Having flatlined for 4 years, Serabi Gold are looking to double their production and get to 80,000oz by getting their recent acquisition to market. High grade selective mining. It’s an old story which is looking to getting going again and like most junior Gold miners for the last 4-5 years, the only thing holding them back was access to money. They have had their head down focusing on producing at 40,000oz at a steady state for the last several years. That is not an exciting level. Most small institutional funders are looking for 100,000oz per annum. So what has Serabi done to change things and make this story relevant again for investors? We get the back story and find out how they plan to sweat their current assets and more importantly how they intend to fund it.
With Gold above $1,500 they are finally making a reasonable margin, even for an underground operator. We find out how they have structured their debt and what happens next. What do you think of their plan?
Retail investors have started to get interested again. And a couple industry strategic players involved. It feels like a new story as shares have started moving in the right direction. That said what we like is that they appear to be sticking to what they know and are targeting growth from very similar assets. Existing greenfield and brownfield also look promising.
A very open and confident pitch by the CEO. They have always had a plan, and now with the cash and cash flow and they seem to know how to deliver it. We follow with great interest.
- Overview of The Company
- Team Experience: Have They Got What it Takes?
- Share Price and Shareholders
- Company Strategy and Assets: How Are The Projects Coming Along?
- Update on Coringa and M&A Plans
- Market Conditions: How Will Free Cashflow Affect Their Chances?
Click here to watch the interview.
Matthew Gordon: Let’s kick off for the one-minute summary for people who haven’t heard the story before.
Mike Hodgson: 40,000
ounces, high-grade gold production in Northern Brazil. Para state. It’s a big
artisanal gold field. We are the first operator in that part of the world.
We’ve got great local relationships. We’ve actually put a mine into production.
It’s taken a while. The company did it many years ago. The mine actually
closed. We actually started it up as brownfield site we’re mining high-grade
gold, 8g/t. Which really, I think sets us apart from the rest. People have got
so used to 1g/t, 2g/t. We are 8g/t. We are underground high-grade, selective
mining. And we’ve acquired about 18 months ago the Coringa asset, which is
essentially a carbon copy of our current Polito operation. We’re going to put
Coringa to production, make it 80,000 ounces. We’re growing organically, but
certainly in a very controlled way.
Matthew Gordon: I’m interested in this story, because you guys have been in South America for a while. I’d love to understand a little bit about the team’s experience in mining in South America. What’s everyone done?
Mike Hodgson: Brazil
is a country that probably is very dominated by large enormous surface
deposits. I won’t pretend to say it’s been easy. We’ve actually had to address
the fact that there aren’t very many small underground mines in Brazil.
Therefore, there’s a people skill shortage. I suppose we’ve cheated a little
bit. We actually are next door to Peru and Bolivia and we’ve got a very key
people that come from there. I was the COO of Ovando Minerals in Bolivia before
this job. I’ve spent much of my career working in the Cornish Tin Mines. So I’m
very specialized in small underground mines and I worked for TVX before on a
small underground mine. I can’t escape it, but clearly, I’m probably moderately
successful at it. So we built a team, which involved key management in the
mine, which came from Bolivia. And we brought over a Peruvian contractor to
help us with the selective mining. Our ore body at Polito and the ore body that
will be developed and put into production at Coringa, are high-grade
subvertical narrow veins. Quality ounces is what it’s all about. Controlling
dilution is what it’s all about.
Matthew Gordon: Apart from yourself, who on the team experience has that level of experience?
Mike Hodgson: Well,
on the board itself is a gentleman called Eduardo Rosselot, an older colleague
of mine. A mining engineer, a Chilanian guy. He’s been very important in terms
of actually helping us with our funding. And the rest of the team in Brazil,
we’ve got key Bolivian mine management. The Mine Superintendent is Bolivian and
all the technical team are Bolivian. The key to our success is really this team
of mining expertise and we have actually boots on the ground. That works very
well. The Peruvian contractor we’ve now actually nationalized. They are now all
Brazilian paid and on the Brazilian payroll. It’s a very important point
because, there’s no real problem in terms of these people working in Brazil
language wise, which certainly was something which concerned us at the very
beginning. But just going back a step, probably people may or may not know that
Serabi did put Polito in production 2003. It started probably the correct way.
