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

Unaudited Interim Financial Results for the three month period to 31 March 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 month period ending 31 March 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 MONTHS ENDING 31 MARCH 2017

3 months to 31 Mar 2017 US$	12 months to 31 Dec 2016 US$	3 months to 31 Mar 2016 US$
Revenue	13,173,584	52,593,751	11,679,089
Cost of sales	(9,792,350)	32,906,426	(6,689,506)
Provision for impairment of inventory	(220,000)	-	-
Depreciation and amortisation charges		(1,900,704)	8,384,738	(1,216,727)
Gross profit		1,260,530	11,302,587	3,772,856
(Loss) / profit before tax		(33,941)	1,870,179	1,501,304
Profit / (loss) after tax		(114,043)	4,430,292	1,347,665
Earnings / (loss) per ordinary share (basic)		(0.016 cents)	0.659 cents	0.195 cents
Average gold price received	US$1,204	US$1,245	US$1,165
As at 31 Mar 2017	As at 31 Dec 2016
Cash and cash equivalents	3,407,117	4,160,923
Net assets	64,798,397	63,378,973
Cash Cost and All-In Sustaining Cost ("AISC")	3 months to 31 Mar 2017	12 months to 31 Dec 2017	3 months to 31 Mar 2016
Gold production for cash cost and AISC purposes		9,861	39,390	9,771
Total Cash Cost of production (per ounce)	US$800	US$770	US$662
Total AISC of production (per ounce)	US$1,043	US$965	US$858

Key Operational Information

Quarter 1 2017	Quarter 1 2016	Quarter 2 2016	Quarter 3 2016	Quarter 4 2016	Total 2016	Total 2015
Metres	2,251	2,925	2,941	2,649	2,694	11,209	9,600

SUMMARY PRODUCTION STATISTICS FOR THE FIRST QUARTER TO 31 MARCH 2017

Horizontal development - Total

Mined ore - Total Tonnes 36,918 37,546 33,606 43,133 44,579 158,864 135,847

Gold

grade (g/t)

10.12 11.02 9.56 9.61 8.94 9.74 9.80

Quarter 1 2017	Quarter 1 2016	Quarter 2 2016	Quarter 3 2016	Quarter 4 2016	Total 2016	Total 2015
46,663	36,615	39,402	42,464	40,485	158,966	130,299
7.09	8.58	8.17	8.08	7.60	8.11	8.43
9,861	9,771	9,896	10,310	9,413	39,390	32,629

SUMMARY PRODUCTION STATISTICS FOR THE FIRST QUARTER TO 31 MARCH 2017

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 refineries.

2. Gold production totals for the first quarter of 2016 include treatment of 4,941 tonnes of flotation tails.

   Financial Highlights

   • Cash Cost for the quarter of US$800 per ounce (12 months to 31 December 2016: US$770).

   • All-In Sustaining Cost for the quarter of US$1,043 per ounce (12 months to 31 December 2016: US$965).

   • Working capital increased by approximately US$0.75 million since 31 December 2016.

   • Cash holdings of US$3.4 million at 31 March 2017.

   • Average gold price of US$1,204 received on gold sales in the first quarter of 2017.

     2017 Guidance

   • Forecast gold production for 2017 expected to be approximately 40,000 ounces.

   • Cost guidance for 2017 of an All-In Sustaining Cost of US$950 to US$975 per ounce.

     First Quarter 2017 Operational Highlights

   • Strong first quarter production of 9,861 ounces of gold, on budget and in line with guidance.

   • Mine production totalled 36,918 tonnes at 10.12 grammes per tonne ("g/t") of gold.

   • 46,663 tonnes of ore processed through the plant for the combined mining operations, at a combined grade of 7.09 g/t of gold.

   • 2,251 metres of horizontal mine development completed in the quarter.

   • At Palito, expansion of working areas continues, with development and production now coming from eight veins from the 25 included in the geological resource.

   • Test stopes using long-hole mining are underway in the Senna vein, with good success to date. The Senna vein is showing wider widths, potentially allowing for an increased level of mechanisation. Four sublevels are already in development with a new cross cut being established at the 180 metre relative level ("mRL").

   • At Palito Main Zone, the main ramp has now reached the -50mRL, where the G3 vein is now under development.

