productivity as a result of higher
staff turnover, unfilled vacancies and reduced
experience and skill levels.
The Group seeks to provide attractive
remuneration and benefits arrangements
for its staff, designed to attract and
retain key employees.
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.
During 2024, The Group increased
activity at the Coringa Mine which
resulted in an increase in the number of
staff employed by the Group. The Group
has been a significant employer in the
region for a number of years with little
competition from other mining
companies.
Tocantinzinho Gold Mine located
approximately 60 kms from the Palito
Complex commenced development
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
33
6. Personnel and expertise
during 2023 and had a negative impact
on the level of staff turnover during
2023.
Tocantinzinho announced commercial
production in 2024 and have therefore
reached the maximum projected levels
of employment. As a result, the Group
experienced a reduction in the level of
staff turnover during 2024 which has
helped to maintain momentum in the
operations.
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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Reduced operating margins and cash flow
generation.
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.
Gold prices in BRL increased
significantly during 2024 with the
average price of BRL12,870 per ounce
being 33% higher than the average price
for 2023.
The price has continued to increase,
reaching all time highs above BRL19,000
per oz during the first four months of
2025, an increase of 48% in comparison
to the full year average price in 2024.
The average gold price achieved by the
Group during 2024 was US$2,407, an
increase of 24% in comparison to 2023.
During the first four months of 2025, the
gold price has reached all time highs
above US$3,400 per ounce.
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$5.80 to USD$1.00 for 2025.
Strategic Report
Risks and Controls
Principal Risks and Uncertainties
34
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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Loss of licences may lead to cessation of
production, inability to develop projects or
limit exploration opportunities.
Engagement in bribery is likely to limit the
Group’s competitiveness in the marketplace
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.
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.
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.
Change in risk level
Potential Impact
Mitigation
Risk Movement
Uncertainty over the level of potential
compensations claims as actions may be
vexatious or frivolous.
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 has robust recruitment and
HR measures, medical monitoring and
accident recording and prevention to
minimise the potential for spurious
accident or medically related claims.
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.
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 counterclaimed for
wrongful dismissal. The matter was
resolved during the fourth quarter of
2024.
Strategic Report
Environmental and Social
35
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.
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 2024 calendar year.
Key highlights
•
Compliance with all legal, environmental and regulatory requirements to operate
•
Continued improvement in health & safety with only Four Lost Time Injuries (LTIs) reported in the year, however it is
disappointing to report that we had one fatality at the Palito mine in 2024.
•
Responsible environmental stewardship with
➢
small footprint from underground mines with no conventional tailing’s 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
➢
52% of waste recycled or repurposed
•
Greenhouse Gas Emissions remain well below industry average with Scope 1+2 emissions of 0.53t CO2 equivalent per
ounce of gold produced in 2024, compared with 0.42t CO2 e/oz in 2023 an increase of 27% year on year. This is a result
of the increased activity at the Coringa Mine and due to the need to increase the use of diesel generators at the Palito
mine during 2024 as a result of the unstable power supply from the grid at Palito.
•
Supporting the local economy:
➢
68% of employment sourced from Pará State (69% in 2023).
➢
46% of procurement of goods and services sourced from Pará State (46% in 2023)
•
Community & stakeholder support and engagement:
➢
137 community / stakeholder meetings held.
➢
investment of US$420,000 in community programmes.
➢
investment of US$340,000 in environmental management programmes.
➢
investment of US$41,000 in refurbishment of the Agamenon da Silva Menezes Municipal Auditorium in Novo
Progresso.
➢
21,681 hours of training.
➢
clean water and electricity to local communities.
➢
40 km of road and infrastructure maintenance.
➢
support for local indigenous communities.
➢
over 2,200 school children supported with the donation of musical instruments, support for sports events and
awareness campaigns, in addition to help with infrastructure and equipment.
Strategic Report
Environmental and Social
36
➢
2,200 people from the local communities, passed through the Company’s environmental education
programmes.
➢
1,200 community residents received medical support.
➢
20 people participated in Young Apprentice programme
•
Establishment of a committee of the Board of Directors with specific responsibility for monitoring ESG performance.
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 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 2024, 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
Serabi continues to demonstrate a strong
commitment to employee health and workplace
safety through ongoing investment in established
initiatives. The Group maintains two key
programmes—the Risk Management Programme
(PGR) and the Occupational Health and Medical
Monitoring Programme (PCMSO)—which are
reinforced by the Internal Commission for
Accident Prevention (CIPA) and the Daily Health,
Safety and Environment (DSSMA) initiative.
These initiatives play a vital role in sustaining a
culture of safety by promoting awareness and encouraging best practices to help prevent workplace accidents.
During 2024, a total of 37,599 hours of safety training was provided to employees, an average of 44 hours per employee, (2023:
16,646 hours, average of 25 hours per employee).
Injury rates remained low during the year with four Lost-Time Injuries (“LTIs”) reported and six Total Reportable Injuries
(“TRIs”) compared with two and six respectively in 2023. However, the Company experienced one fatality during the year where
a mining related accident resulted in an employee succumbing to his injuries several weeks later. The Group has implemented
additional controls and training measures to prevent any future fatal accidents, as well as hiring a new Chief Operating Officer
who will oversee the Health and Safety Department.
Strategic Report
Environmental and Social
37
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.
Environmental Stewardship
Operating within the Amazon basin brings additional responsibility on Serabi as well as added scrutiny. The Company welcomes
this scrutiny and always 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 allows the
Company to identify any issues that may arise and address them. Sixty-seven 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.
In addition to the monitoring described above, the Company 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 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.
Distribution of environmental monitoring stations operated by Serabi
Strategic Report
Environmental and Social
38
Serabi has a nursery in which it grows native trees for rehabilitating deforested areas including areas licenced for suppression by
the Company to undertake exploration activities and areas impacted by historic artisanal mining activity.
During 2024, a programme of reforestation around the Palito Complex has been undertaken with the planting of 331 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.
Strategic Report
Environmental and Social
39
Serabi aims to maximise the amount of process plant water it recycles to minimise its freshwater demand. In total, 46% of process
water was recycled during 2024, up from 24% during 2023 following modifications in the process plant. The overall water usage,
however, increased by almost 49% from 270,000m3 in 2023 to 403,013m3 in 2024.
In addition, the Company has a policy of recycling as much waste material as possible, achieving a level of 65% during the year
compared with 73% in 2023.
Supporting the local economy:
Serabi seeks to ensure its activity maximises the benefits to the local region. 68% of employees come from Pará State and 24% are
from the immediate communities. Whilst this latter figure is down slightly compared with 2023, it reflects the transfer of staff
from the Group’s Palito Complex to the Coringa Mine during the ramp up in activity. Year on year we continue to try and increase
the numbers of staff recruited from both the neighbouring communities and the wider State of Pará. In addition, the Company
tries to maximise its procurement of goods and services locally, sourcing US$12.8 million (46%) of its requirements from within
Pará State including US$10.3 million (37%) sourced from within 100km of its operating sites.
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 137 meetings were organised
by the team, and the company supported 35 initiatives for the local
communities and made several separate donations during the year. It is
estimated that the impact of these actions benefitted over 7,000 residents.
Our staff have also run health awareness campaigns in the local communities,
initiated programmes for environmental educational including waste disposal
and recycling facilities, and provided continued support for local vaccination
programmes.
We have also established partnerships with key groups including the City Hall
of Novo Progresso and Lions Club International for road maintenance
activities and health projects respectively.
Throughout 2024, Serabi has demonstrated a
strong commitment to the social and economic
development of neighbouring communities by
providing consistent financial support for
education and training initiatives. As part of
this effort, the Group has sponsored a variety
of
professional
training
and
income-
generation programmes aimed at enhancing
local capacity and promoting sustainable
livelihoods.
These
initiatives
included
specialised courses such as Sausage and
Smoked Meat Production, Bakery, and Dairy
Product Processing, held in communities such
as PDS Terra Nossa and Jardim do Ouro. By
investing in these programs, Serabi has not
Strategic Report
Environmental and Social
40
only contributed to skill development but also empowered community members
with practical tools to generate income and improve their quality of life.
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 apprentice’s programme providing an opportunity for
young people to prepare for working life, and are developing a technical training
programme for young adults.
The Environmental Scouts Project was launched with the objective of educating
and engaging young individuals in sustainable practices within the Jardim do
Ouro community. The initiative included classes and activities focused on
environmental
awareness,
sustainability,
recycling,
waste
management,
reforestation, protection of local fauna and flora, and the prevention of forest fires.
Historic direct expenditure on community support programmes has reached
over $2 million since the beginning of 2017 in addition to the time and effort of
our own employees involved in delivering these programmes.
Strategic Report
Environmental and Social
41
Community health
Serabi, through its own medical staff, supports communities such as São Chico and Jardim do Ouro with medical and emergency
care and for more serious cases the Group provides an ambulance to take patients to hospitals.
Strategic Report
Environmental and Social
42
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 2024, working alongside it’s long-term
consultants and in collaboration with FUNAI, the government agency for
indigenous communities, updated the impact assessment study for the
Group’s Coringa Mine. During this process we have continued to receive
positive support and encouragement from the indigenous communities.
Diversity
The following tables summarises the levels of staff, by gender, employed by the Group at the end of 2024 and at the end of 2023.
Male
Female
Staff levels at the end of 2024
Number
(per cent)
Number
(per cent)
Board
5
71%
2
29%
Administrative Offices
8
57%
6
43%
Palito Mine
540
93%
41
7%
São Chico Mine
5
83%
1
17%
Coringa Mine
272
94%
16
6%
Male
Female
Staff levels at the end of 2023
Number
(per cent)
Number
(per cent)
Board
5
71%
2
29%
Administrative Offices
9
60%
6
40%
Palito Mine
516
94%
32
6%
São Chico Mine
5
83%
1
17%
Coringa Mine
141
93%
10
7%
Strategic Report
Non-Financial and Sustainability Information Statement
43
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
Disclose
the
organisation’s
governance around climate-related
risks and opportunities.
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.
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.
b)
Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial
planning.
c)
Describe the resilience of the organisation’s strategy, taking
into
consideration
different
climate-related
scenarios,
including a 2°C or lower scenario.
Read more on
pages 45 to 50.
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-
related risks.
c)
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Read more on
page 50.
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.
b)
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
Read more on
pages 50 to 51.
Strategic Report
Non-Financial and Sustainability Information Statement
44
Governance
In line with the UK Listing Rules, and the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022
(SI 2022/31), the Company confirms that its 2024 Annual Report includes climate-related financial disclosures consistent with the
Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations, and that areas of non-compliance with the TCFD
recommendations have been appropriately identified. This section contains the relevant disclosures or otherwise provides cross-
references where the disclosures are located elsewhere in the report.
Disclose the organisation’s governance around climate-related risks and opportunities.
Serabi Gold recognises the importance of adopting a sound framework that supports the business to enhance the sustainability of
our resources and the environment.
Our commitment to sustainability is integral to our long-term growth strategy, and our governance framework has been designed
to ensure accountability and robust decision-making processes regarding environmental concerns.
a)
Describe the Board’s oversight of climate-related risks and opportunities.
Board oversight
The Board has ultimate responsibility for overseeing the Group’s sustainability strategy, including climate-related risks and
opportunities. The Board actively reviews and approves climate-related objectives, ensuring these are integrated into corporate
strategy and risk management frameworks. Climate-related risks are treated with the same importance as other principal risks to
the business.
Board Committees
The Board has established a Sustainability Committee (SC) to provide dedicated oversight of environmental, social, and
governance issues. This committee comprises the Chair of the Board (who also chairs the SC), a Non-executive Director, and the
Chief Executive Officer. The SC convenes quarterly and presents climate-related updates to the Board, ensuring that climate-
related considerations are aligned with corporate targets and strategic decisions.
The SC collaborates closely with the Audit and Risk Committee (ARC) to assess risks and ensure climate-related risks are
incorporated into the company’s risk management framework.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
Management plays a critical role in executing climate-related strategy.
Chief Executive Officer (CEO)
The CEO plays a pivotal role in ensuring Serabi Gold’s climate strategy is executed in alignment with the Board’s vision. The CEO
leads strategic climate initiatives and ensures accountability throughout the organisation by working closely with key teams and
committees. Regular reporting on climate progress, key performance metrics, and alignment with strategy is provided to the
Board and the SC by the CEO.
Site Management
On-site leadership teams, including department heads and operational managers, are responsible for implementing climate-
related policies and initiatives. They manage environmental data collection, risk assessment, and ESG performance monitoring.
The Environmental, Social, and Health & Safety Department leads this effort, gathering information submitted by operational
departments and ensuring accurate and comprehensive reporting Monthly and quarterly performance reports on environmental
data, key climate risks, and ESG progress are compiled for review by the SC and Board.
Strategic Report
Non-Financial and Sustainability Information Statement
45
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.
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
planning.
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
The Group recognises climate change as a material risk to its operations and long-term value and we integrate climate-related
considerations into our overall risk framework accordingly. Across the short, medium, and long-term time horizons, we have
identified a range of risks and opportunities associated with both the physical impacts of climate change and the broader global
transition to a low-carbon economy.
In the short term, the Group faces primarily transition-related risks. These include increased costs of raw materials and fuel
stemming from carbon tariffs and excise taxes, along with tightening climate reporting regulations that may demand enhanced
emissions disclosure and supply chain tracking. However, this period also presents immediate opportunities. Improvements in
regional hydroelectric infrastructure may enable us to reduce our reliance on diesel generation, helping to lower emissions and
energy costs.
Over the medium term, regulatory risks are expected to grow as national and international climate policies evolve. Brazil’s
increasing commitment to its Nationally Determined Contribution targets could require operational changes, while investor
expectations around ESG performance may influence access to capital. Equipment replacement cycles may also necessitate
upgrades to accommodate alternative fuels. At the same time, we see opportunities in the advancement of nature-based solutions,
such as reforestation and biodiversity actions, that can contribute to carbon reduction goals and enhance the Group's
environmental value proposition.
In the long term, reputational and market-related risks are likely to intensify. Stakeholders, including investors and communities,
may exert greater pressure on companies to demonstrate alignment with decarbonisation goals. Failure to meet such expectations
could limit financing options or jeopardise the Group’s social licence to operate. However, gold's historical role as a hedge during
uncertain times and its emerging uses in clean technology suggest potential long-term demand stability. The Group’s focus on
high-grade, low-impact mining positions the Company to benefit from this changing landscape.
BOARD
MANAGEMENT
Strategy & Targets
Strategy & Targets
SUSTAINABILITY
COMMITTEE
AUDIT & RISK
COMMITTEE
REMUNERATION & PEOPLE
COMMITTEE
Risks, Data & Progress
CHIEF EXECUTIVE OFFICER
SITE MANAGEMENT
ENVIRONMENTAL, SOCIAL
AND HEALTH & SAFETY
DEPARTMENT
OPERATIONAL
DEPARTMENTS
BOARD OF DIRECTORS
Risks, Data & Progress
Strategy & Targets
Risks, Data & Progress
Strategic Report
Non-Financial and Sustainability Information Statement
46
Physical Climate Risks – Scenario Analysis
We have assessed the physical climate risks affecting our operations under two climate scenarios: a moderate emissions scenario
(SSP2-4.5) and a high emissions scenario (SSP5-8.5). These scenarios have been applied across the short-term, medium-term and
long-term timeframes.
The following table presents the projected physical risks under each scenario, reflecting expected trends and potential operational
impacts:
Physical Risk
Short-Term
(1-2 years)
Medium-Term
(3-5 years)
Long-Term
(>5 years)
Risk Trend
Extreme
Rainfall &
Flooding
SSP2-4.5: Heavy rainfall events
remain a regular occurrence in
the Amazon wet season. Near-
term rainfall intensity is projected
to stay within historical ranges.
Localised flooding remains a
seasonal but manageable
challenge.
SSP2-4.5: Intense rainstorms
are projected to remain within
historical variability, with no
significant change in flood risk
in the medium-term.
SSP2-4.5: Rainfall levels and
flood risk are projected to remain
stable through to 2040.
Steady
SSP5-8.5: No significant changes
to rainfall intensity are projected,
with no resultant change to flood
risk anticipated.
SSP5-8.5: Similarly, total
rainfall and storm intensity
show little projected change
through to 2030. Flood risk at
site stays comparable to today.
SSP5-8.5: There is a slight
downward trend in projected
annual rainfall, with peak storm
intensity remaining stable. Flood
risk is considered to remain
steady or slightly decrease.
Slightly
Decreasing
Drought &
Water Scarcity
SSP2-4.5: Drought risk is low but
emerging. Short dry spells may
lengthen marginally (by a few
days) in the short-term.
SSP2-4.5: There is a moderate
projected increase in dry-season
intensity with longer dry spells
expected occasionally, although
this is manageable with current
water sourcing strategies.
SSP2-4.5: There is a persistent but
manageable projected extension
to the dry season. Adaptation to
these events is possible with
existing planning tools.
Slightly
Increasing
SSP5-8.5: A slightly higher
probability of infrequent drought
conditions could result in brief
operational water-stress, but the
risk remains consistent with
today.
SSP5-8.5: There is a growing
risk of deeper dry seasons and
water scarcity events could
become less rare than previous
decades.
SSP5-8.5: Drought conditions are
projected to become more
prevalent over time under a high
emissions scenario. By 2040
drought conditions could occur
roughly twice as often as in the
past.
Increasing
Extreme Heat
SSP2-4.5: Average temperatures
are rising gradually. In the short-
term, maximum daily
temperatures could rise by
around +0.7°C above recent
historical averages.
SSP2-4.5: Incremental warming
continues with maximum daily
temperatures and heat index
days >35°C increasing. Sporadic
extreme heat events may have
minor productivity impacts.
SSP2-4.5: Continued warming is
expected with average maximum
temperatures projected to be ~1°C
higher than past years and with
the number of days with a heat
index >35°C projected to increase.
Increasing
SSP5-8.5: Maximum daily
temperatures are projected to
increase by around +0.7°C above
recent historical averages, though
heat index days >35°C remain
infrequent, limiting the risk of
heat-related impacts in the short-
term.
SSP5-8.5: More pronounced
heat increases are projected.
