Business Overview

Serabi Gold Plc (SRB) is a London-headquartered mining company which is focused on production and exploration of gold in Brazil.

Recent News

On 26^th March 2020, the company announced that it had intended to issue its FY2019 annual results for the three months and twelve months periods to 31^st December 2019 on or before 30^th March 2020.  However, due to the global Coronavirus (Covid-19) pandemic, securities regulatory authorities in Canada had granted exemptions allowing companies an additional 45 days to complete their regulatory filings.  The company would seek this additional time to assess the longer-term impacts of the economic and other uncertainties created by the global Coronavirus (Covid-19) pandemic.  The company is expected to report its annual results for the fiscal year 2019 before 14^th April 2020.

Financial Highlights and Operational Highlights

2019 was a year when Serabi Gold Plc attained new milestones on the operational front, and the company would anticipate this to translate into outstanding financial results for the year.  In the year, it produced gold of 40,101 ounces from its Palito Mining Complex, which show good performance. The company’s reported revenue for the nine months period ending on 30^th September 2019 stood at $43,940 thousand against revenue of $43,262 thousand for the financial year 2018.  On 31st December 2019, the company surged its cash to US$14.3 million, representing another quarter of decent financial performance. The company’s EBITDA for the nine months to 30^th September 2019 stood at US$12.1 million, which is increased by 120 per cent as compared with the corresponding period in 2018. The net cash flow was US$4.5 million in the nine months to September 30^th, 2019.

Share Price Performance  

Daily Chart as on 27^th March 2020, before the market closed (Source: Thomson Reuters)

On March 27, 2020, at the time of writing (before the market close, at 8:01 AM GMT), Serabi Gold Plc were trading at GBX 51, down by 2.86 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 97/GBX 24. 

Conclusion

Due to recent Coronavirus outbreak, the company’s performance has impacted. The outlook in the near term looks bleak, and the Group’s operations are hampering due to this uncertainty. The extent of the impact of COVID-19 uncertainty is unclear as of now, and it would take some time to determine it. In the near-term, the margin expansion and production growth stood at 100,000 oz. The company has a strong platform for EBITDA growth. The medium-term growth from Coringa Project, with permitting process well advanced with construction planned to be underway in Q1 2021 and expected to be in production ramp-up by end 2021. The company had shown good financial performance in the first nine months of 2019 and will also deliver good results for the financial year 2019. The company’s top-line performance has improved, but its bottom-line performance improved significantly. The company has improved its production guidance for the financial year 2019 as against 2018 production.

Based on the decent prospects, we have given a “Speculative Buy” recommendation at the current price of GBX 45.00 (as on 27th March 2020, before the market close at 9:17 AM GMT).

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