But back in the 2000s in London, where company originally listed, there was,
let’s say a lot of people in the stock, who perhaps shouldn’t have been in the
stock. They did really understand with junior mining. And I think the company
did two things. 1. It chase scale to try to meet shareholder expectation. 2. It
also changed the mining method because it was very difficult to find the right
people for the job. So when we actually restarted this mine back in 2012/13, we
got the right team in and the formula for success has been the mining. My saying
always is ‘grade pays, toness cost’.
Matthew Gordon: You raise interesting point. There have been, and possibly still are, some people have been in this a long time, long suffering. The share price has been flat for a couple of years, but it’s recently picked up again. You must be quite pleased?
Mike Hodgson: We’re
delighted. A little bit of brief history on that. It comes back to some of the
people that I’ve been around with, like Eduardo Rousselot one of our Chilean
directors. He was really instrumental back in 2012 when we want to reopen this
mine. The markets were terrible. There was no money out there for exploration.
There was no money for resource growth. There was only money for cash flow. And
it was hard to find. Eduardo introduced us to the Fratelli Group, one of our
biggest shareholders. These guys put money in at risk where nobody else would.
And they backed us.
Matthew Gordon: And they’re still there?
Mike Hodgson: They’re
still there. A big shareholder. They basically went through 50% because they
did want trading freedom. But frankly, there was no one else coming in any way.
So that’s where they were. We reopened the mine very successfully, got up to
40,000 ounces pretty quickly, were we’ve now been for about 3 years. They
underwrote the entire financing, took all the risk. The problem with that was
our stock was incredibly tightly held. We had no retail.
Matthew Gordon: Not no retail. Not enough retail.
Mike Hodgson: Very
little retail. There’s no liquidity. Everything was great about our company
except the capital structure in a way. And we thought, well, we’ll fix that.
Matthew Gordon: What have you done about that, because I note Greenstone are now in there.
Mike Hodgson: There
were ticking along quite nicely, doing 40,000 ounces. Operationally terrific.
Corporately still with some problems. But back in 2017, we actually acquired
the Coringa asset. Now the Coringa asset was from a company called Anfield,
which has now been rolled into Equinox, one of Ross Beaty’s companies. Before
that, it was actually in the hands of a company called Magellan. And we’ve been
trying to buy this asset for a long time, because it’s a carbon copy of Polito.
We’ve been mining Palito for a number of years. We know we’ve got all the
relations in the region, we’ve got the methodology, the formula…
Matthew Gordon: Before we get into the project, because I do want to come on and cover that. I just want to stay with the shareholder component and what the thinking is.
Mike Hodgson: The
buying of Coringa actually was a catalyst to do another capital raise. We
bought Coringa for $22M and we funded $5M out of cash flow, but then we
obviously got to find another $5M and then the final payment. $22M in total. We
did a capital raise in March 2018. And that point Greenstone came on board. And
River & Mercantile in London.
Matthew Gordon: Just explain to people don’t know Greenstone, because they are pretty well known in the industry…
Mike Hodgson: Greenstone
are a private equity fund, London based, they’re invested in probably 10 or so
stories. Pretty much a multi-commodity.
Matthew Gordon: A very technical team.
Mike Hodgson: They
whey work with us very well. They obviously liked Clive and myself for a long
time. They’ve been trying to get into Serabi for a long time. And they’ve been
looking for the opportunity and acquiring Coringa was the opportunity for them
to come in.
Matthew Gordon: They know what they like. And they are very selective. It’s a very strong team.
Mike Hodgson: They
came in around that financing in April 2008. A group called City Financial came
in. And also we had a Swiss family office that was still actually in the story.
Now this year, obviously, we know the City Financial ran into some problems.