Peak temperatures could
occasionally reach the high-
30s°C and elevated heat index
days (>35°C) become more
common, resulting in a
marginal increase in heat stress
exposure for personnel and
equipment.
SSP5-8.5: Extreme heat becomes
a more salient risk under a high
emissions scenario. An
exceptionally hot year today
could be routine by 2040, and the
hottest years may be ~2°C
warmer than historical records,
impacting worker health and
overheating of equipment.
Increasing
Strategic Report
Non-Financial and Sustainability Information Statement
47
Physical Risk
Short-Term
(1-2 years)
Medium-Term
(3-5 years)
Long-Term
(>5 years)
Risk Trend
Wildfires
SSP2-4.5: True rainforest (floresta
úmida) does not burn easily, and
wildfire risk remains low due to
surrounding rainforest humidity.
There is no notable increase in
dry season ignition likelihood.
SSP2-4.5: Wildfire risk remains
low with substantial forest
cover and humidity limiting
fire spread near the mine sites.
SSP2-4.5: A gradual fire risk is
expected in the long-term due to
marginal exposure increases from
projected lengthening of the dry
season and nearby deforestation
activities.
Slightly
Increasing
SSP5-8.5: Projected increases in
dry season duration could elevate
wildfire potential, albeit only
marginally.
SSP5-8.5: Wildfire risk rises in
deforested and degraded areas
under a high emissions
scenario with projected
increases in temperature and
extended duration of the dry
season.
SSP5-8.5: Hotter, drier
conditions, coupled with regional
deforestation activities could see
a higher frequency of wildfires
than today, though the mines
themselves are not in high
ignition zones.
Slightly
Increasing
These findings suggest that whilst the region will likely continue to face intense rainfall and warm temperatures, the overall
pattern of physical climate change impacts is manageable within the context of current mine life projections. Drought and heat-
related risks are expected to increase in a high-emissions scenario, warranting proactive water management and worker safety
planning, while flooding and extreme precipitation are forecast to remain within historical norms, indicating that existing
infrastructure and mitigation systems can continue to support site resilience.
Climate Change Transition Risks
We have assessed the potential for transition risks under evolving policy, legal, technological, and market frameworks. These
risks arise from the broader move toward a low-carbon economy and reflect the Company’s exposure to changes in regulation,
energy systems, and stakeholder expectations.
The following table summarises our transition risks and opportunities across the short, medium, and long term:
Risk/Opportunity
Area
Description
Impact
Probability
Mitigation
Short Term (1-2 years)
Risk
Supply Chain
& Carbon
Costs
Introduction of carbon-related
tariffs or fuel tax increases could
raise the cost of key inputs
(diesel, power). For example,
suppliers may pass on costs from
Brazil’s implicit carbon pricing
on diesel.
Low
High
The Company is taking action to
significantly reduce its usage of fossil
based fuel products and to improve
energy efficiency to minimise potential
impacts.
Risk
Legal
New climate disclosure
requirements or supply chain
due diligence laws could impose
additional compliance burden.
Low
Medium
The Company is working on
expanding its emissions data capture
to include Scope 3 and strengthening
its ESG reporting processes.
Opportunity
Renewable
Energy
An improvement in the regional
grid infrastructure will allow
greater availability and use of
hydroelectric power as an energy
source, allowing the company to
transition away from diesel-
powered energy sources.
MediumMedium
The Company is working with the
local energy utility 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.
Strategic Report
Non-Financial and Sustainability Information Statement
48
Risk/Opportunity
Area
Description
Impact
Probability
Mitigation
Medium Term (3-5 years)
Risk
Legal
Legislative change requiring the
business to implement process
changes to reduce climate
impacts.
MediumMedium
The Group works closely with
advisers to anticipate any impending
legislative changes and is ready to
adapt processes if required.
Risk
Capital costs
Climate risk and ESG scores
could increasingly influence
access to finance.
Banks and investors may impose
higher cost of capital for carbon-
intensive operations.
Low
Medium
The Group targets high-grade mineral
opportunities that have small carbon
footprints, low water requirements,
and minimal impact on flora and
fauna, thereby inherently lowering
their carbon intensity.
Continuing to improve climate
disclosures and performance will help
maintain investor confidence.
Risk
Equipment
costs
Transitioning away from diesel
equipment (e.g. adopting electric
mining fleets) could incur
additional costs in the medium
term, if regulations or economics
force a shift to low-carbon
equipment.
Low
Medium
The Group considers emerging
technology for phased fleet
replacement, evaluating hybrid or
electric fleet options in its upcoming
procurement cycles.
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 or
providing value through carbon
credits or similar schemes.
Low
Medium
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 and
biodiversity benefits of these
programmes.
Long Term (greater than 5 years)
Risk
Reputation –
Access to
capital
Investor demand for sustainable
mining and increased focus on
environmental and climate
related disclosures may lead to
an increased cost of capital or
inability to access capital.
MediumMedium
The Group proactively discloses
climate performance and is
continuously improving
policies/procedures for GHG
reduction. Engaging stakeholders with
transparent ESG reporting will help
maintain trust.
Risk
Reputation –
Social
Communities and regulators may
become less tolerant of projects
with heavy environmental
footprints. A failure to curtail
emissions or local environmental
impacts could lead to social
challenges.
MediumMedium
The Group strives to ensure that its
environmental and climate related
programmes are actively disclosed to
the public to minimise negative
perceptions and engages with local
communities to demonstrate itself as a
climate-conscious business.
Risk and
Opportunity
Markets and
Economy
Environmental pressure may
reduce the demand for luxury
items affecting prices for precious
metals.
MediumMedium
Cultural history supports significant
personal demand for jewellery (~45%
of demand) and is less likely to be
swayed by environmental
considerations.
Strategic Report
Non-Financial and Sustainability Information Statement
49
Risk/Opportunity
Area
Description
Impact
Probability
Mitigation
Conversely, heightened market
volatility and uncertainty from
climate-related risks will likely
support the demand for gold as
risk hedge and market insurance
asset.
Gold for investment accounts for ~47%
to 50% of demand with no obvious
alternative.
Opportunity
Emerging
Technology
Gold could play a role in
emerging clean technologies (e.g.
gold used in advanced
electronics, fuel cells, or as a
catalyst). Should such
applications scale up, gold
demand could get a structural
boost.
Low
Low
An increase in the demand for gold as
a potential supply component in
climate-related future technologies
could increase the value of gold.
This analysis highlights that while the most significant risks are currently of low to moderate likelihood and impact, their potential
significance increases over time, particularly under more ambitious climate policy scenarios. Our transition risk strategy focuses
on reducing fossil fuel reliance, improving energy efficiency, enhancing disclosure practices, and exploring renewable energy
alternatives to ensure long-term operational and financial resilience.
Impacts on Business Model and Financial Planning
The Group’s core business of gold mining is expected to remain resilient in the face of climate-related changes. In the short and
medium term, gold demand is not anticipated to be materially affected by climate considerations. Cultural and economic drivers
suggest that jewellery demand will remain stable, and investment demand should continue as gold serves as a hedge in times of
uncertainty. In fact, heightened market volatility resulting from climate-related risks may reinforce gold’s role as a safe-haven
asset, potentially supporting demand in those periods.
Operationally, climate-related factors are influencing our planning and expenditures. We anticipate that goods and energy sources
tied to fossil fuels will face rising costs due to carbon pricing mechanisms and fuel excise taxes. In response, we are focusing on
energy efficiency and renewable energy integration to mitigate fuel cost inflation. For example, a dedicated hydroelectric power
transmission line to the Palito complex is being pursued to reduce diesel consumption and increase renewable energy supply.
Similarly, our fleet replacement strategy involves evaluating low-emission mining equipment (such as electric or hybrid
underground vehicles) to reduce future carbon costs and improve operational efficiency. These initiatives not only lower carbon
emissions but also buffer the business against potential carbon taxes or fuel price volatility.
Physical climate considerations have also been embedded into our business model and financial planning. Given the location of
our operations in Pará State – an area vulnerable to Amazonian climate extremes – we allocate capital and resources to bolster site
resilience. We maintain rigorous tailings storage facility standards, with design criteria that account for extreme weather scenarios,
ensuring these structures remain secure even under severe rainfall conditions. In addition, our ongoing rehabilitation and
reforestation initiatives not only aid environmental restoration but may eventually yield carbon offsets or credits, creating a
potential financial opportunity in a future regulatory environment.
Strategy Resilience
The Group’s strategy has been tested against a range of climate scenarios, and we are confident in the resilience of our business
model under both a low-carbon transition (a 2°C or lower pathway) and a higher-emissions future.
Under a 2°C-aligned scenario, which is characterised by aggressive global mitigation efforts, transition risks such as carbon
regulation are expected to intensify, but we are well-positioned to adapt. Our focus on high-grade, low-volume mining with
underground operations inherently results in a smaller environmental footprint and lower greenhouse gas intensity than the
majority of gold producers. Even though our Scope 1 and 2 greenhouse gas emissions intensity rose to 532 kg CO2e per ounce of
gold in 2024 due to short-term challenges, they remained lower than the industry average of ~792 kg CO2e per ounce of gold1.
Our focus on lower carbon-intensive operations means that in a future with stricter carbon constraints or pricing, our operations
1 Seblos, G. (2024). Primary Gold GHG Emissions Intensities Decline. S&P Global Market Intelligence.
Strategic Report
Non-Financial and Sustainability Information Statement
50
would face relatively lower financial strain per unit of production. We have also begun expanding our climate-related data
collection and enhancing ESG disclosures, which will help meet tightening reporting standards and stakeholder expectations in a
low-temperature-rise scenario.
Conversely, under a scenario where global warming exceeds 2°C, such as the modelled SSP5-8.5 high emissions scenario, physical
climate impacts become more pronounced by mid-century. In this environment, our adaptation measures and the location of our
deposits provide robust defences. Our recent climate risk assessment indicates that through 2040, projected changes in rainfall
and temperature can be managed with current and planned mitigations.
Overall, our strategy remains resilient to climate change risk, and we aim to regularly review climate scenarios as part of our
strategic planning to ensure that as conditions evolve, we can respond effectively and sustain long-term value.
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-related risks.
c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s
overall risk management.
The Group identifies climate-related risks through an integrated risk management framework. Climate risks are evaluated
alongside other strategic and operational risks, ensuring their relative significance is comparable to other corporate risks.
Management maintains a comprehensive risk register – updated at least annually – which includes both emerging and principal
climate-related risks that could affect the business. Risks are ranked according to their impact and probability and the mitigation
strategies considered to assess their overall significance. The Audit and Risk Committee, on behalf of the Board, oversees this risk
identification and assessment process, reviewing the consolidated risk matrix to ensure appropriate prioritisation and uses it to
guide corporate risk oversight and resource allocation.
At the corporate level climate risks are interwoven with strategic planning, whilst at the operational level, ESG officers oversee
mitigation plans and interact with local government agencies in establishing any requirements imposed by regulators. The
Sustainability Committee receives aggregated climate data and progress updates, ensuring board-level visibility into climate
performance. By having climate risk management integrated at all levels, from site operations up to Board oversight, we can
ensure that we respond proactively to climate challenges.
In 2024, we enhanced our climate risk analysis by conducting a detailed climate scenario assessment, which supplements our risk
matrix with forward-looking data. This exercise helps identify site-specific physical vulnerabilities and aids in the scoring of those
risks. Our operational management and site-level ESG officers are utilised to report any new climate-related issues or near-misses.
This bottom-up input is critical to capturing emerging risks in a timely manner. Climate risks that are deemed material are
managed through targeted mitigation actions and incorporated into our site operational plans.
Transition risks are addressed by our decarbonisation and compliance strategies. For instance, to manage policy risks around
carbon pricing, we are pursuing strategies to reduce our reliance on fossil fuels by improving energy efficiency through
technological innovations such as our ore-sorter installations, as well as transitioning to renewable power sources by working
with the local energy supplier to upgrade our transmission line to provide reliable and clean power.
We also remain focused on our greenhouse gas monitoring programme, positioning the Company to meet new reporting
requirements as they arise and identify reduction opportunities. We manage market and reputation risks by maintaining a low
emissions intensity and continuously improving our environmental performance. We provide open disclosure on our climate
progress and aim to align with industry best practices, such as the Brazilian Mining Association’s position on climate change.
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.
b)
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
c)
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against
targets.
Strategic Report
Non-Financial and Sustainability Information Statement
51
The Group recognises the importance of transparently disclosing its greenhouse gas (GHG) emissions data as part of our
commitment to responsible mining. We use Scope 1 and Scope 2 GHG emissions, along with emissions intensity, as key metrics to
assess our climate-related performance. Scope 1 emissions arise from direct fuel use at our sites, while Scope 2 represents indirect
emissions from purchased electricity. These metrics are measured and calculated in accordance with the GHG Protocol
guidelines.
In addition, we track our energy consumption and sources, including the amount of electricity drawn from the grid as a
percentage of our total electricity consumption, to monitor our operational efficiency.
Our GHG emissions inventory encompasses our Tapajós region mining operations (Palito Complex and Coringa) and includes
on-site contractors. Emissions from our corporate offices, regional offices and exploration sites are excluded from our emissions
inventory on the basis of materiality.
Serabi aims to track the wider gold-mining industry’s decarbonisation progress and has set a target to remain 30% or more below
the industry average as reported by S&P Global. We are currently working with our ESG consultant in defining and setting
targets for each of our strategic ESG goals. We are planning on moving toward a more comprehensive account of our carbon
footprint in the near future by expanding our emissions data capture to include relevant Scope 3 categories.
Scope 1 and Scope 2 Emissions
In 2024, our total Scope 1 and 2 GHG emissions increased to 19,955 tCO₂e, up 43% from 13,908 tCO₂e in 2023, driven by higher
emissions at both operations. The Palito Complex recorded emissions of 13,895 tCO₂e in 2024, a 25% increase from 11,134 tCO₂e in
2023, due to a combination of increased production at our process plant along with regional power challenges that necessitated
the extended use of on-site diesel generators to maintain productivity. At the Coringa site, emissions rose to 6,059 tCO₂e, up from
2,774 tCO₂e in 2023, reflecting the ramp-up of mining production at the project. Coringa is yet to be connected to the grid.
Our Scope 1 emissions increased to 19,759 tCO₂e in 2024, representing a 52% year-on-year increase, whereas our Scope 2 location-
based emissions fell to 703 tCO₂e, 27% lower than 2023, as our consumption of grid power was reduced due to inconsistent grid
reliability. 2024 also marked the first year that we have included market-based Scope 2 emissions within our reporting as relevant
data became available. Our Scope 2 market-based emissions were 195 tCO₂e in 2024, an amount significantly lower than the
location-based consideration.
Our GHG emissions intensity, measured in kilograms of CO₂e per ounce of gold produced, was 532 kgCO₂e/oz Au in 2024
representing a 27% increase from 420 kgCO₂e/oz Au in 2023.
Metric
Unit
2021
2022
2023
2024
Scope 1 Emissions
tCO₂e
13,192
13,206
12,946
19,759
Scope 2 Emissions (Location-based2)
tCO₂e
1,471
938
962
703
Scope 2 Emissions (Market-based3)
tCO₂e
1,471
938
962
195
Total Scope 1 + 2 Emissions (Market-based)
tCO₂e
14,663
14,144
13,908
19,955
GHG Emissions Intensity
kgCO₂e / oz Au
433
445
420
532
Palito Complex Scope 1 + 2 Emissions
tCO₂e
14,663
12,830
11,134
13,895
Coringa Mine Scope 1 + 2 Emissions
tCO₂e
0
1,314
2,774
6,059
Scope 1: All direct GHG emissions.
Scope 2: Indirect GHG emissions from the consumption of purchased electricity. Scope 2 emissions are calculated using location-based emission
factors.
2 Scope 2 location-based emissions were calculated using the IEA 2024 Emissions Factors dataset.
3 Scope 2 market-based emissions were calculated using Equatorial Energia’s 2023 Sustainability Report.
Strategic Report
Non-Financial and Sustainability Information Statement
52
Despite the increase in emissions in 2024, reducing our carbon footprint remains a central focus and we continue to implement
efficiency measures to trend this figure downward over the long term. The utilisation of ore sorting technology at our Palito
Complex continues to improve energy efficiency and avoid emissions by reducing the volume of material sent for processing. In
2024, the use of ore sorting avoided over 2,700 tonnes of CO₂e from being generated at Palito.
Following the success at Palito, a second ore sorter was commissioned at Coringa in late 2024. The new unit is expected to deliver
substantial emissions benefits in 2025 and beyond by significantly reducing the amount of ore transported from the Coringa Mine
to the Palito processing plant and decreasing the diesel fuel used in haulage. In effect, only the higher-grade material will be
hauled for processing, cutting down processing-related emissions and saving on transport fuel.
Energy Consumption
In 2024, our total electricity consumption was 27.92 million kWh, a 24% increase from 22.44 million kWh in 2023. This sharp rise
was mainly due to increased production at the Palito process plant and the growing energy demand at Coringa as production
ramped up. Only 39% of 2024’s electricity came from the national grid, down from 58% in 2023, reflecting the heavier reliance on
self-generated diesel generators during the year to maintain productivity.
Including all fuel and power sources, our total energy consumption in 2024 was 318,539 GJ, a 39% increase from 229,397 GJ in
2023. This increase was driven by substantially higher diesel use for power generation and mobile equipment. In particular, the
extended use of diesel generators at Palito and the ramp-up of mining fleet activity at Coringa resulted in higher energy usage.
Correspondingly, energy intensity increased to 8.5 GJ/oz Au, from 6.9 GJ/oz Au in 2023, an increase of 23% year-on-year.
