Serabi Gold : Financial Results for Third Quarter 2017 and Management’s Discussion and Analysis

Unaudited Interim Financial Results for the three and nine month periods to 30 September 2017 and Management's Discussion and Analysis

Serabi Gold (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development company, today releases its unaudited interim financial results for the three and nine month periods ending 30 September 2017 and at the same time has published its Management's Discussion and Analysis for the same period. Key Financial Information SUMMARY FINANCIAL STATISTICS FOR THE THREE AND NINE MONTHS ENDING 30 SEPTEMBER 2017

3 months to 30 September 2017 US$	9 months to 30 September 2017 US$	3 months to 30 September 2016 US$	9 months to 30 September 2016 US$
Revenue	12,908,790	36,225,050	16,209,753	42,120,928
Cost of Sales	(7,695,870)	(24,558,180)	(10,216,119)	(25,828,941)
Depreciation and amortisation charges		(2,934,986)	(7,545,847)	(2,907,161)	(6,552,101)
Gross profit		2,277,934	4,121,023	3,086,473	9,739,886
Profit / (loss) before tax		490,532	(337,135)	743,503	2,305,731
Profit after tax		235,051	(770,629)	465,480	1,471,662
Earnings per ordinary share (basic)		0.03c	(0.11c)	0.07c	0.22c
Average gold price received	US$1,238	US$1,256
As at 30 September 2017 US$	As at 31 December 2016 US$
Cash and cash equivalents	9,753,385	4,160,923
Net assets	64,598,323	63,378,973
Cash Cost and All-In Sustaining Cost ("AISC")	9 months to	9 months to
30 September 2017	30 September 2016
Gold production for cash cost and AISC purposes		27,666	29,900
Total Cash Cost of production (per ounce)	US$795	US$772
Total AISC of production (per ounce)	US$1,058	US$951

Key Operational Information

Horizontal development - Total

Quarter 1	Quarter 2	Quarter 3	Year to Date	Quarter 1	Quarter 2	Quarter 3	Quarter 4
2017	2017	2017	2017	2016	2016	2016	2016
Metres	2,251	1,855	2,996	7,102	2,925	2,941	2,649	2,694

SUMMARY PRODUCTION STATISTICS FOR THE THREE QUARTERS TO 30 SEPTEMBER 2017

Total 2016

11,209

36,918	42,075	41,263	120,256	37,546	33,606	43,133	44,579	158,864
10.12	7.80	9.80	9.20	11.02	9.56	9.61	8.94	9.74
46,663	43,905	44,954	135,522	36,615	39,402	42,464	40,485	158,966
7.09	6.26	7.21	6.86	8.58	8.17	8.08	7.60	8.11
9,861	8,148	9,657	27,666	9,771	9,896	10,310	9,413	39,390

Mined ore - Total Tonnes Gold grade (g/t)

Milled ore Tonnes Gold grade (g/t)

Gold production (1) (2) Ounces

1. Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate and gold doré that is delivered to the refineries.

2. Gold production totals for 2017 include treatment of 4,941 tonnes of flotation tails (2016 full year : 16,716 tonnes)

   Financial Highlights

   • Cash Cost for the year to date of US$795 per ounce of gold.

   • All-In Sustaining Cost for the year to date of US$1,058 per ounce of gold.

   • Gross profit from operations for the first nine months of 2017 of US$4.12 million.

   • Profit per share of 3 cents for Q3 and loss per share of 11 cents for the first nine months of 2017.

   • Cash holdings of US$9.75 million at 30 September 2017.

   • Average gold price of US$1,238 per ounce received on gold sales in the first nine months of 2017.

     2017 Guidance

   • Forecast gold production for the fourth quarter of 2017 of approximately 10,000 ounces to achieve full year production of approximately 38,000 ounces.

   • Cost guidance for 2017 of an All-In Sustaining Cost ("AISC") of US$1,000 to US$1,025 per ounce.

     Operational Highlights

   • Third quarter production of 9,657 ounces of gold.

   • Mine production totalled 41,263 tonnes at 9.80 grammes per tonne ("g/t") of gold.

   • 44,954 tonnes processed through the plant for the combined mining operations, with an average grade of 7.21 g/t of gold.

   • 2,996 metres of horizontal mine development completed in the quarter.

   • The Palito orebody saw development and production focus on the Senna, Pipocas, G3 and Mogno veins principally, with three other veins, (Zonta, G1, Jatoba) in development.

   • The mine ramp accessing the Sao Chico orebody has now reached the 26mRL, approximately 230 vertical metres below surface. Production is coming from the 128mRL and 100mRL levels with levels 86mRL, 70mRL, 56mRL, 40mRL and now 26mRL all either developed or in development, comfortably ahead of production.