And the Swiss Family Office also wanted to liquidate their position, which at
the time wasn’t welcome news. So, 6% of our stock was just basically dumped on
the market in the Spring of this year. And our price went £0.40 to £0.23. And
we thought that was a bit of a nightmare. Turned out to be an absolute blessing
in disguise, because that stock just got picked up by retail guys. So, for
once, and you’ve seen our graph of our liquidity, it’s amazing. We’ve just
flatlined for about 4 years, doing all the right things, but not getting any
love. No appreciation. And then all of sudden, retail guys get a hold of it.
We’ve gone from like 9% retail in London to probably 16%-17%. And it’s happy
Matthew Gordon: It helps. It is really important for new people coming in to look at the corporate structure of a business before they invest. We’ve talked in the past about the paralysis that can come with too much institutional investors. Either one individual or multiple institutions who sit and hold, and don’t trade.
Mike Hodgson: With
Greenstone, in that financing in 2018 didn’t really do a lot for liquidity. I
liked this expression, ‘it gave us an amount of democracy at least’.
Matthew Gordon: What does that mean?
Mike Hodgson: These
days, I don’t know. At least we had two big shareholders on the Board now. So
there was a natural balance now. We got three shareholders now over 10%. And two
of them sit on the Board. So there was a bit more democracy there. Fratelli
came down from 52% to 32%. So that was good. That raise didn’t bring in
liquidity really. But obviously, the selling of this stock in the summer
Matthew Gordon: So you now recognise the importance of retail, family office and HNWIs?
Mike Hodgson: We
have tried so hard to get retail into this company. It’s just been institutions
coming in. We’ve only done two raises.
Matthew Gordon: So now you got a better retail in there. I want to spend some time with you and understand what’s going on in terms of the business plan, the strategy, how you’re going to deliver it, where you’re going and who’s going to actually deliver that? So describe if you can, what is the plan? We know where you’ve come from, you’ve done a great job describing that. So today you’ve got a couple of assets. So you got to deliver those.
Mike Hodgson: Technically,
on their current operation, Polito. Basically is one plant, which is
plant-constrained, which is actually pretty unusual these days. Because most
companies of mine-constrained. Now, the good thing about being
plant-constrained is it brings discipline. You’re always treating it with the
Matthew Gordon: Just be clear to people what you mean by that.
Mike Hodgson: Well,
grade is king. We’ve now had a head grade around 8g/t for ever. So that’s what
we work with. And being plant-constrained means we’re not just throwing tonnes
at the plant. We’re actually throwing quality ounces at the plant. That’s the
important thing. Palito is in a very steady state of production. Two ore bodies
feeding a central plant. 500t per day between 7-8g/t. That’s what we do. And
we’re kind of limited at the moment. We don’t really want to expand the plant,
because our ore bodies, as you can see from the presentation, they are
high-grade, narrow veins. So all our business is to actually mine these veins
as well as we possibly can, minimizing dilution as much as we can, to get
quality out of the mine. And then basically through the plant. Inevitably even
doing this where the best possible way we can, we still get some dilution into
the into the system. Over the last 18 months we’ve actually been testing ‘ore
sorting’. I know this is a big buzzword these days. I’ve just come back from
Beaver Creek and it is all the rage. It won’t solve all our problems, but
certainly help a lot.
Matthew Gordon: What is that going to help with?
Mike Hodgson: There’s
ores and waste. The gold is inside the sulfides and outside that is just pure
waste granite. The ore sorter is actually a waste remover. It sorts on either
color, or on density. The difference is really, really good. The intention is
to pass our lower-grade material through the ore sorter. And it’ll screen out
waste. First of all, it’ll take waste out of the system. That will save us
about $1M a year. But more importantly, it actually liberates about 20% of
space in the plant. We can actually add more high-grade ore and make a little
plant go from 40,000 ounces per year to 50,000.
Matthew Gordon: And very low cost presumably.
Virtually no cost. That almost goes straight to the bottom
line. From today we’re 40,000-ounce operation probably making about $4M-$5M a
year. It’s positive cash flow. We put in
the ore sorter.
Matthew Gordon: It doesn’t cost a lot. Comes out of cash flow.