Strategic Report
Non-Financial and Sustainability Information Statement
53
Metric
Unit
2021
2022
2023
2024
Total Electricity Consumed
kWh
21,258,207
22,139,621
22,435,780
27,917,510
Grid Electricity
kWh
10,960,415
12,595,605
12,910,874
10,756,059
Grid Electricity Percent of Total Electricity
%
52%
57%
58%
39%
Energy Use
GJ
225,813
231,921
229,397
318,539
Energy Intensity
GJ / oz Au
6.7
7.3
6.9
8.5
This Strategic Report was approved by the Board on 29 April 2024
By order of the Board
Mike Hodgson
Chief Executive Officer
29 April 2025
54
Corporate Governance
Contents
55
Chair’s Introduction
56
Corporate Governance Statement
67
Audit and Risk Committee Report
71
Remuneration Committee Report
85
Sustainability Committee Report
87
Directors’ Report
CORPORATE GOVERNANCE
Chair’s Introduction
55
Dear Shareholders,
Chair’s introduction
I have pleasure in introducing Serabi’s Corporate Governance Statement. As Chair of Serabi Gold plc, 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 61.
Application of the new 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”) and this year we are reporting against the new QCA Code which was updated in
2023. A description of how the Board complies with the principles of the new QCA Code is provided in this Corporate Governance
Statement on pages 60 to 66.
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.
Succession planning
At the end of last year, we said farewell to Clive Line as a Board member when he retired from the Board on 31 December 2024.
We welcomed Colm Howlin, who was previously Group Controller of Serabi, into the role of Chief Financial Officer (“CFO”) to
succeed Clive. Colm is a member of the Institute of Chartered Accountants of Ireland and has been with the Company since 2013.
Colm is fluent in Portuguese. Clive remains with us as a consultant for a short period this year to ensure a smooth handover of
his large scope of duties. On 25 April 2025, Colm was appointed to the Board.
On 1 January 2025 we welcomed Marcus Brewster to the newly created role of Chief Operating Officer (“COO"). Marcus has
brought with him significant experience and expertise in both underground and surface mining operations, as well as advancing
projects from later stages of construction through to full operations. Marcus was previously COO at Tristar Gold Inc and holds
an MSc in Mining Geology and an MSc in Mining Engineering. He is also fluent in Portuguese.
In April 2025 we also said farewell to two directors who were representatives of two of the principal shareholders. We are grateful
for the counsel of both Mark Sawyer and Carolina Margozzini and wish them well for the future. The Board will now take stock
and assess the balance of the Board to understand what future Board appointments may be appropriate.
Board Evaluation
Between November 2023 and February 2024, a Board evaluation was undertaken by Ceradas Limited, a board effectiveness
consultancy. Further details of the process of this board evaluation, the recommendations and our progress against those
recommendations can be found on page 65. During March 2025 we have carried out an internal Board effectiveness questionnaire.
Reporting on this process will be included in next year’s Annual Report.
Michael D Lynch-Bell
Chair
29 April 2025.
CORPORATE GOVERNANCE
Corporate Governance Statement
56
The Board of Directors
Committee Membership
A
Audit & Risk Committee
D
Disclosure
Committee
M
Mergers & Acquisitions
Committee
R
Remuneration Committee
S
Sustainability Committee
Chair
Michael Hodgson
Chief Executive
Committee Membership
D
S
M
Mike has worked in the mining
industry for over 40 years and has
extensive international experience in
a
variety
of
commodities
and
jurisdictions, with a South American
gold focus for the last 18 years.
Having initially joined Serabi as
Technical Director, in 2008 he went
on to be the Chief Executive Officer.
Before Serabi, he worked as Chief
Operating Officer for Canadian-
based Orvana Minerals Corporation.
Previous
appointments
include
Manager, Technical Services and
Operations for TVX Gold Inc.,
Technical Services Manager at South
Crofty plc as well as earlier positions
with 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.
Michael Lynch-Bell
Non-executive Chair
Committee Membership
A
D
M
R
S
Michael spent a 38-year
career with Ernst & Young
(EY), where he led its Global
Oil and Gas, UK IPO and
Global Oil and Gas and
Mining transaction advisory
practices. He retired from EY
as a partner in 2012 and
continued as a consultant to
the firm until November
2013. Since
leaving
EY,
Michael has developed a
strong
board
career
including his position as
Deputy Chair and Senior
Independent Director of the
then FTSE 250 large-scale
blue-chip
mining
organisation, KAZ Minerals
plc. He was previously non-
executive
director
of
Barloworld Limited, Lenta
Limited and London-listed
Gem Diamonds. Michael is
currently independent non-
executive chairman of ASX-
listed Little Green Pharma
Limited and non-executive
director of London-listed
Tirupati Graphite plc.
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.
Colm Howlin
Finance Director
Colm initially joined Serabi in
October
2013
as
Group
Financial Controller. He has
played a key role in the
Company’s development over
the
past
decade,
with
responsibility
for
the
implementation and oversight
of
the
Group’s
financial
systems,
budgeting,
and
monthly
and
annual
management and regulatory
reporting
processes.
Before
joining Serabi he spent two
years as a Group Commercial
controller for Kerry Group
Latam, based in São Paulo,
Brazil. Prior to this worked
with KPMG in Dublin, Ireland.
Colm is a member of the
Institute
of
Chartered
Accountants of Ireland and is
fluent in Portuguese.
CORPORATE GOVERNANCE
Corporate Governance Statement
57
Deborah Gudgeon
Independent Non-executive Director
Committee Membership
A
D
S
R
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.
Luis Azevedo
Independent Non-executive Director
Luis is a seasoned industry professional both as
a licensed lawyer and geologist with over 38
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 and Jangada Mines plc. Luis is also a
Non-Executive Director of ASX listed, PVW
Resources Limited. 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.
CORPORATE GOVERNANCE
Corporate Governance Statement
58
The Management Team
Michael Hodgson
Chief Executive & Business
Development
Mike has worked in the mining
industry for over 40 years and has
extensive international experience in a
variety
of
commodities
and
jurisdictions, with a South American
gold focus for the last 18 years. Having
initially joined Serabi as Technical
Director, in 2008 he went on to be the
Chief Executive Officer. Before Serabi,
he worked as Chief Operating Officer
for Canadian-based Orvana Minerals
Corporation. Previous appointments
include Manager, Technical Services
and Operations for TVX Gold Inc.,
Technical Services Manager at South
Crofty plc as well as earlier positions
with 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.
Colm Howlin
Finance Director &
Business Development
Colm initially joined Serabi in
October 2013 as Group Financial
Controller. He has played a key
role
in
the
Company’s
development
over
the
past
decade, with responsibility for
the
implementation
and
oversight
of
the
Group’s
financial systems, budgeting,
and
monthly
and
annual
management
and
regulatory
reporting
processes.
Before
joining Serabi he spent two years
as
a
Group
Commercial
controller
for
Kerry
Group
Latam, based in São Paulo,
Brazil. Prior to this worked with
KPMG in Dublin, Ireland.
Colm is a member of the
Institute
of
Chartered
Accountants of Ireland and is
fluent in Portuguese.
Marcus Brewster
Chief Operating Officer&
Business Development
Mr Brewster has significant
experience and expertise in
both underground and surface
mining operations and in
taking projects from the latter
stages of construction through
to full operations. For the last
two years he has been COO of
Tristar Gold Inc which is
developing the Castelo do
Sonhos
Project
in
Brazil.
Previously he has held General
Manager
roles
with
Troy
Resources in
Brazil, Gold
Fields, in Ghana, Endeavour
Mining
in
Burkina
Faso,
Nordgold in Burkina Faso and
he also served as COO for
Hummingbird Resources Plc.
He holds an MSc in Mining
Geology and an MSc in Mining
Engineering, both from the
Camborne School of Mines.
Marcus is fluent in Portuguese.
Andrew Khov
VP Investor Relations &
Business Development
Andrew has 13 years of
experience
in
corporate
finance, capital markets, and
accounting roles primarily in
the metals and mining sector.
Over the years, he specialized
in corporate finance, M&A,
valuations,
financial
due
diligence, investor relations,
and financial reporting. Prior
to joining Serabi, Andrew was
most recently Vice President,
Investment Banking at RBC
Capital Markets and prior to
that, held the same role at
Raymond James, providing
him with deal experience with
senior
mining
companies
through
to
early-stage
exploration
companies.
He
previously held positions in
equity research at Cormark
Securities
and
Canaccord
Genuity. Prior to that, Andrew
worked in public accounting at
KPMG
LLP
&
BDO
Transaction Advisory Services.
In his spare time, Andrew
serves as a volunteer on the St.
John
Ambulance
Resource
Committee.
Andrew has a degree in
Business Administration from
the Schulich School of Business
(‘10) and holds the Chartered
Professional Accountant and
Chartered Financial Analyst
designations.
CORPORATE GOVERNANCE
Corporate Governance Statement
59
Helio Tavares
Director of Operations and
Projects – Brazil
Helio is a Brazilian mining engineer
who has been involved with many
international junior mining groups
over the past 20 years. His career
began as a Process Engineer in the
Brazilian coal industry. He then
expanded his experience through
his involvement in the coordination,
planning, design, assembly and
management of a range of ore
processing
plants,
before
establishing his own drilling and
industrial
process
design
business. He was General Manager
for Serabi from 2002 to 2005 and
again between November 2012 and
May 2019. He was also a consultant
to
several
international
junior
mining groups working on projects
across a range of minerals including
gold iron ore, kaolin, diamonds and
manganese.
Helio
has
a degree in
Mine
Engineering
from
the
Federal
University of Rio Grande Do Sul.
Lucimar Martins
Director of Finance and
Administration - Brazil
Lucimar spent over 25 years
working
in
Finance
and
Accounting
roles
with
multinational
companies
involved
in
the
Mining,
Automotive
and
Steel
industries. Over his career, he
has managed multidisciplinary
teams,
coordinated
strategic
projects,
implemented
budgeting
and
reporting
systems to improve cost control
and cost management as well as
developing new business lines
always focused on generating
positive
results
for
the
business.
His
career
has
included roles in Argentina,
Austria, USA and Italy.
Lucimar
graduated
from
Pontificia
Universidade
Católica (PUC), specialized in
Controllership
and
Finance
from Federal University of
Minas Gerais (UFMG) and
received
a
Masters
in
Administration
from
the
University Fundação Mineira
de
Educação
e
Cultura
(FUMEC).
Kilser Cardoso
Director of Finance and
Administration - Brazil
Kilser has over 18 years of
experience in small, medium,
and large-scale underground
and open-pit mining projects.
Throughout his professional
career, he has managed both
processing
operations
and
underground
and open-pit
mining
activities
including
narrow
vein
mining
operations. During his career
he has worked for a number of
multinational
companies,
including Vale, Equinox Gold,
and Imerys, across mining
operations producing gold,
copper, iron and kaolin.
Kilser graduated from the
School of Mines in Ouro Preto
as a Mining Engineer.
Rogerio Alves
Exploration Manager -
Brazil
Rogerio is an exploration
geologist with more than 20
years
experience,
both
in
Brazil and internationally in
the mining & metals industry,
and has held previous roles
with Kinross, Vale, Great
Panther
and
AngloGold
Ashanti. Rogerio has managed
exploration
programmes
across a variety of mineral
types and in addition to
running programmes in Brazil
has also worked in Chile and
Africa. During his career he
has
gained
experience
supporting
underground
mine operations as well as
brownfield
and
greenfield
explorations and in particular,
has a strong focus of growing
mineral resources to extend
the life of existing operations.
He
has
managed
large
exploration
teams
and
developed the necessary skills
to
implement
new
methodologies,
manage
projects, and build teams with
a focus on to delivery of
results.
A member of the Australian
Institute of Geoscientists, he
graduated from the University
of Brasilia with a degree in
Geology.
CORPORATE GOVERNANCE
Corporate Governance Statement
60
Corporate Governance Code
The new 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 new QCA
Code’s recommendations and has provided full disclosure relating to all of the principles below and in the Corporate Governance
Statement on its website at Serabigold.com. Set out throughout this Corporate Governance Statement are details of our compliance.
QCA Code - Principle 1 - Establish a purpose, strategy and business model which promote long-term value for shareholders
The Board has collective responsibility for setting the Company’s purpose, strategic aims and objectives. 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 13 to 15.
The Board continually monitors the implementation of strategy. We also have an annual strategy session within our Board meeting
programme. In 2024 the Board held a strategy session in Brazil with a number of the Board members also visiting the mines as part of
the country visit.
QCA Code - Principle 2 - Promote a corporate culture that is based on sound 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 has
in place a Code of Ethics and Conduct and this sets out the Company’s vision, mission and values. The Code of Conduct clearly
communicates internally the ethical and integrity standards required of Serabi's workers, including leadership, contractors and
consultants. It emphasises integrity, transparency and compliance with laws and corporate governance best practises, including fair
competition, anti-corruption, prevention of conflicts of interest, responsible use of company assets, promoting a safe, inclusive and
discrimination free workplace, prohibiting harassment and unethical behaviour. It also enforces strict policies on environmental
responsibility, occupational health and safety and anti-money laundering measures. It also incorporates a whistleblower channel.
The Board receives regular reports on staff morale and conduct. The Non-Executive Directors have spent time during the year at both
the Belo Horizonte head office and the mines to meet and talk to staff themselves.
QCA Code - Principle 3 - 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 Investor Relations and
Business Development Vice President. 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 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.
The Annual General Meeting (“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.
CORPORATE GOVERNANCE
Corporate Governance Statement
61
QCA Code - Principle 4 - Take into account wider stakeholder interests, including social and environmental responsibilities
and their implications for long-term success
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, 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 35 to 42. The Group’s engagement model with wider stakeholders is described in the Strategic Report on pages 16 to 18.
QCA Code - Principle 5 - Embed effective risk management, internal controls and assurance activities, 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.
During the year the Sustainability Committee commissioned Embellie Advisory to undertake a review of the Group’s ESG strategy,
management systems and actions. The review’s remit has included a review of the Group’s risk management process and framework
and provided recommendations for both the Sustainability Committee and the Audit and Risk Committee to work towards. The Group’s
risk management framework is described further in the Strategic Report on pages 26 to 34 and in the Audit and Risk Report on pages
67 to 70.
QCA Code - Principle 6 - Establish and maintain the board as a well-functioning balanced team led by the chair
Board Composition and independence
The Board is currently comprised of five Directors: the Chief Executive Officer, Mike Hodgson, the Chief Financial Officer, Colm Howlin
and three Non-executive Directors. All of the Non-executive Directors are considered to be independent.
Until April 2025 the Board had two shareholder nominated non-executive Directors. Mark Sawyer nominated by Greenstone Resources
II LP and Carolina Margozzini who was nominated by Fratelli Investments Limited. These Directors stepped down from the Board on
11 April 2025 and 21 April 2025 respectively.
The Company had entered into a Relationship Agreement with Greenstone Resources II LP who had been a principal shareholder
holding 25.2% of the issued share capital of the Company but on 12 April 2025 entered into a binding agreement to dispose of
approximately 15.15 million shares representing 19.99% of the issued shared capital of the Company. On 22 April 2025 Greenstone
Resources II LP, pursuant to a placing, sold their remaining shares in the Company representing approximately 5.2% of the issued
share capital of the Company. As a result the Company expects that 30 days following the completion of this share sale, under the
terms of the Relationship Agreement with Greenstone, that agreement will automatically terminate.
The Company had also entered into a Relationship Agreement with Fratelli Investments Limited who had also been a principal
shareholder holding 25.5% of the issue share capital but on 22 April 2025 Fratelli Investments Limited, pursuant to a placing, sold
11,752,903 ordinary shares representing 15.5% of the issued share capital. As a result, the Company expects that 30 days following
the completion of this share sale, under the terms of the Relationship Agreement with Fratelli, that agreement will automatically
terminate.
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
CORPORATE GOVERNANCE
Corporate Governance Statement
62
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.
Board Governance 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.
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.
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.
MERGERS AND
ACQUISITIONS
COMMITTEE
Works closely with
management to manage and
have oversight of potential
non-organic growth
opportunities for Serabi.
CORPORATE GOVERNANCE
Corporate Governance Statement
63
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 (“CEO”), the Chief Financial Officer (“CFO”) and the Chief Operating Officer (“COO”) 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 CEO, CFO
and COO 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. During the year there were nine scheduled Board meetings. There
were also further ad-hoc Board meetings called at short notice to deal with transactional items. All of the Directors receive
comprehensive Board packs in advance of Board and Committee meetings. A Board portal is used 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. During the year one Board meeting was held in Brazil with the rest of the face-to-face meetings
being held in London. 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
Board Meetings (Attended/Held)
Michael Lynch-Bell
9/9
Michael Hodgson
8/9
Clive Line (1)
9/9
Luis Azevedo
6/9
Deborah Gudgeon
9/9
Carolina Margozzini (3)
9/9
Mark Sawyer (2)
6/9
1.
Resigned on 31 December 2024
2.
Resigned on 11 April 2025
3.
Resigned on 21 April 2025
CORPORATE GOVERNANCE
Corporate Governance Statement
64
Board Activities During the Year
Strategy
•
A number of strategic presentations have been received at meetings throughout the year
•
The Board held a separate strategy session in Brazil
Operations
•
The CEO presented a report at each Board meeting which includes updates on
production, plant performance, health and safety, exploration, licenses and permits and
ESG
Finance
•
The Chief Financial Officer 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 an update to the Group Authority Limits
Audit and Risk
•
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 the Audit and Risk
Committee received details of whistleblowing reporting
•
The Audit and Risk Committee assessed the competency of the Group’s auditors and
reported their opinion to the Board.
Stakeholders
•
Stakeholders including local communities, Governmental agencies and regulators,
lenders and shareholders were regularly considered as part of the 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 along with updates on
investor meetings
Governance
•
The Committee chairs reported on key matters discussed at the Board Committees
•
The Company Secretary reported on key governance regulatory developments
•
The Board has reviewed and updated the Group authority limits
•
A Board effectiveness review has been undertaken by an independent board effectiveness
consultancy during 2023 and 2024 and an internal review using questionnaires has been
carried out in 2025
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.
QCA Code - Principle 7 - Maintain appropriate governance structures and ensure that individually and collectively the
directors have the necessary up-to-date experience and 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 56 to 57.
CORPORATE GOVERNANCE
Corporate Governance Statement
65
The Group’s governance structure has not changed during the year and is set out in the diagram under Principle 6.
Training and Development
Directors are encouraged to continue their ongoing professional development. During the year the Directors also received update
training on Directors’ duties and the AIM Rules from Beaumont Cornish Limited, the Company’s Nominated Adviser (“Nomad”). 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 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.