   • By the end of the third quarter, surface ore stocks were approximately 15,000 tonnes (30 June 2017: 12,000 tonnes) with an average grade of 3.2 g/t of gold.

   • A surface diamond drill programme of approximately 10,000 metres has commenced and will principally focus on the strike extensions of the veins in the Palito orebody.

• The results of a new 43-101 Technical Report comprising the geological resource and mineable reserve are close to completion and are expected to be issued before the end of November.

Mike Hodgson, CEO of Serabi commented,

"It was very pleasing to see third quarter production returning to expected levels, after a slightly disappointing second quarter. We have now achieved total production for the first nine months of the year of 27,666 ounces. Whilst a little below the production for the same period in 2016, the shortfall was simply due to a short term operational problem at Sao Chico during April and May, when we lost remote scoop capability and therefore had to rely on lower grade development ore for this period. By June the problem was over, and we have seen strong monthly productions figures since.

"Even more pleasing is the relative financial strength of the Company at the end of the quarter, with cash holdings increasing to over US$9.7 million. We have benefitted during the third quarter from a relatively weak Real and a good gold price and with so much of our costs being in Reais, it is the gold price in Reais that really dictates our margins and cash generation.

"We have earmarked some of this cash to be reinvested back into the operations and in addition to the acquisition of an ore- sorter, other major capital investment include the acquisition of some new mine trucks, and expansion our tailings management facilities.

"We have also commenced a 10,000 metre surface drilling programme which is concentrating on the strike extensions of the veins at the Palito orebody. We anticipate this is just the start of a larger programme which will identify new orebodies, expand the resource base and support increased levels of gold production in the longer term.

"Whilst profitability is down compared with 2016, it must be remembered that not only is production slightly down, resulting in lower revenue, but the Group has been impacted by the relative strength of the Real in 2017 when compared with 2016. The average exchange rate for the nine months to 30 September 2016 was BrR$3.55 to US$1.00 and BrR$3.15 to US$1.00 for the first nine months of 2017 a swing of almost eleven per cent. Nonetheless our operating costs for the nine months have fallen by almost US$2 million or over 7 percent, a reflection of the improvements and efficiencies that we are constantly seeking to implement.

"We have reported a small profit before tax of US$0.5 million for the third quarter which is a pleasing turnaround after the loss reported for the second quarter and I hope that, if production during the fourth quarter is in line with expectation, this can be continued."

SERABI GOLD PLC Condensed Consolidated Statements of Comprehensive Income

For the three months ended 30 September

For the nine months ended 30 September

(expressed in US$)	Notes	2017 (unaudited)	2016 (unaudited)	2017 (unaudited)	2016 (unaudited)
CONTINUING OPERATIONS
Revenue	12,908,790	16,209,753	36,225,050	42,120,928
Operating expenses	(7,295,870)	(10,216,119)	(23,938,180)	(25,828,941)
Provision for impairment of inventory	(400,000)	-	(620,000)	-
Depreciation of plant and equipment	(2,934,986)	(2,907,161)	(7,545,847)	(6,552,101)
Gross profit	2,277,934	3,086,473	4,121,023	9,739,886
Administration expenses	(1,407,836)	(1,267,898)	(3,828,194)	(3,812,218)
Share based payments	(101,665)	(101,072)	(279,697)	(249,828)
Gain on disposal of assets	15,621	2,070	131,596	29,039
Operating profit	784,054	1,719,573	144,728	5,706,879
Foreign exchange loss	(24,021)	(28,860)	(144,420)	(101,268)
Finance expense	(269,532)	(947,250)	(337,543)	(3,299,989)
Investment income	31	40	100	109
Profit / (loss) before taxation	490,532	743,503	(337,135)	2,305,731
Income tax expense	(255,481)	(278,023)	(433,494)	(834,069)
Profit / (loss) for the period from continuing operations (1) (2)	235,051	465,480	(770,629)	1,471,662

Other comprehensive income Items that may be reclassified subsequently to profit or loss

2,367,977	(588,314)	1,710,282	9,041,254
2,602,028	(122,834)	939,653	10,512,916

Exchange differences on translating foreign operations

Total comprehensive profit / (loss) for the period (2)

Profit / (loss) per ordinary share (basic) (1)	3	0.03c	0.07c	(0.11c)	0.22c
Profit / (loss) per ordinary share (diluted) (1)	3	0.03c	0.06c	(0.11c)	0.21c

1. All revenue and expenses arise from continuing operations.

2. The Group has no non-controlling interests and all losses are attributable to the equity holders of the parent company.