Mike Hodgson: $1M
Matthew Gordon: So no dilution. And improve efficiency and productivity.
Mike Hodgson: That’s
the first thing that we’re doing at Palito. Down in Coringa, our other new
asset, which we are developing. That is actually build ready. When we bought
that asset, Anfield did a terrific amount of work there. They spent a lot of
money. And they built camp. They bought a process plant. They bought all the
toys. A lot of the mining equipment. They did a lot of work. They did the
studies, which is great. People ask me all time, why did Equinox sell the
asset. Scale! Too small for them. At the
time they probably thought the asset was going to be a lot bigger and was going
to be their platform to build a gold mining company in Brazil. And they were
looking for something a lot bigger than Coringa could be. Although it’s a very
tiny deposit, it doesn’t really work for anybody else except us. We’re in Tapajos.
We’re the only hard rock producer. Coringa’s 200km down the road from Palito. There’s
little point two companies having to 50,000 ounce mines, in the same region
where there’s very little else. They belong in the same stable. So the marriage
occurred. We bought the asset. We’re now working our way through the permitting
process. We’ve just submitted our new Environmental Impact Assessment (EIA) or
statement yesterday. We should get a public hearing in around well, after
that’s been protocoled and approved, which hopefully will take about less than
a month. We will get a public hearing when we actually go to the local
community, and hopefully get approval. And I think because we have been in the
region for 10 years with the same authorities. We’re not exactly the new kids
on the block.
Matthew Gordon: So just on that. We’re starting to build a picture of the types of facilities, mines, operations that you are comfortable with. And they are similar in profile.
Mike Hodgson: Very
similar. I don’t think you can actually have a deposit more similar.
Matthew Gordon: Sorry I did mean to ask, in terms of the ore sorter, what’s the timing of that and more important what is the timing of when the benefits of that start flowing through?
Mike Hodgson: The
sorter has taken a while to get. But it’s now at site. It’s being all the
infrastructure around. It’s now being fabricated and installed. We will switch
it on probably in November 2019. We hope to be doing its job in January 2020.
Matthew Gordon: So imminently it will start to contribute towards the bottom line?
Mike Hodgson: We’re
going on guidance. We’re about to close Q3/19. It’s been just the same as Q1/19
and Q2/19. Another 10,000-ounce quarter. So we’re bang on guidance to do our
40,000 ounces for the year. And I think next year we’ll hopefully be making a
hole in 50,000 ounces because of the ore sorter.
Matthew Gordon: So that that’s going to hit the bottom line from Q1/20?
Mike Hodgson: Yes,
it will. And we’re sitting here today, 40,000 ounces making about $4M – $5M.
That’s going to go up very handsomely with the ore sorter. 10,000 ounces of
very little incremental cost. With just a little bit more process cost.
Matthew Gordon: Something to look forward to end of Q1/20. So now we’re going to talk about Coringa, because it meets the profile, it’s a similar looking system. More of the same. You know what you’re about. So tell us about what’s happening at Coringa.
Mike Hodgson: Repeat
the formula. Coringa, obviously, our big news recently was the publication of
our PEA, which was great. It really just demonstrated what we absolutely
Matthew Gordon: You made a few tweaks to it?
Mike Hodgson: Yes,
it’s going to be a 40,000-ounce deposit. The process plant is there. A little
different to Polito. This process plant was bought from a mine in Para. It’s
actually much bigger, so there’s no capacity issue with this plant. It’s a very
similar deposit to Polito. We are just working our way through the permitting
process at the moment. One thing that we do have already is we have the mining
license, which is something Equinox never got to. We can start the mine
tomorrow, subject to funding. We are going to start going underground. Why is
this important? It’s important because we want to first of all, we want to
establish the continuity, because Coringa degree is a greenfield site. It’s
drill holes. 1. We actually want to establish that continuity. 2. The
indications are in a lot of the drill holes that actually the widths at Coringa
are probably a little better than Polito. And I think there’s an opportunity to
maybe semi-mechanise this deposit, which would be great. Great for cost per
ounce. And 3. we want to take a nice big bulk sample because Copringa is 200km
away from Polito. We will truck that bulk sample up to our ore sorter at
Polito. And we will let you run it through and see how it performs. I would
suspect that the ore sorting is going to work very well and therefore, although
we don’t need the ore sorter from a capacity issue at Coringa. Why process
granite? Why not put an ore sorter in there? Again, it’s all about grade,
grade, grade. Get that grade up as high as we can and the get the ounces from
processing as little material as possible.