QCA Code - Principle 8 - 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.
Board Evaluation
Between November 2023 and February 2024, a Board evaluation was 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 its 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 and the
progress made during 2024 are as follows.
Recommendations:
Progress on the recommendations:
• Include on the Board timetable a standalone session to
discuss strategic direction and milestones for the longer term
• A standalone strategy Board meeting was held in Brazil in
August 2024
• Consider holding a Board meeting in Brazil at least once a
year
• A Board meeting was held in Brazil in August 2024
• Include in the Board programme a regular session to review
business performance on culture and ESG matters
• Business performance on culture and ESG is on the Board
programme and included in the Sustainability Committee
agenda
• An ESG strategy review was commissioned during 2024
• Consider appointing one of the South American based Non-
executive Directors as a Workforce Engagement Director to
meet with representatives from the workforce on site in
Brazil at least annually and report back to the Board
• Carolina Margozzini was appointed as the Workforce
Engagement Director but has recently resigned (21 April
2025). The Board will appoint a replacement Workforce
Engagement Director in due course.
• Consider options for bringing additional technical,
engineering or mining expertise/advisors into the Board
discussions
• The Board has appointed a Chief Operating Officer with
extensive mining experience
CORPORATE GOVERNANCE
Corporate Governance Statement
66
QCA Code - Principle 9 - Establish a remuneration policy which is supportive of long-term value creation and company’s
purpose, strategy and culture
Details of the Company’s Remuneration Policy and how it was implemented during FY24 are set out in the Directors’ Remuneration
Report on pages 71 to 84. The Remuneration Policy for Executive Directors includes a base salary, annual bonus which is linked to
operational, financial and strategic targets and share based incentive arrangements which are designed to drive sustained long-
term performance that supports the creation of shareholder value. The Remuneration Policy for Non-executive Directors entails
a base fee and additional fees for Board Committee membership and or Board Committee chairmanship. In accordance with its
terms of reference, the Remuneration and People Committee is responsible for providing an objective review and oversight of the
Group’s remuneration and people policies, frameworks and practices and outcomes to ensure they support the Group’s purpose
and the effective implementation of strategy and enable the recruitment, motivation, reward and retention of talent, particularly
at Board and senior executive levels.
QCA Code - Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other key stakeholders
The Board’s approach to engaging with shareholders and other stakeholders is described throughout the Annual Report, in particular
in the Our Stakeholders section and Section 172 statement on pages 16 to 20, the ESG review on page 35 to 42 and the disclosures under
Principles 3 and 4 of the QCA Code above. The Board endeavours 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. The Board recognises that balancing the needs and expectations of all these stakeholders is important and endeavours to
engage with these stakeholders on a regular basis.
CORPORATE GOVERNANCE
Audit and Risk Committee Report
67
The following report sets out the responsibilities and activities of the Audit and Risk Committee for the year ended 31 December
2024. This report is prepared in accordance with the Quoted Companies Alliance corporate governance code for small and mid-
sized quoted companies, revised in 2023 (the New QCA Code 2023).
Committee Composition
The Audit and Risk Committee is comprised of Non-executive Directors. It is chaired by Deborah Gudgeon and its other members
were Michael Lynch-Bell and Mark Sawyer. Mr Mark Sawyer resigned from the Board on 11 April 2025.
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 & Young. More information on the Committee members’ skills and
experience can be found on pages 56 to 57.
The Committee meets at least four times a year. During the year, the Committee met eight times. Attendance at the Committee
meetings is shown below.
Director
Audit Committee Meetings
(Attended/Held)
Deborah Gudgeon (Chair)
8/8
Michael Lynch-Bell
8/8
Mark Sawyer(1)
4/8
(1)
Resigned on 11 April 2025
The CFO 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 receive their feedback and
ensure that there are no issues in the relationship between management and the External Auditor 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;
CORPORATE GOVERNANCE
Audit and Risk Committee Report
68
•
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 2024, PKF presented their audit plan (prepared in consultation with management) to the
Committee in December 2024. 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 US$182,039 for the audit fees of the Group Auditor for the financial year ended 31 December
2024. In addition, it will pay a fee of US$172,909 to KPMG 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 or KPMG for the financial year ended 31
December 2024.
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 and KPMG 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 2024 are
set out in the table below:
Significant issues and judgement
How the issues were addressed
Valuation of capitalised exploration costs
(IFRS6)
As at 31 December 2024, the Group’s Deferred
exploration assets are valued at $18.8m (2023:
$20.5m) 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
The ARC 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 reviewed with management the validity of current exploration
licences ensuring that they remain valid during the year and at the year-
end;
Management prepared details of future plans for each license including
providing potential expenditure projections for each licence where
necessary;
CORPORATE GOVERNANCE
Audit and Risk Committee Report
69
Significant issues and judgement
How the issues were addressed
balances and as a result there is the risk that these
balances are incorrectly valued.
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 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.
Carrying value of mining assets
As at 31 December 2024 the Group’s Mining
Assets totalled $53.6m (2023: $53.3m).
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 in determining the
valuation of these assets.
The ARC reviewed and challenged management’s projections of future
revenues and costs for each cash generating unit (“CGU”). They have
considered and satisfied themselves of the economic assumptions used by
management in generating the discounted cash flow model and the
discount rates used.
The ARC 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 discussed with the Auditors the work that the Auditors 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.
Valuation of investments and intercompany
receivables
As at 31 December 2024, the carrying value of
investments in subsidiaries is $104.4m (2023:
$103.3m). 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.
Valuations for these projects are therefore based
on judgments and estimates made by the
Directors - which leads to a risk of misstatement.
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.
Commercial production at Coringa and its’ implications
In December 2024, the Group announced the commissioning of the classification plant at Coringa, as well as announcing the
receipt of a 3-year extension to the trial mining license (“GUIA”) at Coringa in January 2024. As a result of achieving these two
important milestones, the Committee determined commercial production had commenced at the Coringa mine on 1 January
2025. Therefore, the Group will begin to record amortisation charges against the value of the mining property from that date.
Amortisation of mining property is calculated over the estimated life of the mineable inventory on a unit of production basis.
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Risk management and internal controls
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
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 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; and
•
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). The Committee has overseen the implementation of management’s responses to
the Deloitte recommendations and 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. A recruitment process during the year did not identify any appropriate candidates due to the combination of required
audit and language skills and the location of operations. An outsourced supplier will therefore be sought to provide an internal
audit function with a tender process planned in 2025. During the first quarter of 2025 an initial internal gap analysis programme
began as the first step in developing an internal audit function.
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.
Deborah Gudgeon
Chair of the Audit Committee
29 April 2025
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71
Statement from the Chair of the Remuneration and People 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 2024 the Company has achieved some key milestones and we will continue to
build on these in 2025. The Board recognises 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 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 and to the performance of the Group and the individual. The objectives are also to compensate 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
The Committee has approved a salary increase of 10% for Mike Hodgson for 2025.
Annual Bonus
The 2024 Annual Bonus was based on health and safety targets, production targets, cash costs and permitting. The maximum
theoretical payout for the Executive Directors was 75% of base salary for Michael Hodgson and 65% of base salary for Clive
Line. Not all operational targets were achieved. The resultant out-turn based on performance against agreed KPIs was 24% 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 the
459,800 Conditional Share Awards granted for the calendar year 2021, the Board determined that none of the performance criteria
were achieved and accordingly all 459,800 Conditional Share Awards have lapsed. Awards granted in respect of 2022 are due to
vest in 2025. based on 40% Total Shareholder Return (TSR), 30% Return on Capital Employment (ROCE) and 30% on Return on
Sales (ROS). There has been good progress against these performance targets. Performance against the TSR target is expected to
far exceed the maximum target. Performance against the ROCE target is expected to reach the minimum target and performance
against the ROS target is expected to exceed the maximum target for this measure. It is expected that 83% of these awards will
vest.
Remuneration arrangements for 2025
For 2025 it is 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 so did not do so during 2024. 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 was therefore taken for assessment of
performance targets linked to the grant of awards in 2023 and 2024.
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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 updated in 2023 in so far as is practicable for the Company’s size and
structure. During 2024, there continued to be significant improvements to the Company’s corporate governance arrangements as
the Company grows. During 2024 the Committee further reviewed the appropriateness of the policy for its senior management
and colleagues in Brazil. Conditional share awards were granted at the same time as being granted to Executive Directors to senior
management including some key Brazilian management personnel.
On behalf of the Remuneration Committee
Deborah Gudgeon.
Chair of the Remuneration Committee
29 April 2025
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73
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
Operation
Opportunity
Performance metrics
Implementation
of Remuneration
Policy for 2025
Base salary
To reflect size and scope
of
the
role
and
individual’s
performance
and
contribution.
Reviewed on an annual
basis with any increases
normally
taking
effect
from 1 January.
The Committee reviews
base
salaries
with
reference to:
• the size and scope of
the individual’s roles;
• the
individual’s
performance
and
experience;
• business performance
and
the
external
economic environment;
• market
practice
at
other companies of a
similar
size
and
complexity; and
• salary increases across
the Group
There is no maximum
salary
increase.
The
Committee
retains
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
the
size
and
complexity
of
the
business.
Company
and
individual performance
are considered when
setting
Executive
Director base salaries.
Base remuneration
will be increased
by 10% for the CEO
with effect from 1
January
2025
to
£377,300
Base remuneration
for the CFO will be
€270,000 and will
be prorated and
applicable from his
date
of
appointment on 25
April 2025.
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Purpose and link to
strategy
Operation
Opportunity
Performance metrics
Implementation
of Remuneration
Policy for 2025
Annual bonus
To
incentivise
the
delivery
of
annual
operational
and
financial
performance
and the achievement of
strategic
business
priorities.
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.
The
maximum
opportunity
for
the
Executive Director is:
CEO: 75%
of
base
salary
CFO: 65% of base salary
Performance measures
are selected and their
respective
weightings
may vary from year to
year
depending
on
financial and strategic
priorities.
The
Committee
has
discretion to adjust the
formulaic
bonus
outcomes
both
upwards (within the
policy
limits)
and
downwards to ensure
alignment of pay with
the
underlying
performance
of
the
business
over
the
financial year.
It
is
currently
intended that the
annual bonus will
operate in line with
the prior year.
Share based incentive
plans
To drive sustained long-
term performance that
supports the creation of
shareholder value.
Conditional share awards
(CSAs) under the 2020
plan reward delivery of
sustained
long-term
improvements
in
shareholder
returns
by aligning performance
directly with an increase
in
the
fundamental
measure of the generation
of shareholder value.
The Board seeks to award
equity related incentives
on an annual basis. Whilst
it is generally expected
that these will be equity
settled, provisions exist,
to
be
used
at
the
discretion of the Board,
for these awards to be
cash
settled
on
an
equivalent basis where,
for
example,
the
tax
treatment
might
significantly disadvantage
an individual recipient.
The
Executive
Directors can receive
annual awards of up to
100% of base salary.
The vesting of the CSAs
is subject to company
performance
and
continued employment.
It
is
currently
intended that the
CSA will operate in
line
with
prior
years
with
the
performance
measures
operating
on
a
linear basis.
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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 Director 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 2025 are set out in
the table below:
Purpose and link to
strategy
Operation
Opportunity
Performance
metrics
Implementation
of Remuneration
Policy for 2025
Fees
To attract and retain
Non-executive Directors
of the highest calibre
with broad commercial
and other experience
relevant
to
the
company.
The Chair and Non-executive
Directors receive a basic fee for
their respective roles.
Additional fees may be payable
to Non-executive Directors for
additional services such as
acting as Senior Independent
Director or as Chair of any of
the Board’s Committees etc.
Fee levels are reviewed from
time to time against similar
roles at comparable companies,
taking
into
account
time,
commitment and responsibility
of
the
role,
with
any
adjustments normally effective
1 January in the year following
review.
The fees paid to the Chair are
determined by the Committee,
whilst the fees of the Non-
executive
Directors
are
determined by the Board.
It
is
expected
that
increases
to
Non-
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
the
complexity,
responsibility or time
commitment required
to
fulfil
a
Non-
executive Director role,
the
Board
has
discretion to make an
appropriate adjustment
to the fee level.
Not
performance
related.
The Base fees for
Non-executive
Directors
and
Chair
is
to
be
increased by 4.0%
Chair: £86,695
Non-executive
Directors: £46,598
The
Chair
and
other
Non-
executive Directors
also receive fees for
membership
and
chairing a Board
Committee
Chair
of
a
committee:
£7,500 or £15,000
Membership of a
committee: £5,000
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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.
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 Director has a rolling-term Service Agreement with the Group. The Executive Director’s Service Agreement
includes 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 Director,
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.
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The Service Agreements contain provisions enabling the Group to place the Executive Director on gardening leave during the
period of notice.
Name
Date of Service Agreement
Notice by Group/Individual
Michael Hodgson
1 February 2007
12/6 months
Colm Howlin
31 December 2024
12/12 months
Non-executive Directors
Michael Lynch-Bell
8 August 2022
N/A (2)
Luis Azevedo
27 April 2020
N/A (2)
Deborah Gudgeon
9 May 2023
N/A (2)
(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:
Component
Good leaver reasons
Other leaver reasons
Change of control
Annual bonus
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,
unless
the
Committee
determines otherwise
No bonus payable unless the
Committee
determines
otherwise (as set out above).
Paid
immediately
on
the
effective date of change of
control,
subject
to
the
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.
Conditional Share Awards
May retain their awards
which will vest in accordance
with the original terms and
whilst
continuing
to
be
subject
to
performance
conditions and pro-rating for
the time elapsed since grant.
These provisions may be
over-ridden
at
the
sole
discretion of the Board
Shall cease to have any
entitlements including the
right to exercise any vested
but unexercised options
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
company
may
agree
to
exchange
the
awards
for
equivalent awards in the new
company provided the terms
of the awards are not modified
in any significant way.
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
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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.
Shareholder views and voting at the forthcoming AGM
The Company has not, previously, sought formal shareholder approval for its Remuneration Policy although has always
welcomed discussion with shareholders on the policy. Following the changes to the QCA Code the Committee will seek approval
of the Remuneration Policy and the Remuneration Report at its 2025 Annual General Meeting in accordance with the QCA Code
on an advisory basis.
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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 2024.
Remuneration Committee membership and activities in 2024
The Remuneration Committee’s members as at 31 December 2024 were Non-executive Director Mark Sawyer, who was the Chair
of the Committee up until his resignation from the Board on 11 April 2025, Carolina Margozzini up until her resignation from the
Board on 21 April 2025, and Michael Lynch-Bell. Deborah Gudgeon was appointed Committee Chair on 23 April 2025.
Director
Remuneration Committee
Meetings (Attended/Held)
Mark Sawyer (Chair) (1)
2/2
Michael Lynch-Bell
2/2
Carolina Margozzini(2)
2/2
(1) Mark Sawyer resigned from the Board on 11 April 2025.
(2) Carolina Margozzini resigned form the Board on 21 April 2025.
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 2024 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 2023.
•
Review and assess approval of Executive Director performance against 2021 CSA targets (lapsed).
•
Determination of performance targets for the share incentives for 2024.
•
Determination of performance targets for the 2024 annual bonus.
•
Review of remuneration arrangements and policies for the Executive Director, senior management and the wider Group.
•
Review and approval of salary increases for the Executive Director and senior management.
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(1)
Salaries and bonuses paid to the executive directors reflect the period to which they relate and may not have been received during those periods.
(2)
Luis Azevedo is the owner of FFA Legal which provides legal services to the Group and its Brazilian subsidiaries. During 2024 charges issued
by FFA Legal were US$428,583 of which US$61,000 was outstanding at the period end.
(3)
Clive Line stepped down from the Board on 31 December 2024.
(4)
Carolina Margozzini was appointed on 24 January 2023.
(5)
Deborah Gudgeon was appointed on 9 May 2023.
(6)
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.
(7)
Mark Sawyer resigned from the Board on 11 April 2025.
(8)
Carolina Margozzini resigned from the Board on 21 April 2025.
Incentive outcomes for the year ended 31 December 2024
Annual bonus in respect of 2024 performance
The maximum bonus award for 2024 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 24% of the maximum for each Director. These
bonus amounts will be settled to the individuals in 2025 and reflected in the remuneration paid in 2025.
Conditional Share Awards vesting in 2025
CSA granted in respect of the 2022 calendar year are scheduled to vest on 31 July 2025 or if earlier immediately following the date
on which the Committee determines that the performance conditions have been satisfied (or not as the case may be) based on the
performance measurements between 1 January 2022 to 31 December 2024. The awards were based on 40% Total Shareholder
Return (TSR), 30% Return on Capital Employment (ROCE) and 30% on Return on Sales (ROS). There has been good progress
against these performance targets. Performance against the TSR target is expected to far exceed the maximum target. Performance
against the ROCE target is expected to reach the minimum target and performance against the ROS target is expected to exceed
the maximum target for this measure. Subject to the necessary independent assessment of these targets against the audited results
it is expected that 83% of these awards will vest.
Financial
Year
Salary
Fees as
Director
Other
fees
Bonus
Pension
IFRS 2
charge for
options
granted
Other
Total
Director
US$
US$
US$
US$
US$
US$
US$
US$
Michael Hodgson (1)
2024
427,940
–
–
139,146
10,220
93,780
4,304
675,390
2023
398,906
–
–
138,126
9,989
82,174
5,574
634,769
Clive Line (1)(3)
2024
307,830
–
–
–
78,315
66,288
3,587
456,020
2023
287,064
–
–
83,882
–
61,159
4,645
436,750
Michael Lynch-Bell (3)
2024
–
135,224
–
–
–
–
–
135,224
2023
–
115,495
–
–
–
–
–
115,495
Deborah Gudgeon (5)
2024
–
76,395
–
–
–
–
–
76,395
2023
–
44,349
–
–
–
–
–
44,349
Mark Sawyer (6) (7)
2024
–
90,658
–
–
–
–
–
90,658
2023
–
–
–
–
–
633
–
633
Carolina Margozzini(4) (6) (8)
2024
–
69,087
–
–
–
–
–
69,087
2023
–
–
–
–
–
–
–
–
Luis Azevedo (2)
2024
–
57,126
–
–
–
–
–
57,126
2023
–
–
–
–
–
633
–
633
Total
2024
735,770
428,490
–
139,146
88,535
160,068
7,892
1,559,900
Total
2023
685,970
159,844
–
222,008
9,989
144,599
10,219
1,233,292
CORPORATE GOVERNANCE
Remuneration and People Committee Report
81
Ordinary shares and options
The Directors of the Company, who held office during the year and as of 31 December 2024, had the following interests in the
ordinary shares of the Company according to the register of Directors’ interests:
Shares held at 31
December 2024
Shares held at 31
December 2023
Michael Hodgson
70,066
70,066
Clive Line
73,332
73,332
Michael Lynch-Bell
–
–
Carolina Margozzini(2)
–
–
Luis Azevedo
–
–
Deborah Gudgeon
–
–
Mark Sawyer(3)
–
–
(1)
Carolina Margozzini is Principal of Megeve Investments which is investment adviser to Fratelli Investments Limited which as at 31 December 2024
was interested in 19,318,785 ordinary shares. Carolina Margozzini resigned from the Board on 21 April 2025.
