Why licensing now sets the pace

Serabi Gold (LSE:SRB) cut its 2026 production guidance from more than 53,000 ounces to a level similar to 2025, when the group produced 44,169 ounces, because of permitting delays at Coringa, its newer mine in Pará state, Brazil.

Coringa ore is trucked to the Palito plant for processing, so its permits govern how much gold the group can make.

About the company

Serabi Gold operates the Palito gold complex and the Coringa mine in Pará state, Brazil. Palito has a processing plant, and Coringa ore is trucked to it. The group reports gold production in ounces and sells the gold it pours, so output and grades determine revenue.

The trial licence and its cap

Coringa operates under a three-year trial Mining licence, known as a GUIA, that allows up to 100,000 tonnes of ore a year to be moved to Palito. By 30 September, 85,602 tonnes of the annual allowance had been used, and the licence expires on 29 January 2027. Until the limit is raised or a full operating licence is granted, stockpiled and newly mined ore cannot be transported.

LSE:SRB said it was negotiating with Brazil's national mining agency, the ANM, to continue operating under the GUIA, supported by a legal petition. The outcome of those talks, which the company has not timetabled, is the most immediate issue for 2027 output.

What is still outstanding

Two federal approvals stand between Serabi and an application for the operating licence. The first is a change-of-land-use approval from INCRA, the agrarian reform institute; the company said technical and legal agreement had been reached but final state and federal sign-offs were still needed. The second is final approval from FUNAI, the indigenous peoples agency, of the Indigenous Component Study, which both affected indigenous groups have already approved.

Once those are in hand, Serabi can apply for the operating licence, which would allow the ANM to issue the formal mining concession. There may, however, be one useful shortcut: following a September site visit, the state environmental agency SEMAS indicated that Coringa could skip the installation licence stage, because it needs no processing plant or tailings Facility on site.

Why it matters for the numbers

Coringa has become the group's engine. It produced 23,089 of the 34,057 ounces poured in the first nine months, at milled grades averaging 7.74 grams per tonne, while Palito's grades disappointed at 4.90 grams per tonne. A fourth ball mill at Palito, in final commissioning, is designed to lift capacity to more than 900 tonnes a day and support 330,000 tonnes of throughput in 2027, but that only helps if more Coringa ore can reach it. At the end of September, 14,398 tonnes of the annual allowance remained, less than half of the 34,040 tonnes Coringa mined in the third quarter.

The Balance Sheet buys time. Cash stood at US$63.2m at 30 September, with no debt, after a maiden US$5.1m Dividend in July, and management expects significantly lower Capital spending in 2027.

Risks and limitations

No timetable has been given for the INCRA and FUNAI decisions, and Brazilian permitting can be slow and subject to legal challenge. If the GUIA lapses before an operating licence is granted, ore movements from Coringa could be interrupted.

The trial licence in numbers

A cap of 100,000 tonnes a year with 85,602 tonnes used by 30 September leaves 14,398 tonnes, or about 14%, for the remaining period to the licence expiry on 29 January 2027. At the recent monthly rate of about 9,500 tonnes, based on nine months of use, the remaining allowance would last about a month and a half after 30 September, so the cap is likely to bind before the licence expires. This is why the company is negotiating with the ANM to continue under the trial licence.

Production and grades

Coringa produced 23,089 of the 34,057 ounces poured in nine months, about 68%. Its milled grade of 7.74 grams per tonne is about 58% higher than Palito's 4.90 grams per tonne. Because Coringa is both the higher-grade and the larger contributor, a limit on its ore flow affects the group's output more than a limit at Palito would. Full-year production of a level similar to 44,169 ounces implies about 10,000 ounces in the final quarter if the nine-month total is 34,057.

The approval path

The change-of-land-use approval from INCRA and the final approval of the Indigenous Component Study by FUNAI are the two federal items outstanding. Both affected indigenous groups have already approved the study, so the remaining step is the agency's final sign-off. If the state environmental agency's indication holds that the installation licence can be skipped, the route to a full operating licence would be shorter, since no processing plant or tailings facility is needed on site.

Why the timing matters

Palito's plant needs ore to run at capacity, and a fourth ball mill is intended to raise throughput. A limit on Coringa ore would mean the plant has less high-grade feed, which would lower gold output and raise unit costs. The company has not timetabled the talks with the ANM, so the date by which the licence issue will be resolved is not known.

Production and the plant

The Palito plant processes ore from both Palito and Coringa, so its throughput depends on how much ore each mine supplies. When Coringa's ore is restricted, the plant must rely on lower-grade Palito feed, which reduces the ounces recovered for the same tonnage. The company's plan for a fourth ball mill is intended to raise the plant's capacity, but extra capacity is useful only if there is ore to feed it.

The cut in production guidance for 2026 to a level similar to the previous year shows how much the permits matter. Before the permitting delays, the company expected to exceed 53,000 ounces. The difference between that figure and the 44,169 ounces produced in 2025 is about 8,800 ounces, which is the output the company has effectively lost to the delays.

The legal petition supporting the negotiation with the ANM is a sign that the company is pursuing more than one route to continue operations. A successful outcome would keep ore moving to Palito after 29 January 2027 while the full operating licence is pursued.

Next steps

LSE:SRB said it would publish third-quarter financial results, with a further guidance update, in late November. That statement should indicate whether the ANM talks have progressed and how much stockpiled ore is waiting at Coringa. Investors will also look for news on the restart assessment at São Chico, on care and maintenance since 2023 and dependent on renewal of its own trial licence, and on brownfield drilling at Palito and Coringa.