Matthew Gordon: What was the timing on all of this?
Mike Hodgson: We
want to actually start the underground development in before the end of the
year. In Q1/20. Now, we can start the mine. What we cannot state at Coringa yet
is the process plant and the construction. We’ve got to work our way through
the process. Now, that’s why the EIA has gone in. We hopefully will get what’s
called the Preliminary Licence by the end of the year. That is basically the
Environmental Impact Assessment (EIA) followed by the positive public hearing
by the end of the year. If all that happens, that will be great. Then we can
actually launch into what’s called the construction licence. We then bring in
an engineering company to come and do the basic engineering, which is basically
the design work for the erection of the process plant. That will probably take
around 6 months. So we would like to think we’ve got the construction licence
by early Q3/20 next year. Which means that we can start building.
Matthew Gordon: Construction towards the end of next year is what you are aiming for?
Mike Hodgson: I
would like to think we’ll start August time we will be starting to build. And
having just done it at Polito.
Matthew Gordon: You are talking to the same departments and government bodies. You have established relationships. The track record. You expect those sorts of timings based on what you previously experienced.
Mike Hodgson: Exactly.
These are the guys that gave all of this for Polito five years ago. We’re just
doing it again with Coringa. So they’re very comfortable with us as being the
only game in town really. But the good thing if we do start the mine first to
actually assess and maybe improve the mining, optimize the mine plan by this
underground development. And maybe optimize the flow sheet by adding in an ore
sorter. We’re just going to improve those PEA numbers even more. And the good
thing about that is I think people will note that in the PEA, we’re talking
about a CapEx number of $25M, there’s 20% contingency as well. And let’s face
it, that study was completely based on Polito. It’s the one thing we have 100%
confidence in is costs.
Matthew Gordon: True. I’d say you more than most. Because most PEAs have a variance of +/-30%. You’ve based it on what you’ve done previously.
Mike Hodgson: I
thought that the consultants were being rather penal. 20% contingency on costs
on a mine that’s just up the road is identical to the one we’re going to do. So
we’re pretty confident that the $25M, we can chip into that. And there’s also
the All In Sustaining Cost (AISC) is coming in at about $850 and this 20%
contingency on that. So, we’re looking forward to Coringa really bringing our
Matthew Gordon: Now, that’s because most of your costs are staying at Polito.
Mike Hodgson: So
that’s why it’s loaded.
Matthew Gordon: The blended number?
Mike Hodgson: $900-$950.
Matthew Gordon: A nice number. Is there much you can do about that? I know you’ve got various fixed costs which you can’t affect.
Mike Hodgson: The
gains are basically if we can actually get some mechanised mining in there. The
gains are going to be will an ore sorter work at Coringa too? These are the
real nice little gains.
Matthew Gordon: Is there a number you’re chasing?
Mike Hodgson: I
think we’re pretty tough to do underground mining much less than much less than
$900, maybe high $800s. That’s gonna throw off a nice bit because it wasn’t so
Matthew Gordon: We’ve got three locations. What’s that combined number look like? You’re heading up towards original size production.
Mike Hodgson: So
the two are the two mines, Polito and Coringa. They’ll both be doing about
40,000 ounces each now as well as that. The other thing that we’ve been doing
is basically on mine site exploration in and around the Polito and Sao Chico
ore bodies. One of the use of proceeds of the capital raise that we did in
2018, when Greenstone came on board, was we flew an airborne geophysical
survey, over the whole tenement. 40,000 hectares of that wasn’t cheap, but the
results it threw off were great. The thing lit up like a Christmas tree. Again,
what we’re looking for is, are these sulphides which show up with airborne
geophysics very well. And we have artisanal mines all in our property. They’re
not a problem. They only mine that top 10m They are their exploration tools.