(2)
Mark Sawyer is a partner of Greenstone Resources II LP which as at 31 December 2024 was interested in 19,083,394 ordinary shares. Mark Sawyer
resigned from the Board on 11 April 2025.
During the year ended 31 December 2024 the Company’s shares have traded between 47.00 pence and 123.00 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 2024
The Board approved the issue of CSA to the Executive Directors in respect of the annual Long Term Incentive Plan awards for
the calendar year 2024. 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 2024.
The awards are scheduled to vest, subject to the achievement of the stipulated performance criteria, on the third anniversary of
the award.
CORPORATE GOVERNANCE
Remuneration and People Committee Report
82
Summary of Directors’ Interests
The beneficial interests of the Executive Directors in share awards and share options as at 31 December 2024 are shown in the
following tables.
CSA – Conditional Share Awards (2020 Plan)
(1)
The performance criteria related to these CSA’s were measured after 31 December 2023 and it was determined that none of the performance criteria had
been met.
(1)
The performance criteria related to these CSA’s were measured after 31 December 2023 and it was determined that none of the performance criteria had
been met.
Michael Hodgson
Award year
Plan
Vesting by
Share price
at date of
award £
Exercise
price £
At 31
December
2023
Granted
Lapsed
Exercised
At 31
December
2024
2024
CSA
1 Feb 2027
UK£0.51
n/a
–
385,993
–
–
385,993
2023
CSA
31 Jul 2026
UK£0.25
n/a
490,400
–
–
–
490,400
2022
CSA
31 Jul 2025
UK£0.25
n/a
271,900
–
–
–
271,900
2021
CSA
7 Dec 2024
UK£0.67
n/a
193,000
–
(193,000)(1)
–
–
Total
955,300
385,993
(193,000)
–
1,148,293
Clive Line
Award year
Plan
Vesting by
Share price
at date of
award £
Exercise
price £
At 31
December
2023
Granted
Lapsed
Exercised
At 31
December
2024
2024
CSA
1 Feb 2027
UK£0.51
n/a
–
271,208
–
–
271,208
2023
CSA
31 Jul 2026
UK£0.25
n/a
344,300
–
–
–
344,300
2022
CSA
31 Jul 2025
UK£0.25
n/a
190,500
–
–
–
190,500
2021
CSA
7 Dec 2024
UK£0.67
n/a
138,000
–
(138,000)(1)
–
–
Total
672,800
271,208
(138,000)
–
806,008
CORPORATE GOVERNANCE
Remuneration and People Committee Report
83
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
One Year TSR Comparison
BMO Gold Index
Serabi
Gold
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
Two Year TSR Comparion
BMO Gold Index
Serabi
Gold
CORPORATE GOVERNANCE
Remuneration and People Committee Report
84
-
50.0
100.0
150.0
200.0
250.0
Three Year TSR Comparison
BMO Gold Index
Serabi
Gold
CORPORATE GOVERNANCE
Sustainability Committee Report
85
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 Mike Hodgson and Deborah Gudgeon. Mark Sawyer was also a member
of the Committee up until his resignation from the Board on 11 April 2025. The Committee met twice during 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:
(i)
occupational health; and
(ii)
mental health and well-being in the workforce;
(c)
Environment, including:
(i)
water management;
(ii)
air emissions, including dust;
(iii) land stewardship and biodiversity;
(iv) waste management; and
(v)
mine closure and legacy management,
(d)
Climate change, including compliance with the Taskforce on Climate-related Financial Disclosure (TCFD) requirements
and decarbonisation initiatives and targets
(e)
Communities and social performance, including:
(i)
community relations, including with traditional owners and other indigenous peoples on whose lands Serabi
operates and local politicians;
(ii)
the economic, cultural and social development of the communities in which Serabi operates, including employment,
training and development, and local supply chain development;
(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 during the year
The Committee has considered the reporting requirements that apply to the Company in 2024 and 2025 and the Company’s
compliance with these requirements. To further advise the Committee, proposals from ESG consultants have been considered by
the Committee and Embellie Advisory, an independent consultancy with global offices including offices in Brazil, were appointed
to undertake a review of the Group’s ESG strategy, management systems and actions. The objective of the review was to
understand the strengths and weaknesses of the current approach to ESG, ensure that the Group fully conformed with all current
regulatory requirements and that the Company is prepared for future regulatory changes in Brazil, the UK and Canada.
To perform the review Embellie assessed the ESG strategy, internal policies, processes and procedures of Serabi against the
AA1000 AP sustainability auditing standard, and the mining industry’s performance standard, the Consolidated Mining
Standard. Embellie also carried out baseline ESG risk assessments of Serabi’s operations using their own methodology.
The results of the analysis were positive and the next stage of Embellie’s support will be to create a roadmap to support the
continued development of sustainable practices within the Group, as well as setting targets and measuring performance against
them.
CORPORATE GOVERNANCE
Sustainability Committee Report
86
The Committee has reviewed and approved its TCFD aligned reporting disclosures, the environmental and social reporting in
the Annual Report and is working on updating its annual reporting disclosures for the Modern Slavery Act and also the Canadian
Fighting Against Forced Labour and Child Labour in Supply Chain Act.
Michael Lynch-Bell
Chair of the Sustainability Committee
29 April 2025
CORPORATE GOVERNANCE
Directors’ Report
87
The Directors present their report together with the audited financial statements for the year ended 31 December 2024.
Results and dividends
The Group profit for the year after taxation amounts to US$27,819,718, (2023: US$6,575,612). The Directors do not recommend the
payment of a dividend in respect of the year ended 31 December 2024. The Board has agreed to adopt a future policy to make
returns to shareholders of between 20% and 30% of the Group’s free cash flow, defined as net cash generated from operating
activities less sustaining capital expenditure and necessary brownfield exploration.
Dividends or other returns will only be paid provided there is sufficient cash remaining to meet working capital needs,
contractual debt repayments and to invest in the strategy of the Group. The Group’s current strategy is to double production to
60,000 oz pa Au by end 2026 and become a 100,000 – 200,000 oz pa Au producer within 3-5 years by leveraging its extensive
exploration portfolio, capitalising on management’s proven track record of successfully developing and operating mines in
Brazil and engaging in strategic M&A. To execute its growth strategy the Group will prioritise commitment to investing in
organic growth as well as continuing to analyse potential M&A opportunities, however with a sustained increase in the gold
price there may be an opportunity to allocate a portion of the Group’s capital in paying a dividend to its shareholders.
The results for the year are set out on page 99 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 Tapajós 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
Service in the year 31 December 2024
Michael Lynch-Bell
Served throughout the year
Michael Hodgson
Served throughout the year
Clive Line
Resigned 31 December 2024
Luis Azevedo
Served throughout the year
Deborah Gudgeon
Served throughout the year
Carolina Margozzini
Resigned 21 April 2025
Mark Sawyer
Resigned 11 April 2025
Colm Howlin
Appointed 25 April 2025
The roles and biographies of the Directors in office as at the date of this report are set out on pages 56 to 57.
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 2024 and as at 25 April 2025 (being the
latest practicable date prior to the publication of this report):
As at 31 December 2024
Number of
shares held
Percentage
Fratelli Investments Limited
19,318,785
25.5%
Greenstone Resources II LP
19,083,394
25.2%
Premier Miton Group PLC
3,569,225
4.7%
River and Mercantile Asset Management
3,622,550
4.8%
CORPORATE GOVERNANCE
Directors’ Report
88
As at 25 April 2025 (1)
Number of
shares held
Percentage
Fratelli Investments Limited
19,318,785
25.5%
Greenstone Resources II LP
19,083,394
25.2%
Premier Miton Group PLC
3,569,225
4.7%
Kave Sigaroudinia
3,241,021
4.2%
(1) The table above shows the shareholder position as at 25 April 2025 being the latest practicable date prior to publication.
On 12 April 2025 however Greenstone Resources II LP entered into a binding unconditional agreement to dispose of
approximately 15.15 million shares representing 19.99% of the issued share capital of the Company. On 22 April 2025
Greenstone Resources II LP pursuant to a placing sold their remaining shares in the Company representing
approximately 5.2% of the issued share capital of the Company. Both of these sales transactions are expected to
complete in the first week of May 2025. On 22 April 2025 Fratelli Investments Limited sold 11,752,903 ordinary shares
in the Company representing 15.5% of the issued share capital of the Company. This sale transaction is also expected to
complete in early May 2025.
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 2024, 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 2024, there were no warrants in issue.
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 56 to 91.
Directors’ interests
Details of the Directors’ share interests can be found in the Remuneration Committee Report on pages 71 to 84. 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 to 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
CORPORATE GOVERNANCE
Directors’ Report
89
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 24 to 25.
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.
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 16 to 20.
Principal risks and uncertainties
The principal risks and uncertainties are outlined in the Strategic Report on pages 26 to 34.
Management of financial risks
Capital management and financial risk disclosures are provided within notes 23 to 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”). The QCA code was updated in 2023 (“the New QCA Code”). This updated version has applied to the Company during
2024 and the Company has disclosed compliance against the New QCA Code in its corporate governance statement and on its
website. 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 55 to 66.
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
CORPORATE GOVERNANCE
Directors’ Report
90
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.
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 61.
On 12 April 2025 the Company was notified that Greenstone Resources II LP had entered into a binding agreement to dispose of
approximately 15.15 million shares representing 19.99% of the issued share capital of the Company. On 22 April 2025 Greenstone
Resources II LP pursuant to a placing sold their remaining shares in the Company representing approximately 5.2% of the issued
share capital of the Company. As a result, the Company expect that the Greenstone Relationship Agreement will terminate within
30 days of the completion of their share sale.
On 22 April 2025 Fratelli Investment Limited pursuant to a placing sold 11,752,903 shares in the Company representing 15.5% of
the issued share capital of the Company. As a result of this sale Fratelli retain a holding of 7,565,882 ordinary shares representing
10% of the issued share capital of the Company. The relationship agreement with Fratelli will therefore terminate within 30 days
of the completion of their share sale.
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 2024 (2023: 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 26 June 2025. 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 a
resolution to repurchase shares will also be included. An explanation of the resolutions to be put to shareholders at the 2025 AGM
and recommendations in relation to them will be set out in the 2025 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.
CORPORATE GOVERNANCE
Directors’ Report
91
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
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
29 April 2025
FINANCIAL STATEMENTS
Financial Statements
Contents
93
Independent Auditor’s Report
99
Group Statement of Comprehensive
Income
100
Group Balance Sheet
101
Company Balance Sheet
102
Group Statement of Changes in Equity
103
Company Statement of Changes in
Equity
104
Group and Company Cash Flow
Statements
105
Notes to the Financial Statements
FINANCIAL STATEMENTS
Independent Auditor’s Report
93
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 2024 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company
Balance Sheet, the Group and Company Statements of Changes in Shareholders’ Equity, the Group and Company Cashflow
Statements 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 2024 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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
FINANCIAL STATEMENTS
Independent Auditor’s Report
94
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 $1,250,000 (2023: $900,000) with performance materiality set at
$875,000 (2023: $630,000), being 70% (2023: 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 chosen to apply 70% for the purposes of the performance materiality calculation
as this is our third audit and no material adjustments or significant control deficiencies were identified in prior years.
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 $60,000 (2023: $45,000) 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 $750,000 (2023: $850,000) with performance materiality set at
$525,000 (2023: 595,000), being 70% of the company materiality.
The benchmark for determining materiality of the parent company was 60% (2023: 94%) of group materiality which equates to
0.6% of the company’s total 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 chosen to apply 70% for the purposes of the performance materiality calculation
as this is our third audit and no material adjustments or significant control deficiencies were identified in prior years.
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 $52,500 (2023: $42,500) together with any other audit misstatements below that threshold that we
believe warranted reporting on qualitative grounds.
For each material component in the scope of our audit, we allocated a component performance materiality based on the maximum
aggregate component performance materiality. The range of performance materiality allocated across components was between
$525,000 and $700,000 (2023: $300,000 to $600,000), being a percentage of between 48% and 95% of group performance materiality.
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:
-
Quantification of mineral resources
-
Revenue recognition
-
Inventory valuation
FINANCIAL STATEMENTS
Independent Auditor’s Report
95
-
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 2024, the Group’s Deferred
exploration assets are valued at $18.8m (2023:
$20.4m) 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].
•
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.
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 2024 the Group’s Mining Assets totalled
$53.4m (2023: $53.3m) 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 of the
model is in line with applicable accounting
standards;
FINANCIAL STATEMENTS
Independent Auditor’s Report
96
•
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.
Valuation of investments and Intercompany receivables
(Plc only) – (Note 12)
As at 31 December 2024, the carrying value of investments
in subsidiaries is $104.4m (2023: $103.4m). 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.
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 investment in
subsidiaries against the underlying assets to assess
the recoverability of investments; and
•
Obtaining and testing management’s cash flow
forecast for the CGU which underpins the value
held as investments by Serabi Gold plc.
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.
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:
FINANCIAL STATEMENTS
Independent Auditor’s Report
97
•
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
conducting enquiries of management regarding potential instances of non-compliance;
o
reviewing RNS announcements;
o
reviewing legal and professional fees ledger accounts; and
o
reviewing board minutes and other correspondence from management.
•
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
FINANCIAL STATEMENTS
Independent Auditor’s Report
98
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)
15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
29 April 2025
FINANCIAL STATEMENTS
Group Statement of Comprehensive Income
For the year ended 31 December 2024
99
Group
For the year
ended
31 December
2024
For the year
ended
31 December
2023
Notes
US$
US$
Revenue from continuing operations
2
94,536,392
63,707,468
Cost of sales
(50,940,007)
(43,184,739)
Stock impairment provision
230,000
(230,000)
Depreciation and amortisation charges
(4,273,324)
(6,239,556)
Total cost of sales
(54,983,331)
(49,654,295)
Gross operating profit
39,553,061
14,053,173
Administration expenses
(7,442,698)
(6,492,165)
Share-based payments
(248,911)
(197,344)
Gain on disposal of fixed assets
(274,557)
180,966
Operating profit
3
31,586,895
7,544,630
Foreign exchange gain
(1,515,370)
174,105
Other income – exploration receipts
4
331,144
4,680,414
Other expenses – exploration expenses
4
(299,612)
(4,339,554)
Finance expense
5
(674,399)
(739,245)
Finance income
5
2,848,358
847,523
Profit before taxation
32,277,016
8,167,873
Income tax expense
6
(4,457,298)
(1,592,261)
Profit for the period(1)
27,819,718
6,575,612
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translating foreign
operations
(16,679,024)
4,496,030
Total comprehensive profit for the period(1)
11,140,694
11,071,642
Earnings per ordinary share (basic) (1)
8
36.73
8.68c
Earnings per ordinary share (diluted) (1)
8
36.73
8.68c
(1)
The Group has no non-controlling interests and all profits are attributable to the equity holders of the Parent Company.
(2)
Notes to the Accounts on pages 105 to 147 form an integral part of these financial statements
FINANCIAL STATEMENTS
Group Balance Sheet
As at 31 December 2024
Company Number 5131528
100
Group
At 31 December
2024
At 31 December
2023
Notes
US$
US$
Non-current assets
Deferred exploration costs
9
18,839,836
20,499,257
Property, plant and equipment
10
53,593,723
53,340,903
Right of use assets
11
4,287,020
5,316,330
Taxes receivable
14
6,246,352
4,653,063
Deferred taxation
6
1,878,081
1,791,983
Total non-current assets
84,845,012
85,601,536
Current assets
Inventories
13
13,115,648
12,797,951
Trade and other receivables
14
2,533,450
2,858,072
Prepayments
15
2,220,463
2,320,256
Derivative financial assets
20
—
115,840
Cash and cash equivalents
16
22,183,049
11,552,031
Total current assets
40,052,610
29,644,150
Current liabilities
Trade and other payables
17
9,695,560
8,626,292
Interest-bearing liabilities
19
5,841,804
6,403,084
Accruals
419,493
649,225
Total current liabilities
15,956,857
15,678,601
Net current assets
24,095,753
13,965,549
Total assets less current liabilities
108,940,765
99,567,085
Non-current liabilities
Trade and other payables
17
2,809,243
3,960,920
Provisions
18
1,839,916
2,663,892
Interest-bearing liabilities
19
109,952
150,224
Total non-current liabilities
4,759,111
6,775,036
Net assets
104,181,654
92,792,049
Equity
Share capital
22
11,213,618
11,213,618
Share premium reserve
36,158,068
36,158,068
Share incentive reserve
221,613
175,573
Other reserves
19,486,684
15,960,006
Translation reserve
(78,459,765)
(61,780,741)
Retained surplus
115,561,436
91,065,525
Equity shareholders’ funds attributable
to owners of the parent
104,181,654
92,792,049
Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$19,125,223 (2023: merger reserve of
US$361,461 and taxation reserve of US$15,598,545).