   • At Sao Chico the main ramp has now been deepened to the 56mRL, approximately 190 vertical metres below surface. Production is coming from the 140mRL, and with sublevels developed on levels 128mRL, 116mRL, 100mRL, 86mRL and 70mRL, development is well ahead of production.

   • By the end of the first quarter, surface ore stocks were approximately 13,000 tonnes (31 December 2016: 21,000 tonnes) with an average grade of 4.0 g/t of gold.

   • A ground induced polarisation ("IP") survey undertaken at Sao Chico has identified some excellent targets within 500 metres of the current operation.

Mike Hodgson, CEO of Serabi commented,

"Following on from a very successful 2016, I am pleased that 2017 has started with a strong first quarter during which the Group produced almost 10,000 ounces of gold with a cash cost of US$800.

"Cash holdings are slightly down compared with the end of December 2016 but this is simply a consequence of the timing of receipts from gold sales and at 31 March 2017 the Group was due approximately US$1.8 million for sales made in March, which would otherwise have

improved the cash position to US$5.2 million compared with US$4.2 million at the end of December 2016. The overall working capital position of the Group has improved by approximately US$0.75 million over the last three months. This improvement also reflects the consumption of some of the surface stockpiles during the quarter although the release of the costs associated with these is reflected in our reported operating costs being slightly higher than in prior quarters. The treatment of this lower grade stockpiled material also impacted slightly on the overall grades processed during the quarter.

"Our quarterly operating costs, compared with the same quarter in 2016, are, in local currency terms, generally tracking well and are also, for the most part, close to or below our internal forecasts for 2017. The relative strength of the Brazilian Real compared with the exchange rate that prevailed in the first quarter of 2016, and even compared with the average exchange rate for 2016 calendar year masks this. We estimate that had we experienced the same exchange rate as prevailed for the first quarter of 2016 our AISC for the first quarter of 2017 would have reduced by approximately U$170 per ounce. Even considering the average rate for the 2016 calendar year the effect is approximately US$80 per ounce.

"We continue to look for improvements in the cost structure to improve margins but in the longer term increased production and the ability to spread costs over a larger production base will have the greatest effect on unit costs.

With this objective, I am keen to re-start the exploration programmes on both the Sao Chico and Palito orebodies, which were suspended late last year due to the wet season. The results were very encouraging, especially at Sao Chico with some excellent new targets identified within 500 metres of the current operation. Considering the extent of past artisanal activity in the vicinity, we feel very confident the programme will bring new discoveries. At Palito the down-the-hole geophysics programme was completed and we have a number of drill targets identified which I hope will confirm and prove up the current known discoveries."

SERABI GOLD PLC Condensed Consolidated Statements of Comprehensive Income

For the three months ended 31 March

(expressed in US$)	Notes	2017 (unaudited)	2016 (unaudited)
CONTINUING OPERATIONS Revenue	13,173,584	11,679,089
Cost of sales	(9,792,350)	(6,689,506)
Provision for impairment of Inventory	(220,000)	-
Depreciation and amortisation charges	(1,900,704)	(1,216,727)
Gross profit	1,260,530	3,772,856
Administration expenses	(1,241,455)	(1,132,200)
Share-based payments	(65,620)	(123,116)
Profit on sale of fixed assets	-	2,568
Operating (loss) / profit	(46,545)	2,520,108
Foreign exchange gain/(loss)	46,837	(40,799)
Finance expense	(33,817)	(978,040)
Finance income	34	35
(Loss) / profit before taxation	(33,491)	1,501,304
Income tax expense	(80,552)	(153,639)
(Loss) / profit for the period from continuing operations attributable to the owners of the parent(1)		(114,043)	1,347,665

Other comprehensive income (net of tax) Items that may be reclassified subsequently to profit or loss

1,467,847	4,270,129
1,353,804	5,617,794

Exchange differences on translating foreign operations

Total comprehensive profit for the period operations attributable to the owners of the parent

(Loss) / profit per ordinary share (basic) (1)	3	(0.016c)	0.205c
(Loss) / profit per ordinary share (diluted) (1)	3	(0.016c)	0.195c
(1) All revenue and expenses arise from continuing operations.