They’re great. So a combination of those and anomalies etc are really
important. We use the airborne geophysics as a high-level filter. And then
wherever we have anomalies, we go on the ground to do follow up ground
geophysics and geochemistry, and just basically this risk reduction before we
actually drill. And we’ve actually got some fabulous anomalies, both in
geochemistry and ground geophysics in and around Sao Chico, which is our
satellite ore body. And where we are now drilling at Sao Chico in the immediate
mine site area looking for strike extensions, which is going very well. And
then we’re going to move on to these discovery drill programs on these
anomalies, which are only 3-4km away from the actual Sao Chico deposit itself.
We can turn exploration success into production growth very quickly,
particularly at Sao Chico. So the third part of our our strategy is to continue
Polito as it is, add the ore sorter. Develop Coringa, advance the permitting
and actually get underground at the same time. Finally, on the organic growth,
its mine site exploration and maybe a little bit more in and around our current
producing assets Polito and Sao Chico. So all in all, base case 80,000 ounces,
we think we can with a bit of exploration success in and around our backyard’s,
we can get to 100,000 ounces in the next 2-3 years.
Matthew Gordon: Well that’s the magic number.
Mike Hodgson: It
is but it frustrates me a little bit because, I think the most important thing
is cash flow. Free cash flow. Everyone’s obsessed with 100,000 ounces.
Matthew Gordon: It’s more an indicator of scale and opportunity. I think the picture you’ve painted today is an interesting one, in the sense that, you know the type of structures that you’re after and the types of projects that you are comfortable with and have the knowledge of developing. You’ve got to get Coringa going. But it also says potentially future M&A is we know what we’re looking for. We’re very, very specific. I know you’ve got the organic stuff. Is there much M&A thinking going on?
Mike Hodgson: I
just think we recognize that we’re not ready for that yet. I think I think at
40,000 hours it’s hard. You have really got the currency, and we’ve got a
project to build already. So that’s where our focus lies. I think once we’ve
got Coringa permitted and we’ve got the funding in place, and we’re building
it, we’re really on our way to 80,000 ounces. I think at that point we’ve
probably got the firepower to have some serious conversations. And, you alluded
to our costs. At the end of the day, it’s underground mining. It’s not the
cheapest mining on the planet. Open pit brings that. So, I would like to think
our next acquisition would be if we do one, or merger it’s a blend of
underground high-grade with some scale to get our costs down.
Matthew Gordon: is there much of that in Brazil.
Mike Hodgson: Yes,
there’s more of that than there is the underground. I think we’re the best
small underground miner in Brazil.
Matthew Gordon: I’m a buyer of that.
Mike Hodgson: We
won’t do a deal for the sake of doing the deal.
Matthew Gordon: That’s what I mean. There’s dilution in that. It’s a new type of mining for you. And there are many carcasses on the side of the road in Brazil. Step forward with caution.
Mike Hodgson: Our
ex-chairman always says to me, sometimes the best deals you do are the ones you
Matthew Gordon: Keep your money in your back pocket. But I like sweating your own assets with this organic growth. If you’re in an area that’s prolific and well-known, why not.
Mike Hodgson: The
area has seen 30Moz of artisanal gold mined. There’s been no systematic
exploration in this part of Brazil, which scares a lot of people off. But for
us, it’s a blank canvas. And I really do think the ore sorting, and our
approach is going to be a bit of a paradigm shift to this part of the world. We
do not market ourselves as a Brazilian mining company. We market ourselves as
Para mining company. Because Brazil is a collection of 26 states. State
government rules over Federal government big time. You’re not going to solve
any problems in Brasilia. It’s all in Bélem in the State capital. And again,
we’re in Polito. We’re going to try to develop Coringa using that relationship.
This is a great place to be.