The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2025 and signed on its
behalf by:
Colm Howlin
Chief Financial Officer
29 April 2025
FINANCIAL STATEMENTS
Company Balance Sheet
As at 31 December 2024
Company Number 5131528
101
Company
At 31 December
2024
At 31 December
2023
Notes
US$
US$
Non-current assets
Investments in subsidiaries
12
104,394,490
103,350,358
Other receivables
14
9,788,536
9,788,536
Total non-current assets
114,183,026
113,138,894
Current assets
Trade and other receivables
14
2,192,843
2,491,548
Prepayments and prepaid taxes
15
191,656
226,216
Derivative financial assets
20
—
115,840
Cash and cash equivalents
16
18,102,225
7,713,125
Total current assets
20,486,724
10,546,729
Current liabilities
Trade and other payables
17
44,608,434
33,527,595
Accruals
213,808
225,381
Total current liabilities
44,822,242
33,752,976
Net current liabilities
(24,335,518)
(23,206,247)
Total assets less current liabilities
89,847,508
89,932,647
Net assets
89,847,508
89,932,647
Equity
Share capital
22
11,213,618
11,213,618
Share premium reserve
36,158,068
36,158,068
Share incentive reserve
221,613
175,572
Merger reserve
361,461
361,461
Retained surplus
41,892,748
42,023,928
Equity shareholders’ funds attributable
to owners of the parent
89,847,508
89,932,647
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 2024 was US$334,051 (2023: loss of US$1,562,831).
The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2025 and signed on its
behalf by:
Colm Howlin
Chief Financial Officer
29 April 2025
FINANCIAL STATEMENTS
Statements of Changes in Shareholders’ Equity
For the year ended 31 December 2024
102
Group
Share
capital
Share
premium
Share
incentive
reserve
Other
reserves
Translation
reserve
Retained
surplus
Total equity
US$
US$
US$
US$
US$
US$
US$
Equity shareholders’
funds at 31 December
2022
11,213,618
36,158,068
1,324,558
14,459,255
(66,276,771)
84,644,335
81,523,063
Foreign currency
adjustments
–
–
–
–
4,496,030
–
4,496,030
Profit for year
–
–
–
–
–
6,575,612
6,575,612
Total comprehensive
income for the year
–
–
–
–
4,496,030
6,575,612
11,071,642
Transfer to taxation
reserve
–
–
–
1,500,751
–
(1,500,751)
–
Share based incentives
lapsed in period
–
–
(1,346,329)
–
–
1,346,329
–
Share based incentive
expense
–
–
197,344
–
–
–
197,344
Equity shareholders’
funds at 31 December
2023
11,213,618
36,158,068
175,573
15,960,006
(61,780,741)
91,065,525
92,792,049
Foreign currency
adjustments
–
–
–
–
(16,679,024)
(16,679,024)
Profit for year
–
–
–
–
27,819,718
27,819,718
Total comprehensive
income for the year
–
–
–
–
(16,679,024)
27,819,718
11,140,694
Transfer to taxation
reserve
–
–
–
3,526,678
–
(3,526,678)
–
Share based incentives
lapsed in period
–
–
(202,871)
–
–
202,871
–
Share based incentive
expense
–
–
248,911
–
–
–
248,911
Equity shareholders’
funds at 31 December
2024
11,213,618
36,158,068
221,613
19,486,684
(78,459,765)
115,561,436
104,181,654
Other reserves comprise a merger reserve of US$361,461 and a taxation reserve of US$19,125,223 (2023: merger reserve of
US$361,461 and taxation reserve of US$15,598,545).
The following is a description of each of the reserve accounts that comprise equity shareholders’ funds
Share capital
The share capital comprises the issued ordinary shares of the Company at par.
Share premium
The share premium comprises the excess value recognised from the issue of ordinary shares at par.
Share incentive reserve
Cumulative fair value of options charged to the statement of comprehensive income net of transfers to the profit and
loss reserve on exercised and cancelled/lapsed options.
Other reserves
Other reserves is comprised of a merger reserve arising on the acquisition of Kenai Resources Limited, representing the
difference between the nominal value of the shares issued and their fair value, and a warrant reserve being the
cumulative fair value of warrants issued associated with equity shares issued.
The Group has also established a taxation reserve. The reserve is used to accumulate taxation savings received by the
Group as a result of a lower taxation rate being applied in Brazil through its eligibility for a tax incentive programme
(“SUDAM”). SUDAM reduces the Group’s effective tax rate from approximately 34 per cent to approximately 15.25 per
cent. The regulations of the incentive programme require the Group to accumulate incentives received through tax
savings in a taxation reserve. The taxation reserve is not considered a distributable reserve but can be used to meet the
cost of regional investment programmes completed by the Group and approved by SUDAM.
Translation reserve
Cumulative gains and losses on translating the net assets of overseas operations to the presentation currency.
Retained surplus
Retained surplus / (accumulated losses) comprise the Group’s cumulative accounting profits and losses since inception.
FINANCIAL STATEMENTS
Statements of Changes in Shareholders’ Equity
For the year ended 31 December 2024
103
Company
Share
capital
Share
premium
Share option
reserve
Other reserve
Retained
surplus
Total equity
US$
US$
US$
US$
US$
US$
Equity shareholders’ funds
at 31 December 2022
11,213,618
36,158,068
1,324,558
361,461
42,240,431
91,298,136
Loss for the year
–
–
–
–
(1,562,831)
(1,562,831)
Comprehensive loss for year
–
–
–
–
(1,562,831)
(1,562,831)
Share based incentives
lapsed in period
–
–
(1,346,328)
–
1,346,328
–
Share based incentive
expense
–
–
197,343
–
–
197,343
Equity shareholders’ funds
at 31 December 2023
11,213,618
36,158,068
175,573
361,461
42,023,928
89,932,648
Profit for the year
–
–
–
–
(334,051)
(334,051)
Comprehensive loss for year
–
–
–
–
(334,051)
(334,051)
Share based incentives
lapsed in period
–
–
(202,871)
–
202,871
–
Share based incentive
expense
–
–
248,911
–
–
248,911
Equity shareholders’ funds
at 31 December 2024
11,213,618
36,158,068
221,613
361,461
41,892,748
89,847,508
FINANCIAL STATEMENTS
Cashflow Statements
For the year ended 31 December 2024
104
Group
Company
For the
year ended
31 December
2024
For the
year ended
31 December
2023
For the
year ended
31 December
2024
For the
year ended
31 December
2023
Notes
US$
US$
US$
US$
Cash outflows from operating activities
Profit/(loss) for the period
27,819,718
6,575,612
2,856,766
(1,562,831)
Net financial income
(690,121)
(623,243)
(276,080)
(638,250)
Depreciation – plant, equipment and mining properties
4,273,324
6,239,556
–
–
Provision for inventory impairment
(230,000)
230,000
–
–
Taxation expense
6
4,457,298
1,592,261
–
–
Share-based payments
248,911
197,344
248,911
197,343
Gain on fixed asset sales and other items
274,557
(180,966)
–
–
Taxation paid
(1,967,258)
(1,400,365)
(62,354)
(90,586)
Interest paid
(547,397)
(426,366)
–
–
Foreign exchange (loss)/gain
34,072
(82,829)
84,475
(10,067)
Changes in working capital
Increase in inventories
(2,730,297)
(2,830,651)
–
–
Increase in receivables, prepayments and accrued
income
(2,507,371)
1,614,497
333,266
2,690,814
Increase in payables, accruals and provisions
2,444,483
1,188,337
237,689
56,305
Increase in short-term intercompany payables
–
–
7,640,761
3,111,857
Net cash inflow from operations
30,879,919
12,093,187
11,063,434
3,754,585
Investing activities
Purchase of property, plant, equipment, and projects in
construction
10
(7,902,368)
(2,378,317)
–
–
Mine development expenditure
10
(6,332,004)
(4,425,839)
–
–
Geological exploration expenditure
9
(2,717,201)
(571,411)
–
–
Pre-operational project costs
10
(2,001,086)
–
–
–
Proceeds from sale of assets
64,956
326,727
–
–
Investment in subsidiaries
12
–
–
(1,044,132)
(399,396)
Interest received and other finance income
499,138
313,106
382,944
189,164
Net cash outflow on investing activities
(18,388,565)
(6,735,734)
(661,188)
(210,232)
Financing activities
Receipt of short-term loan
19
5,000,000
5,000,000
–
–
Repayment of short-term loan
19
(5,000,000)
(5,096,397)
–
–
Payment of lease liabilities
(885,344)
(1,171,602)
–
–
Net cash outflow from financing activities
(885,344)
(1,267,999)
–
–
Net increase) in cash and cash equivalents
11,606,010
4,089,454
10,402,246
3,544,353
Cash and cash equivalents at beginning of period
11,552,031
7,196,313
7,713,125
4,156,908
Exchange difference on cash
(974,992)
266,264
(13,146)
11,864
Cash and cash equivalents at end of period
22,183,049
11,552,031
18,102,225
7,713,125
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
105
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 87.
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 2024
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 2024
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
1 January 2024
IFRS S2 Climate-related Disclosures
1 January 2024
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures –
Supplier Finance Arrangements
1 January 2024
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
1 January 2024
Amendments IAS 1 – Classification of Liabilities as Current or Non Current and Non Current Liabilities with Covenants
The IASB issued amendments to IAS 1 Presentation of Financial Statements (“IAS 1”). The amendments clarify that the
classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period.
Classification is unaffected by the entity’s expectation or events after the reporting date. Covenants of loan arrangements will
affect the classification of a liability as current or non-current if the entity must comply with a covenant either before or at the
reporting date, even if the covenant is only tested for compliance after the reporting date. There was no significant impact on the
Company’s consolidated interim financial statements as a result of the adoption of these amendments.
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,
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
106
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 24 and 25.
(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 2024 was 1.2577 (2023: 1.2769). The Brazilian Real/US Dollar exchange rate
at 31 December 2024 was 6.1917 (2023: 4.9947).
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
107
(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. Mining properties 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. On 1 January 2024, the Group adjusted its amortisation estimate to only include
its Measured and Indicated Resources in its calculations of amortisation. Prior to this the Group included all of its Measured,
Indicated and Inferred Resources in its calculations of amortisation.
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
3 – 7 years
Other plant and assay equipment
2 – 10 years
Heavy vehicles
8 years
Light vehicles
3 years
Buildings
10 – 20 years
Mining properties
unit of production
Other assets
Furniture and fittings
4 years
Office equipment
4 years
Communication installations
5 years
Computers
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
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
108
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
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)
sufficient data exists that render the resource uneconomic and unlikely to be developed
(ii)
title to the asset is compromised
(iii)
budgeted or planned expenditure is not expected in the foreseeable future
(iv)
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)
a significant deterioration in the spot price of gold
(ii)
a significant increase in production costs
(iii)
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-
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
109
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.
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
110
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.
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
111
(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)
Financing income
Financing Income includes a once off receipt for an over payment of the local PIS/CONFINS tax for the period from 2019-2024.
PIS and COFINS are federal social contributions imposed monthly on gross revenue earned.
(r)
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
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
112
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.
(s)
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
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.
(t)
Investments in subsidiaries
Investments in subsidiaries are recognised at cost, less any provision for impairment.
(u)
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
113
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.
(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
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
114
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
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.
(v)
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.
(w)
Taxes receivable
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
115
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 receivables are classified as long-term or short-term receivables based on
the expected time frame over which they are expected to be recovered.
(x)
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.
(y)
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
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
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
116
• Credit risk as a result of deterioration of credit profile of the counterparties
The Group did not enter in any hedging arrangements during 2024. However, during the first of quarter of 2023, the Group
entered into a hedging contract 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 were 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.
(z)
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.
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 and Indicated Resources and Inferred Resources in its calculations 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.
Since 1 January 2024, the Group only includes its Measured and Indicated Resources in its calculations of amortisation.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
117
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
shipping, 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.
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. At the end of 2023 the Group carried an
impairment provision of US$230,000 against the carrying value of its low grade stockpile of Coringa ore. Theis provision was
reversed during 2024 as a result of the improved grade in the stockpile of Coringa ore.
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
118
•
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
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)
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
119
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.
Recoverability of ICMS tax debts (note 15)
ICMS tax is a State-imposed sales tax which is recoverable from the State of Pará. 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 Pará. 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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
120
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:
2024
2023
Brazil
UK
Total
Brazil
UK
Total
US$
US$
US$
US$
US$
US$
Revenue
64,001,960
30,534,432
94,536,392
32,604,026
31,103,442
63,707,468
Intra-group sales
22,702,436
(22,702,436)
–
26,582,279
(26,582,279)
–
Operating expenses
(46,530,077)
(4,409,930)
(50,940,007)
(39,361,191)
(3,823,548)
(43,184,739)
Stock impairment provision
230,000
–
230,000
(230,000)
–
(230,000)
Depreciation and amortisation
(4,104,050)
(169,274)
(4,273,324)
(6,069,205)
(170,351)
(6,239,556)
Gross profit/(loss)
36,300,269
3,252,792
39,553,061
13,525,909
527,264
14,053,173
Administration expenses
(3,206,559)
(4,236,139)
(7,442,698)
(3,250,393)
(3,241,772)
(6,492,165)
Share-based payments
–
(248,911)
(248,911)
–
(197,344)
(197,344)
Proceeds from sale of assets
(274,557)
–
(274,557)
180,966
–
180,966
Operating profit/(loss)
32,819,153
(1,232,258)
31,586,895
10,456,482
(2,911,852)
7,544,630
Net other income
31,532
–
31,532
340,860
–
340,860
Foreign exchange (loss)/gain
(1,490,853)
(24,517)
(1,515,370)
193,065
(18,960)
174,105
Finance expense
(612,045)
(62,354)
(674,399)
(648,659)
(90,586)
(739,245)
Finance income
2,458,583
389,775
2,848,358
123,942
723,581
847,523
Profit /(loss) before taxation
33,206,370
(929,354)
32,277,016
10,465,690
(2,297,817)
8,167,873
Income tax expense
(4,457,298)
–
(4,457,298)
(1,592,261)
–
(1,592,261)
Profit/ (loss) for the period
28,749,072
(929,354)
27,819,718
8,873,429
(2,297,817)
6,575,612
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:
Total non-current assets
31 December
31 December
2024
2023
US$
US$
Brazil – operations
57,880,743
58,657,233
Brazil – exploration
18,839,836
20,499,257
Brazil – taxes receivable
6,246,352
4,653,063
Brazil – deferred tax
1,878,081
1,791,983
Brazil – total
84,845,012
85,601,536
UK
–
–
Total
84,845,012
85,601,536
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
121
An analysis of total assets by location is as follows:
Total assets
31 December
31 December
2024
2023
US$
US$
Brazil
104,264,754
104,898,070
UK
20,632,868
10,347,616
Total
124,897,622
115,245,686
During the year, the following amounts incurred by project location were capitalised as pre-operating or deferred exploration
costs (see note 9):
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Brazil
2,717,201
571,411
During the year, the following amounts were capitalised as land and buildings, mine assets, property, plant, equipment and
projects in construction (see note 10):
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Brazil
16,235,458
6,804,156
Revenue
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:
31 December
31 December
2024
2023
US$
US$
Brazil
64,001,960
32,604,026
UK
30,534,432
31,103,442
Total
94,536,392
63,707,468
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
122
An analysis of major customers (accounting for more than 10 per cent of the Group’s revenues) is as follows:
31 December 2024
31 December 2023
US$
%
US$
%
Customer 1 – sale concluded from UK
30,534,432
32.3%
31,103,442
48.8%
Customer 2 – sale concluded from Brazil
64,001,960
67.7%
22,170,738
34.8%
Other – sale concluded from Brazil
–
–
10,433,288
16.4%
Total
94,536,392
100.0%
63,707,468
100.0%
3
Operating profit
a.
Group operating profit for the year is stated after charging the following:
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Staff costs
28,068,080
18,714,746
Depreciation (property, plant and equipment)
2,265,216
1,948,121
Amortisation of the mine asset
2,008,108
4,291,435
b.
Auditor’s remuneration
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Fees payable to the Group’s auditor for the audit of the Group’s annual financial
statements
182,039
178,010
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
–
–
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
123
4
Other income and expense
Under the copper exploration alliance with Vale announced on 10 May 2023, the related exploration activities undertaken by the
Group under the management of a working committee (comprising representatives from Vale and Serabi), were funded in their
entirety by Vale during Phase 1 of the programme. Following the completion of Phase 1, Vale advised the Group, in April 2024,
that it did not wish to continue the exploration alliance.
Exploration and development of copper deposits is not the core activity of the Group and further funding beyond the Phase 1
commitment would be required before a judgment could be made as to a project being commercially viable. There is a significant
cost involved in developing new copper deposits and it is unlikely that, without the financial support of a partner, the Group
would independently seek to develop a copper project in preference to any of its existing gold projects and discoveries. As a
result, both the funding received from Vale and the related exploration expenditures was recognised through the income
statement. As this is not a principal business activity of the Group these receipts and expenditures were classified as other income
and other expenses.
