Serabi Gold (LSE:SRB, TSX:SBI) – Q1/20 Unaudited Financial Results Are In

Serabi Gold PLC
  • Shares Outstanding: 59M
  • Share price GB£0.83 (15.05.2020)
  • Market Cap: GB£50M

A few weeks ago, I penned an article detailing Serabi Gold’s strong Q1/20 operational figures, in addition to some great financials for 2019.

A picture of cartoon gold bars.

What’s The Latest Update?

COVID-19 has obviously had a detrimental effect on the vast majority of mining companies, but we’re very interested to note the management team at Serabi Gold has managed to reduce the impact on productivity.

This morning, Serabi Gold has released its unaudited Results for the three month period ended 31 March 2020. What are the financial highlights?

Unaudited Results – Financial Highlights

  1. Cash Cost for the quarter of US$996/oz.
  2. All-In Sustaining Cost for the quarter of US$1,257/oz.
  3. EBITDA for the first quarter of 2020 of US$3.20M (Q1 2019: US$4.33M).
  4. Post-tax profit of US$0.77M reflecting the lower level of gold sales realised during the period compared with 2019 offset by higher average gold prices in 2020. 
  5. Earnings per share of 1.31 cents.
  6. An average gold price of US$1,549 received on gold sales in 2020
  7. Lower revenue, quarter on quarter, reflects sales of gold inventory realised in Q1/19 and lower production resulting from a mill stoppage in February 2020 (see news release 26 March 2020).
  8. An agreement, concluded in April 2020, with Greenstone Resources II LP, to subscribe for US$12M convertible loan stock.
  9. An agreement has been reached with Equinox Gold Corp. allowing the company to pay, in monthly instalments, the remaining US$12M consideration for the purchase of Coringa, until COVID-19-induced travel restrictions are lifted.

What Does This Tell Us?

Serabi Gold, like the majority of gold producers, has seen its AISC rise slightly, which is entirely understandable given the disruption caused by COVID-19. As a consequence, the EBITDA is also marginally down, as international mining operations become significantly less economic given this global health crisis. The primary cause behind Serabi’s financial tail-off this is the company’s mill stoppage in February 2020. However, another reason behind this decrease in revenue lies in the fact the Q1/19 figures were artificially inflated by the sale of existing inventory.

Serabi Gold - Palito
Serabi Gold’s Palito Gold Mine

When you combine these factors, despite receiving a substantially higher average gold price on gold sales, Serabi’s profits have fallen. It is important to note this is all within expectations, as was reflected in our most recent interview with CEO, Michael Hodgson.

Chief financial officer, Clive Line, has stated that Q2/20 has started off well, with both the soaring gold price and favourable exchange rate expected to provide support moving forward. Could the ore sorter also massively help economics? With exploration also on the cards for 2020, investors will see little reason for concern.

Thus far, Serabi Gold appears to have effectively mitigated the impacts of COVID-19 and its mill stoppage. The Q1/20 gold production figures, discussed in my previous article, were highly impressive. Hodgson predicted these financials, and the impacts of COVID-19 have been unavoidable for all. It’s now time for Hodgson and his team to push on, as we have no doubt they will, into Q2.

We have interviewed the CEO of Serabi Gold, Michael Hodgson, on several occasions. After you’ve listened to those, why not read a different gold article, or even watch one of our latest gold interviews?

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If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

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The Serabi Gold PLC company logo.

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