Serabi Gold plc (LON:SRB) is the topic of conversation with Co-fund manager, Gervais Williams of Miton UK Microcap Trust plc as part of a wide-ranging interview on small-cap investments in his UK investment trust.
DirectorsTalk asked:
In our last interview, you mentioned Miton UK MicroCap Trust had increased its holding in gold mining stocks. I’d like to understand the rationale, and in particular, Serabi Gold reported this week a 4.2 increase in gold production during FY23, meaningful growth in future production and resource estimates. What’s your view on Serabi Gold and others like Amaroq Minerals?
Gervais Williams of Premier Miton commented:
“The nature of gold mining companies is that often the gold price goes up during unsettled economic periods, we saw that after the pandemic, for example, and so, when other companies are struggling because the trading conditions are getting tougher, gold mining companies sometimes are not just surviving, but actually generating more profits and more cash.
So, from that point of view, we do like these kinds of holdings within a context of the portfolio. We don’t know whether there’s going to be a tough period coming up or how tough it will be but what we do know is that gold price has been picking up a little bit and these kind of companies are generating cash.
Serabi is actually in trial production at the moment, which is great, in Brazil, which is what we want. It’s generating decent surplus cash at the moment and most particularly, it’s got an ore sorter which it is going to be installing and it’ll get the full mining production in due course.
So, we’ve got a company generating cash, moving into full mining production over the next two or three years and this is a tiny company, it’s only £31 million market cap.
These kinds of companies get very overlooked and they’ve got real duration but more importantly, they’ve got substantial upside if they get lucky.”
On 31 January 2024, Serabi Gold announced a three-year renewal of the trial mining licence for its wholly owned Coringa mine located in Brazil.
Mike Hodgson, CEO of Serabi, commented:
“This is extremely welcome news, which our management and legal team have been working on tirelessly over the past months. The agreement reached in July 2023 with the indigenous communities has been a pivotal moment in permitting success at Coringa followed by a further agreement with all parties signed in December 2023 and sanctioned by the court allowing the ANM and SEMAS to renew the existing licences.
The new GU allows us to continue our current operations and importantly we are allowed to install the planned crusher and ore sorter under this and the accompanying GUOL. Whilst the permit has an annual limitation of 50 000 t of ore that can be transported per annum from the mine, this would be sufficient for 2024, whilst we now focus on completing the final steps to complete the full permitting at Coringa.”
Serabi Gold plc (LON:SRB) is a gold exploration and production company involved in the evaluation and development of gold deposits in Brazil.