5
Finance expense and income
Group
12 months
ended
31 December
2024
12 months
ended
31 December
2023
US$
US$
Interest on short term unsecured bank loan
(424,639)
(453,675)
Interest in finance leases
(60,404)
(103,568)
Interest on short term trade loan
(62,354)
(90,586)
Variation on discount on rehabilitation provision
(127,002)
(91,416)
Total finance expense
(674,399)
(739,245)
PIS/COFINS recovered
2,342,388
—
Gain on revaluation of derivatives
—
431,348
Realised gain on hedging activities
6,832
103,069
Interest income
499,138
313,106
Total finance income
2,848,358
847,523
Net finance income
2,173,959
108,278
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
124
6
Taxation
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Current tax
UK tax
–
–
Foreign tax – Tax on current year profits
4,999,173
2,199,658
Foreign tax – Adjustment to prior year’s tax charges
–
–
Total current tax
4,999,173
2,199,658
Deferred tax
Increase of deferred tax asset arising from temporary timing differences
(541,875)
(104,652)
Decrease of deferred tax liability arising from temporary timing differences
–
(502,745)
Total deferred tax
(541,875)
(607,397)
Income tax charge
4,457,298
1,592,261
The tax provision for the current period varies from the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%). The
differences are explained as follows:
Group
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Profit/(loss) on ordinary activities before tax
32,277,016
8,167,873
Tax thereon at UK corporate tax rate of 25.00% (2023: 25.00%)
8,069,254
2,041,969
Factors affecting the tax charge:
expenses not deductible for tax purposes
67,758
423,008
temporary differences (not recognised)
(769,335)
(64,933)
lower rate tax overseas – regional tax incentives
(1,950,079)
(917,056)
higher rate tax overseas
610,978
372,537
unrecognised tax losses carried forward and similar adjustments
(303,884)
(158,612)
reduction in prior period overseas taxes due
(627,392)
–
increase of deferred tax asset arising from temporary timing differences
(541,875)
–
other movements
(98,127)
(104,652)
Tax charge
4,457,298
1,592,261
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
125
Unrecognised gross deferred tax position - 2024
Trading losses
Temporary
differences
Total
US$
US$
US$
Tax losses brought forward
76,734,366
–
76,734,366
Movement in tax losses in the period
(6,539,029)
–
(6,539,029)
Total unrecognised gross deferred tax position at end of period
70,195,337
–
70,195,337
Unrecognised gross deferred tax position - 2023
Trading losses
Temporary
differences
Total
US$
US$
US$
Tax losses brought forward
72,372,386
–
72,372,386
Tax losses not recognised in the period
4,361,980
–
4,361,980
Total unrecognised gross deferred tax position at end of period
76,734,366
–
76,734,366
For the
year ended
31 December
2024
For the
year ended
31 December
2023
Unrecognised deferred tax asset
US$
US$
Tax losses (1)
17,548,834
19,183,592
Temporary differences
–
–
Total unrecognised deferred tax asset
17,548,834
19,183,592
Recognised deferred tax asset
Tax losses brought forward
1,791,983
1,545,684
Tax losses and untaxed expenses recognised in the period
541,875
104,652
Exchange
(455,777)
141,647
Net recognised deferred tax asset
1,878,081
1,791,983
Recognised deferred tax liability
Untaxed income brought forward
–
480,922
Untaxed income recognised in the period
–
(502,745)
Exchange
–
21,823
Net recognised deferred tax liability
–
–
(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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
126
7
Employee information
The average number of persons, including Executive Directors, employed by the Group during the year was:
Group
Company
For the
For the
For the
For the
year ended
year ended
year ended
year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
Number
Number
Number
Number
Management and corporate administration
24
24
6
4
Exploration
9
12
–
–
Mine operations and maintenance
715
521
8
8
Mine management and administration
30
30
–
1
Plant and processing
81
68
–
–
Total
859
655
14
13
For the
For the
For the
For the
year ended
year ended
year ended
year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Staff costs
Wages and salaries
20,706,857
14,407,282
4,981,054
4,173,534
Cost of incentive scheme shares
248,911
197,344
248,911
197,344
Social security costs
5,021,741
3,413,039
152,698
147,859
Termination costs
302,326
577,215
–
–
Pension contributions
90,571
119,866
90,571
119,866
Total
26,370,406
18,714,746
5,473,234
4,638,603
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:
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Salary and other benefits
1,311,296
916,343
Post-employment benefits
88,535
89,204
Total
1,399,831
1,005,547
The remuneration paid to the highest paid Director plus the charge in respect of share incentive awards during the year was
US$675,390 (2023: US$568,986). This includes cash contributions made by the Company to their money purchase pension scheme
of US$10,220 (2023: US$9,989).
During the year ended 31 December 2024, two of the Directors (2023: two) were contractually entitled to accrue retirement benefits
under money purchase schemes.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
127
During the years ended 31 December 2024 and 31 December 2023, none of the serving Directors exercised any share options nor
did any shares vest pursuant to the Restricted Stock Plan operated by the Company. Details of share incentives held by the
Directors at 31 December 2024 and other equity related interests are set out in the Remuneration Report on pages 71 to 84.
8
Earnings per share
For the year
ended
31 December
2024
For the year
ended
31 December
2023
Profit/(loss) attributable to ordinary shareholders (US$)
27,819,718
6,575,612
Weighted average ordinary shares in issue
75,734,551
75,734,551
Basic profit per share (US cents)
36.73
8.68
Diluted ordinary shares in issue (1)
75,734,551
75,734,551
Diluted profit per share (US cents)
36.73
8.68
(1) At 31 December 2024 there were 2,814,632 conditional share awards in issue (31 December 2023 - 2,075,400). 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.
9
Intangible assets
Deferred exploration costs
Group
31 December
31 December
2024
2023
US$
US$
Cost
Opening balance
20,499,257
18,621,180
Exploration and evaluation expenditure
2,717,201
571,411
Foreign exchange movements
(4,376,622)
1,306,666
Total as at end of period
18,839,836
20,499,257
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
128
10
Tangible assets
Property, plant and equipment – Group
Land and
buildings
Mining
property
Projects in
construction
Plant and
equipment
Total
– at cost
– at cost
– at cost
– at cost
2024
US$
US$
US$
US$
US$
Cost
Balance at 31 December 2023
5,742,373
77,170,200
7,140,181
18,196,683
108,249,437
Additions
626,030
8,333,090
4,829,206
2,447,132
16,235,458
Reallocations from projects in construction
1,656,770
5,648,893
(10,688,479)
3,382,816
–
Changes in estimates in provision for
rehabilitation
–
(118,729)
–
–
(118,729)
Disposals
–
–
(9,380)
(1,389,166)
(1,398,546)
Foreign exchange movements
(4,610,521)
(12,438,258)
(227,855)
(5,120,269)
(22,396,903)
At 31 December 2024
3,414,652
78,595,196
1,043,673
17,517,196
100,570,717
Depreciation
Balance at 31 December 2023
(1,714,994)
(39,755,827)
–
(13,437,713)
(54,908,534)
Charge for period
(480,654)
(2,850,190)
–
(998,241)
(4,329,085)
Released on asset disposals
–
–
–
1,123,989
1,123,989
Foreign exchange movements
599,312
7,621,531
–
2,915,793
11,136,636
At 31 December 2024
(1,596,336)
(34,984,486)
–
(10,396,172)
(46,976,994)
Net book value at 31 December 2024
1,818,316
43,610,710
1,043,673
7,121,024
53,593,723
No costs of borrowing have been capitalised during the period (2023: nil).
Land and
buildings
Mining
property
Projects in
construction
Plant and
equipment
Total
– at cost
– at cost
– at cost
– at cost
2023
US$
US$
US$
US$
US$
Cost
Balance at 31 December 2022
2,589,667
66,114,988
11,106,563
18,099,900
97,911,118
Additions
236,907
4,425,839
841,845
1,299,565
6,804,156
Reallocations from projects in construction
2,616,100
1,014,644
(4,902,222)
1,271,478
–
Changes in estimates in provision for
rehabilitation
–
1,222,800
–
–
1,222,800
Disposals
–
–
(60,598)
(4,511,613)
(4,572,211)
Foreign exchange movements
299,699
4,391,929
154,593
2,037,353
6,883,574
At 31 December 2023
5,742,373
77,170,200
7,140,181
18,196,683
108,249,437
Depreciation
Balance at 31 December 2022
(1,287,242)
(34,406,476)
–
(13,734,881)
(49,428,599)
Charge for period
(270,396)
(3,016,791)
–
(1,512,472)
(4,799,659)
Released on asset disposals
–
–
–
2,798,953
2,798,953
Foreign exchange movements
(157,356)
(2,332,560)
–
(989,313)
(3,479,229)
At 31 December 2023
(1,714,994)
(39,755,827)
–
(13,437,713)
(54,908,534)
Net book value at 31 December 2023
4,027,379
37,414,373
7,140,181
4,758,970
53,340,903
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.
Management used a base price of US$2,500 per ounce for the duration of its cash flow projection and a fixed exchange rate of
BrR$5:60 to US$1:00. The projection was for the period to 31 December 2033.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
129
Management considered a range of discount rates and was satisfied that even at a 23% discount rate which is above the current
WACC of the Group, there was no indicator of impairments.
Management has assumed inter-alia that:
•
current production rates from the Palito ore body will be maintained.
•
ore production from Coringa will increase as the Serra orebody continues to be produce ore, and the Meio orebody
continues to be developed.
11
Right of use assets
Plant and equipment
31 December
2024
31 December
2023
US$
US$
Cost
Opening balance
7,759,843
7,199,992
Additions
376,648
–
Foreign exchange movements
(1,741,844)
559,851
Total as at end of period
6,394,647
7,759,843
Depreciation
Opening balance
(2,443,513)
(1,825,950)
Charge for period
(226,561)
(460,919)
Foreign exchange movements
562,447
(156,644)
Total as at end of period
(2,107,627)
(2,443,513)
Net book value at end of period
4,287,020
5,316,330
The Group only leases underground mining equipment. As at 31 December 2024, the future minimum lease payments due in
respect of outstanding lease contracts for mining equipment are US$361,671 (2023: US$844,624). The net present value of these
lease contracts is US$308,106 (2023: US$726,831).
31 December 2024
31 December 2023
US$
US$
Current lease liabilities
Plant and equipment
251,719
694,400
251,719
694,400
Non-current lease liabilities
Plant and equipment
109,952
150,224
109,952
150,224
Total lease liabilities
361,671
844,624
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
130
12
Investments in subsidiaries
The Group consists of the following subsidiary undertakings:
Name
Incorporated
Registered office address
Activity
%
holding
Serabi Mineração SA
Brazil
Rodovia Transgarimpeira, km
22,
Bairro Jardim do Ouro –
Itaituba/PA CEP 68181-000
Brazil
Gold mining and
exploration
100%(1)
Kenai Resources Ltd
British Columbia,
Canada
Royal Centre, P.O Box 11125,
Suite 1750-1055
W Georgia Street,
Vancouver, Canada
Investment
100%
Gold Aura do Brasil
Mineração Ltda
Brazil
Rodovia Transgarimpeira, KM
54
Comunidade São Chico –
Itaituba/PA CEP 68181-000
Brazil
Gold mining and
exploration
99.9%(1)
Serabi Mining Ltd
British Virgin
Islands
Craigmuir Chambers,
Road Town, Tortola,
British Virgin Islands
Investment
100%
Chapleau Resources Ltd
British Colombia,
Canada
Royal Centre, P.O Box 11125,
Suite 1750-1055
W Georgia Street,
Vancouver, Canada
Investment
100%
Chapleau Resources
(USA) Inc
Alaska,
USA
1029 West 3rd Avenue
Suite 400
Anchorage,
Alaska USA
Gold exploration
100%(1)
Chapleau Exploração
Mineral Ltda
Brazil
Avenida Jornalista Ricardo
Marinho no 360, loja 113
Barra da Tijuca
Rio de Janeiro
RJ Brazil CEP 22.361-350
Gold mining and
exploration
100%(1)
Serabi Gold Nominee
Limited
England
66 Lincoln’s Inn Fields
London WC2A 3LH
England
Dormant
100%
(1) indirectly held.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
131
Company
31 December
2024
31 December
2023
US$
US$
Cost at start of period
113,135,280
112,735,884
Investment in subsidiary during period
1,044,132
399,396
Cost at end of period
114,179,412
113,135,280
Impairment provision
(9,784,922)
(9,784,922)
Net book value at end of period
104,394,490
103,350,358
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
2024 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
Group
31 December
31 December
2024
2023
US$
US$
Consumables
3,881,486
4,112,470
Stockpile of mined ore
2,464,724
1,230,046
Other material in process
3,554,571
3,835,693
Finished goods awaiting sale
3,214,867
3,619,742
Inventories
13,115,648
12,797,951
14
Trade and other receivables
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Current
Trade receivables
2,182,170
2,478,386
2,182,170
2,478,386
Other receivables
351,280
379,686
10,673
13,162
Trade and other receivables
2,533,450
2,858,072
2,192,843
2,491,548
Non-current
Taxes receivable
8,099,363
6,300,583
–
–
Amounts owed by subsidiaries
–
–
18,180,258
18,180,258
Gross receivable
8,099,363
6,300,583
18,180,258
18,180,258
Impairment provision
(1,853,011)
(1,647,520)
(8,391,722)
(8,391,722)
Net value of non-current other receivables
6,246,352
4,653,063
9,788,536
9,788,536
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
132
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 2024, 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 Pará are fully recoverable.
At 31 December 2024, 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$9,015. The credit risk is considered to be immaterial.
15
Prepayments and prepaid taxes
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Recoverable State and Federal taxes
1,123,071
438,861
–
–
Supplier down payments
349,195
424,685
–
–
Other prepayments and employee advances
748,197
1,456,710
191,656
226,216
Prepayments
2,220,463
2,320,256
191,656
226,216
16
Cash and cash equivalents
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Cash and cash equivalents
22,183,049
11,552,031
18,102,225
7,713,125
Funds are primarily held with HSBC Bank plc in the UK, and Bradesco Bank, ITAU SA, and Santander Bank all in Brazil. All of
the banking institutions have an A or better credit rating.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
133
17
Trade and other payables
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Current
Trade payables
3,948,977
3,587,065
607,671
364,120
Other payables
1,107,906
1,260,628
–
–
Employee benefits
920,406
778,746
51,011
45,300
Other taxes and social security
3,718,271
2,999,853
–
–
Amounts due to subsidiaries
–
–
43,949,752
33,118,175
Due in less than one year
9,695,560
8,626,292
44,608,434
33,527,595
Non-current
(Between one and five years)
Long term tax payable
1,730,003
3,367,626
–
–
Other taxes and social security
1,079,240
593,294
–
–
Due in more than one year
2,809,243
3,960,920
–
–
18
Non-current provisions
Environmental rehabilitation provision
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Opening balance
2,663,892
1,190,175
–
–
Provided for in year
as a result of additions on initial recognition
–
–
–
–
as a result of changes in estimates
(118,729)
1,222,800
–
–
as a result of variations in discount
(127,002)
(91,416)
–
–
as a result of exchange variations
(578,245)
342,333
–
–
Total provided for in year
(823,976)
1,473,717
–
–
Total non-current provisions
1,839,916
2,663,892
–
–
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 been inflated using the current cost inflation rate in Brazil of 4.6 per cent (2023: 3.9 per cent) and discounted to provide
a fair value using a discount rate of 11.29 per cent (2023: 12.25 per cent) being the Brazilian Government Bond Rate at the time of
calculation.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
134
19
Interest-bearing liabilities
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Current
Short term loan
5,590,085
5,708,684
–
–
Obligations under right of use leases (note 11)
251,719
694,400
–
–
Due in less than one year
5,841,804
6,403,084
–
–
Non-current
(Between one and five years)
Obligations under right of use leases (note 11)
109,952
150,224
–
–
Due in more than one year
109,952
150,224
–
–
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
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Short term loan
Balance of short term loan at the start of the period
5,708,684
5,001,608
–
–
Repayment of short-term loan
(5,000,000)
(5,096,397)
–
–
Drawdown of short term loan
5,000,000
5,000,000
–
–
Interest repaid
(358,384)
(334,523)
–
–
Accrued interest
392,755
453,675
–
–
Impact of exchange rate
(152,970)
684,321
–
–
Value of short term loan at the end of the period
5,590,085
5,708,684
–
–
Reconciliation of net cash flow to movement in net funds
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Change in cash resulting from cash flows
11,606,010
4,089,454
10,402,246
3,544,353
Translation movements on cash
(974,992)
266,264
(13,146)
11,864
Movement in cash in the period
10,631,018
4,355,718
10,389,100
3,556,217
Opening net funds
4,998,723
247,894
7,713,125
4,156,908
Movement in interest bearing loans and
borrowings
Drawdown of loan
(5,000,000)
(5,000,000)
–
–
Loan repayment
5,000,000
5,001,608
–
–
Loan and interest repayments
(590,085)
(708,684)
–
–
Movement in lease liabilities
Non cash movement
306,293
(69,415)
–
–
Cash movement
885,344
1,171,602
–
–
Closing Net Funds
16,231,293
4,998,723
18,102,225
7,713,125
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
135
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
US$
US$
US$
US$
Analysis of net funds:
Cash and cash equivalents
22,183,049
11,552,031
18,102,225
7,713,125
Interest-bearing liabilities - current
(5,841,804)
(6,403,084)
–
–
Interest-bearing liabilities – non-current
(109,952)
(150,224)
–
–
Closing net funds
16,231,293
4,998,723
18,102,225
7,713,125
20
Derivatives
Group
Company
31 December
31 December
31 December
31 December
2024
2023
2024
2023
Foreign exchange hedging contracts
US$
US$
US$
US$
Fair value at start of period
158,475
–
158,475
–
Movement in fair value during period
(158,475)
158,475
(158,475)
158,475
Fair value at end of period
–
158,475
–
158,475
31 December
31 December
31 December
31 December
2024
2023
2024
2023
Foreign exchange hedging contracts
US$
US$
US$
US$
Fair value at start of period
(42,635)
–
(42,635)
–
Movement in fair value during period
42,635
(42,635)
42,635
(42,635)
Fair value at end of period
–
(42,635)
–
(42,635)
Total fair value of financial asset at end of period
–
115,840
–
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.
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.
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
136
21
Analysis of changes in liabilities arising from financial activities
Current
obligations
under right of
use assets
Non-current
obligations
under right of
use assets
Total
At 1 January 2024
694,400
150,224
844,624
Cash flows
(658,391)
–
(658,391)
Non-cash flows
Transfers
7,494
(7,494)
–
New lease arrangements
270,628
–
270,628
Exchange rate movements
(62,412)
(32,778)
(95,190)
At 31 December 2024
251,719
109,952
361,671
Current
obligations
under right of
use assets
Non-current
obligations
under right of
use assets
Total
At 1 January 2023
1,109,518
837,293
1,946,811
Cash flows
(1,171,602)
–
(1,171,602)
Non-cash flows
-
Transfers
716,923
(716,923)
–
-
Exchange rate movements
39,561
29,854
69,415
At 31 December 2023
694,400
150,224
844,624
22
Share capital
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.