Matthew Gordon: So let’s talk about the market. Obviously you are producer, so you’re seeing the benefits of the gold price, which is great. Explorers and developers are not seeing it. Most of them aren’t seeing it. You are. Which is great news for the bottom line. More free cash flow. But you’ve got things to spend it on?
Mike Hodgson: We
always have. We’re saving as much cash at the moment. We have a final payment
to actually fully acquire Coringa at the end of the year. We’ve just got the
cash. We’ve basically got that in the bank. Which is good. So we’re just trying
to build as much as cash as we possibly can through the end of the year. So
make sure Coringa is 100% ours. Which it will be and then we derive forward.
Matthew Gordon: You’ve got the cash to acquire the asset. You’ve got incremental free cash flow in with gold as it is today, long may that continue. Is that enough to allow to do the things that you want to do. Certainly around growth organic, for instance?
Mike Hodgson: It’ll
be tight. It all depends on where the gold price is going to be. I look at
Coringa and we’ve got we’ve actually got we’ve had it we’ve got a great
relationship with Sprott Asset Lending. The only equity raises we’ve done the
last 5, 6 years, have been the equity raise to put Polito back in production.
And obviously the what we did last year to get Coringa. In the meantime, we’ve
just taken on some debt.
Matthew Gordon: So that’s Sprott?
Mike Hodgson: Sprott
Asset Lending out of Toronto. We basically borrowed $8M. We paid $8M back out
of cash flow. They thought we were legend Most people do an equity raise to
settle the debt. We earnt a huge amount of trust with these guys and they are
absolutely ready and waiting when we’re ready permitted with Coringa.
Matthew Gordon: So again, I just say it sounds like you know what you’re doing with it goes to your cash position with the acquisition and the debt and so forth. So maybe that’s one we can pick up on the next update when you have delivered a few of these things. Because I guess you’ll be in a position to know where you’re at, and what you want to do. But, just just on this market condition at the moment. Have you got any views? Is it going to sustain? Do you have an opinion?
Mike Hodgson: Well,
we had a board meeting today. Everyone around the table had a different view.
Matthew Gordon: Well, who knows?
Mike Hodgson: Do
Matthew Gordon: Well, no, absolutely. Absolutely not. But I’ve heard some really quite strange $3,000 type numbers being put out there. Obviously that sells.
Mike Hodgson: I
just went to Beavercreek to the Metals Summit. We are all of the gold bulls?
85% of our costs are in Brazilian Real. Once we’ve got the double whammy. We’ve
got we’ve got the gold price growing and 6,300 Real ounce. I mean a year and a
half ago it was just over 3,000. There always used to be a natural hedge
between the Brazilian Real. When gold strengthened, the Real was was weakening
or vice versa. We never really got the double lift.
Matthew Gordon: A lot of people are getting that.
Mike Hodgson: Record
levels in Australia. Record levels in Canada. All the resource-based economies
are actually getting this.
Matthew Gordon: But it’s question of how long it lasts?
Mike Hodgson: At
the end of the day, you look at the macro economics. China and the US and all
that, it probably bodes quite well for gold with all this uncertainty, I think.
But, people with much better pay grades than I, have got it pathetically wrong.
Well that’s probably why, the time is good. Our share has gone to three times,
and the market’s there at the moment. I hope he’s gonna be there when we
finally need it.
Matthew Gordon: It’s been a good chat, good introduction, because we haven’t spoken before. Our listeners and subscribers have not heard the story before. I know you’ve been around for a while. I wanted to speak to you. I like the robust, relentless, can do attitude of the business. And its share price has been what it’s done for the last few years, but it’s on the move. It’s doing all the right things it seems to me. I want to see that you continue to deliver what you say you’re going to. Do you want to leave us with maybe a few reasons why new investors should be looking at Serabi now?
Mike Hodgson: We’ve now got a record. There’s liquidity. You can get stock now, which is great. For a long time, you couldn’t. So that’s a plus. And there’s a lot more steam in this price. We’ve got a real great economic tailwind at the moment. We’re going to be meet guidance. And next year it’s going to get a little bit better.
Company website: https://www.serabigold.com/
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