Serabi Mining plc ("Serabi" or "the Company")

Update on Strategic Review

 

Serabi Mining plc ("Serabi" or "the Company") advises shareholders that the management of its wholly owned subsidiary Serabi Mineracao Ltda ("SMLtda") has initiated a further reduction of the work-force. This is part of the ongoing programme of placing the Palito Mine into a state of care and maintenance as advised in the Company's press release "Announcement of Strategic Review" (17th September 2008).

 

As notified in that press release, operations have recently been concentrated on mining 'blocked out' stopes and it was anticipated at that time that this work would continue until the end of November. As a result of this work-force reduction, underground mining activity will now cease and all equipment will be withdrawn from the mine. The plant will continue operations at a reduced level for a further few months treating stockpiled sulphide ore and near surface oxide ore but it is projected that these sources will probably be depleted in early 2009.

 

The management of SMLtda is preparing all the necessary reports that are required to be submitted to the authorities in conjunction with this programme.

 

The Board of Serabi has also approved the recommendation of its Brazilian management to reduce the level of exploration tenements that the group holds to focus on high priority projects and in so doing limit the future cash requirement for maintaining the exploration portfolio. Exploration work has been on-going at the Rio Marupa prospect, with scout drilling focused on potential structures lying below the current garimpo pits. No significant grades have so far been returned from the drilling programme and it has therefore been agreed that given the Company's current position, the option agreement on this property be terminated. SMLtda will also relinquish the tenements comprising the Castanheira prospect as well as certain tenements northwest of Palito, where it has undertaken little exploration work and considers the tenements to have limited near-term value.

 

The Company held cash deposits in excess of $2 million at the end of November and anticipates that the ongoing production will make a positive contribution to the ongoing wind down costs.

 

Management continues to pursue longer-term options for Serabi and several companies have entered into or requested confidentiality agreements since the Board announced the Strategic Review in September. The Board notes, however, that in the current market place there are limited funds available and many companies competing for those funding opportunities. At the same time, investing groups continue to be circumspect about committing finance to new projects given the global market uncertainties. The progress of any potential transaction will be driven by any investing party and the Board has limited ability to influence this timetable. The Board will, however, immediately communicate progress to all shareholders when it is appropriate to do so.

 

Serabi also advises that Mr Rich Robinson and Mr Roger Davey have stood down as directors of the Company.  In addition Mr Graham Roberts, currently executive Chairman, will become non-executive Chairman. Mr Bill Clough has also assumed a non-executive role.  The Company has taken these steps in order to help further reduce its ongoing cost base.  No compensation is payable in respect of these changes.

 

 

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Serabi Mining plc