2024
2023
Number
US$
Number
US$
Allotted, called up and fully paid
Ordinary shares in issue at start of period
75,734,551
11,213,618
75,734,551
11,213,618
Shares issued in period
–
–
–
–
Ordinary shares in issue at end of period
75,734,551
11,213,618
75,734,551
11,213,618
Conditional Share Awards
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
137
Details of the number of the conditional shares awards outstanding under the 2020 Plan are as follows:
31 December
31 December
2024
2023
Number
Number
Awards in issue at start of period
2,075,400
864,500
Issued in period
2024 awards
1,199,032
–
2023 awards
–
986,000
2022 awards
–
629,600
Expired in period
(459,800)
(404,700)
Awards in issue at end of period
2,814,632
2,075,400
During the Company announced that the performance conditions in respect of the 2021 awards had not been achieved and
therefore 459,800 conditional share awards issued in respect of 2021 lapsed.
During 2024, the Company also announced the issuance of a further 1,119,032 Conditional Share Awards to employees (including
directors) of the Company.
During the first quarter of 2025, the Company announced the issuance of a further 543,017 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 2024 calendar year was calculated by reference to the 30 day VWAP average
of the Company's shares on 30 January 2024. 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$248,911 (2023: US$187,074) has been recorded in the financial statements in respect of these
conditional share awards.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
138
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’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 projected continuing operational and development needs for its Palito and Coringa mining
operations and its brownfield and regional exploration programmes, using cash flow generated from its current operations. If
required, the Group would expect 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 2026, and lease finance
obligation of a further US$0.36 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 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.
24
Commitments and contingencies
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 (2023: US$0.02 million).
Capital Purchases
At 31 December 2024 the Group not made any commitments for 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.
25
Related party transactions
Transactions with intergroup entities
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
139
During the period the Company made no loans to subsidiaries (2023: US$2,500). There were no loans converted into new shares
issued by subsidiaries during 2024 (2023: US$Nil). The balance of these loans at 31 December 2024 was US$9.79 million (2023:
US$9.79 million).
The Company has loans receivable from subsidiaries totalling US$18,180,258 (2023: US$18,180,258) before any provision for the
impairment of these loans (see note 14).
The Company has purchased, during the year from its subsidiary SMSA, 1,600 tonnes of copper/gold concentrate for a
consideration of US$19,916,364 (2023: 1,560 tonnes; US$26,602,457). At the end of the period the Company owed US$40,758,935 to
its subsidiary SMSA (2023: US$33,118,175).
During the year the Group has received legal advice from FFA Legal, a Brazilian based law firm totalling US$428,583 (2023:
US$484,350) for which US$61,000 was outstanding at the period end. Luis Mauricio, a non-executive Director of the Group, is the
founding Partner of FFA Legal
Key management remuneration
Key management comprises the Executive Directors and the Non-executive Directors only. Their compensation is:
For the
For the
year ended
year ended
31 December
31 December
2024
2023
US$
US$
Short-term employee benefits
1,311,296
916,343
Post-employment benefits
88,535
89,204
Share-based payments
160,068
145,430
Total
1,559,899
1,150,977
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 2024 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
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
140
The principal financial instruments by category are as follows:
Group financial assets
Fair value through profit or
loss
Amortised cost
2024
US$
2023
US$
2024
US$
2023
US$
Cash and cash equivalents
–
–
22,183,049
11,552,031
Trade and other receivables
2,533,450
2,858,072
–
–
Total financial assets
2,533,450
2,858,072
22,183,049
11,552,031
Group financial liabilities
Fair value through profit or
loss
Amortised cost
2024
US$
2023
US$
2024
US$
2023
US$
Trade and other payables
–
–
12,504,803
12,587,212
Other loans and borrowings
–
–
5,951,756
6,553,308
Total financial liabilities
–
–
18,456,559
19,140,520
Company financial assets
Fair value through profit or
loss
Amortised cost
2024
US$
2023
US$
2024
US$
2023
US$
Cash and cash equivalents
–
–
18,102,225
7,713,125
Trade and other receivables
2,192,843
2,491,548
–
–
Total financial assets
2,192,843
2,491,548
18,102,225
7,713,125
Company financial liabilities
Fair value through profit or
loss
Amortised cost
2024
US$
2023
US$
2024
US$
2023
US$
Trade and other payables
–
–
44,608,434
33,527,595
Total financial liabilities
–
–
44,608,434
33,527,595
General objectives, policies and processes
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.
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
141
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. These hedge positions expired during 2024.
The Group 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 2024 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.
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 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Brazilian bank Itau which carried a
fixed interest coupon of 8.47 per cent. The loan was repaid as a bullet payment on 6 January 2025. On 22 January 2025, the Group
completed a further US$5.0 million unsecured loan arrangement with a different Brazilian bank (Santander) which carries a fixed
interest coupon of 6.16 per cent. This loan is repayable on 16 January 2026.
As a result, neither the Group nor the Company had any material exposure to market rate movements.
Group
Weighted
average
Fixed interest maturity
effective
interest
rate
Non-interest-
bearing
Floating
One year or
less
Over one to
five years
Total
2024
%
US$
US$
US$
US$
US$
Financial assets
Cash
–
–
22,183,049
–
–
22,183,049
Receivables
–
2,533,450
–
–
–
2,533,450
Total
–
2,533,450
22,183,049
–
–
24,716,499
Financial liabilities
Payables
–
12,924,296
–
–
–
12,924,296
Interest-bearing liabilities
8.37%
–
–
5,841,804
109,952
5,951,756
Total
–
12,924,296
–
5,841,804
109,952
18,876,052
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
142
Weighted
average
Fixed interest maturity
effective
interest
rate
Non-interest-
bearing
Floating
One year or
less
Over one to
five years
Total
2023
%
US$
US$
US$
US$
US$
Financial assets
Cash
–
–
11,552,031
–
–
11,552,031
Receivables
–
2,858,072
–
–
–
2,858,072
Total
–
2,858,072
11,552,031
–
–
14,410,103
Financial liabilities
Payables
–
13,236,437
–
–
–
13,236,437
Interest-bearing liabilities
7.81%
–
–
6,403,084
150,224
6,553,308
Total
–
13,236,437
–
6,403,084
150,224
19,789,745
Company
Weighted
average
Fixed interest maturity
effective
interest
rate
Non-interest-
bearing
Floating
One year or
less
Over one to
five years
Total
2024
%
US$
US$
US$
US$
US$
Financial assets
Cash
–
–
18,102,225
–
–
18,102,225
Receivables
–
12,173,035
–
–
–
12,173,035
Total
–
12,173,035
18,102,225
–
–
30,275,260
Financial liabilities
Payables
–
41,631,425
–
–
–
41,631,425
Total
–
41,631,425
–
–
–
41,631,425
Weighted
average
Fixed interest maturity
effective
interest
rate
Non-interest-
bearing
Floating
One year or
less
Over one to
five years
Total
2023
%
US$
US$
US$
US$
US$
Financial assets
Cash
–
–
7,713,125
–
–
7,713,125
Receivables
–
12,506,300
–
–
–
12,506,300
Total
–
12,506,300
7,713,125
–
–
20,219,425
Financial liabilities
Payables
–
33,752,976
–
–
–
33,752,976
Total
–
33,752,976
–
–
–
33,752,976
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
143
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 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Brazilian bank Itau which carried a
fixed interest coupon of 8.47 per cent. The loan was repaid as a bullet payment on 06 of January 2025. On 22 January 2025, the
Group completed a further US$5.0 million unsecured loan arrangement with a different Brazilian bank (Santander) which carries
a fixed interest coupon of 6.16 per cent. This loan is repayable on 16 January 2026.
In addition to the above, the Group had obligations under fixed rate right of use asset leases amounting to US$0.36 million (2023:
US$0.84 million) (see note 19).
The following table sets out the maturity profile of the financial liabilities as at 31 December 2024:
Group
Company
2024
2023
2024
2023
US$
US$
US$
US$
Due in less than one month
Trade payables and accruals
1,213,806
1,089,407
5,378,669
3,397,836
Interest-bearing liabilities
20,977
57,867
–
–
Total due in less than one month
1,234,783
1,147,274
5,378,669
3,397,836
Due in less than three months
Trade payables and accruals
3,439,118
3,117,037
15,239,562
9,120,065
Interest-bearing liabilities
5,632,038
5,824,417
–
–
Total due in less than three months
9,071,156
8,941,454
15,239,562
9,120,065
Due between three months and one year
Trade payables and accruals
5,462,129
5,069,073
24,204,011
21,235,075
Interest-bearing liabilities
188,789
520,800
–
–
Total due between three months and one year
5,650,918
5,589,873
24,204,011
21,235,075
Total due within one year
15,956,857
15,678,601
44,822,242
33,752,976
Due more than one year
Trade payables and accruals
2,809,243
3,960,920
–
–
Interest-bearing liabilities
109,952
150,224
–
–
Total due more than one year
2,919,195
4,111,144
–
–
Total
18,876,052
19,789,745
44,822,242
33,752,976
Currency risk
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:
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
144
Group
31 December
31 December
2024
2023
US$
US$
US Dollar
17,971,304
7,619,990
Canadian Dollar
50,471
24,108
Sterling
186,930
27,765
Australian Dollar
21,454
15,146
Euro
154,400
55,777
Brazilian Real
3,798,490
3,809,245
Total
22,183,049
11,552,031
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.
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:
Functional currency
Brazilian Real
Canadian $
United States $
TOTAL
Currency of net monetary
asset/(liability)
31 December 2024
US$
31 December 2024
US$
31 December 2024
US$
31 December 2024
US$
US Dollar
–
7,021
12,956,352
12,963,373
Canadian Dollar
–
4,973
24,108
29,081
Sterling
–
–
(852,628)
(852,628)
Australian Dollar
–
–
15,146
15,146
Euro
(361,671)
–
55,777
(305,894)
Brazilian Real
(7,651,162)
–
–
(7,651,162)
Total
(8,012,833)
11,994
12,198,755
4,197,916
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.
Against US Dollar
US$
10% weakening of Brazilian Real
(223,936)
10% strengthening of Brazilian Real
223,936
Against Sterling
US$
10% weakening of US Dollar
(85,263)
10% strengthening of US Dollar
85,263
Against Euro
US$
10% weakening of Brazilian Real
(36,167)
10% strengthening of Brazilian Real
36,167
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
145
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$33,183,314 (2023: US$21,499,262). It is the Group’s policy to only deposit surplus cash with financial institutions that hold
acceptable credit ratings.
The Group currently sells all of its gold bullion to a single customer. The Group seeks to receive full settlement by bank transfer
on delivery of its product to the purchaser to minimise its exposure to any credit risk on that customer.
During 2024, the Group sold all of its shipments of its copper/gold concentrate production to a single customer, a publicly quoted
metals refining group. Settlement terms were in accordance with industry norms. The customer has a strong reputation within
the industry and has a good credit risk history. As at the balance sheet date there were no amounts owed to the Group that were
overdue (2023: amount overdue: US$Nil).
The Company’s exposure to credit risk amounted to US$30,275,260 (2023: US$20,219,425). Of this amount US$9,788,536 (2023:
US$9,788,536) is due from subsidiary companies, US$18,102,225 represents cash holdings (2023: US$7,713,125) 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 2024 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
At 31 December 2024 and Greenstone Resources II LP owned 19,083,395 ordinary shares representing 25.2 per cent of the voting
shares. At 31 December 2024 Fratelli Investments Ltd owned 19,318,785 ordinary shares representing 25.5 per cent of the voting
shares. Both shareholders are completely independent and neither is therefore considered to be a controlling party.
On 12 April 2025 Greenstone Resources II LP entered into a binding agreement to dispose of approximately 15.15 million shares
representing 19.99% of the issued shared capital of the Company. On 22 April 2025 Greenstone Resources II LP, pursuant to a
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2024
146
placing, sold their remaining shares in the Company representing approximately 5.2% of the issued share capital of the Company.
Both of these sales transactions are expected to complete in the first week of May 2025
On 22 April 2025 Fratelli Investments Limited, pursuant to a placing, sold 11,752,903 ordinary shares representing 15.5% of the
issued share capital. As a result of this sale Fratelli retain a holding of 7,565,882 ordinary shares representing 9.99% of the issued
share capital of the Company.
28
Post balance sheet events
On 7 January 2024, the Group completed a US$5.0 million unsecured loan arrangement with Brazilian bank Itau which carried a
fixed interest coupon of 8.47 per cent. The loan was repaid as a bullet payment on 6 January 2025. On 22 January 2025, the Group
completed a further US$5.0 million unsecured loan arrangement with a different Brazilian bank (Santander) which carries a fixed
interest coupon of 6.16 per cent. This loan is repayable on 16 January 2026.
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.
Glossary
147
“actinolite”
amphibole silicate mineral commonly found in metamorphic rocks, including those surrounding cooled
intrusive igneous rocks.
“Ag”
means silver.
“alkalic porphyry”
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.
“albite”
is a plagioclase feldspar mineral.
“aplite”
An intrusive igneous rock in which the mineral composition is the same as granite, but in which the grains are
much finer.
“argillic alteration”
is hydrothermal alteration of wall rock which introduces clay minerals including kaolinite, smectite and illite.
“AISC”
means All-In Sustaining Cost – a non IFRS performance measurement established by the World Gold Council.
“ANM”
means the Agencia Nacional de Mineral.
“Au”
means gold.
“assay”
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.
“biotite”
A phyllosilicate mineral composed of a silicate of iron, magnesium, potassium, and aluminum found in
crystalline rocks and as an alteration mineral.
“breccia”
a rock composed of large angular broken fragments of minerals or rocks cemented together by a fine-grained
matrix.
“brecciation”
Describes the process where large angular broken fragments of minerals or rocks become cemented together by
a fine-grained matrix.
“CIM”
means the Canadian Institute of Mining, Metallurgy and Petroleum.
“CIP” or “Carbon in
Pulp”
means a process used in gold extraction by addition of cyanide.
“chalcopyrite”
is a sulphide of copper and iron.
“copper porphyry”
copper ore body formed from hydrothermal fluids. These fluids will be predated by or associated with are
vertical dykes of porphry intrusive rocks.
“Cu”
means copper.
“cut-off grade”
the lowest grade of mineralised material that qualifies as ore in a given deposit; rock of the lowest assay
included in an ore estimate.
“dacite porphyry
intrusive”
a silica-rich igneous rock with larger phenocrysts (crystals) within a fine-grained matrix.
“deposit”
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.
“electromagnetics”
is a geophysical technique tool measuring the magnetic field generated by subjecting the sub-surface to
electrical currents.
“epidote”
is a calcium aluminium iron sorosilicate mineral.
“garimpo”
is a local artisanal mining operation.
“garimpeiro”
is a local artisanal miner.
“geochemical”
refers to geological information using measurements derived from chemical analysis.
“geophysical”
refers to geological information using measurements derived from the use of magnetic and electrical readings.
“geophysical
techniques”
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.
“gold equivalent”
refers to quantities of materials other than gold stated in units of gold by reference to relative product values at
prevailing market prices.
“gossan”
is an iron-bearing weathered product that overlies a sulphide deposit.
“grade”
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).
“g/t”
means grams per tonne.
Glossary
148
“granodiorite”
is an igneous intrusive rock like granite.
“hectare” or a “ha”
is a unit of measurement equal to 10,000 square metres.
“hematite”
is a common iron oxide compound.
“igneous”
is a rock that has solidified from molten material or magma.
“indicated mineral
resource”
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.
“inferred mineral
resource”
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.
“IP”
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.
“intrusive”
is a body of rock that invades older rocks.
“lithocap”
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.
“measured mineral
resource”
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.
“mineralisation”
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”
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.
“mineral resource”
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.
“NI 43-101”
means Canadian Securities Administrators’ National Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
“ore”
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.
“oxides”
are near surface bed-rock which has been weathered and oxidised by long-term exposure to the effects of water
and air.
“paragenesis”
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.
“phyllic alteration”
is a hydrothermal alteration zone in a permeable rock that has been affected by circulation of hydrothermal
fluids.
“porphry”
any of various granites or igneous rocks with coarse grained crystals.
“ppm”
means parts per million.
“proterozoic”
means the geological eon (period) 2.5 billion years ago to 541 million years ago.
Glossary
149
“pyrite”
an iron sulphide mineral.
“quartz-alunite ±
kaolinite”
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).
“saprolite”
is a weathered or decomposed clay-rich rock.
“scapolites”
are a group of rock-forming silicate minerals composed of aluminium, calcium, and sodium silicate with
chlorine, carbonate and sulfate.
“sulphide”
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”
means tonnes per day.
“vein”
is a generic term to describe an occurrence of mineralised rock within an area of non-mineralised rock.
“VTEM”
refers to versa time domain electromagnetic, a particular variant of time-domain electromagnetic geophysical
survey to prospect for conductive bodies below surface.
“vuggy”
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.
Shareholder Information
150
Company
Serabi Gold plc
UK Office
The Long Barn
Cobham Park Road
Downside
Surrey KT11 3NE
Tel:
+44 (0)20 7246 6830
Serabi Mineração S.A.
Av. Getúlio Vargas 671
11th Floor,
Funcionarios,
Belo Horizonte
Minas Gerais
Brazil
Registered Office
66 Lincoln’s Inn Fields
London WC2A 3LH
Email:
contact@serabigold.com
Web:
www.serabigold.com
Company Number
5131528
Board of Directors
Michael Lynch Bell – Non-executive Chair
Mike Hodgson – Chief Executive
Colm Howlin – Finance Director
Luis Azevedo – Non-executive Director
Deborah Gudgeon – Non-executive Director
Company Secretary
Kerin Williams
Nominated Adviser
Beaumont Cornish Limited
Building 3, Chiswick Park
566 Chiswick High Road
London W4 5YA
Auditor
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Solicitors – UK
Farrer & Co
66 Lincoln’s Inn Fields
London WC2A 3LH
Travers Smith
10 Snow Hill
London EC1A 2AL
Joint Brokers – UK
Peel Hunt LLP
100 Liverpool Street, London, EC2M 2AT
Registrars – UK
Computershare Investor Services PLC
PO Box 82, The Pavilions
Bridgwater Road
Bristol BS99 7NH
Legal Counsel – Canada
Peterson McVicar LLP
18 King Street East, Suite 902
Toronto,
Ontario M5C 1C4
Joint Brokers – UK
Tamesis Partners LLP
125 Old Broad Street, London EC2N 1AR